The Value Of Cash Flow For The Financial Year 2015

In 26 March 2009, the chairman of Harvey Norman Gerald Harvey had made an announcement, that during the economy downturn, company is not revaluating its billions property portfolio. As other listed property company had been revaluated and receive a massive wrote down. With this action that come from Harvey norman, i highly doubt the trustworthy on number that shown in property plant & equipment. Quote from AASB116 para 38’states that a class of assets may be revalued on a rolling basis provided that the revaluation of the class of assets is completed within a short period of time and provided the revaluations are kept up to date’ under an assumption that within the economy turndown, PP&Es have been wrote down for certain percent, however the firm itself didn’t provide the true current value in the report, i would

Property and Equipment—Depreciation and amortization are provided on a straight-line basis over the estimated useful fives of the assets. The following table shows estimated useful lives of property and equipment.

The assets and liabilities being obtained were recorded by the buyer at fair value as of the date of acquisition

The purpose of the audit memo is to clarify the accounting policies and procedures used by clients and the accounting policies and procedures that should be followed. The audit memorandum also provides a clear explanation of a difference between the risk premium in discounting the free cash flow from Plant 3 and the risk premium in discounting the cash flows for the Macinaw Division and which of the appropriate discount rate for computation of goodwill impairment. The case mentioned about impairments which will be written down after the assets are tested for impairments and how

The current degree of leverage at Harvey Norman marks a return to the leverage of 2008. The 2011 Annual Report reveals a number of different reasons for this increase in leverage. The first is that total liabilities borrowings increased by $150 million. This increase comes primarily from an increase in long-term interest-bearing loans and borrowings, which increased $200 million in the last fiscal year. Other changes in the net borrowings derived from bank overdraft, commercial bills, derivatives payable, lease liabilities, and non-trade amounts owing to directors, related parties and unrelated persons (2011 Annual Report, p.114).

At 30 June 2014, the balance of the revaluation surplus is $400 000, of which $300 000 relates to the factory land and $100 000 to the buildings. On this same date, independent valuations of the land and building are obtained. In relation to the above assets, the assessed fair values at 30 June 2014 are:

On some balance sheets assets are split into current and long-term assets as seen in Figure 1. Current assets are asset that are readily liquidated for money within a year, for example: cash, money markets, accounts receivable, inventory, and other current (Edition, 2011). Other current assets group is for prepaid expenses. Under long-term asset is land, plant, building, which refers to real estate machinery. For equipment that possibly has wear and tear or become out of date, is less depreciation. “The book value of an asset is equal to its acquisition cost less accumulated depreciation. Net property, plant, and equipment shows the book value of these assets” (Edition, 2011, p. 750). If you notice in Figure 1, goodwill and intangible asset are part of long-term assets.

Wages and salaries expense plus the increase in wages and salaries payable equals cash paid for wages and salaries.

The objective of AASB 116 is to stipulate the accounting treatment for property, plant and equipment, make user can understand information about an entity’s investment in its property, plant and equipment, and the changes in entity’s investment. The main issue for property, plant and equipment in accounting are the recognition of relationship between assets, the determination of their carrying amounts, the depreciation charges and impairment losses. AASB 116 required the entity disclose it’s information of gross carrying amount, depreciation method, depreciation rate, useful lives of PPE, accumulated depreciation and reconciliation of carrying amount at beginning of the reporting period and at end of the reporting period.

The fair value of an asset is defined as ‘the price that would be received to sell an asset paid to transfer a liability in an orderly transaction between market participants at the measurement date” (Kieso, Weygandt, & Warfield, 2012). It is a market based measure (Averkamp, 2014). Over the past few years, Generally Accepted Accounting Principles has called for the use of fair value measurement in a company’s financial statements. This is what is referred to as the fair value principle (Kieso, Weygandt, & Warfield, 2012). The fair value of an asset or liability is based on an estimate of what the asset should be worth at the time of sale. This gives rise to some conflict among accounting professionals. It is believed that fair value may not be as accurate

The financial condition of nonprofit organization is directly related to how its cash flow is managed. The manner in which an organization creates and controls cash establishes its ability to grow operations, control emergency situations and benefit from investment opportunities. With sufficient cash flow, an organization has capacity to operate in a “current” scenario. “More than adequate cash gives the organization a source of additional revenue, an operating cushion and liberation from some of the daily grind of financial existence” (McLaughlin, 2009). Accordingly, financial planning and cash management must account for how the organization will source revenue, as well as how it will grow revenue for operations and investments.

The cash flow statement of Bega Company declares where the company’s cash comes from and how the company spends its cash. This cash flow analysis covers three years, from 2014 to 2016. There are three main categories to analyse the cash flow statement: cash flows from operating activities, investing activities and Financing activities.

Discounted Cash Flow (DCF) valuations aims to establish the value of operating business on a ’cash free/debt free’ basis and therefore it is normally undertaken using ungeared cash flows. The value of the business should remain the same regardless of its financial structure.

Land is not depreciated since it does not have a useful life time period. Buildings for 33-60 years, plant and machinery for 5-15 years, equipment 4-20 years and other assets are depreciated for 3-10 years. Recording of PPE is also examined in two parts for the period and under construction. In 2015, total PPE amount was recorded under non-current assets which 307,608 Euro where as in 2014 it was 307,561 Euro. All the depreciations are set on a straight line

Discounted cash flow methods are other popular types of capital budgeting besides the Net present value (NPV). Discounted cash flow (DCF) is a common valuation method to evaluate investment opportunities and includes two basic tecnhiques: internal rate of return (IRR) and Profitability index (PI)or benefit-cost ratio (Shapiro, 2005). Since this research focuses Profitability index for evaluating the investment opportunity, the following section would highlight on PI.