The following information is available on four different companies. Assume that there is no salvage value on the equipment. All companies operate in the same industry and use similar processes and equipment. Based on this limited information, which company likely has the weakest quality of earnings?
A) Morton
B) Starburst
C) Ames
D) Summers

Question

The following information is available on four different companies. Assume that there is no salvage value on the equipment. All companies operate in the same industry and use similar processes and equipment.  Based on this limited information, which company likely has the weakest quality of earnings?
A) Morton 
B) Starburst 
C) Ames 
D) Summers

Quizplus · Accepted Answer

because Ames' depreciation is out of line with the other companies indicating a 50 year life, which is highly unlikely.

The Following Information Is Available on Four Different Companies