During 2011,Lele Design earned net income of $250,000.The firm neither bought nor sold any capital assets.The book value of its assets declined by the year's depreciation charge of $200,000.The firm's operating cash flow for the year was $450,000.The market value of its assets increased by $300,000.What was Lele Design's economic income for the year?
Why is this figure different from its accounting income?
Please ignore taxes for this problem.

Question

During 2011,Lele Design earned net income of $250,000.The firm neither bought nor sold any capital assets.The book value of its assets declined by the year's depreciation charge of $200,000.The firm's operating cash flow for the year was $450,000.The market value of its assets increased by $300,000.What was Lele Design's economic income for the year?
 Why is this figure different from its accounting income?
 Please ignore taxes for this problem.

Quizplus · Accepted Answer

The Answer of During 2011,Lele Design earned net income of $250,000.The firm neither bought nor sold any capital assets.The book value of its assets declined by the year's depreciation charge of $200,000.The firm's operating cash flow for the year was $450,000.The market value of its assets increased by $300,000.What was Lele Design's economic income for the year?
 Why is this figure different from its accounting income?
 Please ignore taxes for this problem.

During 2011,Lele Design Earned Net Income of $250,000