Essay about Upstate Canning Case Study

For the depreciation part, we adopted the straight-line method. Here since the depreciation of year 1984 was $1270, we just assumed all the depreciation amount to be equal to $1270 till the year 1989. With all of these previous assumptions, we obtain the complete pro forma financial statement and the cash flow table for the Collinsville Plant.

The situation facing Mr. Larry Brownlow is a tough one. He is young with minimal money to work with. This shows that he must be careful and research all of his investing activities closely. The problem that faces him is deciding if opening a Coors Beer brewery in his area of Delaware is a profitable investment. The beer is obviously not widely carried in the area so that makes the situation that much harder. He has less information to work with. This is why he contacted the Manson Research Firm. That presents the second problem. The firm will do the research to help do a feasibility analysis, but the information is not cheap. Larry is working with about two weeks until the deadline to submit an application for distributorship. He

1. On January 1, a machine with a useful life of five years and a residual value of $40,000 was purchased for $120,000. What is the depreciation expense for year 2 under the double-declining-balance method of depreciation?

Determine the depreciation expense for each of the 10 years of the asset’s life, assuming the company uses:

(b) Compute 2012 depreciation expense using the double-declining balance method assuming the machinery was purchased on October 1, 2012.

The accounting equation is, Assets are equal to Liabilities plus Stockholders’ Equity. Assets are resources owned by a business. Liabilities are the debts and obligations of the business. Liabilities represent claims of creditors on the assets of a business. Stockholders’ equity represents the claims of owners on the assets of the business. This equity is divided into two parts: common stock and retained earnings. The balance sheet reports assets and claims to assets at one specific point in time. Claims to assets are subdivided into two categories: claims of creditors and claims of owners. The accounting equation must always balance. Each transaction has a dual effect on the equation. As an example if an individual asset is increased,

In 1984, Harnischfeger changed its depreciation policy for financial reporting purposes to a straight-line method from a principally accelerated method. A net income of $11 million was realized for 1984 when the straight-line method was applied retroactively to all assets depreciated under the accelerated method. The management viewed this as an approach to match the company’s standard with that of industry peers. We

a. Should Harris Seafoods enter the shrimp processing business by building the new plant? Please assume the firm will be unable to use the Industrial Revenue Bond financing mentioned at the end of the case (we will return to this topic in a later case).

At 30 June 2014, the balance of the revaluation surplus is $400 000, of which $300 000 relates to the factory land and $100 000 to the buildings. On this same date, independent valuations of the land and building are obtained. In relation to the above assets, the assessed fair values at 30 June 2014 are:

PJ-3: Straight line depreciation over 9 years from 30 m to the salvage value of 12 m. Thus, the annual depreciation is .

On some balance sheets assets are split into current and long-term assets as seen in Figure 1. Current assets are asset that are readily liquidated for money within a year, for example: cash, money markets, accounts receivable, inventory, and other current (Edition, 2011). Other current assets group is for prepaid expenses. Under long-term asset is land, plant, building, which refers to real estate machinery. For equipment that possibly has wear and tear or become out of date, is less depreciation. “The book value of an asset is equal to its acquisition cost less accumulated depreciation. Net property, plant, and equipment shows the book value of these assets” (Edition, 2011, p. 750). If you notice in Figure 1, goodwill and intangible asset are part of long-term assets.

Goodwill is a premium that the acquiring company pays above the fair value of all net assets of the acquired company, which represents an extra value attributed to brand and reputation of the acquired company. Accounting treatment for goodwill has evolved significantly as goodwill becomes an increasingly important economic resource for many companies.

Corporate assets cover a wide variety of investments, including buildings, machines, vehicles, computers, office furniture and any other kinds of additions and improvements (as opposed to repairs). With Straight-Line Depreciation, a business owner would select a term (i.e. five years), and divide up the purchase cost evenly for each year of the term. In contrast, Declining-Balance Depreciation using a declining book value to calculate depreciation, which would provide a major shift of generated revenue, affecting income in the short term. Also, by having higher depreciation in the initial years of the asset’s productive live will produce lower taxable income for the company (Fishman 120-22).

The main elements of the balance sheet are assets and liabilities. Assets generally include both current assets (cash or equivalents that will be converted to cash within one year, such as accounts receivable, inventory, and prepaid expenses) and noncurrent assets (assets that are held for more than one year and are used in running the business, including fixed assets like property, plant, and equipment; long-term investments; and intangible assets like patents, copyrights, and goodwill). Both the total amount of assets and the makeup of asset accounts are of interest to financial analysts.

Goodwill is a type of intangible asset which is measured when an entire company is purchased (TEXT pg658). “Conceptually, goodwill represents the future economic benefits arising from the other assets acquired in a business combination that are not individually identified and separately recognized” (TEXT pg659). Goodwill is not measured internally because the valuation is difficult and near to impossible to pair with the costs of creating it (TEXT pg659).