quiz #1 Accumulated depreciation will be the sum of two years of depreciation expense. Annual depreciation for this asset is ($400‚000 - $10‚000)/5 = $78‚000. The sum of two years depreciation is $156‚000 ($78‚000 + $78‚000). | | | Micah Bartlett Company purchased equipment on January 1‚ 2010‚ at a total invoice cost of $400‚000. The equipment has an estimated salvage value of $10‚000 and an estimated useful life of 5 years. The amount of accumulated depreciation at December 31‚ 2011‚ if
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Chapter 3: Financial Statements‚ Cash Flow‚ and Taxes This chapter has a lot of definitions. They are important‚ but we don’t like to make students memorize too many of them early in the course. We let our students use a formula sheet that includes the key definitions. Note that there is an overlap between the T/F and multiple-choice questions‚ as some of the T/F statements are used in multiple-choice questions. Multiple Choice: True/False 1. The annual report contains four basic financial statements:
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2. The net cash provided by financing activities during 2013 is a. $1‚100‚000. b. $1‚300‚000. c. $1‚600‚000. d. $1‚800‚000. e. None of the above. 3. Which of the following should be disclosed in a Summary of Significant Accounting Policies? a. Depreciation method followed b. Types of executory contracts c. Amount for cumulative effect of change in accounting principle d. Claims of equity holders e. None of the above Use the following information for the next three questions. The balance sheet data
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A. Explain the conventional accounting concept of depreciation accounting. Depreciation is described as a process of systematic and rational cost allocation. The depreciation process is depreciation base‚ useful service life‚ and depreciation methods. Depreciation accounting is a system of accounting that aims the distributed cost value to the less salvage value‚ other basic value of tangible capital assets‚ over the estimated useful life of a unit. It’s process of allocation and not valuation
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explain why. a. Both the direct and indirect methods will produce the same cash flow from operating activities. True statement; the indirect approach is an alternative method for preparing the statement of cash flows for the direct method. b. Depreciation expense is added back
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capital leased planes comprised of 164 planes. “Capital Leases – Flight Equipment” totaling $107 is equal to the original present value of the planes under capital lease comprised of 7 planes under capital lease. F. Depreciation Expense $186.26 Accumulated Depreciation $186.26 This amount was calculated by using the amount corresponding to “Flight Equipment” of $6‚574 on the balance sheet minus the residual value of 15% divided by 30 years: [(6‚574 – (6‚574*.15)]/30 = 186.26
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10‚000 Additional depreciation on revaluation of equipment (25‚000) Impairment loss on intangible asset (5‚000) Recognition of deferred development costs 80‚000 Reversal of amortization of deferred gain on sale and leaseback (30‚000) Income under IFRS $1‚030‚000 2014 Stockholders’ equity under US GAAP $8‚000‚000 Adjustments: Reversal of write-down of inventory to replacement cost 10‚000 Original revaluation surplus on equipment 600‚000 Accumulated depreciation on revaluation of
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The initial conclusion is to accept this project as long as everything stays the same‚ and that they should evaluate themselves yearly as things may change. Blue Ridge Mill should take into account the depreciation expense per year when making an educated capital budgeting decision. Depreciation generated cash flows should be included in this project for many reasons. The depreciated generated cash flow gives us a better understanding of the financial breakdown of the project and tells the
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Revised Fall 2012 CHAPTER 12 STATEMENT OF CASH FLOWS Key Terms and Concepts to Know Basic Concepts The statement of cash flows highlights the major activities that impact cash flows and hence‚ affect the overall cash balance. Cash flows are important because they finance operations‚ pay bills‚ pay employees‚ pay dividends‚ repay loans and make investments. The statement analyzes the changes in the non-cash balance sheet from the perspective of whether the changes provided or used cash
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required to attempt in the F7 exam. IAS 16‚ Property‚ Plant and Equipment overview There are essentially four key areas when accounting for property‚ plant and equipment that you must ensure that you are familiar with: ¤ initial recognition ¤ depreciation ¤ revaluation ¤ derecognition (disposals). Initial recognition The basic principle of IAS 16 is that items of property‚ plant and equipment that qualify for recognition should initially be measured at cost. One of the easiest ways to remember
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