What is the effect of using the discount rate

Assignment Help Financial Accounting
Reference no: EM132940184

Question - Casey Co Ltd is assessing the recoverable amount of some land it invested in 5 years ago at a cost $600 000. Management has sought independent valuation advice that indicates that the land may be sold in 6 years' time for $800 000. Since the land is not generating any cash flows, this is its undiscounted recoverable amount. The appropriate discount rate is estimated to be 7%. The present value of $1 received in 6 years' time at a discount rate of 7% is 0.6663. What is the effect of using the discount rate on the need to write down the value of the asset?

Reference no: EM132940184

Questions Cloud

Dividends received from a connected company : Dividends received from a connected company that gave rise to a dividend refund for the connected company as a result of the payment
How much is the salaries expense at June : On average, 50% of the employees take their full entitlement of two weeks sick leave, How much is the salaries expense at 30th June
Maximizing shareholder value : Translates strategies to tactical objectives to be implemented by and include evidenced-based academic citations. Based on your analysis, the proper objective s
Why did a series of organizing drives fail : The article and the film both deal with a 2005 organizing drive and strike at Lakeside Packers in Brooks
What is the effect of using the discount rate : The present value of $1 received in 6 years' time at a discount rate of 7% is 0.6663. What is the effect of using the discount rate
Which a statement of changes in equity shows : Find Which a statement of changes in equity shows? beginning capital + capital contribution + profit + drawings = closing capital.
What is the premium balance for the shares : A company's balance sheet shows a balance of SGD 15 million in common stock, What is the premium balance for the shares if the company does a 6: 4 stock split
Calculate the bonds price today : Calculate the bonds price today. General Mills has $1,000 par value, 22-year bond outstanding with an annual coupon rate of 7.31 percent per year
Which would not be classified as an operating item : Which would NOT be classified as an operating item in a statement of cash flows? Cash received from customers./ Decrease in bank overdraft

Reviews

Write a Review

Financial Accounting Questions & Answers

  Determine reflects the time value of money in situation

Determine which option Kiddy should choose. (Negative amounts should be indicated by a minus sign. Round your final answers to nearest whole dollar amount.)

  Determine if different estimates will change the decision

If the MARR is 12% per year, use PW to determine if these different estimates will change the decision to purchase the equipment.

  Make mr hesabu tax manager indicate down a memorandum

As Mr. Hesabu's tax manager, indicate down a memorandum on each of the points for his consideration. Mr. Hesabu has recently opened all Income Tax Consultancy

  When testing other accrued liabilities

When testing other accrued liabilities, auditors may independently calculate the amount and ________ it to management estimate. Auditors need to compare the percentage of claims accrued to current year ______

  Determine the amount to be credited to paid-in-capital

Determine the amount to be credited to Paid-in-Capital for Common Stock" on July 1st, 2020. If an amortization table is needed

  How to prepare consolidated balance sheet of redcliff ltd

How to Prepare the consolidated balance sheet of Redcliff Ltd and its subsidiary as at 31 December 20X4. Redcliff Ltd acquired entire share capital of ABC Ltd

  What the correct entry to be recorded on August

The dividend is to be paid on August 15, 2022, to shareholders of record on July 31, 2022. What the correct entry to be recorded on August

  What amount would ajax record for interest expense

Ajax Corporation issued 1,000 bonds each, What amount would Ajax record for interest expense when making the second interest payment on December 31, 2025?

  Annual adjusting entries

On December 31, 2018, before making any annual adjusting entries, the equipment was exchanged for new machinery having a fair value

  What would appear in the year-end balance sheet related to

A construction company entered into a fixed-price contract to build an office building for $20 million. Construction costs incurred during the first year were $6 million and estimated costs to complete at the end of the year were $9 million.

  Royal tea a wholly-owned english subsidiary of us beverages

royal tea a wholly-owned english subsidiary of u.s. beverages a u.s. firm maintains its inventory at cost and royal

  Identify could use to audit sun construction revenue

For each of the assertions of occurrence, completeness and accuracy, identify a procedure(s) you could use to audit Sun Construction's revenue.

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