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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accounted for on a consistent basis. It sets out the principles in making a decision as to whether a tangible fixed asset is stated at cost on a financial statement or at a revalued amount. It is acknowledged within the standard that in some cases no depreciation charge will be made on the grounds that it is immaterial. What is a fixed asset? The definition of a fixed asset was discussed in my last article1. As a reminder‚ these are such things as land‚ machinery‚ buildings‚ motor vehicles (school minibus)
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AC505 Course Project Hints: The beginning cash balance for April‚ is the cash from March 31 in the Asset section of the balance sheet. In the merchandise purchases budget‚ in April‚ we need 50% of March purchases (that amount is also given to us 3/31 Accounts payable of $100‚000 on page 415). Therefore‚ Total cash disbursements for April is (50% x $316‚000 April purchases) + ($100‚000 remaining March purchases to be paid) = $258‚000. Class‚ Here are some hints. Lets start from the beginning:
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CHAPTER 11 QUESTIONS 1. Distinguish among depreciation‚ depletion‚ and amortization expenses. Depreciation refers to the cost allocation of tangible long-term assets; depletion refers to the cost allocation of natural resources; and amortization refers to the cost allocation of intangible assets. All three terms have similar underlying principles governing their use. 2. What factors must be considered in determining the periodic deprecation charges that should be made for a company’s depreciable
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Question 1 Discuss the accounting principles and concepts that were violated in the case. Explain the appropriate accounting treatments that should be used. Accounting is a systematic recording of business transactions and statements relating to assets‚ liabilities and summarizes the financial events that occur in a business. There are certain accounting principles and concepts to preparing reports on financial statements. These accounting principles and concepts are usually referred to as
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this year‚ the understate net income of next year C8 1. Fixed asset turnover ratio = Net sales /Operating Revenue ÷ Average net fixed assets 2. Year 1 depreciation expense ($64‚000) = $800‚000 × 2/25 Year 2 depreciation expense ($58‚880) = ($800‚000 - $64‚000) × 2/25 3. The double-declining-balance depreciation method results in more depreciation in the earlier years of an asset’s life 4. An impairment loss occurs when the asset’s net book value ($4.1 million) exceeds its fair value ($3.1million)
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Challenging Issues Under Accrual Accounting: Long-Lived Depreciable Assets – A Closer Look Discussion Questions 8-1. Some factors determining the estimated useful life of assets might include: a. prior experience the company b. industry norms c. anticipated technological advancements d. the way the asset will be used e. anticipated company growth An important point that needs to be made during the discussion of this question
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In this case‚ when Rob recorded the depreciation of computer equipment‚ he chose the straight-line method‚ acceptably so because the computer server’s output cannot be counted by unit. We also cannot determine that there is a higher amount of depreciation expense in the early years than in the later years. In addition‚ based on my research‚ some big companies like eBay and Amazon also use the straight-line method to record the depreciation expense of computer servers. In regards to this‚ I unfortunately
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