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Depreciation and Corn

Decent Essays

This memorandum provides the financial positions of Pemsah’s and Sihathor’s farm after one year of harvest. Part I discusses the policies and procedures for the statement of operations, the corn flows statement, and performance measures. Part II consists of the policies and procedures for the statement of position, the performance measures for statement of position, and the effects of the mice problem on all three statements. PART I Policies and Procedures for Statement of Operations We prepared statements of each farm’s operations that illustrate the performances of the farms, in terms of sacks of corn, during the first harvest year. Income before Royal Taxes is equal to the harvested sacks of corn less operating costs. Sihathor’s …show more content…

As previously discussed, Amenhotep assessed the present value of the annuity at 95 sacks of corn. Therefore, at the end of the harvest Sihathor’s remaining pension liability was 93 sacks of corn due to his payment to the widow. For construction payable, Sihathor’s building was valued at 1,600 sacks of corn and Pemsah’s was valued at 1,100 sacks of corn. Sihathor and Pemsah contracted with a construction firm and agreed to pay 100 sacks of corn upon its completion causing them to owe 1,500 sacks and 1,000 sacks, respectively. Performance Measures The return on equity (ROE) is a measure of how well a noble uses investment sacks of corn to generate a growth. It is calculated by dividing the net income by the average equity. Sihathor’s ROE was 6.758% (24,143 divided by 357,271.5). Pemsah’s ROE was 6.984% (18,395 divided by 263,397.7). Also calculated was the growth in assets, which is the ending assets divided by the beginning assets. Sihathor’s growth in assets totaled to 107.27% (389,086 divided by 362,700). Pemsah’s growth in assets totaled 111.65% (291,620 divided by 261,200). The final measure of the performance was the return on assets (ROA), which is found by dividing the net income by the average assets. The ROA tells the Chief Scribe how a noble’s assets generate revenue. Sihathor’s ROA totaled to 6.423% (24,143 divided by 375,893), while Pemsah’s ROA totaled to 6.655% (18,395 divided by

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