ACC 291 Week 2

1. The first step to evaluating the cash flows is to conduct the depreciation tax flow analysis. Depreciation is not a cash flow, but the depreciation expense lows the taxes payable for the company. As a result, the tax effect of deprecation needs to be calculated as a cash flow. There are two depreciable items on the company's balance sheet the building and the equipment. The equipment is known to have a seven year depreciable life, which will be assumed to be straight line. The building is also assumed to be subject to straight line depreciation, this time of forty years. The tax saving reflects the depreciation expense multiplied by the tax rate, which in this case is assumed to be 28%. The following table illustrates the tax effect in future dollars of the depreciation expense:

The company position is strong enough so its better that company should use debt financing instead of equity financing.

The week four individual paper addresses the implementation of Activity Based Costing (ABC) by Super Bakery, Inc., a virtual corporation founded by Franco Harris. Specifically, management strategies, the reasoning behind an ABC system, and the alternatives of a job order cost system or a process order cost system are assessed for this enterprise.

Head Usher: While the church may not be currently experiencing anything wrong with the usher selection and volunteer system at the church, some improvements might be considered. The church might consider making the head usher a year-long term, elected by church members to create continuity, but also impose term limits – possibly every 3-4 years a head usher must take a sabbatical. Additionally, because the head usher role is so pivotal in the collection process, and it is a place where mistakes or malfeasance can easily take place; it would be helpful for the ushers and the financial secretary to be present in the collection counts, the day of, so someone outside the usher department can verify tithe counts.

Larson Inc. must consider the alternative economic futures for their industry. In any market, economic conditions will change over time. The company must be able to adapt and change with the economy to remain successful. The company needs to find solutions for the changing economy to keep increasing their revenue and decreasing their costs. The economy may go through a recession, expansion and peaks over their years in business. Larson, Inc. needs to analyze the difference scenarios and determine the best course of action for each type of economic future. Also, the company must consider the economy’s stage in the business cycle to make well-informed decisions.

h. On July 1, 2012, the company purchased a new hauling van. Depreciation for July to December 2012 estimated to total $2,750, has not been recorded.

Before diving directly into the article from the Governmental Accounting Standards Board (GASB) titled Governments to Report Liabilities Connected with Their Obligations to Clean Up Pollution (2006), one must first take a step back and take time to read, comprehend, and take to heart exactly what this organization stands for. Taken directly from their main web page under the tab labeled Education, the first thing seen in big, bold, blue letters is, “Due Process: The GASB Is Listening” followed by a definition of what listening means, “to hear with thoughtful attention”. When researching a little more into the GASB, it is easy to see how crucial listening truly is for them in order to fully accomplish their

vi) Goodwill- The beginning balance for Goodwill was determined by finding the difference between Total Assets and Total Liabilities at the beginning . Goodwill accounts for all the intangible assets that were transferred from the old company to the new company, including brand name, as well as a premium paid for the company. Goodwill was not amortized in this model.

The knowledge and understanding that we want for each of the eight categories is as follows:

“The ACH procedure has the offsetting advantage of focusing attention on the few items of critical evidence that cause uncertainty or which, if they were available, would alleviate it.” (Heuer, 1999). Conclusions are derived from analysis of data, evidence is compared to possible hypotheses, and a hypothesis assessment is based on the reliability of the sources and validity and plausibility of the intelligence. Confidence levels are labeled as high, moderate, and low by ICD 203 standards.

Complete an income statement, balance sheet and statement of cash flows for 2011. Please provide information on any assumptions you make not already stated in the case.

For the depreciation part, we adopted the straight-line method. Here since the depreciation of year 1984 was $1270, we just assumed all the depreciation amount to be equal to $1270 till the year 1989. With all of these previous assumptions, we obtain the complete pro forma financial statement and the cash flow table for the Collinsville Plant.

Determine the depreciation expense for each of the 10 years of the asset’s life, assuming the company uses:

Net book value at end of year 1 is $8,793. Less what you received on the sale $7,500. Gives you a disposal loss of $1,293 using the straight-line method of depreciation. You then add the disposal loss from the previous years depreciation $1,880, which results in a total income statement impact of $3,173.

2. What would be the impact on Blockbuster's 1988 earnings per share if 5 amortization were applied to this goodwill?