Economics, Accounting & Business: Post your doubts here!

[Esme]

estimated life of project = 5 yrs


cost of machine = 90,000


estimated proceeds of disposal of machineafter 5 yrs = 10,000


additional working capital requred throughout the project = 30,000


additional annual revenue (net) = 15,000



what will be the accounting rate of return?

This is a weird question. The annual depreciation that I get is 16000. Whereas the annual revenue is only 15000. So I'm getting an average loss of 1000. Never saw a question in which we get loss. What part of the question did you have a problem with ?

 

[Esme]

Need help !
Paper: O/N 2009 P22
Question No.: 2 (a)

I have done 2(a) (i) and (ii) correctly and I checked with the marking schemes, it is correct
But for (iii) to (vi), I do not know how to get the disposal value. On the MS, it says $90000 but I cannot seem to find a way to get that. Same with the rest of the questions.
I am not good in the Depreciation and Disposal section. I always had problems with it. :/

Please help

90000 is the depreciation of the equipment that costs 300000 when purchased in 2006. So its depreciation for one year would be 300000 x 10% = 30000. Now it has been used for 3 years (2006, 2007 and 2008) so total depreciation would be 30000 x 3= 90000. This amount has to be transferred to disposal. Similarly for motor vehicle. It cost 52000 when purchased and depreciation was again charged for 3 years so total amount transferred to disposal would be 3 x 56000 x 25% = 42000.

 

[Zhamed]

90000 is the depreciation of the equipment that costs 300000 when purchased in 2006. So its depreciation for one year would be 300000 x 10% = 30000. Now it has been used for 3 years (2006, 2007 and 2008) so total depreciation would be 30000 x 3= 90000. This amount has to be transferred to disposal. Similarly for motor vehicle. It cost 52000 when purchased and depreciation was again charged for 3 years so total amount transferred to disposal would be 3 x 56000 x 25% = 42000.

Thanks for the answer. Also:
1. Can you tell me from where you got that 25%? Because I don't see any information given on the percentage. How did you find?
2. In the (iii), the balance c/d is $1136. Can you tell me how to find that? Also the balance c/d for the (iv), please. I have no idea how to get that and the total. :S
Totally bad in this. Now this is the only doubt, question no. (iii) and (iv).

PS. I did the rest of question properly, well by looking at the MS

 

[KeepCalmandEatNails]

can someone explain to me the relation between interest rates in a country and its exchange rate.......... XD .....

 

[VelaneDeBeaute]

can someone explain to me the relation between interest rates in a country and its exchange rate.......... XD .....

Interest rates have a large effect in a world where financial capital can move freely between countries.
When a country's interest rates are high relative to elsewhere this attracts inflows of money into a country seeking to take advantage of the high interest rates. This "interest differential" boosts the demand for the currency and can cause its value to rise.

 

[SalmanPakRocks]

90000 is the depreciation of the equipment that costs 300000 when purchased in 2006. So its depreciation for one year would be 300000 x 10% = 30000. Now it has been used for 3 years (2006, 2007 and 2008) so total depreciation would be 30000 x 3= 90000. This amount has to be transferred to disposal. Similarly for motor vehicle. It cost 52000 when purchased and depreciation was again charged for 3 years so total amount transferred to disposal would be 3 x 56000 x 25% = 42000.

How did you find out 10% and 25% respectively?

 

[SalmanPakRocks]

can someone explain to me the relation between interest rates in a country and its exchange rate.......... XD .....

Interest rate attracts the foriegn investors to invest in our country, due to this, the demand of the local currency increases which leads to appreciation of the country's exchange rate; diagramtically, it can be proven by:

Intially, the demand curve D1 was at e but due to hot inflow of money, it shifted to D2 which explains why increase in interest rate led to the appreciation of country's exchange rate. How this clears it up further.

 

[Esme]

How did you find out 10% and 25% respectively?

Zhamed
From the accounts given to us we can see that Depreciation charged to Profit and Loss Account is 297 and the amount on which it has been charged is the balance c/d for furniture and equipment i.e 2970. hence percentage of depreciation would be (297/2970) x 100 = 10%.
Similarly for motor vehicles (450/1800) x 100= 25%

 

[Esme]

Thanks for the answer. Also:
1. Can you tell me from where you got that 25%? Because I don't see any information given on the percentage. How did you find?
2. In the (iii), the balance c/d is $1136. Can you tell me how to find that? Also the balance c/d for the (iv), please. I have no idea how to get that and the total. :S
Totally bad in this. Now this is the only doubt, question no. (iii) and (iv).

PS. I did the rest of question properly, well by looking at the MS

For iii) bal b\d is 897, transfer to disposal is 90, the amount charged to P&L is 329. This is the bal c/d of i) multiplied by 10% depreciation (3290 x 10% = 329). Now that you have all the figures you can find the balance c/d. Again, for iv) depreciation for the year will be 1984 x 25%= 496. Now you can get the balance c/d.

 

[Muhammad Bin Anis]

This is a weird question. The annual depreciation that I get is 16000. Whereas the annual revenue is only 15000. So I'm getting an average loss of 1000. Never saw a question in which we get loss. What part of the question did you have a problem with ?

i think you dont need to put in depreciation coz the annual additional revenue is already NET.
what answer ddo you get ?

 

[shanky631]

a good document for revision

 

[shanky631]

revision note for As accounting

 

[Muhammad Bin Anis]

revision note for As accounting

a good document for revision

dont you have something else as well?

 

[Esme]

i think you dont need to put in depreciation coz the annual additional revenue is already NET.
what answer ddo you get ?

Well without deducting depreciation average profit would be taken as 15000. and average investment is 75000. so ARR would be 15/75 x 100= 20%.
Average investment is calculated : 90000/2 + 30000 = 75000

 

[Sarkerms]

Economics oct/nov 2009 paper 41 Q3 a). Can someone help me with this?

The answer seems complicated but it only has a few key points and you need to be good at relating the answer with a few realistic examples. You have to start with what is economies of scale and then say that how is it achieved. Then you have to talk about how operations in the gas industry requires large scale work and often govt give contracts to 1 r 2 companies max and this is sort of a form of natural monopoly. Then you need to move on and talk about how diseconomies can also set it. Then wrap it off

 

[Zhamed]

Zhamed
From the accounts given to us we can see that Depreciation charged to Profit and Loss Account is 297 and the amount on which it has been charged is the balance c/d for furniture and equipment i.e 2970. hence percentage of depreciation would be (297/2970) x 100 = 10%.
Similarly for motor vehicles (450/1800) x 100= 25%

I think I got it. Thank you

 

[shaahid]

The answer seems complicated but it only has a few key points and you need to be good at relating the answer with a few realistic examples. You have to start with what is economies of scale and then say that how is it achieved. Then you have to talk about how operations in the gas industry requires large scale work and often govt give contracts to 1 r 2 companies max and this is sort of a form of natural monopoly. Then you need to move on and talk about how diseconomies can also set it. Then wrap it off

oh thanks alot That really helped

 

[VelaneDeBeaute]

I was having trouble with this MCQ. I figured out that x was the economic rent and the area below the supply curve were the transfer earnings, but I don't seem to be getting closer to any options. Any help?

 

[cool Asviva]

someone please explain me these mcqs..
http://papers.xtremepapers.com/CIE/...and AS Level/Economics (9708)/9708_s06_er.pdf
Q 1, 15, 19, 20, 27.

 

[Apex-Kill]

How does right issue and other shares affect the net current asset(working capital)?