Accounting Test Questions - 1217 Words

ADMINISTRATIVE MATTERS: - Project #3 is due on Friday, April 18 at 4PM in 340 Wohlers. - Office hours on Thursday at 3:30 in 170 Wohlers. TODAY: †¢ Chapter 12 (CF Estimation) †¢ Web Appendix 12B (Replacement) †¢ Web Appendix 12F (Unequal Lives) PROBLEM 3 (Chapter 12) Kennedy Air Services is now in the final year of a project. The equipment originally cost $20 million, of which 80 percent has been depreciated. Kennedy can sell the used equipment today for $5 million, and its tax rate is 40 percent. What is the equipment’s after tax net salvage value. Book Value (BV) = (1 – 0.8) x $20 = $4 million Market Value (MV) = $5 million Additional Taxable Income = MV – BV = $1 million Additional Taxes = 0.4 x $1 = $0.4 million After†¦show more content†¦CF1 = ($50,000)(0.65) + ($40,500)(0.35) = $32,500 + $14,175 = $46,675. CF2 = ($50,000)(0.65) + ($58,500)(0.35) = $32,500 + $20,475 = $52,975. CF3 = ($50,000)(0.65) + ($13,500)(0.35) = $32,500 + $4,725= $37,225. CF4 = ($50,000)(0.65) + ($1,500)(0.35) = $32,500 + $525= $33,025. CF5 = ($50,000)(0.65) + (-$9,000)(0.35) = $32,500 - $3,150= $29,350. 5 c. What incremental terminal cash flow will occur at the end of Year 5 if the new machine is purchased? After-tax salvage value on new machine $ 0 After-tax salvage value on old machine (opportunity cost) (6,500) Terminal CF ($6,500) d. What is the NPV of this project? Should Erley replace the old machine? Year 0 1 2 3 4 5 Total CF -$98,500 $46,675 $52,975 $37,225 $33,025 $29,350+(-$6,500) = $22.850 6 PROBLEM 2 (Web App. 12F) Cotner Clothes Inc. is considering the replacement of its old, fully depreciated knitting machine. Two new models are available: (a) Machine190-3, which has a cost of $190,000, a 3-year expected life, and after-tax cash flows (labor savings and depreciation) of $87,000 per year; and (b) Machine 360-6, which has a cost of $360,000, a 6-year life, and aftertax cash flows of $98,300 per year. Assume both projects can be repeated. Knitting machine prices are not expected to rise because inflation will be offset by cheaperShow MoreRelatedAccounting Test Questions3498 Words   |  14 PagesQuestion 1 a) On January 1, 2011 the Batista Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2011: Sales units: 1st quarter – 5 000 2nd quarter – 6 000 3rd quarter – 7 000 Ending raw materials inventory – 50% of the next quarter s production requirements. Ending finished goods inventory – 30% of the next quarter s expected sales units. 3rd quarter actual production – 7 250 units Three pounds of raw materialsRead MoreAccounting Test with Multiple Choice Questions1889 Words   |  8 Pagesï » ¿BA 213 - Test#1 Review Instructor: Usha Ramanujam Dear Students, I have indicated answers to the test review questions in BOLD. You can highlight the entire review and remove the bold feature before you start working on these questions and then verify the answers. Also, detailed solutions are given for q.38 and q.40 /Usha 1.  Thread used in the production of mattresses, an indirect material, is classified as manufacturing overhead.  TRUE/ False 2. Prime cost andRead MoreEssay on assignment 1 acct theory629 Words   |  3 PagesQuestion 1 (25 marks) Several accounting standards include ceiling tests (also called impairment tests). Required: a. What is a ceiling test? Identify two IASB accounting standards that contain a ceiling test and describe the test. (7 marks) The ceiling test is an accounting standard that stipulates that capital assets such as property, plant and equipment must be written down if their net carrying value exceeds the net recoverable amount. This is to prevent overvaluation of capital assetsRead MoreA Contemporary Analysis Of Accounting Professionals Work Life Balance1741 Words   |  7 PagesThis paper is aimed at evaluating the validity and reliability of the research paper titled â€Å"A Contemporary Analysis of Accounting Professionals’ Work-Life Balance† by Buchheit, Dalton, Harp and Hollingsworth, published in the Accounting Horizons Journal in March 2016 in its first issue of volume 30. The research paper endeavoured to provide answers for two main research questions that were aimed at scrutinising the difference between 1. auditors and tax professionals in terms of their work-life conflictRead MoreProposed Changes Of The Cpa Exam1100 Words   |  5 PagesPROPOSED CHANGES IN THE CPA EXAM Introduction In order to adapt to the changing needs of professionals in the accounting industry and maintain the relevance of current accounting skills, the American Institute of Certified Public Accountants (AICPA) has made the decision to remake the CPA exam. During the January 2014 to September 1, 2015 timeframe, the AICPA used a number of focus groups, which included supervisors of newly-licensed CPAs, practicing CPAs, and boards of accountancy members. TheseRead MoreCBU Syllabus 2015 MBAC 51031353 Words   |  6 Pagesï » ¿ Introduction to Accounting: MBAC 5103 Instructor Information Professor: Derrick Hayes Winter 2015 Office: SB217 Tues Thurs: 1:00 – 2:15 pm Email: derrick_hayes@cbu.ca Phone: 563-1312 Course Website (URL): Textbooks and Readings Required Text: Hayes, Derrick, Introduction to Accounting, Primus, McGraw Hill Prerequisites: NONE CourseRead MoreAcc 403 Week 8 Assignment 21144 Words   |  5 Pagesfollow when conducting an external audit. External public accounting firms conduct external audits to ensure outside stakeholders that the company’s financial statements are prepared in accordance with generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS) standards. Use the Internet to select a public accounting company that appeals to you. Imagine that you are a senior partner in a public accounting firm hired to complete an audit for the chosen publicRead MoreSample Resume : Business Administration1067 Words   |  5 PagesThis project is focus in helping accounting students to recognize what is best if pursue a master’s degree in business administration immediately after the undergraduate degree or after gaining some years of jobs experience. It is going to compare the different graduate programs related with the accounting field, specially the master in business administration with focus in accounting and the master in accountancy degree. This project should answer any questions of business students regarding toRead MoreMaking A Certified Public Accountant Essay1529 Words   |  7 Pagessome students. This report is based around accounting and what it has to offer. Accountants have many different jobs that they can do. Information to become a Certified Public Accountant will be given in this report. The process through college to get a degree in accounting can be a little overwhelming due to the variety of jobs accounting has to offer. Accounting majors have many directions they can chose, such as working for a public or private accounting firm, focusing on auditing or taking thatRead MoreSelf Reflection : A Teacher1650 Words   |  7 Pagesteacher is able to promote risk-taking, increase higher-order thinking skills, and enhance creativity in all content areas (Guillat, 2008). TWS Assessments: Pre- and Post Tests The quantitative aspect of this study is the pre-and post assessments implemented during the unit of instruction. The TWS typically uses a pre-and post test model to analyze and compare assessment information (Phillips Marston 2008). The TWS uses a single group for testing. In the case of this study, the group is a high-school