Since Nike has bonds outstanding, then the YTM on those bonds (7.13%) is the market-required rate on the Nike’s debt. In order to solve for the total debt, I had to find out the market value of the debt. In doing so I multiplied the book value by the percent of face value that the debt was currently selling for (.9560) or the present value of the debt. I was able to use my calculation from the CAPM as my cost of equity (10.36%). In solving for the percentage of debt I simply subtracted my percentage of equity from 100.
Case 12 REQUIRED 1. Given the unit sales information in Exhibit 1, develop an annual revenue forecast for 2004 through 2009. Forecast sales first assuming that the revised Bernoulli will be introduced one year from today, and then create a forecast which is based on sales of the current model, assuming that Working declines to invest more capital in Bernoulli. 2. Use the cost information Jennifer has assembled to construct a forecast of cost of goods sold and operating expenses for 2004 through 2009.
Reading Responses Samantha Jones ACC/400 August 20, 2014 Arlene Murphy Reading Responses Questions 3 & 4 3 What are the essential features of the allowance method of accounting for bad debts? - Uncollectible accounts receivable are estimated and matched against revenue in the same accounting period in which the revenue occurred. - Estimated uncollectibles are debited to Bad Debts Expense and credited to Allowance for Doubtful Accounts through an adjusting entry at the end of each period. - Actual uncollectibles are debited to Allowance for Doubtful Accounts and credited to Accounts Receivable at the time the specific account is written off. 4.
• Net Carrying value of nonrecourse debt is $4.0 million. • $0.1 million of net working capital (carried at fair value) directly attributed to the cruise ship. • Discount rate According to Smooth Sailing is 7%. How should Smooth Sailings’ management perform the recoverability test for the cruise ship as of December 31, 2010? Before we can define the asset group for the purpose of the recoverability test we need to recognize and measure the impairment of our long-lived asset and to do so there is some guidance according to FASB.
6,250 Net Realizable Balance of Accounts Receivable of 2012 133,150 B. Explain why the uncollectible accounts expense amount is different from the amount that was written off as uncollectible. With the allowance method the amount of doubtful accounts collected is an estimate. When the real amount of accounts that where collected are different than what was estimated. If this problem continues they need to adjust the
For this assignment, use the CAFR your team selected in Week Two. Discussion Questions DQ 1 What is a performance audit? In what significant ways do performance audits differ from financial audits? DQ 2 How do audits of governmental agencies differ from those of not-for-profit entities? How are these audits different from those of organizations that operate for profit?
Stockholders may assume when reading the financial statements that they would be receiving a higher return each month or quarter when in reality that would not be the case especially if they are planning on switching to LIFO. It is unethical to make a huge financial decision based on only short term goals. The Sabarnes-Oxley act of two-thousand and twelve, contains 11 sections detailing rules and regulations for financial reporting. The SOX act section 404 requires that management of
It paints a bad picture because the business may collect zero revenues for a month and pay accounts payable during that month showing a loss of revenue while the next month they may pay zero accounts payable but receive two month’s worth of accounts payable, this would indicate that the company had higher than realistic earnings. Accrual basis accounting paints a better picture of how a company profits or losses over a indicated time period, but fails to state clearly the cash on hand. E3-2B (b) Why would politicians prefer the cash basis over the accrual basis? The Government prefers to use the cash basis over the accrual basis for many reasons but none more the how to account for public unions workers’ pensions. The Government does not want to report their pensions while the employee is working because politicians believe that benefits
| Financial Restatement | Accountant 537 | | Jocelyn Olivares | 2/19/2012 | Instructor: Corrine Hasbany | After the release of the statements, errors can be found by the company, company’s internal auditors or external auditors. If the error is deemed to be material to the financial statements, those statements are required to be corrected and re-issued to users. Materiality relates to a financial statements item’s impact on a company’s overall financial condition and operations (Kimmel, Weygandt, & Kieso, 2007, P 69). Materiality is determined by whether the error would cause users to come to inaccurate conclusions in their analysis. Immaterial would be something that is too insignificant to impact the
59). This decision is based on ASC 320-10-35-33F which indicates under item a. that a factor to be considered is “the length of time and the extent to which the fair value has been less than the amortized cost basis.” The client has indicated to us the Municipal bonds and Corporate bonds have been impaired for 18 months and 32 months respectively. This time more than exceeds the fiscal year for which we are reporting, indicating that the impairment is other-than temporary. Furthermore, item g. of that same section of the codification suggests that we consider transactions or further declines in fair value after the balance sheet date. Although the client did not indicate the fair value had declined further, we do know that the debt securities were sold, indicating again that they better qualify as other-than-temporarily impaired