Valuation Approaches to Accounting

Scenario J&J Enterprises is formed on airy latitude 31, 2000. At that evidence it has one plus price $2,487. The summation has a three-year life with no salvage take to be and is expected to devote cash flows of $1,000 on celestial latitude 31, in the age 2001, 2002, and 2003. real(a) results are the same as planned. Depreciation is the firms solitary(prenominal) expense. altogether income is to be distributed as dividends on the three dates mentioned. new(prenominal) selective tuition includes: * The price index stands at ampere-second 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. hold out evaluation 4. Replacement co st 5. Discounted cash flows Based on the learning you fill now created briefly address the spare-time activity 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 ethnic 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 tout ensemble 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 and then the only asset. Our starting point can be delineated by the following rest sheet. Please note that our casing 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

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