Vinsun Essay

1) Estimate the WACC that is appropriate for discounting the Collinsville plant’s incremental cash flows. You should estimate and present each component of the WACC separately, explaining briefly but clearly what assumptions you are making for each of them. In the same spirit, estimate the appropriate all-equity cost of capital for the APV-based valuation.

1. For financial accounting purposes, what is the total amount of product costs incurred to make 10,000 units?

Under FASB ASC 805-10-25-23, acquisition related costs in business combinations are reported as an expense at the time of their occurrence by the acquiring company. This was a change from the previous way of capitalizing acquisition related costs for all business combinations and was established for all business combinations complete on or after January 1, 2009. This was a needed change in accounting because the acquisition costs do not represent a future value, are not a part of the value of the business being purchased, and would be expensed if the decision was made not to acquire the company being evaluated.

Management wants the sale to be reported in fiscal 20X7. The deposit ($6,000,000) was received in May 2007 according to their sales agreement, so it should be reported in 20X7 as unearned revenue because WAL still possesses the land until February 20X8. Once the sale is complete in February 20X8, the income should be reported in fiscal 20X8. After the land is sold, the remaining balance becomes Accounts Receivable until realized.

Which of the following should be included in the acquisition cost of a piece of

The first option records the acquisition of Drug X and OuchX into an intangible account -- “ownership”. In the case of transfer ownership of the IPR&D of Drug X from Brust-a-Knee to Pharmers, Brust-a-Knee receives $2 million cash and incurred $2 million loss. The disadvantage of treating the $2 million loss into the expense account of Drug X is there may be future economic benefits for Brust-a-Knee to sell Drug X because the estimated revenue is $5.5

According to IAS 16, The cost of an item of property, plant and equipment comprises, its purchase price, including

3.) . Should the February 1, 2012, agreement and the May 1, 2012, agreement be accounted for separately or as a single arrangement?

The first would be that instead of capitalizing the $210,000 to set up displays to promote the line, these displays could have been recorded as an Advertising Expense. One of the IFRS criteria for something to be considered an asset is that the benefit must be reasonably measurable. When it comes to anything done for the purpose of advertisement or promotion, it is hard to measure the benefit and that is why this cost could have been expensed rather than capitalized. However, by recording this event as an expense this would mean that Athina’s net income would have been overstated by $210,000 and that is an undesirable outcome for the national chain.

"They say you had to see him to believe that a man so fine could exist. He

c) Nonrecurring items of initial franchise fees, area development fees and sales to new franchises.

Zen, also known as Ch’an Buddhism in China, is a school of Mahayana Buddhism that was established in China about 1500 years ago. Zen is a form of religious practice of mainly concentrating the mind to a single point in which then results in self-realization and/or enlightenment. Zen philosophy is interpreted that all humans are capable of reaching enlightenment, which is generally blocked by ignorance. The idea emphasizes enlightened masters over forms of scriptures, and is the least “academic” of all the Buddhist schools.

1. Assume there are three separate real estate companies US Realty (which uses the cost model), UK Realty (which uses the revaluation model, and International Realty (which uses the fair value model). Assume that on December 31, 2003, each company pays £1,000 cash to obtain investment property comprising of land with negligible value and an office building worth £1,000.  The building has a 10 year useful life, has no residual value, and is expected to provide a constant stream of economic benefits over time.   What is the accounting entry for each company for the following four scenarios:

Property, Plant & Equipment (PPE) (AASB 116): “Property, plant and equipment are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item including borrowing costs that are related to the

Now the basis for all future transactions relating to this building would also be at its cost, i.e. $12 million. For example: The depreciation would be charged on $12 million and not on $15 million. Similarly when the asset is sold in future, the profit or loss on sale would be based on the cost price actually paid for it. Since the original or