Chapter IX - INVESTMENT PROPERTY 1. Introduction. Investment property is property (land or a building – or part of a building – or both) held to earn rentals or for capital appreciation or both‚ rather than for: 1. use in the production or supply of goods or services or for administrative purposes; or 2. sale in the ordinary course of business. These properties are distinguished from owner-occupied properties which generate cash flows that are directly
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Chapter 13 Risk Analysis and Project Evaluation 13-1. Crusik Distribution Company thinks that there are two possible outcomes for its new facial care product: Either it will be very successful‚ or customers will not appreciate its “unique appeal.” The two outcomes are equally likely‚ but the successful outcome obviously comes with higher revenues. We can picture the situation like this: 50% 40% 30% 20% 10% 0% $1‚000‚000 $5‚000‚000 Thus Crusik’s revenues will be either $1M or $5M. The expected
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Analyzing Lease vs. Buy Dec To buy or not to buy is the question for many companies acquiring assets for their business. Equipment and other assets are extremely important when a company is trying to get off the ground in a new business. The chief executive officer would have to ask how would we finance the equipment needed‚ pay back investors‚ and make the company profitable for all. This new biotech company is seeking financial remedies in becoming a profitable company
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1- On December 31 of the current year‚ Hewett Company reported an ending inventory balance of $215‚000. The following additional information is also available: • Hewett sold goods costing $38‚000 to Trump Enterprises on December 28 and shipped the goods on that date with shipping terms of FOB shipping point. The goods were not included in the ending inventory amount of $215‚000 because they were not in Hewett ’s warehouse. • Hewett purchased goods costing $44‚000 on December 29. The goods were shipped
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(Accounts Receivable‚ Inventory‚ Long-lived Assets‚ Bonds) 1. GNC has the following information regarding the inventory of its Super Mega‚ a multivitamins. Assume GNC uses periodic inventory system each quarter and FIFO. a. On July 1‚ GNC had 200 bottles of Super Mega in stock. Each bottle costs $3. b. On July 15‚ GNC purchased 5‚000 bottles of Super Mega for $25‚000 from a supplier‚ paid $10‚000 in cash and the rest was on credit. c. On August 15‚ GNC purchased another 1‚000 bottles of Super
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Q: Is depreciation expense or depreciation cost is fixed cost or variable cost in nature? Fixed costs: Fixed costs are such costs that do not change with the change in activity level within the relevant range. Where relevant range can be defined in terms of time or activity level. Variable costs: Variable costs are such costs that change with the change in activity level . Coming to the question‚ depreciation expense or depreciation cost can either be fixed or variable and this depends on the
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| | | | | |2A | |Compute depreciation under different methods. | |Simple | |30–40 | | | | | | | | | |3A | |Compute depreciation under different methods. | |Moderate | |30–40
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purchased at a cost of $2‚697.50. We will calculate the difference between the accumulated Depreciation of office equipment balance and the office equipment account. We will then include the new office equipment to the balance‚ and then multiply the new balance by 20 percent using the declining-balance basis: NOTE (a) Office equipment DR. Depreciation Expense $4‚740 CR. Accumulated Office Equipment Depreciation $4‚740 Calculations: ($85‚829.89 – $64‚827.32) + $2‚697.50 $21‚002.57 + $2
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investment expenditure comes to $1‚050. This is your cost basis. What sources are reliably used to estimate as asset’s useful life? Depreciation is the process of allocating the cost of long-lived plant assets other than land to expense over the asset’s estimated useful life. For financial reporting purposes‚ companies may choose from several different depreciation methods. Before studying some of the methods that companies use to depreciate assets‚ make sure you understand the following definitions
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SECTION A Answer any FOUR questions from this section. Each question carries 10 marks. 1. a. Explain the following accounting concepts and illustrate each with an example: i. Historical cost ii. Stable monetary measures (5 marks) b. For each of the independent situations described below‚ list the accounting principle or concept that has been violated and give your explanation: i. Andy Company accrued interest expense on the personal bank loan of the owner at year end
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