...Essay Four (Exchange Rates): Topic 2 – Australia in the global Economy Outline the causes of a decrease in demand for the Australian dollar, and discuss the impacts on the Australian economy of a sustained depreciation of the Australian currency. The exchange rate is a measure of the value of a currency relative to another and is influenced by the demand and supply of the Australian Dollar (AUD). Changes in any of the factors that affect supply and demand causes the AUD to rise or fall. The demand for the AUD is derived from the demand of Australia’s goods, services and assets, which is impacted by domestic and international economic conditions. Therefore, factors such as decreased capital inflow from investors, decreased demand for Australian exports and speculation that the AUD will fall are the predominant causes of the decrease in demand of the Australian dollar. This decrease in demand has resulted in a sustained depreciation of the Australian currency that has resulted in various positive and negative implications for the Australian economy. Capital inflow impact the exchange rate as foreign investors wanting to invest in Australia must exchange their own currency for Australian dollars therefore impacting the demand for Australian currency. The level of Australian interest rates relative to overseas interest rates may influence their investment decisions. Recently the interest rate has fallen from 3.75% in May 2013 to 2.25% in April 2015, causing a decrease in...
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...following tasks for this assignment: 1. Prepare two different depreciation schedules for the equipment—one using the double-declining balance method, and the other using the straight-line method. (Round to the nearest dollar). 2. Determine which method would result in the greatest net income for the year ending December 31, 2005. 3. How would taxes affect management’s choice between these two methods for the financial statements? 1. Let’s begin with straight-line depreciation since the double-declining balance is based upon it. But there’s an important disclaimer here: let’s assume that we know the salvage value at the end, so it reduces the depreciable amount by $10,000. More frequently the business finance problems assume no salvage value because it’s so hard to foresee. Then tooling is depreciated over its Expected life? And any salvage value simply comes back in the last Year. And another disclaimer: the IRS has a half-year convention for equipment put in place but since I am using the full-year in this problem, we’ll ignore that too. STRAIGHT-LINE DEPRECIATION Depreciation expense = Acquisition cost - residual value Estimated useful life in years Depreciation expense per year 22,500 = 100,000 - 10,000 = 90,000 $90,000 over 4 years, which gives 25% per year? Salvage value= $10,000 Estimated useful life= 4 years Depreciation expense= 100,000 - 10,000 = 22,500 4 D= $22,500 per year Single-line Depreciation Balances at End of Year 1 ...
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...to GAAP Essay ACC/291 10/12/15 James Ferguson Comparing IFRS to GAAP Essay The International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) have some similarities and differences when it comes to accounting for liabilities. There are steps that are taken by both the FASB and IASB to move to fair value measurement for financial instruments. There are some differences between these approaches. IFRS 8-1 What are some steps taken by both the FASB and IASB to move to fair value measurement for financial instruments? In what ways have some approaches differed? It doesn’t matter if the FASB or IASB is followed; the steps taken to move to fair value measurement for financial instruments are to be noted in the financial statements regarding fair value measurement practices. Under each system, a company must report the assets at book value or fair value situational depending. Every asset in the same class of assets must get the same valuation. When valuing receivables, the IFRS operates under a two-tiered method that will analyze individual receivables first then takes a look at receivables as a whole to see if there is any impairment. IFRS 9-1 What component depreciation, and when must it be used? Component depreciation should be used when parts of the assets are fundamentally different. It is when the asset has different components with varying lifespans. Under IFRS, companies are required to use component depreciation if the...
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...Paula Hill 06/22/2014 Abstract There are differences between depreciation, valuation, amortization, and depletion. This short essay will show how they different from each other and whether it is ok to calculate depreciation by using two different methods. Depreciation, depletion, and amortization may have a different way of being presented. Each one is are accounting terms and are listed within the Generally Accepted Accounting Principles (GAAP). Each one is used to distribute the past cost of a particular asset. These allocations are especially helpful when checking the life of the asset. They compare the expenses and the wear and tear of the equipment while in production, or daily operations and or in administrative duties. When measuring these three you also have to take into consideration past cost, salvage value if any, and what is the useful life estimated to be? First is depreciation, this is when you allocate any tangibles that the asset has in the past. You take the past cost and you subtract the normal remaining or what the salvage value could be over its lifetime. You can use the easiest method which is the straight line method. Even though this method comes with a lot of criticism because it says that this method of time than the life or usage of the equipment. You can however use the accelerated method. This method gives you a broader range of how to deal with depreciations. Next we go into depletion, this is where the allocations are being...
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...Write a brief essay (suggested length of a total of 1–2 pages) in which you do the following: 1. Describe how you would reconcile the book income to tax income differences for ABC as a corporation and an s-corporation. 2. Make a recommendation for the board of directors about whether or not ABC should become an s-corporation, based on your calculations. (You may present this portion of your essay in memo format if you wish.) For corporations, there is a three step process to reconcile book income to tax income. Usually, corporations keep their accounting records on an accrual basis, which recognizes income when it’s earned, not necessarily when a customer pays for it. Tax returns on the other hand must be completed based on when the income has been received. This may create differences between the general ledger and the tax filing, and must be accounted for. The first step is to total all income items in the current year but not entered into the general ledger. Then add the result to the net income after taxes from the general ledger. Add the current year’s federal tax expense and any capital losses that exceed the corporation’s capital gains. Step two requires the preparer to add any general ledger expenses that are not deductible in the current tax year. Some examples include charitable contribution carryovers from a previous year, nondeductible entertainment and travel expenses, or even timing differences caused by using different depreciation methods on the general...
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...Candidate number:19904 Group 8 Tutors name:mariano scapin PART B Tangible non-current assets are widely existed in many kinds of companies, however, there is question that different companies value similar assets very differently, this essay will elaborate this phenomena in details through referring to some companies. Tangible non-current assets like property, plant and equipment are initially recorded at acquisition cost, it means all costs directly attribute to bringing the asset into working condition, and they have a fundamental influence on the amount of depreciation as a depreciation base. Generally speaking, in the case of the serve life of tangible non-current assets is fixed, the depreciation will be higher if the there is a higher acquisition cost. Further more, the net residual value can also influence the depreciation, if the tangible non-current assets have higher net residual value, correspondingly, the depreciation in unite time or unit labour force will be lower, because net residual value is an estimator at the beginning about the whole serve life has completed in the future, so the real amount can only be confirmed when it really happens, hence it is subjective to some extent and it will lead to companies value similar assets very differently. There are also many other factors which can influence the value of tangible non-current assets. Through referring to the example in Enigma, on the one hand, the...
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...Comparing IFRS to GAAP Essay Joshua Tracey ACC /2291 March 22nd, 2016 Mr. Bob Wells Comparing IFRS to GAAP Essay The past few weeks, the team and I have been discussing each of the questions and have come to some very good answers to each. We tried to compile a list so that each can put into our own words and input our opinions and examples that we have direct experiences with. Each question is outlined below and has a brief excerpt of each of our discussions. IFRS 8-1: What are some steps taken by both the FASB and IASB to move to fair value measurement for financial instruments? In what ways have some of the approaches differed? Under either system, companies will be required to report assets at either book value or fair value, depending on the situation. Fair value measurements provide users of financial statements with an accurate picture of the value of a company’s assets. Both IFRS and GAAP require firms to include information regarding fair value measurement practices in the notes of financial statements. As a general rule of thumb, all assets in the same class must receive the same valuation treatment. In regards to the value of receivables, IRFS uses a two-tiered method that first analyzes individual receivables, and then looks at receivables as a whole to determine if there is any impairment. IFRS 9-1: What is component depreciation, and when must it be used? Component depreciation happens when an asset has fundamentally different parts that should...
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...How to value tangible non current assets “Valuing tangible non-current assets is subjective and complex and can therefore result in different companies valuing similar assets very differently.” Discuss this statement with specific regard to your knowledge of how tangible non-current assets discussion. Valuing tangible non-current assets can be subjective and complicated. This essay explains it from two aspects, costs of PPE and depreciation respectively, under the international accounting standards. Property, plant and equipment are the representative of tangible non-current assets which commonly are held by business entity. When to value assets the definition from the outset that should be understood is carrying account. According to IAS16, carrying amount is defined as” the amount at which an asset is recognized after deducting any accumulated depreciation and accumulated impairment losses”. Therefore, subjectivity of valuing tangible non-current assets can be attributed to recognized cost, accumulated depreciation. From the outset the cost should be measured after assets are recognized. This is the first step that confirms initial costs. When buying same assets, the costs can be totally different. For example, the items of assets can have many spare parts which may be minor or major for corporation usage. However, if the corporation defines that this spare parts is important-major spare parts, this amount should belong to part of costs of this assets. In contrary...
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...Value Tangible Non Current Assets How to value tangible non current assets “Valuing tangible non-current assets is subjective and complex and can therefore result in different companies valuing similar assets very differently.” Discuss this statement with specific regard to your knowledge of how tangible non-current assets discussion. Valuing tangible non-current assets can be subjective and complicated. This essay explains it from two aspects, costs of PPE and depreciation respectively, under the international accounting standards. Property, plant and equipment are the representative of tangible non-current assets which commonly are held by business entity. When to value assets the definition from the outset that should be understood is carrying account. According to IAS16, carrying amount is defined as” the amount at which an asset is recognized after deducting any accumulated depreciation and accumulated impairment losses”. Therefore, subjectivity of valuing tangible non-current assets can be attributed to recognized cost, accumulated depreciation. From the outset the cost should be measured after assets are recognized. This is the first step that confirms initial costs. When buying same assets, the costs can be totally different. For example, the items of assets can have many spare parts which may be minor or major for corporation usage. However, if the corporation defines that this spare parts is important-major spare parts, this amount should belong to part...
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... IFRS 8-1 The Financial Accounting Board and the International Accounting Standards Boards both work together to develop and re-enforce the financial reporting standards for publicly held companies. In order to move fair value measurement for financial instruments certain steps need to be taken. One step is related guidance on measurement and enhanced disclosure requirements to inform financial statement users about the fair value measurements included in the financial statement. There are different standards for fair value measurements between the United States and other countries. Component depreciation is very important for companies in the United States and across the globe. Component depreciation is when an asset has fundamentally different parts that should be depreciated with different treatment. Under the IFRS, firms are required to use component depreciation if the parts of the asset offer varying patterns of benefit. The reasoning behind this is that it provides a clear picture of the asset’s book value. This method is also permitted under GAAP but United States companies rarely use it in...
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...ACC 321 Reflection Essay After I take ACC 221 and ACC 222, this semester I decide to take ACC 321. The name of the class is intermediate financial accounting. Before I took the class, I heard the class is the most difficult class among accounting class because of there is a lot of materials to cover in very short time. There are around 15 chapters to cover in a semester so that we have to learn a chapter in a week because we have to use some classes to take the exams and quizzes. And if I want to learn this course well and get a good grade as what I did in ACC221 and ACC222. I will have to read the book, listen to the teacher carefully, do the quiz well, prepare for the exam well and finish all the homework online. It is very important to study the ungraded homework as well because there are more questions to practice, more different kinds of problems to solve, different essay questions and more challenging question to practice. In chapter 1, we learned the differences between GAAP (General Accepted Accounting Principal) and IASB (International Accounting Standard Board). GAAP is the principal that America is using and IASB is the standard that Europe and some other countries are using. AICPA is America Institute of Certified Public Accountant. CPA is Certified Public Accountant. FASB is Financial Accounting Standard Board. SEC is the Securities and Exchange Commissions. In chapter 2, we learn the qualitative characteristics of accounting information like Relevance (Predictable...
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...The Indian Rupee Crisis Economics Essay-1 In this paper we are going to examine the cause and the impact of rupee depreciation on the Indian economy. Since last few months Indian rupee came under great stress as overseas investors are paring their exposure to Asia’s third-largest economy amid international uncertainty and mounting worries over the domestic economy. In 2009 – 2010 the exchange rate was hovering around the 43 – 45 rupees per US Dollar level. And now it is around 55 – 56 levels, the main reasons to examine are increase in import bill, higher inflation, fiscal mismanagement and all resulting in higher cost of borrowing. The rupee has lost more than 15% of its value this year, making it one of the worst performing currencies in Asia. This paper reviews the probable reasons for this depreciation of the rupee and the outlook for the same. It also reflects on the policy options to help prevent the depreciation of the Rupee. This paper will firstly discuss about the economy of currency to give an overview of the problem and the factors related to it. Afterwards it will be examining the causes of the Indian rupee depreciation with respect to the Indian economy and the global economy. And after that it will analyse the impact of the same on trade and business. Finally, recommending the policy actions in response of the falling currency. II. LITERATURE REVIEW: These papers include the work which have been used as a basis or reference for formulating the policies regarding...
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...Management, Control and Accountability for Financial Resources Assignment title: Plato Ltd 3000 words “the appendices are not included Introduction Plato Ltd manufacture PCs for the student market and are considered the regional market leader in the North West of England, which is home to some of the leading universities in the UK. The company pride themselves on delivering cutting-edge technology at affordable prices and with payment plans to suit students. However, in recent months several ‘spin-off’ companies have emerged from local universities that have really damaged the market share of Plato Ltd. The managing director, Jimmy Wong, is a good friend of yours and he has invited you for a coffee to discuss some ‘urgent accountancy matters’. Jimmy shared with you the following Statement of Financial Position (balance sheet). He stated: “We had a really healthy position last year. Despite recently investing in developing the plant and machinery, we have become more efficient by cutting receivables, holding less stock, even honouring payables quicker than usual and restructuring long term debt. However, we are struggling so much that we have had to take out an overdraft and offload our current investments. I am really baffled as my Finance Director stated that we had made a profit this year.’’ Statement of Financial Position for Plato Ltd for year ending 31March2015 | | 2015 | | | 2014 | | £000 | | £000 | £000 | £000 | Tangible Non-current Assets(NBV) | | | 3...
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...College Number(Bottom Left of College Card) | 100724676 | Year: | 3 | Course Code | MN3245 | Course Tutor: | Professor Christopher Napier1 | Assignment No.: | 1 | Degree Title: | Management with Accounting | Question No. & Title: | Fair Value Accounting Standard | Candidate Number: 1401240 Fair Value Accounting International Accounting Standard Board defines Fair Value and it gives a guide on how to measure it in the IFRS13 section. Fair Value is “ the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measure date”. (Financial Accounting Series, 2006) In IFRS13 dictate the measurement, which is market value, meaning assets and liabilities should be adjusted to a value which reflect the actual market value. On the fair value basis, balance sheet provides timely and reliable information as compared to other measurement basis like historical cost. Similar to historical cost fair value accounting method also ignore the transaction cost and only consider the asset itself. (Financial Instrument Working Group, 2007) According to IFRS13 fair value price is an exit price not an entry price. Exit price means the price for an assets or liability which is different from the contractually transaction price or entry price. The main objective of fair value measurement of exit price applies to all assets regardless the company intended to use or sell the asset. (Fair Value...
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...Midterm Exam Review 1.The revenue recognition principle provides that revenue is recognized when? Pages 907-8 Dot Point, Inc. is a retailer of washers and dryers and offers a three-year service contract on each appliance sold. Although Dot Point sells the appliances on an installment basis, all service contracts are cash sales at the time of purchase by the buyer. Collections received for service contracts should be recorded when? An alternative available when the seller is exposed to continued risks of ownership through return of the product is what? Page 910 2. In selecting an accounting method for a newly-contracted long-term construction project, the principal factor to be considered should be what? Page 933 The percentage-of-completion method must be used when certain conditions exist. Review the necessary conditions? Page 912 In accounting for a long-term construction-type contract using the percentage-of-completion method, the gross profit recognized during the first year would be the estimated total gross profit from the contract, multiplied by the percentage of the costs incurred during the year is what? Page 914 (and Interactive example included in lecture) 3. Melton Construction Co. began operations in 2010. Construction activity for 2010 is shown below. Melton uses the completed-contract method. Contract Contract Price Billings Through 12/31/10 Collections Through 12/31/10 Costs to 12/31/10 Estimated Costs to Complete 1 $3,200,000 $3,150,000 $2,600...
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