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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though this analysis‚ give a better understanding how these standards apply in the real world accounting field. This paper analyzes similarities and differences in revenue recognition‚ asset impairment‚ consolidation processes‚ contingencies‚ and depreciation. In revenue recognition‚ the definition and treatment of revenue recognition according to US GAAP and IFRS is different. GAAP recognizes revenue when all of the following criterions are made: persuasive evidence of an arrangement exists‚ delivery
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causing them to increase by $5.4 million. They changed the way they compute depreciation expense by using the straight-line method‚ resulting in an increase in net income by $11 million or $.93 per common share. The depreciation policy and residual values were changed as well of machinery‚ plants‚ and equipment‚ which caused and increase in net income by $3.2 million or $.27 per share. What is the effect of the depreciation accounting method change on the reported income in 1984? How will this change
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Variable costs 345‚300 Depreciation 96‚000 EBIT $ 202‚500 Taxes@35% 70‚875 Net income $ 131‚625 The OCF for the company is: OCF = EBIT + Depreciation – Taxes OCF = $202‚500 + 96‚000 – 70‚875 OCF = $227‚625 The depreciation tax shield is the depreciation times the tax rate‚ so: Depreciation tax shield = TcDepreciation Depreciation tax shield = .35($96‚000) Depreciation tax shield = $33‚600 The depreciation tax shield shows us the
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They were given a 10% discount by the manufacturer. They paid $400 for shipping and sales tax of $3‚000. Stine estimates that the machinery will have a useful life of 10 years and a residual value of $20‚000. If Stine uses straight-line depreciation‚ annual depreciation will be $4‚100. $6‚100. $4‚072. $3‚760. Given the following account balances at year end‚ compute the total intangible assets on the balance sheet of Janssen Enterprises. Cash $1‚500‚000 Accounts Receivable 4‚000‚000 Trademarks
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reduces profits. 8-2 CLASSIFYING LONG-LIVED ASSETS Actively Used in Operations Expected to Benefit Future Periods Tangible Physical Substance Intangible No Physical Substance 8-3 CLASSIFYING LONG-LIVED ASSETS Land Assets subject to depreciation Buildings and equipment Furniture and fixtures Natural resource assets subject to depletion Mineral deposits and timber Tangible Physical Substance Definite life Patents Copyrights Franchises Indefinite life Trademarks Goodwill
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unions all of the above 4. Expenses can be found in the: a. b. c. statement of owner’s equity income statement balance sheet d. e. both b and c all of the above 5. This account does not appear on the income statement: a. b. c. accumulated depreciation depreciation expense sales revenue d. e. marketing expense interest expense 6. 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. $8‚850 $15‚700
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