Open a discussion on how to treat the NWC, charity donation in the project work. The facts
Question:
Open a discussion on how to treat the NWC, charity donation in the project work. The facts of the project indicate that the mine requires a 5% of sale investment on networking capital. The nwc will be build up in the year prior to sales. However, it did not state whether the 5% requirement on sale is per year basis or one time initial investment requirement on nwc.
How will you treat the nwc requirement on the project? Also, let's come to terms on how to treat $6 million charity donation. Note, the same piece of land market value of $5.5 million needs to be accounted for as relevant cost (opportunity cost). There is a tax shield as cash inflow from the cahrity donation.
Accounting for Governmental and Nonprofit Entities
ISBN: ?978-0073379609
15th Edition
Authors: Earl R. Wilson, Jacqueline L Reck, Susan C Kattelus