The Phillip Zee Company financial statements for the first three years of its life which began...
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The Phillip Zee Company financial statements for the first three years of its life which began as of the end of Year O are shown below. The company initially recorded an intangible asset for $10,000, and amortized 50% of this intangible asset in each of the first two years of its operation. Assume the company uses equity financing only and does not pay income taxes. The company has a 10% cost of capital. Reported Financial Statements Income Statement Revenue Operating expenses Amortization. Net income. Balance Sheet Net operating working capital Intangible asset Total assets. Equity... Total equities Year 1 Year 2 Year 0 Year 3 Year 1 $10,000 -6,000 -5,000 -$ 1,000 Year 2 Year 3 $15,000 $17,250 -9,000 -10,350 -5,000 $1,000 Measure the company's excess earnings in Years 1 through 3 using the company's financial statements. $6,900 $2,000 $3,000 $4,500 $5,175 10,000 0 0 $12,000 $12,000 5,000 $8,000 $ 4,500 $5,175 $8,000 $4,500 $5,175 $8,000 $4,500 $5,175 $12,000 The Phillip Zee Company financial statements for the first three years of its life which began as of the end of Year O are shown below. The company initially recorded an intangible asset for $10,000, and amortized 50% of this intangible asset in each of the first two years of its operation. Assume the company uses equity financing only and does not pay income taxes. The company has a 10% cost of capital. Reported Financial Statements Income Statement Revenue Operating expenses Amortization. Net income. Balance Sheet Net operating working capital Intangible asset Total assets. Equity... Total equities Year 1 Year 2 Year 0 Year 3 Year 1 $10,000 -6,000 -5,000 -$ 1,000 Year 2 Year 3 $15,000 $17,250 -9,000 -10,350 -5,000 $1,000 Measure the company's excess earnings in Years 1 through 3 using the company's financial statements. $6,900 $2,000 $3,000 $4,500 $5,175 10,000 0 0 $12,000 $12,000 5,000 $8,000 $ 4,500 $5,175 $8,000 $4,500 $5,175 $8,000 $4,500 $5,175 $12,000
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Related Book For
Intermediate Accounting
ISBN: 978-0077400163
6th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
Posted Date:
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