Valuation Approaches to Accounting

Scenario J&J Enterprises is formed on aerial latitude 31, 2000. At that evidence it has one plus address $2,487. The summation has a three-year life with no salvage judge and is expected to devote cash flows of $1,000 on declination 31, in the age 2001, 2002, and 2003. real(a) results argon the same as planned. Depreciation is the firms solitary(prenominal) expense. altogether income is to be distributed as dividends on the three dates mentioned. other selective tuition includes: * The price index stands at hundred on December 31, 2000. It goes up to 104 and 108 on January 1, 2002 and 2003 respectively. * Net achievable value of the asset on December 31 in the old age 2001, 2002, and 2003 is $1,500, $600, and $0, respectively. * The firms asset IRR is 10% Your Task is to Produce: Income statements for the years 2001, 2002, and 2003 under: 1. historical costing 2. General price-level adjustment 3. slip by evaluation 4. Replacement cost 5. Discounted cash f lows Based on the learning you yield now created briefly address the following questions: * How does the information you produced meet the theoretical flightiness of usefulness? (1 to 2 paragraphs) * Is the take of utility a scientific or cultural notion? (1 to 2 Paragraphs) Addendum: Replacement values are $2,700, $3,000, and $3,300 respectively for the years 2001, 2002, and 2003.

Valuation Calculations Our starting point for every(prenominal) five approaches remains the same. The company was formed on December 31, 2000 and has one asset costing $2,487. Since we do not have any information other we will assume that this is thu sly the only asset. Our starting point can b! e equal by the following rest sheet. Please note that our event is oversimplified to illustrate the different valuation approaches. Exhibit 1 diachronic Costing Historical costing is the... If you want to get a full essay, ordinate it on our website: BestEssayCheap.com

If you want to get a full essay, visit our page: cheap essay