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17 download_doc-12.php - A311 (4/2/2009) Identifying and...

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A311 (4/2/2009) Identifying and Measuring Consideration Given/Rec’d: V(Purchases) = V(Informal Obligation to Pay Suppliers) Measurement of: +∆AP Measurement +∆Inventories +∆Prepaid Exp +∆Capital Assets Possible Exchanges --------------------- V(Purch) = V(Cash PMT due in ≤ 1 yr) FMV ≈ contractual amt due Non-Monetary Consideration V(Purch) = V(Non-cash PMT due in ≤ 1 yr) FMV, if clearer FMV, if clearer V(Purch) = V(Contractual PMTs due over time > 1yr) FMV, if clearer FMV, if clearer ≈ Present Value of contractual PMTs using appropriate risk-adjusted discount rate = FMV 0 = C 1 R* -1 + C 2 R* -2 + … + C T R* -T HEP (1+IRR = 1 + risk-adjusted discount rate set in a “fair market”) Expense Recognition Principle -------------- A standard taxonomy of expense/inc.stmt. classifications: Cost of Sales Rev ≈ Consumption associated w/ product sales Cost of Service Rev ≈ Consumption associated w/ service sales Ch. 8-13 Operating Expenses ≈ Consumption associated w/ normal operations Depreciation Expense ≈ Consumption associated w/ capital assets Ch. 6
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This note was uploaded on 04/18/2011 for the course BUS 311 taught by Professor Palmer during the Winter '11 term at Indiana.

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17 download_doc-12.php - A311 (4/2/2009) Identifying and...

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