Chapter 4

Exercise

4 -

LIFO reserve

a)
End. Fito inventories

COGS & Grass

Profit under FIFO method
FIFO method 150 method

inventories 904 816

Beg,
cost
of goods purchased 4,262 4,262

Less:End, inventories 904.4 819.8

COGS 4,261.6 4,258.2

Net sales-COGS
Gross
profit -

6,285.8-4,261.6
=

1,944.25
=
mil
 Explain:
inventories 1150 inventories
Beg,
HFU reserve
·
Beg.
+

$816 $88 $904 mil

=
+

purchased(HF0=FIF0) COGS + End inventories

I cost
of good =

I 4,258.2
=
+
819.8- 816 $4,262
=
-

Beg, inventories

affectedby using
Purchase in 11F0 FIFO
=

b/c it does not be

LIFO & FIFO.

COGS (FIF0) cost

good purchased Beg. End
+
of
-

. =

4,261.68
- mil

b) When we convert
from
LIFO to FIFO, we can see that there

COGS increases when it's

are
differences in COGS & Gross profit.
reverted then it also leads to
a decrease
FIFO,
gross profit.
to in

End. End. 11F0 10 reserve

inventory
FIFO
2) inventoly +
-

Year 10 Year 11

End. 819.8
inventory
LIF 706.7

LIFO reserve 84.6 89.6

End FIFO 796.3

inventory 904.4
 d) B/c when
using FIFO method, it
reflects the recentcost of
inventories. The FIFo, chiphhang on whose
gan bang gia thistriong
hien tainhat'-> Dedang phantich financial statementof firm a in

this periods
easily for analysist predict the cost of inventory
to in

next period.
It makes easier
for analyst compare between firms using
-

to

methods
differentinventory
4 -
11

wages exp (income

statement) 3 Income statement
8 O AR
both
assets liabilities Liabilities
G a

O AR

equity O
8 O
8
8
8 spol dang

A deferred tax liability (DTL) is a tax payment that a company has listed on its
balance sheet, but does not have to be paid until a future tax filing.

A deferred tax asset (DTA) is an entry on the balance sheet that represents a
difference between the company’s internal accounting and taxes owed. For
example, if your company paid its taxes in full and then received a tax
deduction for that period, that unused deduction can be used in future tax
filings as a deferred tax asset. cac khoan the 'phainop
Deferred charges
To receive a discount, some companies pay their rent in advance. This
advanced payment is recorded as a deferred charge on the balance sheet
problems

Hotel
gia & Casino la 1.6 ti
4 -

Net
ROA:
income (after depreciation o taxes)
Book value

1.6
$0.064bil $64
a) 25
years -> Depreciation mil/year
=
=
=

25

Net income (Net income

=
-

Depreciation) (1 -

Taxcate)
lafter interest) (before)
Y1:
(50 64) (1 25%) $-10.5mil
- -
=

42: (70 -

64) (1 25%) $4.5mil

-

y3:(75 64) (1 25%) $8.25mil

-
-
=

ROA:

10.5
0.684%
-

Y1: ROA= =
-

1,600 -

64
 4.5
Y2:ROA= 0.306%
=

156 -

64
-

1,600 -
book
64: value

Y3:ROA 8.25 =

= 0.597%
1,472 -
64

b) 15
Depreciation 1,600 $106.67 mil/year
years
=
->
=

15

Net income:41: (50-106.67) (1 25%) $-42.5mil

-

42: (70 186.67)(1-25%) $-27.5 mil

-
=

y 9:(75 186.67)(1 25%) $- 25.75mil

- -
=

42.5
ROA: Y1:
-

= -2.85%
1,600 -
106.67

27.5
Y 2: 1.98%
-

=-

1,495.39-180.67
23.75
43: 1.86%
-

=-

1,386.66 -

186.67

2) 10
years -> Depreciation =

1 $160
=

mill/year
Net income:41: (50-160) (1-25%) $-82.5mil =

y2:(70 -

160) (1 25%) $-67.5 mil

-

49:(75 -

160)(1 25%) $- 65.75 mil

-
=
 82.5
ROA:y1: 5.73%
-

-
=

1,600 -
160

67.5
5.27%
-

42: =
-

1,440 -
160

65.75
49: 5.69%
-

-
=

1,280 -
160

4 -

ROA

Initial cost $300,000=

5
years
Income
(before depreciation taxes) $100,000
=

300,000
a) Depreciation $60,000/year
=

5
book value
Year
Beg. Depreciation Net income
(after) ROA

1 300,000 60,000 30,000 10%

2
240,000 60,000 30,000 12.5%

G 190,000 60,000 30,000 16.67%

4
120,000 60,000 30,000 25%

5 60,000 60,000 00 1%
(100,000 -

60,000) (1-25%).
Net income

Book value