Solution to Case 103 IF THE COAT FITS WEAR IT – TEACHING NOTE Questions 1. Your supervisor‚ Vic Gonzales‚ has asked you to prepare a capital budgeting report indicating whether ISGC should replace the existing machine or not. Indicate how would you proceed (without making any calculations)? I would estimate the incremental cash flows over the economic life of the new machine‚ taking into consideration the after-tax salvage values of the old and new machine respectively. Changes in
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income is substantially smaller than average total assets‚ the percentage decrease in the numerator would be greater‚ and ROA would be understated. However‚ in the next two years‚ net income would be overstated because it is not burdened by a depreciation charge‚ average total assets would remain understated‚ and ROA would be overstated. b. This error does not affect cash flows‚ but it does affect classification within the statement of cash flows. Expensing results in an operating cash ouflow
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loss account. Properties for sale: It belongs to the commodity‚ be treated as an inventory account for real estate industry. It can bring sales revenue after be sold. Question 2 a) What is purpose of amortization / depreciation? What is the difference between depreciation and
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your answer book and start each question on a fresh page. Please write legibly. 3. You must return your exam and answer book or your exam will not be graded. 4. SHOW ALL YOUR STEPS OR NO CREDIT WILL BE GIVEN. 1. (25 points) Analysis of Depreciation Candy Coffee purchased a professional coffee machine on January 1‚ 2008. The management provides the following information about the asset and its acquisition: |Purchase Price |$100
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Module I - Assessment of Inherent Risk 1. See Figure BR.A-Biltrite’s organizational chart. Based on the chart and the case description‚ the following strengths and weaknesses should be identified: STRENGTHS: • The structure shows adequate separation within the CBIS function‚ i.e.‚ systems analysis and programming are separate from data processing and control (implications for control risk assessment) • Separation is also maintained between the accounting and finance functions (implications
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Derek Greenfield Intermediate Accounting I 3/2/2012 CA1-1.) 1. True 2. False‚ must comply with all standards and interpretations including disclosure requirements 3. True 4. False‚ FASB must operate in full view of public through a “due process” system that gives interested parties ample opportunity to make their views known CA1-3.) 1. D 2. A 3. D 4. B 5. A 6. B 7. A 8. B E2-5.) Assets- F Liabilities- B Equity- I Investment by owners-
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IPSAS 17—PROPERTY‚ PLANT AND EQUIPMENT Acknowledgment This International Public Sector Accounting Standard (IPSAS) is drawn primarily from International Accounting Standard (IAS) 16 (revised 2003)‚ “Property‚ Plant and Equipment” published by the International Accounting Standards Board (IASB). Extracts from IAS 16 are reproduced in this publication of the International Public Sector Accounting Standards Board (IPSASB) of the International Federation of Accountants (IFAC) with the permission
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accounting concept? A) B) C) D) 2) Going concern. Historical cost. Consistency. Prudence. Which statement relating to depreciation is true? A) The cash account is affected by charging depreciation B) Accumulated depreciation represents the portion of an asset’s cost that has been transferred to depreciation expense C) Accumulated depreciation is a contra-expense account D) Depreciation represents cash that can be used to replace assets when they wear out 3) As at 31 December 2010 there are outstanding
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$121‚000 Accounts receivable 83‚200 Allowance for doubtful accounts 13‚300 Inventory 74‚200 Prepaid expenses 17‚800 Investment in subsidiary (equity method) 20‚000 Plant and equipment 210‚000 Accumulated depreciation 130‚000 Accounts payable 80‚700 Accrued liabilities 21‚500 Deferred tax liability 15‚500 8% serial bonds 80‚000 Common stock‚ $10 par 90‚000 Additional paid-in capital 150‚000 Retained earnings—Appropriation
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Chapter 9 Property Acquisition and Cost Recovery McGraw-Hill Connect Homework Answers 40. [LO 1] Emily purchased a building to store inventory for her business. The purchase price was $760‚000. Beyond this‚ Emily incurred the following necessary expenses to get the building ready for use: $10‚000 to repair the roof‚ $5‚000 to make the interior suitable for her finished goods‚ and $300 in legal fees. What is Emily’s cost basis in the new building? $765‚300 cost basis‚ computed
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