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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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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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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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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total revenues. To estimate expenses‚ we are given the breakdown of fixed and variable expenses for each of the expense items. The fixed expenses increase by the inflation rate‚ whereas the variable expenses adjust with the change in revenue. Depreciation is given as constant and interest expense is also taken as constant as we have not decided on the financing of the EFN. In addition some new expenses are added due to the new initiatives. This includes salaries for four national accounts managers
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accounting h. Managerial accounting i. Financial Accounting j. Managerial accounting 10-3 Classifying Costs: Product or G‚ S‚ & A/ Asset or Expense a. Production supplies- Product cost‚ asset b. Depreciation on Administrative Building- G‚ S‚ & A‚ expense c. Depreciation on manufacturing equipment – Product cost‚ expense d. Research and development costs- G‚ S‚ & A‚ Expense e. Cost to set up manufacturing equipment – Product cost‚ asset f. Utilities used in factory-
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Income | | $0.8 | $2 | $2 | $2 | $2 | $2 | | + | Operating Saving | | $2 | $3.5 | $3.5 | $3.5 | $3.5 | $3.5 | | - | Depreciation | | $3 | $3 | $3 | $3 | $3 | $3 | | | EBIT | | -$0.2 | $2.5 | $2.5 | $2.5 | $2.5 | $2.5 | | - | Tax (40%) | | -$0.08 | $1 | $1 | $1 | $1 | $1 | | | EAT | | -$0.12 | $1.5 | $1.5 | $1.5 | $1.5 | $1.5 | | + | Add back Depreciation | | $3 | $3 | $3 | $3 | $3 | $3 | | | Total Operating Cash Flow | | $2.88 | $4.5 | $4.5 | $4.5 | $4.5 | $4.5 | |
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information include: a. b. c. 4. d. observing e. classifying The financial statement or statements that pertain to a stated period of time is (are) the: a. b. c. d. e. 3. interpreting reporting purchasing accumulated depreciation depreciation expense sales revenue d. e. marketing expense interest expense A brand new company has a building costing $10‚000‚ machinery costing $5‚000‚ cash of $700‚ and a bank loan of $7‚850. What is the owner’s equity? a. b. c.
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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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reasons why the cash position for the business does not equal to the profit for the period. By showing the spreadsheet‚ two financial statements and looking into theories of matching principle‚ prepayments and accruals‚ provisions(bad debts and depreciation)‚ it is not hard to distinguish the cash flow from the profit. Content It is vital to understand the cash position and the profit do not necessarily go together when running business. Profitable businesses still can go out of business because
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