Make accounting adjustments to accounting numbers

Assignment Help Accounting Basics
Reference no: EM132568450

Question - BAV Energy has provided electricity and gas to thousands of households and companies. Recently, the new CEO of BAV Energy, who began in that position 3 months ago, announced that the company has a plan to borrow from banks. A credit analyst, examining the company's ?nancial statements of 2018, finds the following information for its operating leases:

Year

2019

2020

2021

2022

2023

Lease payments

11

12.1

13.31

14.64

16.11

The company also reported the following information in its 201 8 annual reports:

Total debt $1000

Total equity $2000

Earnings before interest and tax (EBIT) $500

Lease payment $10

Interest expense $100

Required -

1. Assume the company has a cost of debt of 10%. Estimate the present value of the leased assets.

2. Make accounting adjustments to accounting numbers in the financial statement to convert the operating lease into capital lease.

Reference no: EM132568450

Questions Cloud

What is big data analytics : What is Big Data? Why is it important? Where does Big Data come from? What is Big Data analytics? How does it differ from regular analytics?
Interrelationship between language and culture for els : Share ways to promote interrelationship between language and culture for ELs. Be specific.
Recommendations for improving business-it communication : What are the recommendations for improving business-IT communication? What do you consider are the qualities of good IT Leadership?
Systematic approach of finding : Success is obtained through a systematic approach of finding one's intrinsic meaning behind the task, recognizing daily victories, and reframing one's mentality
Make accounting adjustments to accounting numbers : Make accounting adjustments to accounting numbers in the financial statement to convert the operating lease into capital lease
What is the proper citation if you take from a government : What is the proper citation if you take from a government website?
What effect would the have on the low-risk securities : What effect would this have on the SML and on returns of high- and low-risk securities? Suppose instead that investors' risk aversion
What is the relationship between academic integrity : What is the relationship between academic integrity and writing
What are some possible alternatives for the client : You are a nurse at an outpatient clinic and are presented with a 68-year-old female client. She is experiencing the following symptoms: decreased appetite.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd