term paper about fixed assets

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:

Capital assets that can be deprecated must be, either by straight-line depreciation or the composite method (weighted average) of depreciation.

c. Depreciation is computed using the straight-line method over the asset’s estimated useful life, which is determined by asset category as follows: Buildings and improvements (5 – 40 years); Store fixtures and equipment (3 – 15years), Leasehold improvements (Shorter of initial lease term or asset life); Capitalized software (3 – 7 years).

Even though Mr. Fordham mentions that he in his “Statement of Cost of Goods Manufactured for Year Ended Dec. 31 1956” that he depreciated $24,000 of Plant and Equipment, I decided to change the depreciation schedule so that PP&E would be fully depreciated by the end of the 5 year period. Thus, I used a straight-line depreciation schedule that accumulated $40,000 worth of depreciation per year, which was spread evenly across the 12 months of this Balance Sheet (or $3,333.33 per month).

ii. Using double- declining method, the first year ending balance of $6,404 is subtracted form the proceeds of the sale netting in a gain of $1,096 on the disposal. Once this is subtracted form the previous years depreciation $4,269, you get a total income statement impact of $3,173.

Furthermore, by adopting a historical cost approach the assets will be depreciated over that useful life which has been estimated. With the useful life of an asset being so subjective it is hard to apportion a useful figure to depreciation. By increasing the useful life of an asset you are effectively spreading the depreciation expense over a longer period of time resulting in lower depreciation expenses and vice versa. In fact, Zheng et al. (2012) go one step further and consider depreciation to be a strategy for managers to manipulate profits.

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.

10. Fixed asset turnover = Total Revenues in Statement of Operations / Net Property and

Edgar Allan Poe gave a lecture regarding his Philosophy in writing in Franklin Asylum, Providence, Rhode Island that comprised of 2000 people. In this lecture, he gave everyone a glimpse in the mind of genius. He spoke of how to compose poetry, the proper length, the purpose in making one. The words of Poe regarding his principle will be restated to assimilate his own point of view: “Previously, talking of the Poetic Principle, I bring no configuration on a chance to be possibly careful or profound. Same time discussing, a whole lot toward random, the centrality from claiming what we call Poetry, my vital motivation will be on refer to for attention a portion couple for the individuals minor English or American poems which best suit of reinforcement

The value of fixed assets typically decreases over time. The amount of the decrease each year is accounted for and is called depreciation. Depreciation for the year is expensed on the income statement and added to the accumulated depreciation account on the balance sheet. So the value of the fixed assets on the balance sheet is reduced by the accumulated depreciation.

One similarity between the U.S. GAAP and IFRS is that fixed assets are estimated at cost originally under both accounting standards; however, after initial recognition, differences occur between the two accounting standards. Under IFRS, after initial recognition, fixed assets are allowed to be altered to fair value. The revolution method is used to do this. This method uses the fair value on the time of assessment, less any accrued devaluation and impairment losses. This method is not used often though due to the high costs of appraisal that is involved. The U.S. GAAP values fixed assets using the cost model. This values fixed assets at historical cost, less any accrued devaluation. Fixed assets include property, plants, and equipment.

The Handmaid’s Tale by Margaret Atwood Born in 1939 in Ottawa, Canada, Margaret Atwood was raised in northern Ontario, Quebec, and Toronto. She is a renown poet, novelist, literary critic, and environmental activist. Her books have received critical acclaim in the United States, Europe, and her native Canada, along with numerous literary awards. Atwood’s representations of gender tackle the social constructs defining femininity, representations of women's bodies, the economic and social exploitation of women, as well as women’s relations with each other and with men. Atwood is a firm believer that the feminist label can only be applied to writers who consciously work within the framework of the feminist movement.

An impairment loss shall be recognized only if the carrying amount of a long-lived asset (asset group) is

Charles Dickens is an outstanding humanitarian in the 19th century. Even though a society can create a great writer, the great writer can also use his own power to improve the society. However, whatever the society period belongs to, a great literature work is able to influence a lot of souls and clarify them by its great value. Charles Dickens may eventually mount unprocessed bright brightness with his unique charm in world history of literature, and, forever.

Depreciation is the reduction in the value of certain fixed assets. It is a periodic reduction of fixed assets, usually done every year. Fixed assets are assets that add value to the company. Examples of fixed assets that can be depreciated are vehicles, buildings, machinery, equipment and fixture and fittings. The only fixed asset that is not depreciated is land, because it is not worn-out overtime, unless natural resources are being exploited. When a company buys a new fixed asset it doesn’t account for the full cost of it as one single large expense, instead the expense is spread over the life time of the asset. This is done by depreciating the asset. For example a company purchases a CNC router for €50,000 and will be used for five year. If they pay the full amount in the