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Your firm uses return on assets (ROA) to evaluate investment centers and is considering changing the valuation basis of assets from historical cost to current value. When the historical cost of the asset is updated, a price index is used to approximate replacement value. For example, a metal fabrication press, which bends and shapes metal, was bought seven years ago for $522,000. The company will add 19 percent to this cost, representing the change in the wholesale price index over the seven years. This new, higher cost figure is depreciated using the straight-line method over the same 12-year assumed life (no salvage value). Required: a.Calculate depreciation expense and book value of the metal press under both historical cost and price-level-adjusted historical cost. b.In general, what is the effect of ROA of changing valuation bases from historical cost to current values? c.The manager of the investment center with the metal press is considering replacing it because it is becoming obsolete. Will the manager's incentives to replace the metal press change if the firm shifts from historical cost valuation to the proposed price-level-adjusted historical cost valuation?
strephanies building which was used in her business was destroyed in a fire. stephanies adjusted basis in the building
Available-for-sale securities are securities that management expects to sell in the future, but are not actively traded for profit.
At the beginning of the year, Penguin Corporation (a calendar year taxpayer) has accumulated E & P of $55,000. During the year, Penguin incurs a $36,000 loss from operations that accrues ratably. On October 1, Penguin distributes $40,000 in cash t..
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Assuming that no other costs are involved in processing potatoesor in selling products, how much money does the company make from processing one batch of the common input into the end products Xand Y? Show work
jose paid the following amounts for his son to attend big state university in
The central stores fund of cook city provides centralized management of purchasing, storage,and issue of supplies for the entire city. For the following summarized transactions and events for the year ended june 30, provide the fund level entries ..
Which of the following statements concerning consolidated financial statements is true?
sudowood inc. reported pretax book income of 1 million. during the current year net reserve for warranties increased by
compute the roi for each department. use the dupont method to analyze the return on sales and capital turnover. round
If you require a 7 percent nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?
calculate the profit volume ratio with the figures given below selling price per unit 69 variable cost per unit ?
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