Depreciation Essays

Investment Banking Interview

Standard Questions: 1. Walk me through the highlights of your resume. What is your story, walk through the decisions you have made, and how that relates to your current interest in Investment Banking.. 2. Why investment banking? Why our bank? 3. How do you value a company? 4. To what extent have you created and used financial models before? Discuss your excel modeling skills. 5. Why did you choose McCombs? 6. What other firms are you interviewing with and why?…

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Capital Budgeting Methods and Cash

In the early 1990s, the farm economy in the heartland of the United States was weak. Farmers in North Dakota produced hard, amber Durham wheat and exported 75% to Italy for the production of high quality pasta. Prices for raw wheat fluctuated radically, depending on weather and growing conditions. Many farmers were having difficulty meeting payments for the expensive farm machin- ery required for crop production. Small family farms were disappearing and non-farm jobs in the area were scarce. Although…

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Interco Case

Interco On August 8, 1988, Interco’s board of directors met to discuss, among other matters, a merger proposal from City Capital Associates Limited Partnership. City Capital had offered $64 per common share of Interco on July 28, 1988, and had raised that offer to $70 per share on the morning of August 8. At this board meeting Interco’s financial advisors, Wasserstein, Perella & Co., established a valuation range of $68-$80 per common share of Interco and presented their evaluation of…

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Amsterdam Company

Question 2 Presented below is information related to Rembrandt Inc.’s inventory. (per unit)SkisBootsParkas Historical Cost273.79152.7576.37 Selling Price312.70208.95106.27 Cost to distribute27.3811.533.60 Current replacement cost292.52151.3173.49 Normal profit margin46.1141.7930.62 Determine the following: Question 3 Matlock Company uses a perpetual inventory system. Its beginning inventory consists of 67 units that cost $40 each. During June, the company purchased 202 units at $40 each, returned 8 units for credit, and sold 168 units at $67 each. Journalize the June transactions. Question 4 Amsterdam Company uses…

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Training Phase

Depreciation, in accounting is the process of allocating in a systematic and rational manner the cost of a capital asset over the period of its useful life (Depreciation, 2006). Straight-line is a depreciation method in which the rate of depreciation is constant for the entire working life of the capital assets. Office equipment is an example of asset that depreciates using the straight-line method. Sum-of –the-year’s digit method provides decreasing depreciation charges per year. Double-declining balance method depreciates assets twice…

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us Gaap Versus Ifrs

Due to the controversy economies have had towards which method to use for accounting, there has been a compromise to converge the two most commonly used methods – GAAP and IFRS. However, these two methods are still very different. The convergence project has yet to be completed; in the meantime, more and more countries are running towards the IFRS since it is more reliable and relevant. The main difference between these two methods is the US GAAP is rule-based while…

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Why Profit Does not Equal Cash

Why is profit not equal to cash coming in? Some differences such as loans received which do not impact the profit and loss statement are pretty obvious. Others may not be as obvious but you can break them down into three main areas: – Revenue is booked at sale. In many cases a sale is recorded for accounting purposes in the profit and loss statement when a company delivers a product or service. In many cases, no cash has been…

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Acc 422 Final Exams

1) Which of the following is NOT considered cash for financial reporting purposes? 2) What is the preferable presentation of accounts receivable from officers, employees, or affiliated companies on a balance sheet? 3) Which of the following is considered cash? 4) If a company employs the gross method of recording accounts receivable from customers, then sales discounts taken should be reported as 5) Assuming that the ideal measure of short-term receivables in the balance sheet is the discounted value of…

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Final Exam_ Corporations

Question 1: Buttercup Corporation issued 250 shares of $11 par value common stock for $4,125. Prepare Buttercup’ journal entry. Question 2: Wilco Corporation has the following account balances at December 31, 2012. Common stock, $5 par value $511,670 Treasury stock 95,260 Retained earnings 2,400,840 Paid-in capital in excess of par 1,320,150 Prepare Wilco’s December 31, 2012, stockholders’ equity section Question 3: Woolford Inc. declared a cash dividend of $1.38 per share on its 2.22 million outstanding shares. The dividend was…

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East Coast Yachts Cash Flows

When looking at a statement of cash flow it’s essential to find out what resources are being used under the operations category. As our text states, operating cash flow is really the cash flow generated by business activities, including sales of goods and services. Under this category organizations can also calculate tax payments, but not financing, capital spending, or changes in net working capital (Ross, Westerfield, Jaffe, & Jordan, 2009). When examining the East Coast Yachts cash flow statement we…

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Tax Issues

Prepare a three-page memo (at least 900-1,500 words per page) to John and Jane Smith addressing the issues presented: 1. John Smith tax issues: a. How is the $300,000 treated for purposes of federal tax income? b. How is the $25,000 treated for purposes of federal tax income? c. What is your determination regarding reducing the taxable amount of income for both (a) and (b) above? d. Is it more beneficial to continue leasing the business space or to buy…

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Accrual Basis Over Cash Basis Accounting

There are two accounting methods that companies use to report revenues and expenses. The two methods are the accrual basis and cash basis. The difference in the accounting processes will fundamentally change the way the organization reports its cash, so a decision must be made prior to recording any transactions. Accrual Basis Accounting Accrual basis accounting is the method accepted by commercial accounting and the general accepted accounting principles. “Accrual-basis accounting means that transactions that change a company’s financial statements…

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Pressco Case Study

In reviewing the proposal presented by Pressco, Inc. to provide new mechanical drying equipment at a cost of $2.9 million I have considered the cash flow implications of the purchase in terms of present value of the investment and estimated resulting savings, as well as possible alternatives to purchase, and the current political climate as it affects the business issues of taxation and energy policy. Following this review, it is my recommendation that we enter into a contract for the…

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China Petroleum and Chemical Corporation

The net profit figure of RMB 19,011 reported under PRC GAAP was increased to RMB 21,593 under IFRS. The increase of RMB 2,582 under IFRS was due to the following reasons: Dep. and disposal of oil and gas properties RMB3,044 Acquisition of subsidiaries 443 Capitalization of general borrowing costs 389 Gain from issuance of shares by subsidiary 136 Gain from debt restructuring 82 Revaluation of land use rights 18 4,112 Unrecognized losses of subsidiaries (182) Pre-operating expenditures (169) Effect on…

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Discussed from Paperco, Inc.

This case study is discussed from Paperco, Inc. point of view of whether they should avail the tax benefits and cost savings in replacing the mechanical drying equipment. Recommendation Based on the analysis below in this memo, Paperco should purchase new mechanical drying equipment now in advance in anticipation of the passage of new tax legislation. Purchasing the equipment now maintains a positive Net Present Value for the capital project if the legislation is not enacted, or if the new…

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