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www.downloadslide.net CHAPTER 11 OVERVIEW Property, Plant, and Equipment and Intangible Assets: Utilization and Disposition This chapter completes our discussion of accounting for property, plant, and equipment and intangible assets We address the allocation of the cost of these assets to the periods benefited by their use The usefulness of most of these assets is consumed as the assets are applied to the production of goods or services Cost allocation corresponding to this consumption of usefulness is known as depreciation for plant and equipment, depletion for natural resources, and amortization for intangibles We also consider other issues until final disposal such as impairment of these assets and the treatment of expenditures subsequent to acquisition LEARNING OBJECTIVES After studying this chapter, you should be able to: ● LO11–1 Explain the concept of cost allocation as it pertains to property, plant, and equipment and intangible assets (p 575) ● LO11–2 Determine periodic depreciation using both time-based and activity-based methods and account for dispositions (p 578) ● LO11–3 Calculate the periodic depletion of a natural resource (p 591) ● LO11–4 Calculate the periodic amortization of an intangible asset (p 593) ● LO11–5 Explain the appropriate accounting treatment required when a change is made in the service life or residual value of property, plant, and equipment and intangible assets (p 599) ● LO11–6 Explain the appropriate accounting treatment required when a change in depreciation, amortization, or depletion method is made (p 600) ● LO11–7 Explain the appropriate treatment required when an error in accounting for property, plant, and equipment and intangible assets is discovered (p 601) ● LO11–8 Identify situations that involve a significant impairment of the value of property, plant, and equipment and intangible assets and describe the required accounting procedures (p 603) ● LO11–9 Discuss the accounting treatment of repairs and maintenance, additions, improvements, and rearrangements to property, plant, and equipment and intangible assets (p 614) ● LO11–10 Discuss the primary differences between U.S GAAP and IFRS with respect to the utilization and impairment of property, plant, and equipment and intangible assets (pp 584, 589, 593, 596, 605, 607, 611, and 617) 574 www.downloadslide.net FINANCIAL REPORTING CASE What’s in a Name? “I don’t understand this at all,” your friend Penny Lane moaned “Depreciation, depletion, amortization; what’s the difference? Aren’t they all the same thing?” Penny and you are part of a class team working on a case involving Weyerhaeuser Company, a large forest products company Part of the project involves comparing reporting methods over a three-year period “Look at these disclosure notes from last year’s annual report Besides mentioning those three terms, they also talk about asset impairment How is that different?” Penny showed you the disclosure notes Property and Equipment and Timber and Timberlands (in part) Depreciation is calculated using a straight-line method at rates based on estimated service lives Logging roads are generally amortized—as timber is harvested—at rates based on the volume of timber estimated to be removed We carry timber and timberlands at cost less depletion Depletion (in part) To determine depletion rates, we divide the net carrying value by the related volume of timber estimated to be available over the growth cycle Impairment of Long-Lived Assets (in part) © fStop/Getty Images We review long-lived assets—including certain identifiable intangibles—for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable By the time you finish this chapter, you should be able to respond appropriately to the questions posed in this case Compare your response to the solution provided at the end of the chapter QUESTIONS Is Penny correct? Do the terms depreciation, depletion, and amortization all mean the same thing? (p 576) Weyerhaeuser determines depletion based on the “volume of timber estimated to be available.” Explain this approach (p 581) Explain how asset impairment differs from depreciation, depletion, and amortization How companies measure impairment losses for property, plant, and equipment and intangible assets with finite useful lives? (p 602) PART A Depreciation, Depletion, and Amortization Cost Allocation—an Overview Property, plant, and equipment and intangible assets are purchased with the expectation that they will provide future benefits Specifically, they are acquired to be used as part of the revenue-generating operations, usually for several years Logically, then, the cost of these acquisitions initially should be recorded as assets (as we saw in Chapter 10), and then these costs should be allocated to expense over the reporting periods benefited by their use That is, their costs are reported with the revenues they help generate ● LO11–1 575 www.downloadslide.net 576 SECTION 2 Assets Let’s suppose that a company purchases a used truck for $8,200 to deliver products to customers The company estimates that five years from the acquisition date the truck will be sold for $2,200 It is estimated, then, that $6,000 ($8,200 − 2,200) of the truck’s purchase cost will be used up (consumed) during a five-year useful life The situation is portrayed in Illustration 11–1 Illustration 11–1 Cost Allocation Beginning of year Year End of year Year Year $8,200 cost Year Year $2,200 residual $6,000 FINANCIAL Reporting Case Q1, p 575 Depreciation, depletion, and amortization are processes that allocate an asset’s cost to periods of benefit Because the truck will help to produce revenues over the next five years, an asset of $8,200 is recorded at the time of acquisition Over the subsequent five years, $6,000 of the truck’s costs is expected to be consumed and, conceptually, should be allocated to expense in those years in direct proportion to the role the asset played in revenue production However, very seldom is there a clear-cut relationship between the use of the asset and revenue production In other words, we can’t tell precisely the portion of the total benefits of the asset that was consumed in any particular period As a consequence, we must resort to arbitrary allocation methods to approximate the portion of the asset’s cost used each period Contrast this situation with the $24,000 prepayment of one year’s rent on an office building at $2,000 per month In that case, we know precisely that the benefits of the asset (prepaid rent) are consumed at a rate of $2,000 per month That’s why we allocate $2,000 of prepaid rent to rent expense for each month that passes The process of allocating the cost of plant and equipment over the periods they are used to produce revenues is known as depreciation The process of depreciation often is confused with measuring a decline in fair value of an asset For example, let’s say our delivery truck purchased for $8,200 can be sold for $5,000 at the end of one year but we intend to keep it for the full five-year estimated life It has experienced a decline in value of $3,200 ($8,200 − 5,000) However, depreciation is a process of cost allocation, not valuation We would not record depreciation expense of $3,200 for year one of the truck’s life Instead, we would distribute the cost of the asset, less any anticipated residual value, over the estimated useful life in a systematic and rational manner that attempts to associate revenues with the use of the asset, not the decline in its value After all, the truck is purchased to be used in operations, not to be sold For natural resources, we refer to cost allocation as depletion, and for intangible assets, we refer to it as amortization While the terms depreciation, depletion, and amortization differ across types of assets, they conceptually refer to the same idea—the process of allocating an asset’s cost over the periods it is used to produce revenues For assets used in the manufacture of a product, depreciation, depletion, or amortization is considered a product cost to be included as part of the cost of inventory Eventually, when the product is sold, it becomes part of the cost of goods sold For assets not used in production, primarily plant and equipment and certain intangibles used in the selling and administrative functions of the company, depreciation or amortization is reported as a period expense in the income statement You might recognize this distinction between a product cost and a period cost A product cost is reported as an expense (cost of goods sold) when the product is sold; a period cost is reported as an expense in the reporting period in which it is incurred Measuring Cost Allocation The process of cost allocation requires that three factors be established at the time the asset is put into use These factors are Service life—The estimated use that the company expects to receive from the asset www.downloadslide.net CHAPTER 11 Property, Plant, and Equipment and Intangible Assets: Utilization and Disposition 577 Allocation base—The cost of the asset expected to be consumed during its service life Allocation method—The pattern in which the allocation base is expected to be consumed Let’s consider these one at a time Service Life The service life, or useful life, is the amount of use that the company expects to obtain from the asset before disposing of it This use can be expressed in units of time or in units of activity For example, the estimated service life of a delivery truck could be expressed in terms of years or in terms of the number of miles that the company expects the truck to be driven before disposition We use the terms service life and useful life interchangeably throughout the chapter Physical life provides the upper bound for service life of tangible, long-lived assets Physical life will vary according to the purpose for which the asset is acquired and the environment in which it is operated For example, a diesel powered electric generator may last for many years if it is used only as an emergency backup or for only a few years if it is used regularly The service life of a tangible asset may be less than physical life for a variety of reasons For example, the expected rate of technological change may shorten service life If suppliers are expected to develop new technologies that are more efficient, the company may keep an asset for a period of time much shorter than physical life Likewise, if the company sells its product in a market that frequently demands new products, the machinery and equipment used to produce products may be useful only for as long as its output can be sold Similarly, a mineral deposit might be projected to contain million tons of a mineral, but it may be economically feasible with existing extraction methods to mine only million tons For intangible assets, legal or contractual life often is a limiting factor For instance, a patent might be capable of providing enhanced profitability for 50 years, but the legal life of a patent is only 20 years Management intent also may shorten the period of an asset’s usefulness below its physical, legal, or contractual life For example, a company may have a policy of using its delivery trucks for a three-year period and then trading the trucks for new models Companies quite often disclose the range of service lives for different categories of assets For example, Illustration 11–2 shows how IBM Corporation disclosed its service lives in a note accompanying recent financial statements Summary of Significant Accounting Policies (in part) Depreciation and Amortization The estimated useful lives of certain depreciable assets are as follows: buildings, 30 to 50 years; building equipment, 10 to 20 years; land improvements, 20 years; plant, laboratory, and office equipment, to 20 years; and computer equipment, 1.5 to years The service life, or useful life, can be expressed in units of time or in units of activity Expected obsolescence can shorten service life below physical life Illustration 11–2 Service Life Disclosure— International Business Machines Corporation Real World Financials Allocation Base The amount of cost to be allocated over an asset’s service life is called its allocation base The amount is the difference between the asset’s capitalized cost at the date placed in service and the asset’s residual value Residual value (sometimes called salvage value) is the amount the company expects to receive for the asset at the end of its service life less any anticipated disposal costs For plant and equipment, we commonly refer to the allocation base as the depreciable base In our delivery truck example above, the depreciable base is $6,000 ($8,200 cost less $2,200 anticipated residual value) We will allocate a portion of the $6,000 to each year of the truck’s service life For the depletion of natural resources, we refer to the allocation base as the depletion base For amortization of intangible asset, we refer to the allocation base as the amortization base Allocation base is the difference between the cost of the asset and its anticipated residual value www.downloadslide.net 578 SECTION 2 Assets In certain situations, residual value can be estimated by referring to a company’s prior experience or to publicly available information concerning resale values of various types of assets For example, if a company intends to trade its delivery truck in three years for the new model, approximations of the three-year residual value for that type of truck can be obtained from used truck values However, estimating residual value for many assets can be very difficult due to the uncertainty about the future For this reason, along with the fact that residual values often are immaterial, many companies simply assume a residual value of zero Companies usually not disclose estimated residual values Allocation Method The allocation method used should be systematic and rational and correspond to the pattern of asset use In determining how much cost to allocate to periods of an asset’s use, a method should be selected that corresponds to the pattern of benefits received from the asset’s use Generally accepted accounting principles state that the chosen method should allocate the asset’s cost “as equitably as possible to the periods during which services are obtained from [its] use.” GAAP further specifies that the method should produce a cost allocation in a “systematic and rational manner.”1 The objective is to try to allocate cost to the period in an amount that is proportional to the amount of benefits generated by the asset during the period relative to the total benefits provided by the asset during its life In practice, there are two general approaches that attempt to obtain this systematic and rational allocation The first approach allocates the cost base according to the passage of time Methods following this approach are referred to as time-based methods The second approach allocates an asset’s cost base using a measure of the asset’s input or output This is an activity-based method We compare these approaches first in the context of depreciation Later we see that depletion of natural resources typically follows an activity-based approach, and the amortization of intangibles typically follows a time-based approach Depreciation ● LO11–2 To demonstrate and compare the most common depreciation methods, we refer to the situation described in Illustration 11–3 Illustration 11–3 The Hogan Manufacturing Company purchased a machine for $250,000 The company expects the service life of the machine to be five years During that time, it is expected that the machine will produce 140,000 units The estimated residual value is $40,000 The machine was disposed of after five years of use Actual production during the five years of the asset’s life was: Depreciation Methods Year Units Produced Total 20,000 32,000 44,000 28,000 26,000 150,000 Time-Based Depreciation Methods The straight-line method depreciates an equal amount of the depreciable base to each year of the asset’s service life STRAIGHT-LINE METHOD By far the most easily understood and widely used depreciation method is straight line In this approach, an equal amount of the depreciable base (or allocation base) is allocated to each year of the asset’s service life The depreciable base is simply divided by the number of years in the asset’s life to determine annual depreciation FASB ASC 360–10–35–4: Property, Plant, and Equipment–Overall–Subsequent Measurement (previously “Restatement and Revision of Accounting Research Bulletins,” Accounting Research Bulletin No 43 (New York: AICPA, 1953), Ch 9) www.downloadslide.net CHAPTER 11 Property, Plant, and Equipment and Intangible Assets: Utilization and Disposition 579 Using the information given in Illustration 11–3, straight-line depreciation expense in each year is $42,000, calculated as follows: $250,000 − 40,000 _ = $42,000 per year 5 years The calculation of depreciation over the entire five-year life is demonstrated in detail in I llustration 11–3A Notice the last three columns Depreciation expense is the portion of the asset’s cost that is allocated to an expense in the current year Accumulated depreciation (a contra-asset account) represents the cumulative amount of the asset’s cost that has been depreciated in all prior years including the current year This amount represents the reduction in the asset’s cost reported in the balance sheet The asset is reported in the balance sheet at its book value, which is the asset’s cost minus accumulated depreciation Book value is sometimes called carrying value or carrying amount The residual value ($40,000 in this example) does not affect the calculation of book value, but the residual value does set a limit on which book value cannot go below Illustration 11–3A Straight-Line Depreciation Using the information given in Illustration 11–3: Year Totals Depreciable Base ($250,000 − 40,000) $210,000 210,000 210,000 210,000 210,000 × Depreciation Rate per Year = ⁄5* ⁄5 ⁄5 ⁄5 ⁄5 1 Depreciation Expense Accumulated Depreciation Book Value End of Year ($250,000 less Accum Depreciation) $ 42,000 42,000 42,000 42,000 42,000 $210,000 $ 42,000 84,000 126,000 168,000 210,000 $208,000 166,000 124,000 82,000 40,000 *The rate equals one divided by the asset’s five-year estimated service life (1⁄5 = 20%) The entry to record depreciation at the end of each year using the straight-line method would be: Depreciation expense������������������������������������������������������������������������������������������ Accumulated depreciation����������������������������������������������������������������������������� 42,000* 42,000 *$42,000 = ($250,000 − 40,000) ÷ years ACCELERATED METHODS Using the straight-line method implicitly assumes that the benefits derived from the use of the asset are the same each year In some situations it might be more appropriate to assume that the asset will provide greater benefits in the early years of its life than in the later years In these cases, a more appropriate matching of depreciation with revenues is achieved with a declining pattern of depreciation, with higher depreciation in the early years of the asset’s life and lower depreciation in later years An accelerated depreciation method also would be appropriate when benefits derived from the asset are approximately equal over the asset’s life, but repair and maintenance costs increase significantly in later years The early years incur higher depreciation and lower repairs and maintenance expense, while the later years have lower depreciation and higher repairs and maintenance Two ways to achieve such a declining pattern of d epreciation are the sum-of-the-years’-digits method and declining balance methods Accelerated depreciation methods report higher depreciation in earlier years Sum-of-the-years’-digits method. The sum-of-the-years’-digits (SYD) method has no The SYD method multiplies depreciable base by a declining fraction logical foundation other than the fact that it accomplishes the objective of accelerating depreciation in a systematic manner This is achieved by multiplying the depreciable base by a fraction that declines each year and results in depreciation that decreases by the same www.downloadslide.net 580 SECTION 2 Assets amount each year The denominator of the fraction remains constant and is the sum of the digits from one to n, where n is the number of years in the asset’s service life For example, if there are five years in the service life, the denominator is the sum of 1, 2, 3, 4, and 5, which equals 15.2 The numerator decreases each year; it begins with the value of n in the first year and decreases by one each year until it equals one in the final year of the asset’s estimated service life The annual fractions for an asset with a five-year life are: 5⁄15, 4⁄15, 3⁄15, ⁄15, and 1⁄15 We calculate depreciation for the five years of the machine’s life using the sumof-the-years’-digits method in Illustration 11–3B Illustration 11–3B Sum-of-the-Years’-Digits Depreciation Using the information given in Illustration 11–3: Year Totals Depreciable Base ($250,000 − 40,000) $210,000 210,000 210,000 210,000 210,000 × Depreciation Rate per Year ⁄15* ⁄15 ⁄15 ⁄15 ⁄15 15 ⁄15 = Depreciation Expense Accumulated Depreciation Book Value End of Year ($250,000 less Accum Depreciation) $ 70,000 56,000 42,000 28,000 14,000 $210,000 $ 70,000 126,000 168,000 196,000 210,000 $180,000 124,000 82,000 54,000 40,000 * n(n + 1) 5(5 + 1) 2 = 2 = 15 Notice that total depreciation ($210,000) is the same for an accelerated method like SYD as it is for the straight-line method, as shown in Illustration 11–3A The difference is the pattern in which this total cost is allocated to each year of the asset’s service life Declining balance depreciation methods multiply beginning-ofyear book value, not depreciable base, by an annual rate that is a multiple of the straight-line rate Declining balance methods. As an alternative, an accelerated depreciation pattern can be achieved by a declining balance method Rather than multiplying a constant balance by a declining fraction as we in SYD depreciation, we multiply a constant fraction by a declining balance each year Specifically, we multiply a constant percentage rate times the decreasing book value (cost less accumulated depreciation) of the asset (not depreciable base) at the beginning of the year Because the rate remains constant while the book value declines, annual depreciation declines each year A common declining balance method is known as the double-declining-balance (DDB) method Under this method, we multiply the straight-line rate by 200% (or double the straight-line rate) For example, in our illustration, the double-declining-balance rate would be 40% (double the straight-line rate of 20%) Various other multiples are used in practice, such as 125% or 150% of the straight-line rate Depreciation using the double-declining-balance method is calculated in Illustration 11–3C for the five years of the machine’s life Notice that book value at the beginning of the year, rather than the depreciable base, is used as the starting point Further, notice that in year we did not multiply $54,000 by 40% If we had, annual depreciation would have been $21,600 This amount would have resulted in accumulated depreciation by the end of year of $217,600 and book value of $32,400, which is below the asset’s expected residual value of $40,000 Therefore, we instead use a plug amount that reduces book value to the expected residual value (book value beginning of year, $54,000, minus expected residual value, $40,000 = $14,000) This also means there is no depreciation in year since book value has already been reduced to the expected residual value Declining balance methods often allocate the asset’s depreciable base over fewer years than the expected service life A formula useful when calculating the denominator is n (n + 1)/2 www.downloadslide.net CHAPTER 11 Property, Plant, and Equipment and Intangible Assets: Utilization and Disposition Illustration 11–3C Using the information given in Illustration 11–3: Book Value End of Year Book Value ($250,000 Beginning of Depreciation Depreciation Accumulated less Accum Year Year × Rate per Year = Expense Depreciation Depreciation) Total $250,000 150,000 90,000 54,000 40,000 40%* 40% 40% 581 $100,000 60,000 36,000 14,000† — $210,000 $100,000 160,000 196,000 210,000 Double-Declining-Balance Depreciation $150,000 90,000 54,000 40,000 40,000 *Double the straight-line rate of 20% The straight-line rate is one divided by the asset’s five-year estimated service life (1⁄ 5 = 20%) †Amount necessary to reduce book value to residual value SWITCH FROM ACCELERATED TO STRAIGHT LINE. The result of applying the double-declining-balance method in our illustration produces an awkward result in the later years of the asset’s life By using the double-declining-balance method in our illustration, no depreciation is recorded in year even though the asset is still producing benefits As a planned approach to depreciation, many companies have a formal policy to use accelerated depreciation for approximately the first half of an asset’s service life and then switch to the straight-line method for the remaining life of the asset In our illustration, the company would switch to straight line in either year or year Assuming the switch is made at the beginning of year 4, and the book value at the beginning of that year is $54,000, an additional $14,000 ($54,000 − 40,000 in residual value) of depreciation must be recorded over the remaining life of the asset Applying the straight-line concept, $7,000 ($14,000 divided by two remaining years) in depreciation is recorded in both year and year It should be noted that this switch to straight line is not a change in depreciation method The switch is part of the company’s planned depreciation approach However, as you will learn later in the chapter, the accounting treatment is the same as a change in depreciation method Activity-Based Depreciation Methods The most logical way to allocate an asset’s cost to periods of an asset’s use is to measure the usefulness of the asset in terms of its productivity For example, we could measure the service life of a machine in terms of its output (for example, the estimated number of units it will produce) or in terms of its input (for example, the number of hours it will operate) We have already mentioned that one way to measure the service life of a vehicle is to estimate the number of miles it will operate The most common activity-based method is called the units-of-production method The measure of output used is the estimated number of units (pounds, items, barrels, etc.) to be produced by the machine By the units-of-production method, we first compute the average depreciation rate per unit by dividing the depreciable base by the number of units expected to be produced This per unit rate is then multiplied by the actual number of units produced each period In our illustration, the depreciation rate per unit is $1.50, computed as follows: $250,000 − 40,000 _ = $1.50 per unit 140,000 units Each unit produced will require $1.50 of depreciation to be recorded In other words, each unit produced is assigned $1.50 of the asset’s cost It is not uncommon for a company to switch from accelerated to straight line approximately halfway through an asset’s useful life as part of the company’s planned depreciation approach Activity-based depreciation methods estimate service life in terms of some measure of productivity FINANCIAL Reporting Case Q2, p 575 The units-of-production method computes a depreciation rate per measure of activity and then multiplies this rate by actual activity to determine periodic depreciation www.downloadslide.net 582 SECTION 2 Assets Illustration 11–3D shows that depreciation each year is the actual units produced multiplied by the depreciation rate per unit This means that the amount of depreciation each year varies proportionately with the number of units being produced, with one exception Notice that the asset produced 26,000 units in year 5, causing total production over the life of the asset (150,000 units) to exceed its estimated production (140,000 units) In this case, we cannot record depreciation for the final 10,000 units produced Depreciation in year five is limited to the amount that brings the book value of the asset down to its residual value (book value beginning of year, $64,000, minus expected residual value, $40,000 = $24,000) Illustration 11–3D Units-of-Production Depreciation Using the information given in Illustration 11–3: Year Units Produced Totals 20,000 32,000 44,000 28,000 26,000 150,000 × Depreciation Rate per Unit = Depreciation Expense Accumulated Depreciation Book Value End of Year ($250,000 less Accum Depreciation) $ 30,000 48,000 66,000 42,000 24,000† $210,000 $ 30,000 78,000 144,000 186,000 210,000 $220,000 172,000 106,000 64,000 40,000 $1.50* 1.50 1.50 1.50 *($250,000 − 40,000) / 140,000 units = $1.50 per unit †Amount necessary to reduce book value to residual value The machine may produce fewer than 140,000 units by the end of its useful life For example, suppose production in year had been only 6,000 units, bringing total production to 130,000 units, and management has no future plans to use the machine We would record depreciation in Year for $9,000 (6,000 units × $1.50) If management then develops a formal plan to sell the machine, the machine is classified as “held for sale” (discussed in more detail below) and reported at the lower of its current book value or its fair value less any cost to sell If management plans to retire the asset without selling it, a loss is recorded for the remaining book value Decision Makers’ Perspective—Selecting A Depreciation Method All methods provide the same total depreciation over an asset’s life Illustration 11–3E compares periodic depreciation calculated using each of the alternatives we discussed and illustrated Illustration 11–3E Comparison of Various Depreciation Methods Year Straight Line Sum-of-theYears’-Digits Double-Declining Balance Units of Production Total $ 42,000 42,000 42,000 42,000 42,000 $210,000 $ 70,000 56,000 42,000 28,000 14,000 $210,000 $100,000 60,000 36,000 14,000 $210,000 $ 30,000 48,000 66,000 42,000 24,000 $210,000 Conceptually, using an activity-based depreciation method provides a better matching of the asset’s cost to the use of that asset to help produce revenues Clearly, the productivity of www.downloadslide.net CHAPTER 11 Property, Plant, and Equipment and Intangible Assets: Utilization and Disposition a plant asset is more closely associated with the benefits provided by that asset than the mere passage of time Also, these methods allow for patterns of depreciation to correspond with the patterns of asset use However, activity-based methods quite often are either infeasible or too costly to use For example, buildings don’t have an identifiable measure of productivity Even for machinery, there may be an identifiable measure of productivity such as machine hours or units produced, but it frequently is more costly to determine each period than it is to simply measure the passage of time For these reasons, most companies use time-based depreciation methods Illustration 11–4 shows the results of a recent survey of depreciation methods used by large public companies.3 Depreciation Method Straight line Declining balance Sum-of-the-years’-digits Accelerated method—not specified Units of production Group/composite Number of Companies 490 9 12 17 Why so many companies use the straight-line method as opposed to other time-based methods? Many companies perhaps consider the benefits derived from the majority of plant assets to be realized approximately evenly over these assets’ useful lives Certainly a contributing factor is that straight-line is the easiest method to understand and apply Another motivation is the positive effect on reported income Straight-line depreciation produces a higher net income than accelerated methods in the early years of an asset’s life In Chapter we pointed out that reported net income can affect bonuses paid to management or debt agreements with lenders Conflicting with the desire to report higher profits is the desire to reduce taxes by reducing taxable income An accelerated method serves this objective by reducing taxable income more in the early years of an asset’s life than straight line You probably recall a similar discussion from Chapter in which the benefits of using the LIFO inventory method during periods of increasing costs were described However, remember that the LIFO conformity rule requires companies using LIFO for income tax reporting to also use LIFO for financial reporting No such conformity rule exists for depreciation methods Income tax regulations allow firms to use different approaches to computing depreciation in their tax returns and in their financial statements The method used for tax purposes is therefore not a constraint in the choice of depreciation methods for financial reporting As a result, most companies use the straight-line method for financial reporting and the Internal Revenue Service’s prescribed accelerated method (discussed in Appendix 11A) for income tax purposes For example, Illustration 11–5 shows Merck & Co.’s depreciation policy as reported in a disclosure note accompanying recent financial statements Summary of Accounting Policies (in part): Depreciation Depreciation is provided over the estimated useful lives of the assets, principally using the straight-line method For tax purposes, accelerated methods are used It is not unusual for a company to use different depreciation methods for different classes of assets For example, Illustration 11–6 illustrates the International Paper Company depreciation policy disclosure contained in a note accompanying recent financial statements U.S GAAP Financial Statements–Best Practices in Presentation and Disclosure– 2013 (New York: AICPA, 2013) 583 Activity-based methods are conceptually superior to time-based methods but often are impractical to apply in practice Illustration 11–4 Use of Various Depreciation Methods Real World Financials A company does not have to use the same depreciation method for both financial reporting and income tax purposes Illustration 11–5 Depreciation Method Disclosure—Merck & Co Real World Financials www.downloadslide.net I-40 Subject Index Statement of cash flows (SCF), 5, 8, 185–191, 1204–1246 available-for-sale (AFS) securities presentation, 658 basic structure illustrated, 1244–1245 cash inflows and outflows, 185–191, 1206–1207 classification of cash flows, 74, 185–191, 1207, 1210–1215 financing activities, 74, 190–191, 1213–1214 investing activities, 74, 189–191, 1212–1213, 1216 noncash investing and financing, 1214–1215, 1216 operating activities, 74, 186–189, 1210–1211 predominance principle, 1214 reconciliation with change in cash balance, 1214, 1235 content and value of, 1205–1217 decision makers’ perspective, 1205–1206, 1245–1246 direct method of preparing See Direct method example of basic structure, 1208 financial reporting case, 1205, 1210, 1212, 1246–1247 financing activities See Financing activities global perspective, 1235 held-to-maturity (HTM) securities, 649, 650 indirect method of preparing See Indirect method investing activities See Investing activities lease accounting impact, 867–868 operating activities See Operating activities preparation of, 74, 1215–1245 direct method See Direct method indirect method See Indirect method T-account method, 1251–1253 using spreadsheet See Spreadsheet preparation of statement of cash flows presentation of investments equity method investments, 677 purpose of, 162, 164, 185 relationship to income statement, 1210 restricted cash, 354 role of, 1207–1215 cash and cash equivalents, 1209–1210 importance of cash flows in economic decline, 1208–1209 primary elements, 1210–1215 trading security presentation, 653, 654 usefulness of, 186 Statement of comprehensive income available-for-sale (AFS) securities presentation, 658 gain or loss on pension assets, 991 held-to-maturity (HTM) securities, 649, 650 OCI reported in, 1038–1039 preparation of, 72 purpose of, 72 trading security presentation, 653, 654 Statement of earnings See Income statement Statement of financial position, 5, 110 under IFRS, 118 in U.S See Balance sheet(s) Statement of operations See Income statement Statement of other comprehensive income, Statement of shareholders’ equity, 5, 1039–1041 error correction, 179–180 global perspective, 1040 preparation of, 75 purpose of, 1039 revising due to change in accounting principle, 1164 State unemployment taxes, 745 Statutory depletion, 593 Stock(s) authorized shares, 1043 bonds with detachable stock purchase warrants, 796–797 common See Common shares compensation based on See Share-based compensation contingently issuable shares, 1122 convertible bonds, 793–796 EPS See Earnings per share (EPS) issuance of See New share issuance preferred See Preferred stock retained earnings See Retained earnings retired shares See Retired stock sale of, as financing activity, 1213–1214 share buybacks (repurchases) See Share buybacks (repurchases) stock appreciation rights (SARs) payable in, 1132, 1133 treasury stock See Treasury stock Stock appreciation rights (SARs), 1131–1134 as debt or equity, 1132 payable in cash, 1132–1134 payable in shares (equity), 1132, 1133 Stock award plans, 1092–1093 Stock dividends, 1058–1060 basic EPS and, 1108–1109 dividends issuable, 1059 large, 1061–1062 reasons for, 1060 reporting in statement of cash flows, 1233 stock market reaction to, 1059–1060 stock splits as, 1060–1064 Stockholders’ equity See Shareholders’ equity Stockholders’ investment See Shareholders’ equity Stock market, reaction to stock dividends, 1059–1060 Stock option(s) antidilutive securities, 1116–1117 customer options compared with, 247n diluted EPS and, 1111–1112 intrinsic values, 1094 as portion of executive pay, 125 potential common shares, 1106, 1123 Stock option plans, 1094–1104 exercise of options, 1098, 1111 expensing, 1094–1095 attempt to require, 1094–1095 current requirement, 1095 voluntary, 1095 expiration of unexercised options, 1098 with graded vesting, 1100–1101 with performance or market conditions, 1102–1104 decline in popularity of, 1103–1104 market conditions, 1103 performance conditions, 1102–1103 recognizing fair value of options, 1095–1098 Stock rights antidilutive securities, 1116–1117 diluted EPS and, 1111–1112 potential common shares, 1123 Stock splits, 1060–1064 basic EPS and, 1108–1109 large stock dividends as, 1061–1062 reverse stock split, 1062 Stock warrants antidilutive securities, 1116–1117 bonds with detachable stock purchase warrants, 796–797 diluted EPS and, 1111–1112 issue price allocation, 797 more than one security issued for a single price, 1047–1048 potential common shares, 1123 www.downloadslide.net Straight-line amortization, 845 Straight-line method bonds payable, 781–782 decision makers’ perspective, 583 frequency of use, 583 overview of, 578–579 stock option plans with graded vesting, 1101, 1102 switch from accelerated method, 581 Strategic shift, discontinued operations and, 173–174 Subordinated debentures, 773 Subscription revenues, 64–65 Subsequent events disclosure notes, 121–122 financial disclosures, 737 loss contingencies, 736–737 Subsidiaries, 672 Subsidiary accounts, 51 Subsidiary ledgers, 86, 88 Substitution method, 616 Subway, 257 Successful efforts method, 552 Sufficiency ratios, 1246 Summary of significant accounting policies, 121 Summary transactions, 56 Sum-of-the-years’-digits (SYD) depreciation method, 579–580 Sunbeam Corporation, 257, 291, 384 Supplemental schedules and tables, 31 Supplies, 85—86 prepayments, 63–64 recording purchase, 55 Surface, Carol A., 126 Swaps See Interest rate swaps Sycamore Networks, 491 Symantec Corporation, 383 Symbolic intellectual property, 256 T T-account(s) debits and credits, 50, 51 illustrated, 1252–1253 T-account method of preparing statement of cash flows, 1218, 1251–1253 visualizing adjusting entries, 86 visualizing inventory accounts, 417 Tainted classification, 648n Take-Two Interactive Software, 251 Tandem plans, 1132n Tangible assets See also specific types of tangible assets Target Corporation, 3–4, 5, 6, 122, 160, 259, 475, 865, 1036, 1053 case, 44, 106, 161, 231, 292, 347, 412, 463, 514, 572, 640, 711–712, 767, 828, 895–896, 963, 1032, 1089, 1156–1157, 1202, 1281–1282, B–0–B–5 Tarpley, Robin L., 18n Taxable income, 166 Tax basis, 908, 910–911 Tax benefits advantages of leasing, 834–835 LIFO inventory accounting, 432 measuring, 936 Taxes correcting error and, 1178 as liabilities from advance collection, 726–727 as nonlease components of lease payment, 861, 863 Tax laws changes in laws or rates, 926–928 Subject Index effect on retrospective reporting of changes, 1165 tax code, 1099–1100 tax rate considerations, 926–928 Tax reporting See also Income tax(es) change to LIFO method, 488 objectives of, 908 Technological feasibility criterion, 547, 550 Temporary accounts, 51 income statement, 74 reducing to zero balances, 75 in worksheet, 84 Temporary differences deferred tax liabilities, 908–915 defined, 907, 908 income tax effects, 908–918 deferred tax assets, 915–918 deferred tax liabilities, 908–915 multiple temporary differences, 928–929 permanent differences compared, 923–924 multiple, 928–929 types, 911–915 Temporary investments See Short-term investments Thiagarajan, S R., 439, 439n Third-party advance collections, 726–727 Thrift pension plans, 970 ThyssenKrupp AG, 311 Timberline Resources, 127 Time-based allocation method, 578 Time-based depreciation methods, 578–581 accelerated methods, 579–581 declining balance, 580 sum-of-the-years’-digits, 579–580 switch to straight-line, 581 decision makers’ perspective, 583 straight-line method See Straight-line method Time line(s) cause of loss contingency, 737 for cost allocation, 576 for R&D, 545, 548 Timeliness of information, 23–24, 201 Time periods, 28, 72 balance sheet reporting, 110 pension plan reporting, 981 revenue recognition period of time, 239–240 single point in time, 238–239 Times interest earned ratio, 131, 789–791 Time value of money, 312–337, 1130–1131 accounting applications of, 320–321, 333–336 basic annuities, 323–329 financial calculators and Excel, 329–330 future value of annuity, 324–325 present value of annuity, 325–329, 330–331 present value techniques, 333–336 solving for unknown values, 330–332 deferred payments, 530 defined, 313 expected cash flow approach, 322–323 financial reporting case, 313, 326, 331, 334, 337 in loss contingencies, 739 in option-pricing theory, 1130–1131 present value techniques, 320–321 simple vs compound interest, 314 single cash flow amount, 315–323 solving for unknown values, 318, 330–332 I-41 www.downloadslide.net I-42 Subject Index Time value of money—Cont summary of concepts, 336 transaction price and, 253–254 Time-weighting of expenditures, 540–544 of reacquired shares, 1109 of shares outstanding, 1107–1108 Timing bank reconciliation and, 386 expense recognition, 28 revenue recognition, 27, 171 Timing strategies, 743 Toll Brothers, 241 Toys “R” Us, Inc., 1244–1245 Trade discounts, 357 Trademarks (tradenames) acquisition costs, 519 balance sheet classifications, 115 costs to be capitalized, 526 defined, 519, 526 legal life of, 595 Trade notes payable, 718 Trade receivables See Accounts receivable Trading securities (TS), 645 accounting for portfolios, 651–652 adjusting to fair value, 650–651 cash outflows from, 1228 compared with held-to-maturity and available-for-sale securities, 650, 659–660 compared with HTM and available-for-sale (AFS) securities, 659–660 decision makers’ perspective, 681–683 defined, 647, 649 fair value adjustments, 650–651, 652 fair value through net income, 668 financial statement presentation, 653, 654 purchase of investment, 649–650 reporting approach, 647 sale of investment, 652–653 transfers between reporting categories, 661 unrealized holding gains and losses for, 650–651 Tranche(s), 1101 Transaction(s), 6, 48–49 Transaction analysis, 49, 51–52, 53 Transaction price allocation to performance obligations, 236, 237, 238, 242, 244, 254, 260 adjusted market assessment approach, 254 expected cost plus margin approach, 254 residual approach, 254 variable consideration, 256 defined, 242, 248 determination, 236, 237, 238, 242, 244, 248–254, 260 payments by seller to customer, 254 right of return, 251–252 seller as principal or agent, 252–253 time value of money, 253–254 variable consideration, 248–251 Transferee, 374 Transfer of notes receivable, 377–381 global perspective, 381 partial transfers, 380 Transferor, 374, 378–379 Transitory earnings, 169, 195 Transportation-in, 421–422 Treadway Commission, 352–353, 352n Treasury bill futures, A–2–A–3 Treasury bills, 1209, 1228 as cash equivalent, 112 Treasury stock, 1038 accounting for, 1053 acquired at different costs, 1054 defined, 1051 dividends not paid on, 1061 resale of shares, 1053–1054 retired stock compared, 1051, 1054 Treasury stock method components of proceeds in, 1120–1121 dilutive effect of stock options, 1111–1112 earnings per share (EPS) and, 1106 options, rights, and warrants as antidilutive securities, 1116–1117 restricted stock awards, 1121 Trial balance adjusted, 68, 69, 83, 84 post-closing, 76–77 unadjusted, 60, 63, 65, 67, 84 Troubled debt restructuring, 391–392, 805–808 debt continues, modified, 391, 806–808 amortization schedule, 808 cash payments exceed book value, 806–808 cash payments less than book value, 806–807 debt settled outright, 391–392, 805–806 Trustee, 980 TS See Trading securities (TS) Turnover ratios, 742 2/10, n/30 terms, 357 Two statement approach, 72 Two-step decision process, 935 Tyco International, 1095 Tyson Foods Inc., 411, 1044 U Unadjusted trial balance in determining adjusting entries, 60, 63, 65, 67 preparation of, 60 worksheet and, 84 Uncertainty See Risk (uncertainty) Uncollectible accounts See also Bad debt(s) balance sheet approach to estimating, 364–365 CECL (Current Expected Credit Loss) model, 366–367 combined approaches to, 365–366 direct write-off of, 362 income statement approach to estimating, 365 loss contingencies, 732 Uncollectible accounts receivable, 362–367 Under Armour, 109–110 Underfunded pension plans, 980 Understandability, 24 Underwriters, 783 Unearned (deferred) revenues See also Prepayments/deferrals advances from customers, 724–726 balance sheet classifications, 116 defined, 116 from extended warranty contracts, 734–735 rent revenue, 56–57 Unilever, 1046 Union Pacific Corporation, 738 Unit LIFO, 440n www.downloadslide.net Units-of-production depreciation method, 581–582 Unqualified opinion, 126–127 Unrealized gain (loss), 184 Unrealized holding gains (losses) available-for-sale (AFS) securities not included in, 655 debt investments, 646–647 fair value vs equity method, 679 held-to-maturity (HTM) securities, 648 pension plans, 991 for trading securities, 650–651 Unusual or infrequent items, 202 Unvested restricted stock award shares, 1121 UPS, 240 U.S Congress, 553 U.S Department of Defense, 137 U.S Department of Energy, 553 Useful life of asset See Service (useful) life U.S Patent Office, 526 U.S Securities and Exchange Commission (SEC) See Securities and Exchange Commission (SEC) U.S Steel Corporation, 732 V Vacations, 722–723 Valuation allowance balance sheet classifications income taxes, 934 deferred tax assets and liabilities, 918–920, 934 net operating loss carryforward, 931–932 Variable consideration, 248–251 allocation to performance obligations, 256 constraint on recognizing, 249–251 defined, 248 estimating, 248–249 licenses and, 256 revenue recognition and, 248–251, 256 sales returns as, 358–359 Vendor-specific objective evidence (VSOE) of fair values, 300–301 Verifiability, 23 VeriFone Systems, 944 Verizon Communications Inc., 237, 600 Vertical analysis, 128 Vested benefit obligation (VBO), 973, 974 Vesting cliff vesting, 1100–1101 graded vesting, 1100–1101 requirements for, 974 vesting date, 1092 Vickrey, D., 1061n Virco Mfg Corporation, 374 VISA, 375 Vodafone Group, Plc., 154–155, 310–311, 739 Volatility value, 1131 Volkswagen, 544 Voluntary conversion, 796 Voluntary deductions, 745 Voting rights of shareholders, 1044, 1051 VSOE (vendor-specific objective evidence) of fair values, 300–301 W Wakabayashi, Daisuke, 1050n Walgreen Boots Alliance, Inc., 352, 354, 447 Subject Index I-43 Wal-Mart Stores, Inc., 26, 157–158, 164–165, 197–199, 475, 544, 895, 924, 934, 960–961, 1036, 1039, 1042, 1151 Walt Disney Company, 517, 539, 551 WAM (Amadeus), 678 Warranties in identifying performance obligations, 247 Warrants See Stock warrants Warranty expense, 915–917, 1169 See also Product warranties and guarantees Watered shares, 1046 Waters, Gary, A–21 Watts, R L., 1161n, 1162n Weighted-average accumulated expenditures, 540–544 Weighted-average interest method, 541–544 Weighted-average number of shares outstanding, 1107–1108 Weighted-average unit cost of inventory, 426 Wells Fargo & Company, 372 Weyerhaeuser Company, 575 Whole Foods Market, Inc., 461–462 Wicks ‘N’ Sticks, 1207 Wilson, Arlette C., A–21 Winn-Dixie, 1095 With recourse, 376–377 Without recourse, 376 Wolverine World Wide, Inc., 461 Working capital current ratio and, 129 defined, 129 Work-in-process inventory, 114, 416–417 Worksheets, 83–84 WorldCom, Inc., 16, 520, 1095 Wright Medical Group, 1072 Write-downs of assets inventory, 465 as big bath accounting, 491 damaged or defective merchandise, 359 lower of cost and net realizable value (LCNRV), 466–469 lower of cost or market (LCM), 471–472 reversals of, 469 used to manipulate earnings, 439 property, plant, and equipment, 603, 613 Write-offs of uncollectible accounts, 362 W T Grant, 1207 Wysocki, P., 12n X Xerox Corporation, 16, 1045 Y Yahoo, 610 Z Zeff, Stephen A., 15n Zega, Cheryl A., 1207n Zero balances of temporary accounts, 75 Zero-coupon bonds, 777–778 Zimmerman, J L., 1161n, 1162n Zmijewski, M., 1162n Zoo Doo Compost Company, 760 Zuckerberg, Mark, 1094 www.downloadslide.net Accounting Standards Index Notes: Page numbers followed by n indicate material in footnotes Specific standards and pronouncements are found in this index; general information about standards and standard-setting organizations is found in the Subject Index Unless otherwise noted, standards will be found under the name of the issuing organization Accounting Principles Board (APB) Interpretations, Opinions, No 12: “Omnibus Opinion,” 1039n No 14: “Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants,” 794n No 18: “The Equity Method of Accounting for Investments in Common Stock,” 1167n No 20: “Accounting Changes and Error Corrections,” 1159n, 1162n, 1174n No 21: “Interest on Receivables and Payables,” 320n, 717n No 22: “Disclosure of Accounting Policies,” 121n No 25: “Accounting for Stock Issued to Employees,” 1094n No 28: “Interim Financial Reporting,” 203n No 29: “Accounting for Nonmonetary Transactions,” 537n, 1047n Statements, Accounting Standards Codification System (ASC) of FASB, 11 No 105-10: Generally Accepted Accounting Principles—Overall, 11n No 205: Presentation of Financial Statements—Discontinued Operations 20-15-2: A discontinued operation is also defined as business or nonprofit activity that is considered held for sale when acquired, 173n 20-20: Glossary, 174n 20-45-10: 22 Assets and liabilities held for sale are not offset and presented as a single net amount, but instead are listed separately, 177n 20-50: Disclosure, 177n No 210-10-S99-2: SAB Topic 6.H—Balance Sheet—Overall— SEC Materials, 354n No 220: Comprehensive Income 10-45-1: Overall—Other Presentation Matters, 72n, 181n 10-55-2: Overall—Implementation Guidance and Illustrations, A–9n 10-55 (para 24-27): Overall—Implementation Guidance and Illustrations—Case B, 656n 45: Other Presentation Matters, 5n No 230: Statement of Cash Flows—Overall 10-45: Other Presentation Matters, 185n 10-50-6: Disclosure—Noncash Investing and Financing Activities, 1215n No 235-10-50: Notes to Financial Statements—Overall— Disclosure, 121n No 250: Accounting Changes and Error Corrections, 1159n, 1174n 10-45: Overall—Other Presentation Matters, 178n, 179n, 1162n, 1172n 10-S99-1: Overall—SEC Materials, SAB Topic 1.M, Assessing Materiality, 123n No 260: Earnings per Share, 1106n No 270-10-50: Interim Reporting—Overall—Disclosure, 203n No 280: Segment Reporting, 24n 10-50-1: Overall—Disclosure, 135n 10-50-20 through 26: Overall—Disclosure—Disclosure Requirements, 136n I-44 10-50-32 through 26: Overall Disclosure, 136n 10-50-41: Overall–Disclosure, 137n No 310: Receivables 10-35: Overall—Subsequent Measurement, 389n, 392, 392n, 732n 40-15: Troubled Debt Restructurings by Creditors—Scope and Scope Exceptions, 391n No 320: Investments—Debt and Equity Securities 10-25: Overall—Recognition, 648n 10-35: Overall—Subsequent Measurement, 687n 10-40: Overall—Derecognition, 653n, 657n 10-45: Overall—Other Presentation Matters, 666n No 321 Investments–Equity Securities 10-35: Overall—General, 668n, 672 10-40: Overall—Derecognition, 669n, 670n No 323: Investments—Equity Method and Joint Ventures—Overall 10-15-10: Scope and Scope Exceptions, 673n 10-35-33: Increase in Level of Ownership or Degree of Influence, 678n 10-35-36: Subsequent Measurement—Decrease in Level of Ownership or Degree of Influence, 1167n No 330: Inventory—Overall 10-30: Initial Measurement, 421n 10-35-1A through 1C: Subsequent Measurement, 466n 10-35-8: Subsequent Measurement, 467n 10-S35-1: Subsequent Measurement, 468n No 350: Intangibles—Goodwill and Other 20-35: Goodwill—Subsequent Measurement, 526n, 607n, 608n, 675n 30-35: General Intangibles Other Than Goodwill—Subsequent Measurement—Determining the Useful Life of an Intangible Asset, 526n, 595n 40-25: Internal-Use Software—Recognition, 548n No 360: Property, Plant, and Equipment 10-35-4: Overall—Subsequent Measurement—Depreciation, 578n, 587n 10-35-15 through 21: Overall—Subsequent Measurement— Impairment or Disposal of Long-Lived Assets, 603n, 604n 10-45-5: Overall—Other Presentation Matters—Presentation of Disposal Gains or Losses in Continuing Operations, 166n 10-45-9: Overall—Other Presentation Matters—Long-Lived Assets Classified as Held for Sale, 176n 20: Real Estate Sales, 296n No 410: Asset Retirement and Environmental Obligations 20-25: Asset Retirement Obligations—Recognition, 523n 30-35-12: Environmental Obligations—Subsequent Measurement, 739n No 420-10-20: Exit or Disposal Cost Obligations—Overall— Glossary, 170n No 450: Contingencies 20-30: Loss Contingencies—Initial Measurement, 731n 20-50: Loss Contingencies—Disclosure, 737n 30-50: Gain Contingencies—Disclosure, 740n No 460-10-25: Guarantees—Overall—Recognition, 740n www.downloadslide.net Accounting Standards Index No 470: Debt 10-45: Overall—Other Presentation Matters, 728n 20-25: Debt with Conversion and Other Options—Recognition, 794n 20-40: Debt with Conversion and Other Options— Derecognition, 796n No 480-10-25-4: Distinguishing Liabilities from Equity— Overall—Recognition, 1045n No 505: Equity 10-50: Overall—Disclosure, 1039n 20: Stock Dividends and Stock Splits, 1059n 25-2: Recognition, 1060n 30-3: Initial Measurement, 1060n 30-30-8: “a corporation can always capitalize or allocate retained earnings for such purposes,” 1053 No 605: Revenue Recognition 10-S99: Overall—SEC Materials, 235n, 258n 25-25: Multiple-Element Arrangements—Recognition, 300n 45-50: Principal Agent Considerations, 422n No 606: Revenue from Contracts with Customers, 848 10-05-4: Overall—Overview and Background—General, 236n 10-25: Overall–Identifying Performance Obligations, 249n 10-32-15: Overall—Measurement—The Existence of a Significant Financing Component, 356n 10-32-16: Overall—Measurement—The Existence of a Significant Financing Component in the Contract, 726n 10-55-59-62: Overall–Implementation Guidance and Illustrations—Determining the Nature of the Entity’s Promise, 255n No 710-10-25: Compensation—General—Overall— Recognition, 722n No 715: Compensation—Retirement Benefits 20-50: General—Disclosure, 993n 30-25: Defined Benefit Plans—Pension—Recognition, 981n, 985n 30-35: Defined Benefit Plans—Pension—Subsequent Measurement, 994, 994n, 1008n 715-60-50: Compensation–Retirement Benefits—Defined Benefit Plans—Other Postretirement—Disclosure, 1004n 60: Defined Benefit Plans—Postretirement, 997n, 1000n Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, 989n No 718: Compensation—Stock Compensation, 1095n, 1099n, 1103n 10-35-3: Overall—Subsequent Measurement, 1097n 10-55-30 to 32: Overall—Implementation and Guidance Illustrations—Selecting or Estimating the Expected Term, 1096n 50-25-1 and 2: Employee Share Purchase Plans— Recognition, 1104n No 720-15-25-1: Other Expenses—Start-Up Costs—Recognition, 548n, 551n No 730-10: Research and Development—Overall 20: Glossary, 545n 25-1: Recognition, 544n 55: Implementation Guidance, 546n No 740: Income Taxes, 730 10: Overall, 935n 25: Recognition, 731n, 912, 918n 30: Initial Measurement, 918n 35: Subsequent Measurement, 926n No 805: Business Combinations, 528n, 550n 20-25: Identifiable Assets and Liabilities, and Any Noncontrolling Interest—Recognition, 738n No 810: Consolidation, 1171n No 815: Derivatives and Hedging—Overall, A–5n, A–11n I-45 20-25-104: Hedging—General—Recognition—Shortcut Method, A–12n No 820: Fair Value Measurements and Disclosures, 29n No 825-10: Financial Instruments—Overall 1: Fair Value Option, 31n 25: Recognition, 373n, 798n 50-1: Disclosure, A–11n 50-10: Disclosure—Fair Value of Financial Instruments, 372n, 788n 50-28: Disclosure—Fair Value Option, 680n No 830: Foreign Currency Matters, A–10n No 835: Interest 15-3: Scope and Scope Exceptions, 717n 20-25: Capitalization of Interest—Recognition, 539n 30: Imputation of Interest, 320n No 840: Leases, 1171n No 842: Leases, 833, 833n, 835n No 845: Nonmonetary Transactions—Overall, 535n 10-25-6: Recognition, 537n 10-30: Initial Measurement, 1047n No 850-10-50: Related Party Disclosures—Overall— Disclosure, 122n No 855: Subsequent Events, 121n, 736n No 860: Transfers and Servicing, 376n, 381, 381n 10-40: Overall—Derecognition, 379n, 380n 10-55: Overall—Implementation Guidance and Illustration, 379n No 915: Development Stage Entities, 548n No 922: Entertainment—Cable Television, 302n No 928: Entertainment—Music, 302n No 932: Extractive Activities–Oil and Gas, 553n No 944: Financial Services—Insurance, 302n No 958-605-15-2 and 4: Not-for-Profit Entities—Revenue Recognition—Scope and Scope Exceptions—Contributions Received, 532n No 985: Software 20-25-1 and 2: Costs of Software to be Sold, Leased, or Marketed—Recognition, 548n, 549 605-25: Revenue Recognition—Recognition, 300n American Institute of Certified Public Accountants (AICPA) Accounting Research Bulletins, No 43: “Restatement and Revision of Accounting Research Bulletins,” 421n, 578n, 1059n, 1060n Professional Standards AU 240 “Consideration of Fraud in a Financial Statement Audit,” 123n Professional Standards AU 250 “Consideration of Laws and Regulations in an Audit of Financial Statements,” 123n Professional Standards AU 570 “The Auditor’s Consideration of an Entity’s Ability to Continue as a Going Concern,” 127n Statements of Position No 00-2: “Accounting by Producers or Distributors of Films,” 302n No 97-2: “Software Revenue Recognition,” 300n No 98-5: “Reporting on the Costs of Start-Up Activities,” 551n Committee on Accounting Procedure (CAP) Accounting Research Bulletins, Financial Accounting Standards Board (FASB) Accounting Standards Updates, 10–11, 15, 609 No 2011-02: “A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring,” 391n No 2011-03: “Transfers and Servicing (Topic 860): Reconsideration of Effective Control for Repurchase Agreements,” 379n No 2011-05: “Comprehensive Income (Topic 220): Presentation of Comprehensive Income,” 72n www.downloadslide.net I-46 Accounting Standards Index No 2014-02: “Intangibles—Goodwill and Other,” 610, 610n No 2014-03: “Derivatives and Hedging,” A–15n No 2014-09: “Revenue from Contracts with Customers,” 27, 236n, 245n, 246, 262, 294–304, 356n No 2014-12: “Compensation—Stock Compensation,” 1103n No 2015-01: “Income Statement—Extraordinary and Unusual Items,” 169n, 937n No 2015-03: “Interest–Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs,” 783n No 2015-11: “Inventory-Simplifying the Measurement of Inventory,” 466n No 2015-17: “Balance Sheet Classification of Deferred Taxes,” 934n No 2016-1: “Recognition and Measurement of Financial Assets and Financial Liabilities,” 668n, 669n, 672, 672n No 2016-02: Leases, 835n, 841n, 897–905 No 2016-07: “Simplifying the Transition to the Equity Method of Accounting,” 678n No 2016-09: “Improvements to Employee Share-Based Payment Accounting,” 1099n No 2016-10: “Identifying Performance Obligations and Licensing,” 249n, 255n No 2016-13: “Financial Instruments—Credit Losses,” 366n, 389n, 662n, 689n Emerging Issues Task Force (EITF) Abstracts No 00-10: “Accounting for Shipping Fees and Handling Costs,” 422n No 01-02: “Interpretations of APB Opinion No 29,” 537n No 08-1: “Revenue Arrangements with Multiple Deliverables,” 300n No 09-3: “Applicability of AICPA Statement of Position 97-2 to Certain Arrangements That Include Software Elements,” 300n Emerging Issues Task Force (EITF) Issue Consensuses, 11 Interpretations, 11 No 14: “Reasonable Estimation of the Amount of the Loss,” 731n No 35: “Criteria for Applying the Equity Method of Accounting for Investments in Common Stock,” 673n No 45: “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others,” 740n No 48: “Accounting for Uncertainty in Income Taxes,” 731n, 935n Staff Positions, 11 No 141R-1: “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies,” 738n Nos 115-1 and 124-1: “The Meaning of Other-ThanTemporary Impairment and Its Application to Certain Investments,” 687n Nos 115-2 and 124-2: “Recognition and Presentation of OtherThan-Temporary Impairments,” 687n Statements of Financial Accounting Concepts (SFAC) of FASB No 1: “Objectives of Financial Reporting by Business Enterprises,” 1207n, 1210n No 2: “Qualitative Characteristics of Accounting Information,” 1207n, 1210n No 5: “Recognition and Measurement in Financial Statements of Business Enterprises,” 20, 26–27, 27n, 28, 28n, 29, 295n No 6: “Elements of Financial Statements,” 19, 20, 24, 24n, 28n, 235n, 246, 716n, 724n, 739n No 7: “Using Cash Flow Information and Present Value in Accounting Measurements,” 19, 20, 29, 29n, 322–323, 323n, 523, 523n, 733–734, 733n No 8: “Conceptual Framework for Financial Reporting— Chapter 1, The Objective of General Purpose Financial Reporting and Chapter 3, Qualitative Characteristics of Useful Financial Information,” 19–20, 19n, 20, 23, 27n, 1207n, 1210n No 84: “Induced Conversions of Convertible Debt,” 796n No 107: “Disclosures About Fair Values of Financial Instruments,” 788n No 141: “Goodwill and Other Intangible Assets,” 675n Proposed Statement of Financial Accounting Concepts: Chapter 8: Notes to Financial Statements, 32, 32n Statements of Financial Accounting Standards (SFAS) of FASB, 11, 11n No 2: “Accounting for Research and Development Costs,” 544n, 545n No 5: “Accounting for Contingencies,” 731n, 732n, 737n, 740n No 6: “Classification of Obligations Expected to Be Refinanced,” 728n No 16: “Prior Period Adjustments,” 179n, 1172n No 19: “Financial Accounting and Reporting by Oil and Gas Producing Companies,” 553n No 34: “Capitalization of Interest Costs,” 539n No 43: “Accounting for Compensated Absences,” 722n No 50: “Financial Reporting in the Record and Music Industry,” 302n No 51: “Financial Reporting by Cable Television Companies,” 302n No 52: “Foreign Currency Matters,” A–10n No 60: “Accounting and Reporting by Insurance Enterprises,” 302n No 66: “Accounting for Sales of Real Estate,” 296n No 78: “Classification of Obligations That Are Callable by the Creditor,” 728n No 86: “Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed,” 548n No 87: “Employers’ Accounting for Pensions,” 981n, 985n, 1008n No 88: “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits,” 981n, 994, 994n No 94: “Consolidation of All Majority-Owned Subsidiaries,” 1171n No 95: “Statement of Cash Flows,” 185n, 1215n No 105: “Disclosure of Information about Financial Instruments with Off-Balance-Sheet Risk and Financial Instruments with Concentrations of Credit Risk,” 683n No 106: “Employers’ Accounting for Postretirement Benefits Other Than Pensions,” 981n, 997n, 1000n No 107: “Disclosures About Fair Value of Financial Instruments,” 372n, A–11n No 109: “Accounting for Income Taxes,” 912, 918n, 926n, 935n No 114: “Accounting by Creditors for Impairment of a Loan— An Amendment of FASB Statements No and 15,” 389n No 115: “Accounting for Certain Investments in Debt and Equity Securities,” 648n, 666n No 116: “Accounting for Contributions Received and Contributions Made,” 532n No 123: “Share-Based Payment,” 1095n, 1096n, 1097n, 1104n No 128: “Earnings per Share,” 1106n No 129: “Disclosure of Information about Capital Structure,” 1039n No 130: “Reporting Comprehensive Income,” 181n, A–9n No 131: “Disclosures about Segments of an Enterprise and Related Information,” 135n, 136n, 137n No 132: “Employers’ Disclosures about Pensions and Other Postretirement Benefits,” 981n, 993n, 1004n www.downloadslide.net No 133: “Accounting for Derivative Instruments and Hedging Activities,” A–5n, A–11n, A–12n No 141: “Business Combinations,” 528n, 550n No 142: “Goodwill and Other Intangible Assets,” 526n, 595n, 607n No 143: “Accounting for Asset Retirement Obligations,” 523n No 144: “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” 166n, 176n, 603n, 604n No 146: “Accounting for Costs Associated with Exit or Disposal Activities,” 170n No 150: “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity,” 1045n No 151: “Inventory Costs—An Amendment of ARB No 43, 421n No 153: “Exchanges of Nonmonetary Assets—An Amendment of APB Opinion No 29,” 535n No 154: “Accounting Changes and Error Corrections—A Replacement of APB Opinion No 20 and FASB Statement No 3,” 178n, 1159n, 1162n, 1174n No 157: “Fair Value Measurements,” 29n No 159: “The Fair Value Option for Financial Assets and Financial Liabilities,” 31n, 680n, 798n No 161: “Disclosures about Derivative Instruments and Hedging Activities—An Amendment of FASB Statement No 133,” A–11n No 165: “Subsequent Events,” 121n, 736n No 166: “Accounting for Transfers of Financial Assets— An Amendment of FASB Statement No 140,” 376n, 379n, 380n, 381n No 168: “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles—A Replacement of FASB Statement No 162,” 11n Technical Bulletins, 11 International Accounting Standards Board (IASB) International Accounting Standards (IAS), 12 No 1: “Financial Statement Presentation,” 118, 118n, 729n No 2: “Inventories,” 431, 431n, 469, 469n, 476n No 7: “Statement of Cash Flows,” 191n, 355, 355n, 1235 No 8: “Accounting Policies, Changes in Accounting Estimates and Errors,” 1174n, 1181, 1181n No 9: “Financial Instruments,” 373, 373n, 660, 660n, 661, 662, 663, 671, 671n, 690–691 No 11: “Construction Contracts,” 303, 303n No 12: “Income Tax,” 924, 924n Accounting Standards Index I-47 No 16: “Property, Plant, and Equipment,” 182n, 584, 584n, 589, 589n, 590, 590n No 17: “Leases,” 846, 846n No 18: “Revenue,” 304, 304n No 19: “Employee Benefits,” 987–988, 988n, 989, 989n, 995–997 No 20: “Government Grants,” 533, 533n No 28: “Investments in Associates,” 680, 680n No 32: “Financial Statements: Presentation,” 795n, 1046, 1046n No 34: “Interim Financial Reporting,” 202, 202n No 36: “Impairment of Assets,” 605, 605n, 611, 612 No 37: “Provisions, Contingent Liabilities and Contingent Assets,” 739, 739n No 38: “Intangible Assets,” 182n, 547, 547n, 596, 596n, 617n No 39: “Financial Instruments: Recognition and Measurement,” 15, 373, 373n, 381, 381n, 392, 392n, 660, 660n, 661, 662, 671, 671n No 41: “Agriculture,” 593n International Financial Reporting Standards (IFRS), 12–13, 15 Accounting Trends and Techniques, 591n No 5: “Noncurrent Assets Held for Sale and Discontinued Operations,” 174n No 8: “Operating Segments,” 136, 136n No 9: “Financial Instruments,” A–15 No 13: “Fair Value Measurement,” 30n Public Company Accounting Oversight Board (PCAOB) Auditing Standards No 2: “An Audit of Internal Control Over Financial Reporting Performed in Conjunction with an Audit of Financial Statements,” 17 No 5: “An Audit of Internal Control Over Financial Reporting That Is Integrated with An Audit of Financial Statements,” 17, 126n, 352, 352n Securities and Exchange Commission (SEC) Accounting Series Release No 148: “Amendments to Regulations S-X and Related Interpretations and Guidelines Regarding the Disclosure of Compensating Balances and Short-Term Borrowing Arrangements,” 354n Financial Reporting Releases, 9n Staff Accounting Bulletins, 9n No 99: “Materiality,” 123n No 100: “Restructuring and Impairment Charges,” 468n No 101: “Revenue Recognition in Financial Statements,” 235n, 245n No 104: “Revenue Recognition,” 235n, 245n, 258n www.downloadslide.net 26.62333 31.94800 38.33760 46.00512 95.39622 19 1.20811 1.32695 1.45681 1.59865 1.75351 1.92250 2.10685 2.30786 2.52695 2.76565 3.02560 3.61653 4.31570 5.14166 6.11591 7.26334 8.61276 20 1.22019 1.34686 1.48595 1.63862 1.80611 1.98979 2.19112 2.41171 2.65330 2.91776 3.20714 3.86968 4.66096 5.60441 6.72750 8.06231 9.64629 21 1.23239 1.36706 1.51567 1.67958 1.86029 2.05943 2.27877 2.52024 2.78596 3.07823 3.39956 4.14056 5.03383 6.10881 7.40025 8.94917 10.80385 25 1.28243 1.45095 1.64061 1.85394 2.09378 2.36324 2.66584 3.00543 3.38635 3.81339 4.29187 5.42743 6.84848 8.62308 10.83471 13.58546 17.00006 40 1.48886 1.81402 2.20804 2.68506 3.26204 3.95926 4.80102 5.81636 7.03999 8.51331 10.28572 14.97446 21.72452 31.40942 45.25926 65.00087 93.05097 1469.77160 30 1.34785 1.56308 1.81136 2.09757 2.42726 2.80679 3.24340 3.74532 4.32194 4.98395 5.74349 7.61226 10.06266 13.26768 17.44940 22.89230 29.95992 237.37631 22.18611 18 1.19615 1.30734 1.42825 1.55966 1.70243 1.85749 2.02582 2.20848 2.40662 2.62147 2.85434 3.37993 3.99602 4.71712 5.55992 6.54355 7.68997 7.43008 11 1.11567 1.17795 1.24337 1.31209 1.38423 1.45997 1.53945 1.62285 1.71034 1.80209 1.89830 2.10485 2.33164 2.58043 2.85312 3.15176 3.47855 18.48843 6.19174 10 1.10462 1.16054 1.21899 1.28008 1.34392 1.41060 1.48024 1.55297 1.62889 1.70814 1.79085 1.96715 2.15892 2.36736 2.59374 2.83942 3.10585 17 1.18430 1.28802 1.40024 1.52162 1.65285 1.79468 1.94790 2.11338 2.29202 2.48480 2.69277 3.15882 3.70002 4.32763 5.05447 5.89509 6.86604 5.15978 9 1.09369 1.14339 1.19509 1.24886 1.30477 1.36290 1.42331 1.48610 1.55133 1.61909 1.68948 1.83846 1.99900 2.17189 2.35795 2.55804 2.77308 16 1.17258 1.26899 1.37279 1.48451 1.60471 1.73399 1.87298 2.02237 2.18287 2.35526 2.54035 2.95216 3.42594 3.97031 4.59497 5.31089 6.13039 4.29982 8 1.08286 1.12649 1.17166 1.21840 1.26677 1.31681 1.36857 1.42210 1.47746 1.53469 1.59385 1.71819 1.85093 1.99256 2.14359 2.30454 2.47596 15.40702 3.58318 7 1.07214 1.10984 1.14869 1.18869 1.22987 1.27228 1.31593 1.36086 1.40710 1.45468 1.50363 1.60578 1.71382 1.82804 1.94872 2.07616 2.21068 12.83918 2.98598 6 1.06152 1.09344 1.12616 1.15969 1.19405 1.22926 1.26532 1.30226 1.34010 1.37884 1.41852 1.50073 1.58687 1.67710 1.77156 1.87041 1.97382 15 1.16097 1.25023 1.34587 1.44830 1.55797 1.67535 1.80094 1.93528 2.07893 2.23248 2.39656 2.75903 3.17217 3.64248 4.17725 4.78459 5.47357 2.48832 5 1.05101 1.07728 1.10408 1.13141 1.15927 1.18769 1.21665 1.24618 1.27628 1.30696 1.33823 1.40255 1.46933 1.53862 1.61051 1.68506 1.76234 14 1.14947 1.23176 1.31948 1.41297 1.51259 1.61869 1.73168 1.85194 1.97993 2.11609 2.26090 2.57853 2.93719 3.34173 3.79750 4.31044 4.88711 2.07360 4 1.04060 1.06136 1.08243 1.10381 1.12551 1.14752 1.16986 1.19252 1.21551 1.23882 1.26248 1.31080 1.36049 1.41158 1.46410 1.51807 1.57352 8.91610 1.72800 3 1.03030 1.04568 1.06121 1.07689 1.09273 1.10872 1.12486 1.14117 1.15763 1.17424 1.19102 1.22504 1.25971 1.29503 1.33100 1.36763 1.40493 10.69932 1.44000 2 1.02010 1.03022 1.04040 1.05063 1.06090 1.07123 1.08160 1.09203 1.10250 1.11303 1.12360 1.14490 1.16640 1.18810 1.21000 1.23210 1.25440 13 1.13809 1.21355 1.29361 1.37851 1.46853 1.56396 1.66507 1.77220 1.88565 2.00577 2.13293 2.40985 2.71962 3.06580 3.45227 3.88328 4.36349 1.20000 1 1.01000 1.01500 1.02000 1.02500 1.03000 1.03500 1.04000 1.04500 1.05000 1.05500 1.06000 1.07000 1.08000 1.09000 1.10000 1.11000 1.12000 12 1.12683 1.19562 1.26824 1.34489 1.42576 1.51107 1.60103 1.69588 1.79586 1.90121 2.01220 2.25219 2.51817 2.81266 3.13843 3.49845 3.89598 20.0% n/i 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% FV = $1 (1 + i )n TABLE 1 Future Value of $1 www.downloadslide.net Present and Future Value Tables This table shows the future value of $1 at various interest rates (i) and time periods (n) It is used to calculate the future value of any single amount P-1 P-2 0.57870 0.48225 0.40188 0.33490 0.27908 0.23257 0.19381 0.16151 0.13459 0.11216 0.09346 0.07789 0.06491 0.05409 0.04507 0.03756 0.03130 0.02608 0.02174 0.01258 0.01048 0.00607 0.00506 0.00421 0.00351 0.00068 3 0.97059 0.95632 0.94232 0.92860 0.91514 0.90194 0.88900 0.87630 0.86384 0.85161 0.83962 0.81630 0.79383 0.77218 0.75131 0.73119 0.71178 4 0.96098 0.94218 0.92385 0.90595 0.88849 0.87144 0.85480 0.83856 0.82270 0.80722 0.79209 0.76290 0.73503 0.70843 0.68301 0.65873 0.63552 5 0.95147 0.92826 0.90573 0.88385 0.86261 0.84197 0.82193 0.80245 0.78353 0.76513 0.74726 0.71299 0.68058 0.64993 0.62092 0.59345 0.56743 6 0.94205 0.91454 0.88797 0.86230 0.83748 0.81350 0.79031 0.76790 0.74622 0.72525 0.70496 0.66634 0.63017 0.59627 0.56447 0.53464 0.50663 7 0.93272 0.90103 0.87056 0.84127 0.81309 0.78599 0.75992 0.73483 0.71068 0.68744 0.66506 0.62275 0.58349 0.54703 0.51316 0.48166 0.45235 8 0.92348 0.88771 0.85349 0.82075 0.78941 0.75941 0.73069 0.70319 0.67684 0.65160 0.62741 0.58201 0.54027 0.50187 0.46651 0.43393 0.40388 9 0.91434 0.87459 0.83676 0.80073 0.76642 0.73373 0.70259 0.67290 0.64461 0.61763 0.59190 0.54393 0.50025 0.46043 0.42410 0.39092 0.36061 10 0.90529 0.86167 0.82035 0.78120 0.74409 0.70892 0.67556 0.64393 0.61391 0.58543 0.55839 0.50835 0.46319 0.42241 0.38554 0.35218 0.32197 11 0.89632 0.84893 0.80426 0.76214 0.72242 0.68495 0.64958 0.61620 0.58468 0.55491 0.52679 0.47509 0.42888 0.38753 0.35049 0.31728 0.28748 12 0.88745 0.83639 0.78849 0.74356 0.70138 0.66178 0.62460 0.58966 0.55684 0.52598 0.49697 0.44401 0.39711 0.35553 0.31863 0.28584 0.25668 13 0.87866 0.82403 0.77303 0.72542 0.68095 0.63940 0.60057 0.56427 0.53032 0.49856 0.46884 0.41496 0.36770 0.32618 0.28966 0.25751 0.22917 14 0.86996 0.81185 0.75788 0.70773 0.66112 0.61778 0.57748 0.53997 0.50507 0.47257 0.44230 0.38782 0.34046 0.29925 0.26333 0.23199 0.20462 15 0.86135 0.79985 0.74301 0.69047 0.64186 0.59689 0.55526 0.51672 0.48102 0.44793 0.41727 0.36245 0.31524 0.27454 0.23939 0.20900 0.18270 16 0.85282 0.78803 0.72845 0.67362 0.62317 0.57671 0.53391 0.49447 0.45811 0.42458 0.39365 0.33873 0.29189 0.25187 0.21763 0.18829 0.16312 17 0.84438 0.77639 0.71416 0.65720 0.60502 0.55720 0.51337 0.47318 0.43630 0.40245 0.37136 0.31657 0.27027 0.23107 0.19784 0.16963 0.14564 18 0.83602 0.76491 0.70016 0.64117 0.58739 0.53836 0.49363 0.45280 0.41552 0.38147 0.35034 0.29586 0.25025 0.21199 0.17986 0.15282 0.13004 19 0.82774 0.75361 0.68643 0.62553 0.57029 0.52016 0.47464 0.43330 0.39573 0.36158 0.33051 0.27651 0.23171 0.19449 0.16351 0.13768 0.11611 20 0.81954 0.74247 0.67297 0.61027 0.55368 0.50257 0.45639 0.41464 0.37689 0.34273 0.31180 0.25842 0.21455 0.17843 0.14864 0.12403 0.10367 0.09256 24 0.78757 0.69954 0.62172 0.55288 0.49193 0.43796 0.39012 0.34770 0.31007 0.27666 0.24698 0.19715 0.15770 0.12640 0.10153 0.08170 0.06588 25 0.77977 0.68921 0.60953 0.53939 0.47761 0.42315 0.37512 0.33273 0.29530 0.26223 0.23300 0.18425 0.14602 0.11597 0.09230 0.07361 0.05882 28 0.75684 0.65910 0.57437 0.50088 0.43708 0.38165 0.33348 0.29157 0.25509 0.22332 0.19563 0.15040 0.11591 0.08955 0.06934 0.05382 0.04187 29 0.74934 0.64936 0.56311 0.48866 0.42435 0.36875 0.32065 0.27902 0.24295 0.21168 0.18456 0.14056 0.10733 0.08215 0.06304 0.04849 0.03738 0.09938 0.07537 0.05731 0.04368 0.03338 21 0.81143 0.73150 0.65978 0.59539 0.53755 0.48557 0.43883 0.39679 0.35894 0.32486 0.29416 0.24151 30 0.74192 0.63976 0.55207 0.47674 0.41199 0.35628 0.30832 0.26700 0.23138 0.20064 0.17411 31 0.73458 0.63031 0.54125 0.46511 0.39999 0.34423 0.29646 0.25550 0.22036 0.19018 0.16425 0.12277 0.09202 0.06915 0.05210 0.03935 0.02980 40 0.67165 0.55126 0.45289 0.37243 0.30656 0.25257 0.20829 0.17193 0.14205 0.11746 0.09722 0.06678 0.04603 0.03184 0.02209 0.01538 0.01075 0.13137 0.69444 2 0.98030 0.97066 0.96117 0.95181 0.94260 0.93351 0.92456 0.91573 0.90703 0.89845 0.89000 0.87344 0.85734 0.84168 0.82645 0.81162 0.79719 0.11174 0.83333 1 0.99010 0.98522 0.98039 0.97561 0.97087 0.96618 0.96154 0.95694 0.95238 0.94787 0.94340 0.93458 0.92593 0.91743 0.90909 0.90090 0.89286 0.19866 0.16370 0.13513 20.0% n/i 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% PV = _ (1 + i)n $1 TABLE 2 Present Value of $1 www.downloadslide.net This table shows the present value of $1 at various interest rates (i) and time periods (n) It is used to calculate the present value of any single amount 6.1520 6.2296 6.3081 6.3877 6.4684 6.5502 6.6330 6.7169 6.8019 6.8881 6.9753 7.1533 7.3359 7.5233 7.7156 7.9129 8.1152 9.9299 15.7836 16.6455 17.5603 18.5312 19.5614 20.6546 32.1504 87.4421 37.7861 39.9927 44.8652 50.4229 56.7645 64.0025 72.2651 81.6987 225.0256 40 48.8864 54.2679 60.4020 67.4026 75.4013 84.5503 95.0255 107.0303 120.7998 136.6056 154.7620 199.6351 259.0565 337.8824 442.5926 581.8261 767.0914 7343.8578 30 34.7849 37.5387 40.5681 43.9027 47.5754 51.6227 56.0849 61.0071 66.4388 72.4355 79.0582 94.4608 113.2832 136.3075 164.4940 199.0209 241.3327 1181.8816 21 23.2392 24.4705 25.7833 27.1833 28.6765 30.2695 31.9692 33.7831 35.7193 20 22.0190 23.1237 24.2974 25.5447 26.8704 28.2797 29.7781 31.3714 33.0660 34.8683 36.7856 40.9955 45.7620 51.1601 57.2750 64.2028 72.0524 186.6880 19 20.8109 21.7967 22.8406 23.9460 25.1169 26.3572 27.6712 29.0636 30.5390 32.1027 33.7600 37.3790 41.4463 46.0185 51.1591 56.9395 63.4397 154.7400 18 19.6147 20.4894 21.4123 22.3863 23.4144 24.4997 25.6454 26.8551 28.1324 29.4812 30.9057 33.9990 37.4502 41.3013 45.5992 50.3959 55.7497 128.1167 17 18.4304 19.2014 20.0121 20.8647 21.7616 22.7050 23.6975 24.7417 25.8404 26.9964 28.2129 30.8402 33.7502 36.9737 40.5447 44.5008 48.8837 105.9306 16 17.2579 17.9324 18.6393 19.3802 20.1569 20.9710 21.8245 22.7193 23.6575 24.6411 25.6725 27.8881 30.3243 33.0034 35.9497 39.1899 42.7533 15 16.0969 16.6821 17.2934 17.9319 18.5989 19.2957 20.0236 20.7841 21.5786 22.4087 23.2760 25.1290 27.1521 29.3609 31.7725 34.4054 37.2797 72.0351 14 14.9474 15.4504 15.9739 16.5190 17.0863 17.6770 18.2919 18.9321 19.5986 20.2926 21.0151 22.5505 24.2149 26.0192 27.9750 30.0949 32.3926 59.1959 13 13.8093 14.2368 14.6803 15.1404 15.6178 16.1130 16.6268 17.1599 17.7130 18.2868 18.8821 20.1406 21.4953 22.9534 24.5227 26.2116 28.0291 48.4966 12 12.6825 13.0412 13.4121 13.7956 14.1920 14.6020 15.0258 15.4640 15.9171 16.3856 16.8699 17.8885 18.9771 20.1407 21.3843 22.7132 24.1331 39.5805 11 11.5668 11.8633 12.1687 12.4835 12.8078 13.1420 13.4864 13.8412 14.2068 14.5835 14.9716 10 10.4622 10.7027 10.9497 11.2034 11.4639 11.7314 12.0061 12.2882 12.5779 12.8754 13.1808 13.8164 14.4866 15.1929 15.9374 16.7220 17.5487 25.9587 9.3685 9.5593 9.7546 9.9545 10.1591 10.3685 10.5828 10.8021 11.0266 11.2563 11.4913 11.9780 12.4876 13.0210 13.5795 14.1640 14.7757 20.7989 8.2857 8.4328 8.5830 8.7361 8.8923 9.0517 9.2142 9.3800 9.5491 9.7216 9.8975 10.2598 10.6366 11.0285 11.4359 11.8594 12.2997 16.4991 7 7.2135 7.3230 7.4343 7.5474 7.6625 7.7794 7.8983 8.0192 8.1420 8.2669 8.3938 8.6540 8.9228 9.2004 9.4872 9.7833 10.0890 12.9159 6 5 5.1010 5.1523 5.2040 5.2563 5.3091 5.3625 5.4163 5.4707 5.5256 5.5811 5.6371 5.7507 5.8666 5.9847 6.1051 6.2278 6.3528 7.4416 4 4.0604 4.0909 4.1216 4.1525 4.1836 4.2149 4.2465 4.2782 4.3101 4.3423 4.3746 4.4399 4.5061 4.5731 4.6410 4.7097 4.7793 5.3680 3 3.0301 3.0452 3.0604 3.0756 3.0909 3.1062 3.1216 3.1370 3.1525 3.1680 3.1836 3.2149 3.2464 3.2781 3.3100 3.3421 3.3744 3.6400 2 2.0100 2.0150 2.0200 2.0250 2.0300 2.0350 2.0400 2.0450 2.0500 2.0550 2.0600 2.0700 2.0800 2.0900 2.1000 2.1100 2.1200 2.2000 1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 n/i 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 20.0% FVA = _ i (1 + i)n - TABLE 3 Future Value of an Ordinary Annuity of $1 www.downloadslide.net This table shows the future value of an ordinary annuity of $1 at various interest rates (i) and time periods (n) It is used to calculate the future value of any series of equal payments made at the end of each compounding period P-3 P-4 1.5% 2.0% i 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 20.0% 5.50813 5.41719 5.32855 5.24214 5.15787 5.07569 4.99553 4.91732 4.76654 4.62288 4.48592 4.35526 4.23054 4.11141 3.32551 9.78685 9.51421 9.25262 9.00155 8.76048 8.52892 8.30641 8.09254 7.88687 7.49867 7.13896 6.80519 6.49506 6.20652 5.93770 4.32706 9.44665 8.85137 8.31256 7.82371 7.37916 6.97399 4.72956 40 32.83469 29.91585 27.35548 25.10278 23.11477 21.35507 19.79277 18.40158 17.15909 16.04612 15.04630 13.33171 11.92461 10.75736 9.77905 8.95105 8.24378 4.99660 30 25.80771 24.01584 22.39646 20.93029 19.60044 18.39205 17.29203 16.28889 15.37245 14.53375 13.76483 12.40904 11.25778 10.27365 9.42691 8.69379 8.05518 4.97894 25 22.02316 20.71961 19.52346 18.42438 17.41315 16.48151 15.62208 14.82821 14.09394 13.41393 12.78336 11.65358 10.67478 9.82258 9.07704 8.42174 7.84314 4.94759 21 18.85698 17.90014 17.01121 16.18455 15.41502 14.69797 14.02916 13.40472 12.82115 12.27524 11.76408 10.83553 10.01680 9.29224 8.64869 8.07507 7.56200 4.89132 20 18.04555 17.16864 16.35143 15.58916 14.87747 14.21240 13.59033 13.00794 12.46221 11.95038 11.46992 10.59401 9.81815 9.12855 8.51356 7.96333 7.46944 4.86958 19 17.22601 16.42617 15.67846 14.97889 14.32380 13.70984 13.13394 12.59329 12.08532 11.60765 11.15812 10.33560 9.60360 8.95011 8.36492 7.83929 7.36578 4.84350 18 16.39827 15.67256 14.99203 14.35336 13.75351 13.18968 12.65930 12.15999 11.68959 11.24607 10.82760 10.05909 9.37189 8.75563 8.20141 7.70162 7.24967 4.81219 17 15.56225 14.90765 14.29187 13.71220 13.16612 12.65132 12.16567 11.70719 11.27407 10.86461 10.47726 9.76322 9.12164 8.54363 8.02155 7.54879 7.11963 4.77463 16 14.71787 14.13126 13.57771 13.05500 12.56110 12.09412 11.65230 11.23402 10.83777 10.46216 10.10590 15 13.86505 13.34323 12.84926 12.38138 11.93794 11.51741 11.11839 10.73955 10.37966 10.03758 9.71225 9.10791 8.55948 8.06069 7.60608 7.19087 6.81086 4.67547 14 13.00370 12.54338 12.10625 11.69091 11.29607 10.92052 10.56312 10.22283 9.89864 9.58965 9.29498 8.74547 8.24424 7.78615 7.36669 6.98187 6.62817 4.61057 13 12.13374 11.73153 11.34837 10.98319 10.63496 10.30274 9.98565 9.68285 9.39357 9.11708 8.85268 8.35765 7.90378 7.48690 7.10336 6.74987 6.42355 4.53268 12 11.25508 10.90751 10.57534 10.25776 9.95400 9.66333 9.38507 9.11858 8.86325 8.61852 8.38384 7.94269 7.53608 7.16073 6.81369 6.49236 6.19437 4.43922 11 10.36763 10.07112 10 9.47130 9.22218 8.98259 8.75206 8.53020 8.31661 8.11090 7.91272 7.72173 7.53763 7.36009 7.02358 6.71008 6.41766 6.14457 5.88923 5.65022 4.19247 8.56602 8.36052 8.16224 7.97087 7.78611 7.60769 7.43533 7.26879 7.10782 6.95220 6.80169 6.51523 6.24689 5.99525 5.75902 5.53705 5.32825 4.03097 7.65168 7.48593 7.32548 7.17014 7.01969 6.87396 6.73274 6.59589 6.46321 6.33457 6.20979 5.97130 5.74664 5.53482 5.33493 5.14612 4.96764 3.83716 6.72819 6.59821 6.47199 6.34939 6.23028 6.11454 6.00205 5.89270 5.78637 5.68297 5.58238 5.38929 5.20637 5.03295 4.86842 4.71220 4.56376 3.60459 6 5.79548 5.69719 5.60143 4.85343 4.78264 4.71346 4.64583 4.57971 4.51505 4.45182 4.38998 4.32948 4.27028 4.21236 4.10020 3.99271 3.88965 3.79079 3.69590 3.60478 2.99061 3.90197 3.85438 3.80773 3.76197 3.71710 3.67308 3.62990 3.58753 3.54595 3.50515 3.46511 3.38721 3.31213 3.23972 3.16987 3.10245 3.03735 2.58873 2.94099 2.91220 2.88388 2.85602 2.82861 2.80164 2.77509 2.74896 2.72325 2.69793 2.67301 2.62432 2.57710 2.53129 2.48685 2.44371 2.40183 2.10648 1.97040 1.95588 1.94156 1.92742 1.91347 1.89969 1.88609 1.87267 1.85941 1.84632 1.83339 1.80802 1.78326 1.75911 1.73554 1.71252 1.69005 1.52778 0.99010 0.98522 0.98039 0.97561 0.97087 0.96618 0.96154 0.95694 0.95238 0.94787 0.94340 0.93458 0.92593 0.91743 0.90909 0.90090 0.89286 0.83333 n/i 1.0% PVA = − _ 1 n (1 + i) _ TABLE 4 Present Value of an Ordinary Annuity of $1 www.downloadslide.net This table shows the future value of an annuity due of $1 at various interest rates (i) and time periods (n) It is used to calculate the future value of any series of equal payments made at the beginning of each compounding period i n (1 + i ) - _ × (1 + i ) 4.5% 5.0% 5.5% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 20.0% 6.3230 6.4343 6.5474 6.6625 6.7794 6.8983 7.0192 7.1420 7.2669 7.3938 7.6540 7.9228 8.2004 8.4872 8.7833 9.0890 11.9159 15.3856 15.8699 16.8885 17.9771 19.1407 20.3843 21.7132 23.1331 38.5805 54.4568 61.8733 70.4027 80.2143 91.5026 270.0307 40 49.3752 55.0819 61.6100 69.0876 77.6633 87.5095 98.8265 111.8467 126.8398 144.1189 164.0477 213.6096 279.7810 368.2919 486.8518 645.8269 859.1424 8812.6294 30 35.1327 38.1018 41.3794 45.0003 49.0027 53.4295 58.3283 63.7524 69.7608 76.4194 83.8017 101.0730 122.3459 148.5752 180.9434 220.9132 270.2926 1418.2579 25 28.5256 30.5140 32.6709 35.0117 37.5530 40.3131 43.3117 46.5706 50.1135 53.9660 58.1564 67.6765 78.9544 92.3240 108.1818 126.9988 149.3339 566.3773 21 23.4716 24.8376 26.2990 27.8629 29.5368 31.3289 33.2480 35.3034 37.5052 39.8643 42.3923 48.0057 20 22.2392 23.4705 24.7833 26.1833 27.6765 29.2695 30.9692 32.7831 34.7193 36.7861 38.9927 43.8652 49.4229 55.7645 63.0025 71.2651 80.6987 224.0256 19 21.0190 22.1237 23.2974 24.5447 25.8704 27.2797 28.7781 30.3714 32.0660 33.8683 35.7856 39.9955 44.7620 50.1601 56.2750 63.2028 71.0524 185.6880 18 19.8109 20.7967 21.8406 22.9460 24.1169 25.3572 26.6712 28.0636 29.5390 31.1027 32.7600 36.3790 40.4463 45.0185 50.1591 55.9395 62.4397 153.7400 17 18.6147 19.4894 20.4123 21.3863 22.4144 23.4997 24.6454 25.8551 27.1324 28.4812 29.9057 32.9990 36.4502 40.3013 44.5992 49.3959 54.7497 127.1167 16 17.4304 18.2014 19.0121 19.8647 20.7616 21.7050 22.6975 23.7417 24.8404 25.9964 27.2129 29.8402 32.7502 35.9737 39.5447 43.5008 47.8837 104.9306 15 16.2579 16.9324 17.6393 18.3802 19.1569 19.9710 20.8245 21.7193 22.6575 23.6411 24.6725 26.8881 29.3243 32.0034 34.9497 38.1899 41.7533 86.4421 14 15.0969 15.6821 16.2934 16.9319 17.5989 18.2957 19.0236 19.7841 20.5786 21.4087 22.2760 24.1290 26.1521 28.3609 30.7725 33.4054 36.2797 71.0351 13 13.9474 14.4504 14.9739 15.5190 16.0863 16.6770 17.2919 17.9321 18.5986 19.2926 20.0151 21.5505 23.2149 25.0192 26.9750 29.0949 31.3926 58.1959 12 12.8093 13.2368 13.6803 14.1404 14.6178 15.1130 15.6268 16.1599 16.7130 17.2868 17.8821 19.1406 20.4953 21.9534 23.5227 25.2116 27.0291 47.4966 11 11.6825 12.0412 12.4121 12.7956 13.1920 13.6020 14.0258 14.4640 14.9171 10 10.5668 10.8633 11.1687 11.4835 11.8078 12.1420 12.4864 12.8412 13.2068 13.5835 13.9716 14.7836 15.6455 16.5603 17.5312 18.5614 19.6546 31.1504 9.4622 9.7027 9.9497 10.2034 10.4639 10.7314 11.0061 11.2882 11.5779 11.8754 12.1808 12.8164 13.4866 14.1929 14.9374 15.7220 16.5487 24.9587 8.3685 8.5593 8.7546 8.9545 9.1591 9.3685 9.5828 9.8021 10.0266 10.2563 10.4913 10.9780 11.4876 12.0210 12.5795 13.1640 13.7757 19.7989 7.2857 7.4328 7.5830 7.7361 7.8923 8.0517 8.2142 8.3800 8.5491 8.7216 8.8975 9.2598 9.6366 10.0285 10.4359 10.8594 11.2997 15.4991 6 6.2135 5.1520 5.2296 5.3081 5.3877 5.4684 5.5502 5.6330 5.7169 5.8019 5.8881 5.9753 6.1533 6.3359 6.5233 6.7156 6.9129 7.1152 8.9299 4.1010 4.1523 4.2040 4.2563 4.3091 4.3625 4.4163 4.4707 4.5256 4.5811 4.6371 4.7507 4.8666 4.9847 5.1051 5.2278 5.3528 6.4416 3.0604 3.0909 3.1216 3.1525 3.1836 3.2149 3.2465 3.2782 3.3101 3.3423 3.3746 3.4399 3.5061 3.5731 3.6410 3.7097 3.7793 4.3680 2.0301 2.0452 2.0604 2.0756 2.0909 2.1062 2.1216 2.1370 2.1525 2.1680 2.1836 2.2149 2.2464 2.2781 2.3100 2.3421 2.3744 2.6400 1.0100 1.0150 1.0200 1.0250 1.0300 1.0350 1.0400 1.0450 1.0500 1.0550 1.0600 1.0700 1.0800 1.0900 1.1000 1.1100 1.1200 1.2000 n/i 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% FVAD = TABLE 5 Future Value of an Annuity Due of $1 www.downloadslide.net This table shows the future value of an annuity due of $1 at various interest rates (i) and time periods (n) It is used to calculate the future value of any series of equal payments made at the beginning of each compounding period P-5 P-6 1.5% 1 - _ n 2.0% i 2.5% (1 + i ) × (1 + i ) _ 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 20.0% 5.64583 5.57971 5.51505 5.45182 5.38998 5.32948 5.27028 5.21236 5.10020 4.99271 4.88965 4.79079 4.69590 4.60478 3.99061 9.11090 8.91272 8.72173 8.53763 8.36009 8.02358 7.71008 7.41766 7.14457 6.88923 6.65022 5.19247 40 33.16303 30.36458 27.90259 25.73034 23.80822 22.10250 20.58448 19.22966 18.01704 16.92866 15.94907 14.26493 12.87858 11.72552 10.75696 9.93567 9.23303 5.99592 30 26.06579 24.37608 22.84438 21.45355 20.18845 19.03577 17.98371 17.02189 16.14107 15.33310 14.59072 13.27767 12.15841 11.19828 10.36961 9.65011 9.02181 5.97472 25 22.24339 21.03041 19.91393 18.88499 17.93554 17.05837 16.24696 15.49548 14.79864 14.15170 13.55036 12.46933 11.52876 10.70661 9.98474 9.34814 8.78432 5.93710 21 19.04555 18.16864 17.35143 16.58916 15.87747 15.21240 14.59033 14.00794 13.46221 12.95038 12.46992 11.59401 10.81815 10.12855 9.51356 8.96333 8.46944 5.86958 20 18.22601 17.42617 16.67846 15.97889 15.32380 14.70984 14.13394 13.59329 13.08532 12.60765 12.15812 11.33560 10.60360 9.95011 9.36492 8.83929 8.36578 5.84350 19 17.39827 16.67256 15.99203 15.35336 14.75351 14.18968 13.65930 13.15999 12.68959 12.24607 11.82760 11.05909 10.37189 9.75563 9.20141 8.70162 8.24967 5.81219 18 16.56225 15.90765 15.29187 14.71220 14.16612 13.65132 13.16567 12.70719 12.27407 11.86461 11.47726 10.76322 10.12164 9.54363 9.02155 8.54879 8.11963 5.77463 17 15.71787 15.13126 14.57771 14.05500 13.56110 13.09412 12.65230 12.23402 11.83777 11.46216 11.10590 10.44665 9.85137 9.31256 8.82371 8.37916 7.97399 5.72956 16 14.86505 14.34323 13.84926 13.38138 12.93794 12.51741 12.11839 11.73955 11.37966 11.03758 10.71225 10.10791 9.55948 9.06069 8.60608 8.19087 7.81086 5.67547 15 14.00370 13.54338 13.10625 12.69091 12.29607 11.92052 11.56312 11.22283 10.89864 10.58965 10.29498 9.74547 9.24424 8.78615 8.36669 7.98187 7.62817 5.61057 14 13.13374 12.73153 12.34837 11.98318 11.63496 11.30274 10.98565 10.68285 10.39357 10.11708 9.85268 9.35765 8.90378 8.48690 8.10336 7.74987 7.42355 5.53268 13 12.25508 11.90751 11.57534 11.25776 10.95400 10.66333 10.38507 10.11858 9.86325 9.61852 9.38384 8.94269 8.53608 8.16073 7.81369 7.49236 7.19437 5.43922 12 11.36763 11.07112 10.78685 10.51421 10.25262 10.00155 9.76048 9.52892 9.30641 9.09254 8.88687 8.49867 8.13896 7.80519 7.49506 7.20652 6.93770 5.32706 11 10.47130 10.22218 9.98259 9.75206 9.53020 9.31661 10 9.56602 9.36052 9.16224 8.97087 8.78611 8.60769 8.43533 8.26879 8.10782 7.95220 7.80169 7.51523 7.24689 6.99525 6.75902 6.53705 6.32825 5.03097 8.65168 8.48593 8.32548 8.17014 8.01969 7.87396 7.73274 7.59589 7.46321 7.33457 7.20979 6.97130 6.74664 6.53482 6.33493 6.14612 5.96764 4.83716 7.72819 7.59821 7.47199 7.34939 7.23028 7.11454 7.00205 6.89270 6.78637 6.68297 6.58238 6.38929 6.20637 6.03295 5.86842 5.71220 5.56376 4.60459 6.79548 6.69719 6.60143 6.50813 6.41719 6.32855 6.24214 6.15787 6.07569 5.99553 5.91732 5.76654 5.62288 5.48592 5.35526 5.23054 5.11141 4.32551 6 5.85343 5.78264 5.71346 4.90197 4.85438 4.80773 4.76197 4.71710 4.67308 4.62990 4.58753 4.54595 4.50515 4.46511 4.38721 4.31213 4.23972 4.16987 4.10245 4.03735 3.58873 3.94099 3.91220 3.88388 3.85602 3.82861 3.80164 3.77509 3.74896 3.72325 3.69793 3.67301 3.62432 3.57710 3.53129 3.48685 3.44371 3.40183 3.10648 2.97040 2.95588 2.94156 2.92742 2.91347 2.89969 2.88609 2.87267 2.85941 2.84632 2.83339 2.80802 2.78326 2.75911 2.73554 2.71252 2.69005 2.52778 1.99010 1.98522 1.98039 1.97561 1.97087 1.96618 1.96154 1.95694 1.95238 1.94787 1.94340 1.93458 1.92593 1.91743 1.90909 1.90090 1.89286 1.83333 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 n/i 1.0% PVAD = TABLE 6 Present Value of an Annuity Due of $1 www.downloadslide.net This table shows the present value of an annuity due of $1 at various interest rates (i) and time periods (n) It is used to calculate the present value of any series of equal payments made at the beginning of each compounding period ... Production Total $ 42, 000 42, 000 42, 000 42, 000 42, 000 $21 0,000 $ 70,000 56,000 42, 000 28 ,000 14,000 $21 0,000 $100,000 60,000 36,000 14,000 $21 0,000 $ 30,000 48,000 66,000 42, 000 24 ,000 $21 0,000 Conceptually,... recorded in 20 18 and 20 19 ($ 42, 000 + $ 42, 000) plus the depreciation recorded above in 20 20 ($ 42, 000) Accumulated Depreciation 42, 000 20 18 42, 000 20 19 42, 000 20 20 126 ,000 We can now calculate the... ( $25 0,000 less Accum Depreciation) $ 42, 000 42, 000 42, 000 42, 000 42, 000 $21 0,000 $ 42, 000 84,000 126 ,000 168,000 21 0,000 $20 8,000 166,000 124 ,000 82, 000 40,000 *The rate equals one divided