e EDouble entry - Income statement 1. Sales When sales are made‚ capital increases by the amount of profit made on the sale. 2. Expenses When ongoing costs‚ such as wages or rent are incurred‚ capital decreases. 3. Income and expense accounts Periodically‚ usually once a year‚ the figure of profit (income - minus expenses) is added to capital. During the year figures are accumulated in separate accounts for each item of income and expenditure. 4. Cost of sales At the end of the year‚ the
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CHAPTER 12 Statement of Cash Flows Study Objectives 1. Indicate the usefulness of the statement of cash flows. 2. Distinguish among operating‚ investing‚ and financing activities. 3. Explain the impact of the product life cycle on a company’s cash flows. 4. Prepare a statement of cash flows using the indirect method. 5. Use the statement of cash flows to evaluate a company. *6. Prepare a statement of cash flows using the direct method. Summary of Questions by Study Objectives
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liabilities – long – term debt =14030 – 2470 – 3980 = 7580 Net working capital = current assest – current liabilities NWC = 3840 – 2470 NWC = 1370 2. Building an income statement Lifetime‚ Inc.‚ has sales of $585‚000‚ cost of $273‚000‚ depreciation expense of $71‚000‚ interest expense of $38‚000‚ and tax rate of 40%. What is the net income for this firm? Income statement Sales 585000 Costs 273000 Deprectiation 71000 EBIT 241000 Interest 38000 Taxable income
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I. Brief Background of the Case August Scientific Instruments‚ Inc. (ASI‚ Inc.) is a small private company which specializes in the manufacturing of miniature electromechanical components. It is located on a small but progressive town wherein a Technical Education Institute is also based. At first‚ the company underwent several problems and setbacks and was able to grow steadily and expand its operations until in 1958; it was able to acquire additional investments‚ substantial monthly sales and
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Topic: IFRS and US GAAP in the Oil and Natural Gas Industry Summer 2013 July 17‚ 2013 Introduction Many countries in the world speaks many different languages when it comes to financial reporting. When one compare the accounting standards years ago to what is seen today‚ it’s shown that investors tolerated a great deal. As the markets are becoming global‚ investors are choosing the better global accounting standards that are available to them. For this reason‚ this paper will point out the International
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• Depreciation according to the straight line method = (Cost - Residual value) / Useful life. For the rehabilitation alternative‚ residual value is zero at the end of year 20. • ATCF(After-tax cash flow) will be calculated using the formula = Operating Costs after taxes plus Tax shields from depreciation. Part A: Rehabilitation without parts Depreciation =(39500+115000)/20 = $7725 per year. Tax shield from depreciation = $7725*0.48 = $3708 per year Here are the depreciation cash
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1. Fairdeals Ltd. presents the balance sheets as at 31.12.2009 and 31.12.2010 as follows: 31.12.09 31.12.10 Assets Rs. Rs. Fixed Assets at cost 31‚30‚000 36‚05‚000 Less: Depreciation 6‚80.000 8‚20‚000 24‚50‚000 27‚85‚000 Investments 12‚50‚000 13‚50‚000 Marketable Securities 60‚000 30‚000 Inventories 4‚10‚000 5‚20‚000 Book Debts 5‚30‚000 5‚05‚000 Cash and Bank 1‚20‚000 1‚40‚000 Preliminary Expenses 1‚00‚000 50‚000 49‚20‚000 53‚80‚000 Liabilities
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the equipment‚ extend depreciation lives for new equipment‚ and reduce corporate tax from 46% to 34% in the beginning of 1986. Rogers now needs to make a presentation about when will be the best time to close the deal with Paperco. There are three possible scenarios namely sale of equipment without the new tax legislation‚ sale of equipment with the new tax legislation and with grandfathering‚ and sale of equipment with the new legislation and without grandfathering. Depreciation expense (see Appendix
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Life University Chapter 4 Chapter Sections 1. 2. 3. 4. 5. 6. 7. Cost of plant assets Lump sum purchase Capital expenditure and Revenue expenditure Depreciation method Partial year Depreciation Revise estimate of salvage value and useful life Disposal of plant assets Long Term Assets • Plant Assets • Natural Resource • Intangible Assets Plant Assets • • • • Possess physical substance. Used in operation and not for resale. Long-term in nature Examples: Land Land Improvement
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112‚500 102‚850 Incr $9‚650 subtract (-) Prepaid Expenses 28‚400 26‚000 Incr $2‚400 subtract (-) Investments 138‚000 114‚000 Incr $24‚000 Plant assets 270‚000 242‚500 Incr $27‚500 Less: Accumulated depreciation (50‚000) (52‚000) Decr $2‚000 Total $ 682‚500 $ 514‚750 Liabilities and Stockholders’ Equity: Accounts Payable $ 112‚000 $ 67‚300 Incr $44‚700 add (+) Accrued expenses payable 16‚500 17‚000 Decr $500
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