ACC620 Contemporary Issues in Accounting

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ACC620 Contemporary Issues in Accounting

ACC620 Contemporary Issues in Accounting

Semester 2 2018

Research Proposal

Student Name:

Title:

Submission Date:

 

Acknowledgment:

I certify that I have carefully reviewed the university’s academic misconduct policy. I understand that the source of ideas must be referenced and that quotation marks and a reference are required when directly quoting anyone else’s words.

 

 

 

 

Introduction:

Clearly and concisely define your issue. Capture the reader’s attention, why the research is important and the theoretical basis that you have adopted. Work on the introduction every week but complete it last.

Length: one paragraph.

Practical Motivation:

Demonstrate, with references where possible, why the issue is important to practice (e.g., to accountants, managers, regulators, the general public). References here may be to academic journal articles, but may also be to newspapers etc.

Length: one paragraph

Theoretical Motivation:

Provide an overview of the contribution that the research will make to theory (e.g., replicating existing research, testing theory, addressing gaps in existing research, reconciling conflicting results from prior research…)

Length: one or two paragraphs

Literature Review:

Build a logical argument for a specific relationship between two variables (i.e., a theoretical framework), using established research published in academic journals. Start by identifying your theoretical framework, naming the theory and referencing the seminal article(s), identify the key theoretical constructs that you will be considering and the predicted relationship based on the theory.

Carefully review the empirical research, the proxy measures that have been tested in previous studies, and the results. Highlight the extent to which previous research has been consistent or if there have been differences (which you might have mentioned in the theoretical motivation).

Remember you are building an argument for a specific relationship between two variables: clearly define the two variables; explain how these two variables are understood to be linked; and outline the reasons given for why there is a relationship between these two variables. Critically discuss the strengths and limitations of the existing research and use this to justify the argument for a modification to the theory or a new application of the theory. Then draw your conclusion about the predicted relationship for the variables that you plan to test. The argument must lead to a specific prediction (to be stated in the next section) that can be tested.

Length: this is the longest part of your proposal, similar to the ‘body’ of other assignments.

Hypotheses:

Clearly state your testable and falsifiable predictions. A single hypothesis is sufficient, however, sometimes your argument might lead to two hypotheses. Express your hypothesis in the alternative form where appropriate (i.e., the relationship that you predict based on the theory).

Length: one sentence only.

 

 

Appendix:

Complete summaries for five of your most important journal articles in the following Table (not included in the word count).

Table – Annotated Bibliography for Selected Articles

Author Date Title Journal Type of Paper (Theoretical or Empirical) If empirical, research method and sample If empirical, dependent and independent variables 100 word summary of contribution to the research question

 

 

“The present value of the future cash flows expected from an investment project is R30,000,000”. (2)

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Question one: 10 Marks 

 

  • What is meant by each of each of the following statements?

 

  1. “The present value of the future cash flows expected from an investment project is R30,000,000”. (2)
  2. “The net present value (NPV) of an investment project is R10,000,000”. (2)
  3. “A project’s cost of capital is 10 percent”. (2)

 

1.2. What are managerial options embedded in an investment projects? Give some examples. (4)

 

Question Two: 20 Marks

On March 22, 2017, Woodlands paid annual dividend of R2.50 per share. Because Woodlands’ financial prospects are particularly bright, investors believe that the company will increase its dividend by 20 percent per year for the next four years. After that, Woodlands will increase the dividend at a modest annual rate of 4 percent. Investors require a 16 percent return on Woodlands stock, and Woodlands always make its dividend payment on March 22 each year.

Required:

6.1. What is the price of Woodlands stock on March 23, 2017? [2]

6.2. What is the price of Woodlands stock on March 23, 2018? [2]

6.3. Calculate the percentage change in price of Woodlands stock from March 23, 2017, to March 23,       2018. [2]

6.4. For an investor who bought Woodlands stock on March 23, 2017, received a dividend on March 22, 2018, and sold the stock on March 23, 2018, what was the total rate of return on the investment? How much of this return came from the dividend, and how much came from the capital gain? [4]

6.5. What is the price of Woodlands stock on March 23, 2021? [3]

6.6. What is the price of Woodlands stock on March 23, 2022? [3]

6.7. For an investor who bought Woodlands stock on March 23, 2021, received a dividend on March 22, 2022, and sold the stock on March 23, 2022, what was the total rate of return on the investment? How much of this return came from the dividend, and how much came the capital gains? Comment on the differences between your answers to this question and your answers in part (6.4).

 

Question three: 15 Marks

Kebla is evaluating the viability of going public but is unsure of a fair price for the company. The company would like to make its estimate of the company’s common stock and data has been collected to perform the valuation using the free cash flow valuation model.

The company’s weighted average cost of capital is 12 percent and it has R1,600,000 of debt at market value and R600,000 of preferred stock at its assumed market value. The estimated free cash flows over the next five years, 2019 through 2023, are given below. It is envisaged that the free cash flow will grow at 4 percent annually for the foreseeable future beyond 2023.

Year (t) Free Cash Flow (FCF)
2019 230 000
2020 270 000
2021 300 000
2022 350 000
2023 400 000

 

Required:

7.1. Estimate the value of Kebla’s entire company using the free cash flow approach. [5]

7.2. Using your finding in 7.1 along with data provided above, determine Kebla’s common stock value. [5]

7.3. If the company plans to issue 240,000 share of common stock, what is it estimated value per share? [5]

 

Accounting Entries and Depreciation :XXYZ Holdings made a $150,000 shareholder loan to Sweet Sensations.

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Accounting Entries and Depreciation

Please follow all the instructions.

 

  1. XXYZ Holdings made a $150,000 shareholder loan to Sweet Sensations.
  2. What journal entries should be made to accurate and correctly record this transaction.

 

 

  1. Marshall Smith (Shareholder) also made a $200,000 loan to Sweet Sensations.
  2. What journal entries should be made to accurately and correctly record this transaction.

 

  1. Purchased a Toyota Avalon for $38,459.75 at an interest rate of 3.44% for 5 years.
  2. Calculate the MACRS depreciation for the 5 years. (Show Steps and Provide Template)
  3. What journal entries should be made to accurate and correctly record the vehicle loan payment?
  4. What journal entry should made to record the monthly Interest Expense on the vehicle?
  5. Calculate the depreciation Expense.
  6. What journal entry should be made to record the depreciation expense every month?

 

  1. Purchased a Mercedes Benz for $38,208,89 at an interest rate of 3.44% for 5 years.
  2. Calculate the MACRS depreciation for 5 years. (Show Steps and Provide Template)

 

  1. Purchased a Chevy Tahoe for $35,166,.81 at an interest rate of 3.44% for 5 years.
  2. Calculate the MACRS depreciation for 5 years. (Show Steps and Provide Template)

 

What amount will Jensen report in its 2010 Statement of Cash flows as cash collected from Customers?

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What amount will Jensen report in its 2010 Statement of Cash flows as cash collected from Customers?

Q2. Determine the following amounts:
a. Purchase account
b. Cash paid to vendors of inventory

Q3. What amount will Jensen report as cash paid for income taxes?

Q4. What amount will Jensen reportas cash paid for Se, G&A expenses?

Q5. What amount of cash inflow (outflow) should be reported for depreciation under the direct method?

Q6. Chaka CO’s worksheet for the preperation of its SOCF indluded teh following (see attachemnt).