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Your firm uses return on assets (ROA) to evaluate investment centers and is considering changing the valuation basis of assets from historical cost to current value. When the historical cost of the asset is updated, a price index is used to approximate replacement value. For example, a metal fabrication press, which bends and shapes metal, was bought seven years ago for $522,000. The company will add 19 percent to this cost, representing the change in the wholesale price index over the seven years. This new, higher cost figure is depreciated using the straight-line method over the same 12-year assumed life (no salvage value). Required: a.Calculate depreciation expense and book value of the metal press under both historical cost and price-level-adjusted historical cost. b.In general, what is the effect of ROA of changing valuation bases from historical cost to current values? c.The manager of the investment center with the metal press is considering replacing it because it is becoming obsolete. Will the manager's incentives to replace the metal press change if the firm shifts from historical cost valuation to the proposed price-level-adjusted historical cost valuation?
The following expenditures were incurred by obermeyer company in purchasing land: cash price $68,011, accrued taxes $3,3618, attorney's fees $2,877, real estate broker's commission $1,189, and clearing and grading $4,045. What is the cost of the l..
more co. is a merchandising business. the account balances for more co. as of november 30 2008 unless otherwise
no ache company has a division that produces a single product - a backache reducing pill - that sells for 1. the pill
for an incremental order of 5000 units at 70 each the following costs have been compiled incremental variable costs 50
Sampson Apparel Incorporated incurred actual variable overhead expenses of $62,000 in the current year for the production of 10,000 units.
for the following projects compute nw irr killtr pi and payback. if these projects are mutually exclusive which ones
The committee which is responsible for holding hearings on tax legislation for the House of Representatives is the
Manual General Ledger Project
He wants to settle the case. Write a memo to him that states your view of whether the company is exposed to liability on all issues you feel are in play. Include in your memo any laws that apply and any precedent cases either for or against Teddy'..
cairns owns 75 of the voting stock of hamilton inc. the parents interest was acquired several years ago on the date
the herald company has 50000 shares of common stock outstanding. earnings per share of common stock for the year is
The Role of Accounting on Business and Our Society
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