and equipment to sales H&M: (420+222+7134) / 78346 = 9.9% Burberry: (58.2+99.2) / 995.4 = 15.8% (b) Ratio of depreciation to sales H&M: (14+1750) / 78346 = 2.25% Burberry: (1.9+27)/ 995.4 = 2.9% The above ratios can be used to measure the efficiency of a firm’s investment policy. Burberry has a higher land‚ buildings and equipment to sales ratio as well as a higher depreciation to sales ratio. The higher the ratio of land‚ buildings and equipment to sales‚ the smaller the investment required
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financial statements Harnischfeger Corporation computed depreciation expenses on plants‚ machinery and equipment using the straight-line method for financial reporting purposes. 2. What is the effect of the depreciation accounting method change on the reported income in 1984? How will this change affect profits in future years? The effect of this change was applied retroactively to all assets that were subjected to accelerated depreciation. It increased net income by $11 million or $0.93 per
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were other critical factors to address before moving forward with the project. One of the most important factors to consider was the rumored new tax legislation that would‚ “(1) eliminate the investment tax credit for new equipment; (2) extend depreciation lives for new equipment; and (3) reduce the corporate tax rate from 46% to 34% beginning in 1986. (Harvard‚ 1991)” Therefore‚ the financial problem facing Paperco is what is the Net Present Value (NPV) of replacing its existing mechanical drying
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Introduction IN1 International Accounting Standard 16 Property‚ Plant and Equipment (IAS 16) replaces IAS 16 Property‚ Plant and Equipment (revised in 1998)‚ and should be applied for annual periods beginning on or after 1 January 2005. Earlier application is encouraged. The Standard also replaces the following Interpretations: • SIC-6 Costs of Modifying Existing Software • SIC-14 Property‚ Plant and Equipment—Compensation for the Impairment or Loss of Items • SIC-23 Property‚ Plant and
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Income statement The income statement or the profit and loss account as it is also called measures reports how much profit (wealth) has the business generated over a period of time. To measure profit the total generated revenue over a period must be identified. Revenue is a measure of inflow of economic benefits arising from the operations of the business. These benefits will either result in an increase of assets such as cash or amounts owed to the business by the customers or a decrease
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Discussion Question #1 What are the differences among valuation‚ depreciation‚ amortization‚ and depletion? Is it appropriate to calculate depreciation using two different methods? Why? Which depreciation method provides you the highest depreciation expense in the first year? Why? Valuation refers to the asset being recorded and disclosed at current market price regardless of whether that price is above or below cost. Depreciation is the allocation of the cost of a plant asset to expense over its
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equipment for cash‚ at a total cost of $2.9 million‚ there are several possible scenarios to consider: tax and depreciation rates remaining as they are or changing and the loss or continuation of the Investment Tax Credit (ITC). Without providing an excess of detail here‚ those scenarios include: a possible tax rate decrease from the current level of 46% to 34%‚ possible extension of depreciation to 7 years‚ and the possible repeal for the ITC tax credit‚ as well as the possibility of “Grandfathering”
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Week 3 Problem Set Answer the following questions and solve the following problems in the space provided. When you are done‚ save the file in the format flastname_Week_3_Problem_Set.docx‚ where flastname is your first initial and you last name‚ and submit it to the appropriate dropbox. Chapter 7 (pages 225–228): 1. Your brother wants to borrow $10‚000 from you. He has offered to pay you back $12‚000 in a year. If the cost of capital of this investment opportunity is 10%‚ what is its NPV? Should you
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how to account for: 1. The expenditures and depreciation (if applicable) of the leasehold improvements. 2. The general repairs and maintenance. 3. The reinstating to the property’s original condition. The purpose of this memo is to analyze the circumstances and obligations arising under this lease agreement and make recommendations regarding the accounting treatment. 1. How to account for the expenditures and depreciation (if applicable) of the leasehold improvement? NeedsLease
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costs $12‚600‚000.00 $21‚600‚000.00 $25‚200‚000.00 $14‚400‚000.00 $10‚800‚000.00 Fixed costs $200‚000.00 $200‚000.00 $200‚000.00 $200‚000.00 $200‚000.00 Gross profit $8‚200‚000.00 $14‚200‚000.00 $16‚600‚000.00 $9‚400‚000.00 $4‚600‚000.00 Depreciation $1‚600‚000.00 $1‚600‚000.00 $1‚600‚000.00 $1‚600‚000.00 $1‚600‚000.00 net opearting income $6‚600‚000.00 $12‚600‚000.00 $15‚000‚000.00 $7‚800‚000.00 $3‚000‚000.00 Income taxes $2‚244‚000.00 $4‚284‚000.00 $5‚100‚000.00 $2‚652‚000.00 $1‚020
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