reject the project. d. Yes‚ the annual depreciation expense must be taken into account when calculating the cash flows related to a given project. While depreciation is not a cash expense that directly affects cash flow‚ it decreases a firm’s net income and hence‚ lowers its tax bill for the year. Because of this depreciation tax shield‚ the firm has more cash on hand at the end of the year than it would have had without expensing depreciation. e. No‚ dividend payments should not
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Operating activities - decrease in accounts receivable $76‚000 g) Financing activities - paid dividend (97‚000) Note: this cash outflow may also be classified in operating activtiies if the company wishes. h) Operating activities - add back depreciation 67‚000 i) Operating activities - deduct gain on sale (3‚000) Investing activities - sold capital asset 13‚000 Requirement 3 a) Investing activities - cash paid for capital asset (no change from above) (18‚000) b) Financing activities
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and Management 2012” May 10-11‚ 2012‚ Vilnius‚ LITHUANIA ISSN 2029-4441 print / ISSN 2029-929X online ISBN 978-609-457-116-9 CD doi:10.3846/bm.2012.036 http://www.bm.vgtu.lt © Vilnius Gediminas Technical University‚ 2012 THE INFLUENCE OF DEPRECIATION POLICIES ON FINANCIAL STATEMENT ANALYSIS: A CASE STUDY OF AIRLINE INDUSTRY Xiaosong Zheng1‚ 2‚ Yingya Guo3‚ Jiali Xu4 Tallinn School of Economics and Business Administration‚ Tallinn University of Technology‚ 19086 Tallinn‚ Estonia Email: xiaosong
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The time an asset is expected to last is called its a. depreciation. b. fiscal period. c. net loss value. d. useful life. ANS: D DIF: Easy OBJ: LO 5-1 MSC: AACSB Communication 6. Matching the cost of an asset with the revenue it is expected to produce is called a. adjusting. b. expensing. c. depreciation. d. contra-valuing. ANS: C DIF: Easy OBJ: LO 5-1 MSC: AACSB Communication 7. The cost of an asset that is subject to depreciation is called a. salvage value. b. depreciable cost. c. revenue
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ACCT1A Sample Exam 3 Name: __________________________ Date: _____________ 1. The maturity date of a note receivable: A) Is the day of the credit sale. B) Is the day the note was signed. C) Is the day the note is due to be paid. D) Is the date of the first payment. E) Is the last day of the month. 2. The amount of bad debt expense can be estimated by: A) The percent of sales method. B) The percent of accounts receivable method. C) The aging of accounts receivable method. D) Only b and c. E)
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Chapter 12 Analyzing Project Cash Flows 12-1. Captain’s Cereal’s new Crunch Stuff n’ Stars is expected to generate $25M in sales. However‚ 20% of that will be cannibalized from the original cereal‚ Crunch Stuff. Thus‚ the sales amount that should be allocated to the new Stars version is only (100% − 20%) of the $25M‚ or $20M. This is an example of finding an “incremental” cash flow. As shown in equation 12-1‚ we only want to consider what is different if we go ahead with the project: incremental
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ERASMUS UNIVERSITY ROTTERDAM - ESE Bachelor Thesis: Economic Value Added and its Effect on Managerial Behaviour An Investigation into the Effectiveness of an Economic Value Added Compensation System ARUN PARAGH 11/7/2012 Student: Student ID: Supervisor: Department: July 2012 Arun Paragh 321388 Bart Snel Accounting‚ Auditing & Control Abstract As the financial statements of companies grow in importance‚ its users are increasingly demanding more adequate measures of performance and
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Balls and Bats‚ Inc. made a purchase of equipment. The cost of the equipment was one hundred thousand dollars and had life expectancy of four years. The following schedules are the double-declining balance method and the straight line method of depreciation. This schedule will assist Balls and Bats‚ Inc determine the best method to depreciate there new acquisition. Further‚ the schedules will determine which will glean a higher net income for the organization for the year ending December 31‚ 2005
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the effect of the depreciation accounting method change on the reported income in 1984? How will this change affect profits in future years? a. In the case of depreciation of some type of assets‚ Harnischfeger is adjusting its depreciation policy to the straight-line method from accelerated methods‚ which let the company increased net income as the adjustments are being applied retroactively. This change will increase net income in the coming immediate years‚ but the depreciation expense will be
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Chart Year 1 2 3 4 5 Sales Volume 1400 1525 1730 1650 1420 Sales Revenue 8.680 9.455 10.726 10.230 8.804 Variable Costs 3.906 4.255 4.827 4.604 3.962 Fixed Costs 2.1 2.1 2.1 2.1 2.1 Total Costs 6.006 6.355 6.927 6.704 6.062 Depreciation Case 1 1.343 2.302 1.644 Depreciation Case 2 1.343 2.302 1.644 1.174 0.839 (The unit of the price is million) Step 1 In this case‚ it seems to be an important decision for XYZ Bicycle Co. Ltd to determine whether to introduce the new mountain bike.
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