is necessary to determine the relevant cash flows of each period and then apply the PV techniques. The step involves adjusting the sum of the scheduled annual payments and maintenance costs after the tax deductions attributable to maintenance‚ depreciation and interest to find the after-tax cash outflows for each period. After having computed the after-tax cash outflows for each
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possess physical substance‚” (Kimmel‚ Weygandt‚ & Kieso‚ 2010‚ p. 414). Types of intangible assets include patents‚ copyrights‚ trademarks‚ franchises‚ licenses‚ and goodwill. These assets would be classified as long-lived assets. Depreciation “Depreciation is the process of allocating to expense the cost of a plant asset over its useful (service) life in a rational and systematic manner‚” (Kimmel‚ Weygandt‚ & Kieso‚ 2010‚ p. 402). Depreciable assets include land improvements‚ buildings
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A) Straight-line Depreciation Computation End of Year Year DC X DR = ADE AD BV 2012 220‚000 25% 55‚000 55‚000 195‚000 2013 220‚000 25% 55‚000 110‚000 140‚000 2014 220‚000 25% 55‚000 165‚000 85‚000 2015 220‚000 25% 55‚000 220‚000 30‚000 ($250‚000 – $30‚000) 1/4 = 25% Please note abbreviations are the same as bellow Double- Declining-Balance Depreciation Computation End of Year Book Value Annual
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CHAPTER 3 EXAM STUDY OBJECTIVE . The annual report contains four basic financial statements: the income statement‚ the balance sheet‚ the cash flow statement‚ and statement of stockholders’ equity. a. True b. False . The primary reason the annual report is important in finance is that it is used by investors when they form expectations about the firm’s future earnings and dividends‚ and the riskiness of those cash flows. a. True b. False . Companies typically
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statements. • Based on the financial statements in 1984 Harnischfeger made changes from the previous year‚ the corporation computed depreciation expenses on plants‚ machinery and equipment using the straight-line method. Prior to the accounting changes in 1984‚ the company had experienced some financial losses was able to recover. There has been a change in depreciation accounting when it comes to profit. Before they used to apply the accelerated methods for the operating plants. The changes were made
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CHAPTER 24 PROBLEMS AND CASE PROBLEM 24-1 Annual Budget $18‚000 Gasoline Oil‚ minor 5‚626 repairs .. Outside repairs 4‚500 Insurance 28‚000 Salaries & 90‚000 benefits Depreciation 66‚000 202‚125 Total miles 375‚000 Cost per mile $0.539 No. of Cars 15 One-Month Budget 1‚500 April Varianc Actual e 1‚720 220 469 550 81 375 1‚500 495 1‚600 120 100 7‚500 7‚500 5‚500 16‚844 31‚250 $0.539 15 5‚867 17‚732 35‚000 $0.507 16 367 888 Required: Employing flexible budgeting techniques‚
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4000*(1.04^n) annually 3. Depreciation Expense From year 2003 to year 2006‚ the annual depreciation = book value of new vessel /25 = 39‚000‚000/25 = 1‚560‚000 From year 2007 to year 2011‚ the annual depreciation = new vessel depreciation + survey depreciation = 1‚560‚000 +300‚000/5= 1‚620‚000 From year 2012 to year 2016‚ the annual depreciation = new vessel depreciation + survey depreciation = 1‚560‚000+350‚000/5= 1‚630‚000 In year 2017‚ the annual depreciation = 1‚560‚000 4. Unlevered
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© The Hong Kong Polytechnic University T HE H ONG K ONG P OLYTECHNIC U NIVERSITY SCHOOL O F A CCOUNTING AND FINANCE Final Examination Programme BBA (Hons) in Accountancy (02002-BAC) BBA (Hons) in Accounting and Finance (02002-BAF) BBA (Hons) in Financial Services (02002-BFS) BBA (Hons) in Management (02002-MGT) BBA (Hons) in Marketing (02002-MKT) BBA (Hons) in Global Supply Chain Management (02002-GSC) (02004-GSC) (02004-IST) BBA (Hons) in International
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$34‚630‚ costs of $10‚340‚ depreciation expense of $2‚520‚ and interest expense of $1‚750. If the tax rate is 35 percent‚ what is the operating cash flow‚ or OCF? Operating cash flow $ 17283 Calculations: Sales - Cost - Depreciation = EBIT(Earnings Before Interest Taxes –Depreciation Amortization) 34630 - 10340 - 2520 = 21770 EBIT - Interest = Taxable Income 21770 - 1750 = 20020 Taxes (35%) = 20020 x .35 = 7007 Net income: 20020 - 7007 = 13013 EBIT + depreciation - less taxes = OCF 21770 +
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Module 6 Reporting and Analyzing Operating Assets DISCUSSION QUESTIONS Q6-1. When a company increases its allowance for uncollectible accounts‚ it also records bad debt expense in the income statement. If a company overestimates the allowance account‚ bad debt expense is too high and net income is understated. As well‚ accounts receivable (net of the allowance account) and total assets are both understated on the balance sheet. In future periods‚ the company will not need to add as much
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