Assignment 3 Excel Problems At The End Of Each Module

Assignment 3 Excel Problemsat The End Of Each Module You Will Apply

The assignment involves completing specific financial problems from the textbook, including preparing depreciation schedules, calculating present values, and analyzing stockholders’ equity. You are required to present your analysis in Excel format, entering non-numerical responses within the worksheet using textboxes. Submit your completed Excel file by Wednesday, July 15, 2015, to the designated Dropbox, naming the file as LastnameFirstInitial_M4A3.Excel.xls.

Paper For Above instruction

The comprehensive assignment encompasses three key areas: depreciation scheduling, present value calculations, and stockholders’ equity analysis, each demanding meticulous financial computation and presentation through Excel. These tasks not only aim to reinforce theoretical understanding but also to enhance practical skills in applying accounting principles using spreadsheet tools.

Depreciation Scheduling for Swifty Delivery Service

Swifty Delivery Service purchased a truck on January 9, 2010, at a cost of $67,000, with additional costs of $2,200 for painting, $5,000 for replacing tires, and $5,000 for engine overhaul, culminating in a total capitalized cost of $79,200. The truck’s estimated service life is six years, with a residual value of $14,700, and it is expected to be driven 15,000 miles annually for the first four years and 10,000 miles in the last two years, totaling 80,000 miles.

The assignment necessitates preparing depreciation schedules for three methods: straight-line, units of production, and double-declining balance. Each schedule should indicate asset cost, depreciation expense, and book value for each year. Additionally, selecting the depreciation method that aligns with management's objective of reporting higher net income early in the asset’s life while also considering the tax-minimizing method used for tax purposes is essential. This analysis informs decision-making on which depreciation approach best serves the company's financial presentation versus tax strategy.

Present Value Calculations for Equipment Acquisition

Axel considers two alternative financing plans for acquiring manufacturing equipment:

  • Plan A: Payments of $55,000 annually for five years, including interest at 12%.
  • Plan B: A lump-sum payment of $425,000 at the end of five years, including principal and interest at 12%.

The task involves calculating the present value of both plans to determine which option results in the lower cost, guiding Axel’s purchase decision. This exercise illustrates discounting techniques and emphasizes the importance of present value analysis in capital budgeting and financial planning.

Stockholders’ Equity Analysis of Ballcraft, Inc.

Ballcraft reports a stockholders’ equity section with specific details: preferred stock at $6 par with 6% dividend rate, 5,000 shares authorized and issued, totaling $30,000; common stock at $4 par with 10,000 shares issued, totaling $40,000; additional paid-in capital of $219,000; and retained earnings of $90,000, culminating in total equity of $379,000.

The analysis requires determining whether the preferred stock is cumulative or noncumulative by examining dividend arrears. Additionally, you will compute the total paid-in capital, the total market value of the common stock based on current market per share, and the book value per share of common stock. This assessment provides insights into the company’s equity structure and valuation, essential for investors and financial analysts.

References

  • Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2021). Managerial Accounting (16th ed.). McGraw-Hill Education.
  • Wild, J. J., Subramanyam, K. R., & Halsey, R. F. (2020). Financial Statement Analysis (12th ed.). McGraw-Hill Education.
  • Brigham, E. F., & Houston, J. F. (2019). Fundamentals of Financial Management (14th ed.). Cengage Learning.
  • Ross, S. A., Westerfield, R. W., & Jaffe, J. (2020). Corporate Finance (12th ed.). McGraw-Hill Education.
  • Damodaran, A. (2012). Investment Valuation: Tools and Techniques for Determining the Value of Any Asset. Wiley Finance.
  • Euromoney Institutional Investor. (2016). International Accounting and Financial Statement Analysis.
  • Healy, P. M., & Palepu, K. G. (2012). Business Analysis & Valuation: Using Financial Statements. Cengage Learning.
  • Gray, R. H., & Salter, S. B. (2015). Financial Accounting in an Economic Context. Routledge.
  • Higgins, R. C. (2018). Analysis for Financial Management (12th ed.). McGraw-Hill Education.
  • Investopedia. (2023). Present Value (PV) Definition. https://www.investopedia.com/terms/p/presentvalue.asp

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