{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

ORIE 3150 practice prelim II

# ORIE 3150 practice prelim II - ORIE 3150 Name(please print...

This preview shows pages 1–3. Sign up to view the full content.

ORIE 3150 Name (please print)_____________________________________ Practice Prelim Two Fall 2010 1. Time Value of Money A i i c = ( 29 n i 1 PV FV + = single payment ordinary annuities: - + = i 1 ) i 1 ( A FV n + - = - i ) i 1 ( 1 A PV n annuities due: n 1 (1 i) 1 FV A A i + + - = - ( 29 n 1 (1 i) PV A 1 i i - - + = + ______________________________________________________________ 2. Bonds ( 29 ( 29 n n i 1 FV i i 1 1 A PV + + + - = - The “bond equation” The annual yield for a bond is 2 × i for bonds that pay interest semi-annually. Interest Expense = i × Carrying Value Carrying value must be updated every 6 months when interest is paid. ______________________________________________________________ 3. Leases - The Lease Checklist: 1. The lease transfers ownership to the lessee at the end of the lease term. 2. The lease contains a bargain purchase option 3. The lease term is equal to 75% or more of the estimated economic life of the asset 4. The present value of the lease payments amounts to 90% or more of the fair value of the lease property. If any one is true, it is a capital lease! If none are true, it is an operating lease. For #1 or #2 is true, depreciate over the useful life. For other capital leases, depreciate over the lease term. Interest Expense = i × Lease Obligation Sale-leaseback arrangements may result in a gain or loss. If there is a gain, this is usually amortized over the life of the lease. Losses (very rare) are recognized immediately.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
4. Inventory Impairment Net realizable value (NRV) – equals the estimated selling price in the ordinary course of business less costs of repair, preparation and disposal Net adjusted cost (NAC) – equals the NRV less a normal profit margin (NPM). NAC = NRV – NPM
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 4

ORIE 3150 practice prelim II - ORIE 3150 Name(please print...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online