Includes bargain purchase option. Note: There is a rounding error of $1. PREPARE A SCHEDULE OF LEASE PAYMENTS FOR PURPLE LTD. Note: There is a rounding error of $1. JOURNAL ENTRIES For Lemon Ltd: (Depreciation expense = [$29‚568 - $3‚600] / 5 years = $5‚194) For Purple Ltd: (Net Method) For Purple Ltd: (Gross Method) FINANCIAL STATEMENTS OF BOTH COMPANIES FOR YEAR ENDING 30 JUNE 2009 Lemon Ltd Extract of Financial Statement Note 5: Fees for
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Depreciation Expense |Accumulated Depreciation | |Year 1 |$30‚000 |$30‚000 | |Year 2 | 30‚000 | 60‚000 | |Year 3 | 30‚000 | 90‚000 | Double Declining | |Annual Depreciation Expense
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There is also an additional added tax of 3% on income between $15 million and $18 1/3 million ($18‚333‚333.33). 1-1. William B. Waugh Corporation—Corporate Income Tax Sales Cost of Goods Sold + Operating Expenses Operating Profits Dividend Income Less 70% Exclusion Interest Expense S-T Capital Gain Selling Price Cost L-T Capital Gain Selling Price (#Shares)(Price/Share) 1000 x $100.00 Cost (#Shares)(Price/Share) 1000 x $80.00 Taxable Ordinary Income $50‚000 25‚000 451‚800 $526‚800 Surtax:
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we calculated the ra to be 14.8% Estimating the cost of debt We estimated the cost of debt using the average interest expense out of total debt. Pre-bid: interest expense / (notes payable + current portion of long-term debt + long-term debt) = 10.3% Management Group: interest expense / (principal debt payments + total year-end book value of debt) = 12.5% KKR: interest expense / (principal debt payments + total year-end book value of debt) = 12.8% As we can see‚ the cost of debt is higher in both
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Chapter 1 Overview of Financial Reporting‚ Financial Statement Analysis‚ and Valuation CHAPTER 1 OVERVIEW OF FINANCIAL REPORTING‚ FINANCIAL STATEMENT ANALYSIS‚ AND VALUATION Solutions to Questions‚ Exercises‚ and Problems‚ and Teaching Notes to Cases 1.1 Value Chain Analysis Applied to the Timber and Timber Products Industry. Exhibit 1.A below contains a depiction of the value chain. The links in the value chain are as follows: 1. 2. 3a. 3b. 4a. 4b. 5a. 5b. Timber Tracts: Plant and maintain timber
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refers to the process of identifying specific overheads of a particular cost centre and charging them. For example‚ in this case wages paid to truck drivers is an overhead cost which is directly identifiable with the Cost Centre i.e. ACF. In case of expenses which cannot be directly identified with that cost centre or which are used by many cost centres allocation will be made on a suitable basis. For example‚ rent on the basis of floor area. The above mentioned methods are called as direct method
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customer was paid as commission in first year and 16% monthly in subsequent years. This used to hit the income statement directly as expenses in the first year. But later the company changed its policy by paying and advance of 25% of subscription of 3 years worth of commissions in the first year itself but recorded it evenly over the 3 years of its duration. So‚ now the expense is spread over the 3 years making the profit and loss statement look good. Also it is a scheme that serves as an incentive
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for achieving quantified objectives‚ (2) standard for measuring performance‚ and (3) device for coping with foreseeable adverse situation. What is a budget and why is it important? Simply put‚ a budget is an itemized summary of likely income and expenses for a given period. It helps you determine whether you can grab that bite to eat or should head home for a bowl of soup. It is typically created using a spreadsheet‚ and it provides a concrete‚ organized‚ and easily understood breakdown of how
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forth rules‚ which define legitimate expense reimbursements. A qualified Accountable Plan requires all expenditures to • Have a bona-fide business purpose The IRS may view a disbursement as providing a personal benefit if there is any doubt concerning its business purpose. Even though in some cases the business purpose may be implied‚ it must be specifically documented to pass IRS scrutiny. Paying for or reimbursing for lavish or extravagant expenses in unacceptable. These terms are used
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Substantive Procedures - Class of Transactions SALES AND SALES RETURN Occurrence Compare Sales of this year with Sales of last year as well as Analytical Procedures (for with budgeted and Industry average. Investigate unusual Overstatement) difference. Completeness (for Compare G.P. Ratio of this year with last year as well as budgeted and Industry average. Investigate unusual difference. Understatement) Review a reconciliation of Inventory (opening
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