Refer to the Amazon.com financial statements, including Notes 1and 3, in Apprendix A at the end of this book. Answer the following questions.
1. Which depreciation method does Amazon use for reporting in the financial statements?
What type of depreciation method does the company probably use for income tax purposes? Why is this method preferable for tax purposes?
2. Depreciation expense is embedded in the operating expense amounts listed on the income statement. Note 3 gives the amount of depreciation expense. What was the amount of depreciation for 2009? Record Amazon’s depreciation expense for 2009.
3. The statement of cash flows reports the purchases of fixed assets. How much were Amazon’s fixed asset purchases during 2009? Journalize the company’s purchases of assets for cash, as reflected in the cash flow report.
Please include explanations on how you got you answer.