| Expenses: | Other Than Depreciation (75% of revenue) | $8‚000‚000 | Depreciation Expense | $1‚500‚000 | Net Income | | $2‚500‚000 | b. Net Income is $2.5M as shown in part a. The Total Profit Margin is Net Income ($2.5M)/ total revenues ($12M) = Total Margin of 0.208 (20.8%). The cash flow is the net income plus the depreciation costs‚ thus $1.5M (Depreciation Expense) + $2.5M (Net Income) = Cash Flow of $4.0M. c. If the depreciation expense doubled then the Net income
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investment E11-4. Book value and recaptured depreciation Answer: Book value $175‚000 Recaptured depreciation E11-5. $124‚ 250 $50‚750 $110‚000 $50‚ 750 $59‚250 Initial investment Answer: Initial investment purchase price installation costs – after-tax proceeds from sale of old asset change in net working capital $55‚000 $7‚500 – $23‚750 $2‚000 $40‚750 CAPITAL BUDGETING PROBLEMS: CHAPTER 11 Solutions to Problems Note: The MACRS depreciation percentages used in the following problems
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which will result in the increasing of annual depreciation by $20‚000. As a result‚ the cost on factory equipment depreciation is increased from 60‚000 to 80‚000. Cost of Goods Sold is increased from 1‚770‚000 to 1‚790‚000‚ and the net income is reduced from 41‚000 to 28‚520 Case2: This action indicates the effect of renovation of factory building‚ which will result in the increasing of annual depreciation by $25‚000. As a result‚ the cost on depreciation on factory building is increased from 125‚000
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degree of financial leverage »Income Statement - Performance over some period of time * Income = Revenues – Expenses * Matching principle: production costs are matched with revenues * Noncash items: an income item (e.g.‚ depreciation) that does not affect its cash flow * Calculating Earnings and Dividends per Share * Earnings per share = Net income/Total shares outstanding * Dividends per share = Total dividends/Total shares outstanding »Taxes:
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CHAPTER 16 (fin man); chapter 1 (man) MANAGERIAL ACCOUNTING CONCEPTS AND PRINCIPLES discussion questions 1. Financial accounting and managerial accounting are different in several ways. Financial accounting information is reported in statements that are useful to persons or groups outside of a company. These statements objectively report the results of past operations at fixed periods and the financial condition of the business under generally accepted accounting principles. Managerial
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Multiple Choice—Conceptual Answer No. Description b 21. Differences between taxable and accounting income. c 22. Differences between taxable and accounting income. b 23. Determination of deferred tax expense. a 24. Differences arising from depreciation methods. a P25. Temporary difference and a revenue item. b S26. Effect of future taxable amount. c P27. Causes of a deferred tax liability. d S28. Distinction between temporary and permanent differences. b S29. Identification of deductible
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Interest Interest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money‚ or money earned by deposited funds. When money is borrowed‚ interest is typically paid to the lender as a percentage of the principal‚ the amount owed to the lender. The percentage of the principal that is paid as a fee over a certain period of time (typically one month or year) is called the interest rate. A
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500 000. The wages for December were - wages of production workers were - Wages of administration people were - wages of distribution workers were 100 000‚ out of which: 60 000 30 000 10 000 Depreciation of production machines and buildings were Depreciation of administrative buildings were Depreciation of distribution cars were 20 000 10 000 5 000 Costs of marketing were 80 000 Interest costs related to loans received were 5 000 Tax expenses were 3 000 10 printing machines were produced in December
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and a residual value of $40‚000 was purchased for $120‚000. What is the depreciation expense for year 2 under the double-declining-balance method of depreciation? 2. As a recent graduate of State University you ’re aware that IFRS requires component depreciation for plant assets. A friend has asked you to succinctly explain what component depreciation means. Which of the following correctly describes component depreciation? 3. Given the following account balances at year end‚ compute the total
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Chapter 3: Financial Statements‚ Cash Flow‚ and Taxes This chapter has a lot of definitions. They are important‚ but we don’t like to make students memorize too many of them early in the course. We let our students use a formula sheet that includes the key definitions. Note that there is an overlap between the T/F and multiple-choice questions‚ as some of the T/F statements are used in multiple-choice questions. Multiple Choice: True/False 1. The annual report contains four basic financial statements:
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