...CHAPTER 10 Plant Assets, Natural Resources, and Intangible Assets ASSIGNMENT CLASSIFICATION TABLE Brief Exercises 1, 2 A Problems 1A B Problems 1B Study Objectives 1. Describe how the cost principle applies to plant assets. Explain the concept of depreciation. Compute periodic depreciation using different methods. Describe the procedure for revising periodic depreciation. Distinguish between revenue and capital expenditures, and explain the entries for each. Explain how to account for the disposal of a plant asset. Compute periodic depletion of natural resources. Explain the basic issues related to accounting for intangible assets. Questions 1, 2, 3 Exercises 1, 2, 3 2. 4, 5 4 3. 6, 7, 22 3, 4, 5, 6 5, 6, 7 2A, 3A, 4A, 5A 4A 2B, 3B, 4B, 5B 4B 4. 8 7 8 5. 9, 24 8 6. 10, 11 9, 10 9, 10 5A, 6A 5B, 6B 7. 12, 13 11 11 8. 14, 15, 16, 17, 18, 19 12 12, 13 7A, 8A 7B, 8B 10-1 ASSIGNMENT CLASSIFICATION TABLE (Continued) Brief Exercises 13, 14 A Problems 5A, 7A, 9A B Problems 5B, 7B, 9B Study Objectives 9. Indicate how plant assets, natural resources, and intangible assets are reported. Questions 20, 21, 23 Exercises 14 *10. Explain how to account for the exchange of plant assets. 25, 26 15, 16 15, 16 10-2 ASSIGNMENT CHARACTERISTICS TABLE Problem Number 1A 2A 3A 4A 5A Difficulty Level Simple Simple Moderate Moderate Moderate Time Allotted (min.)...
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...Rupee Depreciation and Impact on the Economy (Dr. Nikhil Saket, Senior Assistant Secretary, ICAI, New Delhi) Introduction Depreciation refers to a fall in the value of the domestic currency which is caused by the demand for foreign currency exceeding its supply in the market. In such a situation one has to pay more than before to get units of foreign currency. This fall takes place in the market and on its own. Market determined exchange rate serves the purpose of aligning the domestic economy with the world economy was the price route. As consequences the domestic price gets linked up with those of the world price. With the liberalizations and globalization of the economy in recent years, imports are bound to increase. The lessening of restrictions on imports and lowering of tariff on imports which the economic reform implies, an increase in imports has in fact taken place. Again with trade having become an important element of the new strategy of growth. India got freedom from British rule on Aug 15, 1947. At that time the Indian rupee was linked to the British pound and its value was at par with the American dollar. There was no foreign borrowing on India's balance sheet. To finance welfare and development activities, especially with the introduction of the Five-Year Plan in 1951, the government started external borrowings. This required the devaluation of the rupee.- After independence, Indian choose to adopt a fixed rate currency regime. The rupee was pegged at 4.79 against...
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...DEPRICIATION All non-current assets will have a finite life because its life expires and cant be consumed for the entire time Finite life: the limited period of time a non current asset will exist Depreciable assets: a NCA that has a finite life, and thus must be depreciated over that life. Depreciation: allocation of cost of a non current asset over it useful period of life. When some has been consumed it is known as depreciation expense Depreciation expense: the part of the cost of a non current asset that has been consumed in the current reporting period Why use depreciation expense? To ensure profits are calculated accurately and to upheld reliability and relevance. (depreciation- no payment of cash, only affects income statement and balance sheet, no cash receipts or payment journals) HC: the original purchase price of the NCA RV: the estimated value of the NCA at the end of the useful life UL: the estimated time the the NCA will be used If fiya paid $1600 for a shelving on May 2014 which is expected to last for 4 years; it will be reported as non current asset in balance sheet, nothing happens in the income statement because it has not been consumed yet but if it was to be reported in balance sheet at 30 May 2015 it would be 1600/4 which is 400 that would be (1600-400) 1200 that would be reported in the balance sheet and 400 that would be reported as an expense. STRAIGHT LINE DEPRICIATION Depreciation expense: HC- RV ...
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...Arauco Case Study Question 1 - Do you think it is a good idea for Arauco to build the Nueva Aldea project? In this question we will be using the DCF technique in order to evaluate the project feasibility: Project name: Nueva Aldea Construction time: 3-4 years, we chose a 4 year construction time because we assumed it will take 3 years of direct constructing and a 1 year for extra delays and administrative procedures. We will also assume that the cost of the construction will be divided evenly between the years. Mill life time: 30-40 years, for the sake of this question we will assume a 35 years lifetime. (P.1 L.10) Expected sales: 350$ million per year at full capacity production. (P.1 L.10) Production Capacity: 700,000 tons of pulp. (P.1 L.9) MES of new pulp mill: 665,000. As of 2004 the minimum efficient scale was 95% of maximum mill capacity. (P.12 L.9) Year of producing | 1 (80% of MES) | 2 (90% of MES) | 3 (100% of MES) | 4-35 (100% of MES) | Capacity usage | 532,000 | 598,500 | 665,000 | 665,000 | (P.12 L.7-8) Cost of production: 197$ per ton. (Exhibit 6) Rate of return: 11%.Chile's expected market return is an indication to the company's project return. (P.12 line 10 from bottom) Depreciation: 44$ per ton. (Exhibit 6) Transportation: 38$ per ton. (Exhibit 6) Export: 85% calculated as average between years. (Exhibit 5) Sunk cost: 150$ million. The first phase of the project is already invested and cannot be returned, thus it is not calculated in the...
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...Networks Networks Three types of cloud computing are infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS). IaaS is renting hardware, data center space, and servers. This is beneficial to the business because they can have access to the latest devices without having to pay the full cost for them, which will depreciate as time goes on. PaaS is renting a platform, hardware and software. The applications that run can be newly formed or off the shelf. SaaS is renting software that is accessed from the internet. The provider handles patches, bug fixes, and software licencing. Access to the cloud is beneficial to businesses in a few different ways. The depriciation of hardware and software does not fall on the business. Security issues are handled by the provider, which means the business does not have to pay for in house IT. Private cloud computing is where hardware, software, and storage are all dedicated to a single client or business. Public computing is buying a part of a server that is also used by toher client’s or business’s. This type of environment is usually for applications where security is less of an issue because the data being stored does not contain private or confidential information. When looking at cloud vs VPN the advantages seem to be with the cloud. A VPN requires the business to keep the hardware up to date as well as security issues associated with the hardware and access. In a...
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...Cost of new equipment | 200000 | | | | | | | Disposal value | 40000 | | | | | | | Total Production for Cans | 5500000 | | | | | | | Annual production or purchase needs | 1100000 | | | | | | | Salary for Employees (3*(2000*12*1.18 + 2500) | 92460 | | | | | | | Cost of raw materials per can | 25¢ | | | | | | | Other variable production costs per can | 5¢ | | | | | | | Costs to purchase one can | 45¢ | | | | | | | Required rate of return | 12.00% | | | | | | | Tax rate | 35.00% | | | | | | | | | | | | | | | Working Note 1 | | | | | | | | Make Vs. Buy | | | | | | | | | Make | Buy | | | | | | Purchase price | | 495000 | | | | | | Variable Cost | 330000 | | | | | | | Employee Salary | 92460 | | | | | | | | | | | | | | | Total Cash Cost | 422460 | 495000 | | | | | | | | | | | | | | Annual Cash Saving (Before Tax) | 72540 | | | | | | | Annual Cash Saving (After Tax) | 47151 | | | | | | | | | | | | | | | Working Note 2 | | | | | | | | | | | | | | | | Annual Depreciation = (200000-40000)/5 = $32000 | | | | | | | Tax Saving Due to Depreciation = 32000*.35 = 11200 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Part 1 | | | | | | | | Annual cash flows over the expected life of the equipment | | | | | | | ...
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...Assesment Urinalysis case management group counselling individual counselling crisis intervention intensive outpatient medical somatics methadone maint. ambul detox total Revenue Medicaid rate 40 100 80 30 90 140 110 200 15 260 units of service 4000 11550 6000 28000 12000 1500 2000 800 8000 1300 75150 revenue 160000 1155000 480000 840000 1080000 210000 220000 160000 120000 338000 4763000 state 0 0 0 0 0 0 3000 0 0 205000 208000 private pay 10000 500 0 5000 10000 0 3500 0 0 0 29000 total 170000 1155500 480000 845000 1090000 210000 226500 160000 120000 543000 5000000 private pay units 250 5 0 166.67 111.11 0 31.82 0 0 0 564.5959596 State units 0 0 0 0 0 0 27.27 0 0 788.4615385 0 Variable cost units 4250 11555 6000 28166.67 12111.11 1500 2059.09 800 8000 2088.461538 76530.33023 medication /test 30000 404250 0 140000 120000 30000 200000 200000 96000 260000 1480250 others 2500 2000 10000 2000 2000 1000 250 0 0 0 19750 total 32500 406250 10000 142000 122000 31000 200250 200000 96000 260000 1500000 variable/unit price 7.647058824 35.15794029 1.666666667 5.041420118 10.0733945 20.66666667 97.25165563 250 12 124.4935543 19.60007223 contribution margin 137500 749250 470000 703000 968000 179000 26250 -40000 24000 283000 3500000 contribution margin/unit 32.35294118 64.84205971 78.33333333 24.95857988 79.9266055 119.3333333 12.74834437 -50 3 135.5064457 501.001643 contribution margin ratio 3%...
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...TOTAL | 81401.70 | 87883.20 | | | | | | | PROFIT AND LOSS ACCOUNT OF BHARTI MITTAL AS ON 31st MARCH 2013 (in crores) | | | | | PATICULARS | AMOUNT (IN RS.) | PARTICULARS | AMOUNT (IN RS.) | | | | | OPENING STOCK | 32.10 | SALES | 45350.90 | PURCHASES | 11.20 | CLOSING STOCK | 2.10 | POWER AND FUEL COST | 3569.90 | | | GROSS PROFIT c/d | 41739.80 | | | | | | | TOTAL | 45353.00 | TOTAL | 45353.00 | | | | | EMPLOYEE COST | 1511.30 | GROSS PROFIT b/f | 41739.80 | OTHER MANUFACTURING EXPENSES | 14325.30 | OTHER INCOME | 1463.00 | SELLING & ADMINISTRATION EXPENSES | 5252.00 | | | MISCELLANEOUS EXPENSES | 7191.70 | | | INTEREST | 1652.30 | | | DEPRICIATION | 6826.70 | | | TAX | 1358.50 | | | NET PROFIT c/d | 5085.00 | | | | | | | TOTAL | 43202.80 | TOTAL | 43202.80 | 1.Current Ratio = Total current assets/...
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...Capital Budgeting March 28, 2016 Capital Budgeting An investment project is part of a business growth initiatives, which may be s deemed acceptable or unacceptable based on the rate of the projects return. Unlike most decisions that an organization makes, a capital budgeting decision requires that two decisions a financial and an investment decision. For a business to decide which project to invest their resources, they must use one or several of the tools design for capital budgeting. Definitions, Analysis, and Interpretation Capital budgeting is used to make calculated informed decisions about acquiring property, businesses, and equipment. It is a process that allows investors to analyze, compare and select the acquisition, which will maximize their wealth. Our team had to analyze a Capital Budgeting Case Study presented in week 6 of Quantitative Reasoning for Business course. In this case, we are to choose only one corporation within the budget of $250,000. As stated in the guidelines, there is a comparison between Company A and company B. This is done by four calculations for both companies. Which are the 5-year projected income statement, a 5-year projected cash flow, net present value (NPV), and the internal rate of return (IRR). Included is the excel spreadsheet with our calculations and graph to decipher easily which company will make the best purchase. The NPV and IRR are two critical numbers that are helpful in determining the purchase. “The NPV tells us...
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...Team Name-Let’s Recycle College Name-Symbiosis Institute of Compute Studies and Research Srno 1 2 3 4 5 6 Name Nitin Amraotkar Omkar Ghate Akanksha Saini Disha Manocha Vivek Behani Shreevats Pandey E-mail 8956457343 8149226469 99757418176 9960860260 9049229205 9503226227 Phone No. 11030141064@sicsr.ac.in 11030141095@sicsr.ac.in 11030141031@sicsr.ac.in 11030141106@sicsr.ac.in 11030141100@sicsr.ac.in 11030141101@sicsr.ac.in Let’s Recycle Enterprises B wing Flat no. 101 Chitrakoot Appartments Besides Symbiosis Centre for Distance learning Model Colony Gokhale Cross Road- Pune-400016 Phone: 9975418176 Fax: N.A Email:11030141031@sicsr.ac.in Web Address:N/A Business Description: Let’s Recycle enterprises will operate in Pune and suburbs, in cooperation with the local corporation, to pick-up and purchase the segregated garbage from individuals. The collected waste will be recycled for the production of best quality organic compost fertilizer and additional bi-products like charcoal, tar, plastic and glass bottles. This business will be recession proof because the garbage will be coming out in any case. Let’s recycle will also set its foot in nutritious organic farming and mushrooms cultivation. Our unique features of the business will be1) It will be a helping hand to the municipal corporation for collection of the waste and keeping the city clean and green. Our Business will also help the city to reduce the pollution of the city and hence reduce the carbon credits. The filthy...
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...How to analyse a market for investment point of view ? * The most important point is the govt incentives. Theses may include- 1. FiTs- Feed-in-Trade If you are eligible to receive FITs you will benefit in three ways: * Generation tariff: your energy supplier will pay you a set rate for each unit (or kWh) of electricity you generate. Once your system has been registered, the tariff levels are guaranteed for the period of the tariff (up to 20 years) and are index-linked. * Export tariff: you will get a further 4.77p/kWh from your energy supplier for each unit you export back to the electricity grid, so you can sell any electricity you generate but don't use yourself. This rate is the same for all technologies. At some stage smart meters will be installed to measure what you export, but until then it is estimated as being 50 per cent of the electricity you generate (only systems above 30kWp need to have an export meter fitted, and a domestic system is unlikely to be that big). * Energy bill savings: you will be making savings on your electricity bills because generating electricity to power your appliances means you don’t have to buy as much electricity from your energy supplier. The amount you save will vary depending how much of the electricity you use on site. 2. VGF- Viability Gap funding VGF is typically provided in competitively bid projects. Under VGF, the central government meets up to 20% of capital cost of a project being implemented in public private...
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...1 1.1 CAKES AND PASTRIES Introduction Bakery products have become very popular throughout the country. Breads and biscuits are the most common products but other items like cakes, pastries, cream-rolls, cookies etc. are also not lagging far behind. These items are consumed by people of all age groups across the board. Nature of these products is such that the consumers prefer fresh items. Shelf life of cakes & pastries is limited and thus local manufacturers enjoy distinct advantage. In spite of continuous increase in the consumption of these items during last few years, the per capita consumption is still very low compared to the advanced countries. There is, thus, good scope for these items. A good pastry is light and airy, easily broken in the mouth (what is called 'short' eating), but firm enough to support the weight of the filling. The dough must be well mixed but care must be taken not to overmix the pastry. This results in long gluten strands and toughens the pastry. Thus, the manufacture of good pastry is something of a fine art. 1.2 Objective The primary objective of the model report is to facilitate the entrepreneurs in understanding the importance of setting up unit of cakes and pastries. This model report will serve as guidance to the entrepreneurs on starting up such a new project and basic technical knowledge for setting up such a facility. 1.3 Raw Material Availability The all important raw materials will be wheat flour, sugar, eggs and ghee for which...
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...1 ENERGY FOOD 1.1 Introduction With growing health awareness, many people have become very selective about their diet and there is a marked preference for low calorie high protein focod supplements. At the same time, poor people cannot afford costly energy food available in the market. Thus, there is a growing market for good quality health food if the prices are reasonable. Growing children is yet another target group. 1.2 Objective The primary objective of the model report is to facilitate the entrepreneurs in understanding the importance of setting up unit of energy food with latest technology. This model report will serve as guidance to the entrepreneurs on starting up such a new project and basic technical knowledge for setting up such a facility. 1.3 Raw Material Availability Materials like wheat, gram dal, edible groundnut cake and jaggery shall be available locally. Major requirement will be wheat for which arrangements for bulk supply must be made. The total production of the wheat in the MP is 71.76 lakh MT. The state ranks fourth in the country with the percentage share of 10.04. 1.4 Market Opportunities There are many health foods especially targeted at urban markets as they are priced at around Rs.100-120 per kg. But bulk of them is for children. But there is a large semi-urban and rural market wherein these products are considered to be very costly. With greater health awareness, people prefer diet food but presently...
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...B1. (Choosing financial targets) Bixton Company's new chief financial officer is evaluating Bixton's capital structure. She is concerned that the firm might be underleveraged, even though the firm has larger-than-average research and development and foreign tax credits when compared to other firms in its industry. Her staff prepared the industry comparison shown here. a. Bixton's objective is to achieve a credit standing that falls, in the words of the chief financial officer, "comfortably within the ‘A' range." What target range would you recommend for each of the three credit measures? b. Before settling on these target ranges, what other factors should Bixton's chief financial officer consider? c. Before deciding whether the target ranges are really appropriate for Bixton in its current financial situation, what key issues specific to Bixton must the chief financial officer resolve? a. To be “comfortably” within the range, the firm should stay off the low end of the ratings. Fixed Charge Coverage = 3.40 - 4.30 Cash Flow / Total Debt = 55 - 65 Long-Term Debt / Total Capitalization = 25 - 30 b. Ability to use fully non-interest tax credits and debt management considerations such as issuance costs. The CFO should also consider that the firm’s R&D is an intangible asset and that lenders may not be willing to loan the same percentage of debt to Bixton as to its competitors. c. The CFO needs to consider R&D and foreign tax credits. The additional tax...
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...1.0 INTRODUCTION Akademi Teknikal Laut Malaysia (ATLAM) was established on 15 August 1981, which wholly owned and organization by MICT Berhad located in Melaka and Terengganu. ATLAM was focused on training and preparing Malaysia for the maritime industry. On 1 January 1997 ATLAM went privatized and became one of the subsidiaries of the PETRA group-wide SAP. ATLAM vision and mission was to be a leader in maritime education and training and to facilitate value added learning via a conductive environment and provide excellent services to its clients. According to the conductive study by World Maritime University in 1997 ATLAM IT infrastructure was poor if compared to other countries in Europe and/or Japan. Because ATLAM used the single-user system, which allows users to produce only accounting entries, the system could not function for financial report. The access for better IT facilities was provided by PETRA after ATLAM was privatized. In 2001, ATLAM IT solution was to follow the PETRA IT infrastructure standards. ATLAM management had been asked to upgrade its accounting system with the PETRA group-wide SAP system in December 2001. SAP system, application and product in data processing are integrated business applications package that covered most functions of an organization. Those core functions of SAP are Financial Accounting, Controlling, Human Resources, Plant Maintenance, Project Systems and Basis System. In particularly, SAP system is feasible for ATLAM to run its financial...
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