Responsibility Accounting and Transfer Pricing - Math Problem Example

Extract of sample
Responsibility Accounting and Transfer Pricing

Required: a. Calculate depreciation expense and book value of the metal press under both historical cost and price-level-adjusted historical cost. For the historical cost, the metal fabrication press would depreciate $43,500 per year ($522,000/12). In terms of the book value of the metal fabrication press under historical cost, the net book value would be $217,500 ($522,000-($43,500*7)). In comparison, the price-level-adjusted historical cost would give a new cost of $621,180 (Increase of 19% on the original cost. If this is so, the new book value would amount to $316,680 ($621,180-$304,500). Because this value would depreciate over the remaining five years of its life, the depreciation expense would be$63,336 ($316,680/5). b. In general, what is the effect on ROA of changing valuation bases from historical cost to current values? Because assets are generally higher, the return on assets would be lower because a fraction always becomes less when the denominator is increased. This would result in the managers having more motivation to change the equipment because the return on the equipment would not be as great. c. The manager of the investment center with the metal press is considering replacing it because it is becoming obsolete. ...Show more

Summary

P5-6 "Metal Press" 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…
Author : denesikserena
Save Your Time for More Important Things
Let us write or edit the math problem on your topic
"Responsibility Accounting and Transfer Pricing"
with a personal 20% discount.
Grab the best paper

Related Essays

Banking
The determination of the suitable credit product to be offered to Mr. Mark Angelo and his company Mark Equipment Pty Ltd. necessitates the credit assessment of Mr. Mark Angelo and his company. The collected financial information have to be analyzed in order to examine the ability of the client, Mr.
6 pages (1500 words) Essay
Finance and Accounting Essay: Option Pricing
Stock options have a minimum amount of 100 shares to be delivered by the seller (writer) to the buyer (holder) in the contract. Securities on the other hand, are sold in cash thus settlement is reached. If an option is held longer than the specified time, it reaches the point of the expiration when the holder does not exercise his rights.
12 pages (3000 words) Essay
Assigment for Strategic management accounting
As a result, Pear Ltd is at crossroads as to which budgeting, costing, and transfer pricing modules it should adopt. Pear Ltd’s management should pursue alternative methods of budgeting, costing, and transfer pricing since they avail the best chance to address issues affecting its operations.
12 pages (3000 words) Essay
Nvestment Strategy Report For Investment Analysis Class
As such the importance of developing an effective investment strategy is made more prominent. A great number of strategic approaches have been proposed. One notable strategy has entirely neglected fundamental analysis for an approach that rests squarely on technical considerations.
3 pages (750 words) Essay
Essay on Management Accounting
This information also equips the managers and the management staff with management skills and control functions. Management accounting information has a forward outlook, as opposed to the historical outlook of financial management. Management accounting models have degrees of notion for supporting the decision making process, instead of the case based model of financial accountancy.
3 pages (750 words) Essay
Management accounting- S-10
Cybernetics takes as its area the configuration or revelation and requisition of standards of regulation and conveyance. Cybernetics treats not things however courses of acting. It doesn't ask "what is this thing?" however "what does it do?" and "what would it be able to do?
20 pages (5000 words) Assignment
Assignment 4: Transfer Pricing
Most companies review global taxable income levels and cash requirements prior to establishing inter-company pricing and arrangements. The most dominant methods employed to establish arm’s length pricing entail: comparable uncontrolled price, resale price approach, and cost-plus approach.
6 pages (1500 words) Research Paper
Strategic Management Accounting
Performance measures can be considered as metrics for monitoring the success of an activity and competence of the workforce in utilizing the available resources. Competence can be attained by maximising the output with the minimum number of resources. Improvement in competence can be achieved by providing fewer inputs that can be used to produce a particular amount of output.
12 pages (3000 words) Essay
International Taxation - Transfer Pricing
[Shaxon, N. (2012)] In order to acquaint with the concept of transfer pricing, consider two companies, that is a parent companies and a subsidiary company or two subsidiaries that have the same parent company, actively involved in trading with each other.
8 pages (2000 words) Research Paper
Managerial accounting essay,all explained above
The internal rate of return tool enhances the decision making process. Internal Rate of Return Concept The internal rate of return (IRR) is one of the popular tools used in managements’ decision making activities (Moyer, 2009). The tool shows the real economic return of a project or investment alternative.
5 pages (1250 words) Essay
Financial Leverage
Analysis of a firm’s financial leverage ratios is essential because financial leverage ratios accomplish two things: First, they are a measure of the extent to which firms finance their assets through debt; second, they are the indicators of the financial risk of the firm (Arditti, 19).
9 pages (2250 words) Essay
Find out how much would it cost
to get a custom paper written by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT