Question 1. Valuing Early Stage a. Estimate Mindy Ltd’s terminal value based on the following information: Current year’s net income = $20,000; next year’s expected cash flow = $26,000; Constant future growth rate = 7%; Venture investors’ required rate of return = 20%.   b. In a wildly successful first year at Sachin Inc. that started and ended with no required cash, the firm has: Operating income of $989,000, net income of $637,000; Change in current assets of $900,000, change in current liabilities of $659,000; Net capital expenditures were $690,000, and depreciation was $460,000. The firm has never financed itself with debt. What is its equity valuation cash flow?   c. Estimate Darien Ltd’s equity valuation cash flow based on the…

Case 1: Consolidation worksheet, previously held investment in subsidiary   On 1 August 2018, Erik Ltd acquired 10% of the shares in Finn Ltd for $8000. Erik Ltd used the fair value method to measure this investment with movements in fair value being recognised in profit or loss. At 1 July 2017, the fair value of this investment was $15 400. The original investment in Finn Ltd was due to the fact that Finn Ltd was undertaking research into particular microbiological elements that could influence the profitability of Erik Ltd. With the continuing success of this research, Erik Ltd decided to acquire the remaining shares (cum div.) in Finn Ltd. On 1 July 2017, Erik Ltd made an offer to buy…

Question: #1 Why depreciation on fixed assets should be brought into account? Discuss in detail the several methods of providing for depreciation. You own a bakery and you’ve just bought a big Elba oven for the baking at a cost of RM30,200. It estimated disposal value or scrap value is RM200. Elba gives warranty of 3 years but it can be used for five years in the business. At the same time Users’ manual indicates that the oven can be used for 12,000 baking hours. Since you’ve just started the business, your estimate for using the oven will be Year Baking hours 1 1400 2 1800 3 2400 4 2800 5 2600 Prepare depreciation schedules based on the information given above…

Question 1 Patterson Ltd was registered on 18 March 2017, as a company with a constitution limiting the shares that could be offered to; 4 000 000 Ordinary A shares and 2 000 000 non-voting Ordinary B shares. The company issued a prospectus dated 12 May inviting the public to apply for 3 000 000 Ordinary A class shares at $2.50 per share. The terms of the shares on issue are $1.00 on application, $1.00 on allotment and $0.50 to be called within six months of allotment.   If the issue is oversubscribed the directors will make a pro-rata issue of shares and the excess application money will be applied to allotment and calls before any refunds will be given. On…

QUESTION 1: Balance Day Adjustments Below is the unadjusted Trial Balance as at 30 June 2018 for "Feed Me Seymour", a retail plant nursery and garden centre. It is owned and operated by Fran Giapani.   Feed Me Seymour Unadjusted Trial Balance As at 30 June 2018 Debit ($) Credit ($) Cash at Bank 35,760 Accounts Receivable 42,500 Inventory 187,200 Prepaid Insurance 6,480 Office Supplies on hand 4,368 Nursery Equipment 53,040 Accumulated Depreciation — Nursery Equipment 15,912 Delivery Van 62,400 Accumulated Depreciation — Delivery Van 24,960 Accounts Payable 36,036 Loan Payable 156,000 F. Giapani — Capital (1 July 2017) 88,296 F. Giapani — Drawings 37,440 Sales Revenue 921,372 Sales Returns and Allowances 13,232 Cost of Sales 549,744 Discount received 17,276 Freight…

Part A   The following represented an extract from the Statement of Financial Position of the assets and liabilities of Nelson Ltd (Nelson) for the years ending 30 June 2017 and 30 June 2018. The company reported a profit before tax for the year to 30 June 2018 of $700 000. 2018 2017 Accounts receivable $ 245 000 $ 200 000 Allowance for doubtful debts (20 000) (10 000) Plant-at cost 600 000 600 000 Accumulated depreciation-plant (190 000) (120 000) Interest receivable 10 000 20 000 Provision for long-service leave 48 000 62 000 Deferred tax asset ? 21 600 Deferred tax liability ? 24 000   You were appointed as a junior accountant at Nelson after graduation from Western…

BikePro Ltd want you to perform a Cost Volume Profit Analysis for their High-End Racing Bike product, the X-800.  You will need to calculate the labour costs, material costs, fixed costs and variable costs and then work out the break-even volume.  You have also been asked to show a forecast for different sales volumes and produce a break-even analysis line chart.   Start by downloading the assessment workbook from iLearn and copying/moving it to an appropriate folder. When you open the workbook it is very important that you Enable Macros/Content. You will then be asked to enter your Student Number (you will not be able to edit it afterwards, so type it in carefully) and then enter your Student Name.  …

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Company Background Charles Boutique Books Pty Ltd has been in business in Melbourne since July, 2014. The company was started by James Lowe and operates a shop which sells books on a wholesale basis to other businesses on both credit and cash terms. The company's share capital consists of 162,000 ordinary shares, issued at $1 each, that are owned by various members of the Lowe family. The company employs a combination of sales and administration staff to operate the business.   Accounting System Information & Procedures The company has a financial year end of 30 June and prepares adjusting entries at the end of the financial year. To ensure efficiency of its accounting procedures, the company uses the following Special Journals to maintain…

Case Study One:   On 1 January 2017, Nicolaidis Ltd purchased two identical new machines at a total cost of $700 000 plus GST. It was estimated that the machines would have a useful life of 10 years and a residual value of $50 000 each. Nicolaidis Ltd uses the straight-line method of depreciation for all of its equipment. The company’s end of reporting period is 31 December.   Required Record the purchase of the trucks on 1 January 2017. Record the depreciation expense on the trucks for 2022. Assume that early in 2023 the company revalued the machines upwards by $80 000 each and assessed that the machines would last 6 more years instead of 4 but that the residual value would…