2014 John Dewey 1. Why should Caledonia focus on project free cash flows as opposed to the accounting profits earned by the project when analyzing whether to undertake the project? Caledonia should focus on cash flows, because free cash flows can be reinvested when received, unlike accounting profits which are shown when earned, and not at the time cash is received. The company should focus on incremental after-tax cash flows.
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| |63,64,65, 66,67,68, | | | | | |69,70 | | |LO4: Value and account for long-term lease |18,19,20, |42 |71,72,73,74, 75,76,77 |89,91 | |obligations. |21,22 | | | | |LO5: Evaluate pensions
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AN OVERVIW OF CREATIVE ACCOUNTING AND WINDOW DRESSING Introduction: Every organization is expected to operate within the confinement of best practices or core competence at least, which has tendency of leading them to distinctive competence or exceptional practice. Since business operations center basically on finance, firms therefore take the accounting records of their organizations very serious as it determines their stay in industry or extinction from the market (business operations). It is
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Capital Lease: which is a lease treated as an acquisition of the assets financed by a loan OR Operating Lease: which is a lease treated as a rental agreement so there for would not be an asset. BUT a capital lease has to meet one of three criteria and in this case it does. The criteria it meets States: The present value of the minimum lease payments is equal to or greater than 90% of the fair market value of leased property. And if you were to calculate the lease payments out
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expected to last for a five year period, provide a recommendation and respond to a number of questions on the capital-budgeting process. They must also factor in whether it should lease versus buying the equipment. Cash Flows versus Accounting Profits Caledonia should focus on free cash flows opposed to the accounting profits earned by the project when analyzing whether to undertake the project because focusing on free cash flow will allow Caledonia to see what all funds they will have available
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Accounting at MacCloud Winery Write Up The leased building should be accounted for as an asset. Specifically a capital lease. A capital lease is a long-term lease that transfers the lessee most rights and obligations concerning the asset leased. To calculate out the lease payments on the building (10 years x $5,000 per year = $50,000) $50,000 exceeds the value of the building being at only $32,000. While a capital lease usually transfers ownerships at the end of the lease that won't be the
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Jensen September 22, 2015 WorldCom Case Analysis According to the section 301.4 of Sarbanes-Oxley Act of 2002, each audit committee shall establish procedures for complaints regarding accounting, internal accounting control, and auditing matters, and the anonymous complaints regarding questionable accounting or auditing matters. However, in this case, the WorldCom Company did not have the procedures for anonymous complaints, so Cynthia Cooper decided to go over Sullivan’s head and reported her
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International Financial Reporting Standards (IFRS) is fast becoming the global accounting language. Over 100 countries have now adopted IFRS and many more have committed to make the transition in the next few years. The benefits of global standards are widely acknowledged. For companies, however, the conversion to IFRS is a major change both for the finance function and for the wider business. The International Accounting Standards Board (IASB) has recognised the need for guidance. In 2003 it published
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Advertising whereby the only connection the consumer has to the product is the advertising and the only way a consumer can act on the advertisement or commercial is to return a coupon or make a phone call. Direct-response advertising is geared to eliminate an intermediary in the purchase process. It can utilize a wide range of media, from matchbook covers to print or radio and television, although it is typically conducted through the mail. In direct-response advertising, the effectiveness of the
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ownership right on its balance sheet where employees do not meet that test. Furthermore, since there is no financial transaction creating the intangibles, the dollar value of intangibles can be difficult to identify (Adams, 2010). In basic accounting, we can see that accounting entries are made when there is money involve such as when the firm buys something, money is deducted from bank and the expense get booked to an expense or investment (Adams, 2010). However in most cases, intangibles are created outside
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