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    Accounting for Long-Term Assets

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    Asset Replacement - Equivalent Annual Cost

    Because of its age, your car costs $4000 annually in maintenance expense. You could replace it with a newer vehicle costing $8000. Both vehicles would be expected to last four more years. If your opportunity cost is 8%, by how much must maintenance expense decrease on the newer vehicle to justify its purchase?

    Research and Development costs: asset or expense

    1. In the United States, companies must charge expenditures for research and development directly to expense. In some other countries companies can recognize such cost as assets. Suppose you were a manager of a research and development department. Which method of accounting for research and development would be most consistent w

    Average Real Annual Returns for the Following Asset Classes

    Calculate the average real annual returns for each of the following asset classes using the information below: Series Mean of Annual Total Return (1926-2002) Large-company stocks 12.2% Long-term corporate bonds 6.2 Long-term government bonds 5.8 U.S. Treasury bills 3.8 Inflation 3.1 A. Large-com

    Asset level: Firm Needs to Issue Additional Stock

    A firm has $25 million in assets and its optimal capital structure is 60% equity. If the firm has $18 million in retained earnings, at what asset level will the firm need to issue additional stock? (Assume no growth in retained earnings).

    Basis in a partnership: contribution of property

    A taxpayer contributes property with an adjusted basis of $125,000 and a fair market value of $155,000 to her business entity. If the entity is a partnership and the transaction qualifies under § 721, the partnership's basis for the asset and the partner's basis for her partnership interest are: Asset Basis Interest Basis

    Asset Beta

    ABC Corporation is a firm with all-equity financing. Its equity beta .80. The treasury bill is 4$ and the market risk premium is expected to be at 10 percent. What is ABC's asset beta? What is its weighted average cost of capital? The firm is exempt from paying taxes?

    Valuation of a Self - Constructed Asset Sale

    TEST BC's Software Development Division (SDD) has developed several architectural design software packages. One software package that they have developed is being sold to English Company for $250,000 or 325,000 pounds. The cost of developing the software was $195,000. As payment, BC has accepted a note receivable that is due in

    Riskiness of an Isolated Asset

    A measure of the riskiness of an asset held in isolation is a. beta b. standard deviation c. covariance d. semi-variance Please explain your reasoning as to how you obtain your answer.


    PART VII ? ASSET PURCHASES AND DISPOSITIONS 1. Wells Construction gave up a used crane and $16,000 cash for a similar new crane. The old crane cost $24,000, had $9,000 of accumulated depreciation, and a fair market value of $17,000. In recording this exchange, the new crane should be recorded at $_____________. 2. Br

    Accounting problems and questions

    1. An alternative available when the seller is exposed to continued risks of ownership through return of the product is Recording the sale, and accounting for returns as they occur in future periods. Not recording a sale until all return privileges have expired. Recording the sale, but reducing sa

    Asset Securitization

    In what way can asset securitization reduce the cost of funds for an issuer? Could you please explain in details? Also, can you provide some example?

    Candy Corp: Recording of Asset in Exchange for Stock

    Candy Corp purchased $175,000 worth of equipment in 2008 for $100,000 cash and a promise to deliver an indeterminate number of treasury shares of its $ XX.00 par common stock, with a market value of $25,000 on January 1 of each year for the next 4 years. Hence $100,000 in "market value" of treasury shares will be required to dis

    Regard employees as greatest asset

    An organization's strategy might be to train their leadership to regard our employees as their greatest asset. How would that affect recruiting, and retention?

    Selling an old asset

    A firm is selling an old asset below book value in a replacement decision. As the firm's tax rate is raised, the net cash outflow (purchase price less proceeds from the sale of the old asset) would: A) go up B) go down C) remain the same D) more info is required

    Discussion Board

    For each of the following items, give an example of a business transaction that has the described effect on the accounting equation: Increase an asset and increase a liability. Borrowing money & signing a note payable Increase one asset and decrease another asset. Buying inventory for cash Decrease an

    Calculate the net asset value (NAV) of a fund

    See attached file. On January 2, the prices at 4:00pm are as follows: 1.Calculate the net asset value(NAV) for the fund. 2. Assume the new investor then sells 420 shares. What is his profit? What is the annualized return? The fund sells 800 shares of stock 4 to raise the needed funds. Assume 250 trading days per year.

    Calculate the net asset value (NAV) for the mutual fund

    On January 1, a mutual fund has the following assets and prices at 4:00 p.m. (see attached) 1. Calculate the net asset value (NAV) for the fund Assume that 8000 shares are outstanding for the fund. 2. An investor sends the fund a check for $50,000. If there is no front-end load, calculate the new number of shares and price

    Compute the rate of return on an asset using the SML

    Please show all work so I can understand your conclusion. An asset has a beta of 1.6. The risk-free rate is 6 percent, and the market risk premium is 8 percent. Using the SML, estimate the required rate of return on this asset.

    Asset Management and Liabilty

    Please assist in writing a short research report on a company outlining at least 2 ways that company could increase its liquidity (consider both asset management and liability management).