First, condensed financial statements, also called pro-forma statements, are forecasted several years into the future. Second, the forecasted statements are used to calculate free cash flows for the entire firm, which are then discounted by the cost of capital for the firm. Third, the intrinsic value of one share of the common stock is calculated as total firm value minus the market value of the debt, divide by the number of outstanding shares. The resulting intrinsic value of the shares can
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Accounting Standards Board Limited 1999 ISBN 1 85712 079 5 ACCOUNTING STANDARDS BOARD FEBRUARY FRS CONTENTS Paragraphs SUMMARY FINANCIAL REPORTING STANDARD 15 Objective Definitions Scope Initial measurement Cost Finance costs Disclosures—finance costs Recoverable amount Subsequent expenditure Valuation Frequency Valuation basis Class of assets Reporting gains and losses on revaluation Reporting gains and losses on disposal Disclosures Depreciation Depreciable amount
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below are the assumptions, principles, and constraints used in this chapter. 1. Economic entity assumption 5. Historical-cost principle 9. Materiality 2. Going-concern assumption 6. Matching principle 10. Industry practices 3. Monetary unit assumption 7. Full disclosure principle 11. Conservatism 4. Periodicity assumption 8. Cost-benefit relationship Instructions: Identify by number the accounting assumption, principle, or constraint that describes
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CHAPTER 6- Cost of Goods Sold and Inventory CHAPTER OUTLINE Nature of Inventory and cost of goods sold Inventory represents products Held for resale and is classified as a current asset on the balance sheet. When companies sell their inventory to customers, the cost of the inventory becomes an expense called cost of goods sold. Cost of goods sold, cost of sales, or cost of merchandise sold, represents the outflow of resources caused by the sale of inventory and is the most important expense
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STENEFORD MANJENGWA 520151129C742F1EE6368 COURSE NAME: DEVELOPMENT OF CURRICULUM DESIGN Financial Accounting ATLANTIC INTERNATIONAL UNIVERSITY TABLE OF CONTENTS Introduction ………………………………………………………….3 History ……………………………………………………………….3
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theories CPPA- current/constant purchasing power accounting CCA- current cost accounting CoCoA- continuous contemporary accounting Current purchasing power accounting a form of accounting that measures profit after allowing for the maintenance of the purchasing power of the shareholders' capital. ‘There are various prescriptive theories of accounting that were advanced by various people on the basis that historical cost accounting has too many shortcomings, particularly in times of rising prices’
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would produce improved results. To be effective, this strategy incorporated a reduction in product and inventory costs as well as a reinforced stakeholder culture. To justify the course of action with this strategy, we will prepare a three-year financial forecast to help predict The Body Shop’s future earnings and financial needs. This forecast will be based on The Body Shop’s historical financial statements to create the best possible financial model going forward. II. Statement of the Problem
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Mandich Co. had the following amounts for its assets, liabilities, and stockholders' equity accounts just before filing a bankruptcy petition and requesting liquidation: Of the salaries payable, $30,000 was owed to an officer of the company. The remaining amount was owed to salaried employees who had not been paid within the previous 80 days: John Webb was owed $10,600, Samantha Jones was owed $15,000, Sandra Johnson was owed $11,900, and Dennis Roberts was owed $2,500. The maximum owed for any
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PROS AND CONS OF FAIR VALUE ACCOUNTING Abstract The speed of globalization in the capital markets and the increasing complexity of financial instruments have caused financial statement users to question the relevance and usefulness of historical cost accounting (HCA). The propensity to use fair value accounting (FVA) is imminent as we enter into a borderless economy and as financial markets evolve that require more current and relevant financial information. The U.S. Generally Accepted Accounting
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Financial statements are based on historical costs and as such the impact of price level changes is completely ignored. They are interim reports. The basic nature of financial statements is historic. These statements are neither complete nor exact. They reflect only monetary transactions of a business. The following limitations may be noted: 1. The financial position of a business concern is affected by several factors-economic, social and financial, but financial factors are being recorded in these
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