mid2_fall03 - Name ID ACCOUNTING 15.501/516 FALL 2003...

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Name _________________________ ID #_________________________ ACCOUNTING 15.501/516 FALL 2003 MIDTERM II EXAM GUIDELINES 1 . Please detach the last (blank) page, fold in half lengthwise, and write your name on it in LARGE block letters. Display this sign in front of you so that I can see it from the center of the room. 2 . The exam must be completed within 80 minutes. 3 . The total number of points in this exam is also 80, so budget about 1 minute / point. Avoid spending too much time on any one question. Question Topic Points I PP&E, depreciation, and deferred taxes 20 II Marketable securities 20 III Present values and long-term debt 20 IV Leases 20 4 . Please work the problems in a clear, readable manner and show all computations. We will not grade what we cannot read. 5 . If you feel that assumptions are necessary to solve a problem, please state your assumption and why it was necessary. 6 . The following formulas may be useful for answering some of the questions. Present value factor for an ordinary annuity: Future value factor for an ordinary annuity: n r r r r n ) 1 ( 1 1 ) periods, PVFA( + = r r r r n n 1 ) 1 ( ) , periods ( + = FVFA 7 . Calculators may be used for computations on this exam. 8 . Good luck! Page 1 of 8
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QUESTION I: PP&E, DEPRECIATION, AND DEFERRED TAXES (20 POINTS) Abercrombie & Fitch (A&F) is a large and growing retail chain of 597 stores in the U.S. The following information has been extracted from the company’s February 1, 2003 annual report. (thousands of dollars) 2003 2002 Gross property, plant, and equipment $585,642 $501,323 Accumulated depreciation 192,701 136,211 Net property, plant, and equipment 392,941 365,112 Deferred tax liabilities related to PP&E 25,954 7,417 Statutory tax rate
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mid2_fall03 - Name ID ACCOUNTING 15.501/516 FALL 2003...

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