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Recasting FS Example
Recasting FS Example
straig
Hence, management has considerable amount of discretion over the depreciation expense.
Asumsi kedua perusahaan memiliki Jenis yg sama dan terdapat dalam soal use Q to analyze data
Q Airways
2007 2008
Aircraft and Engines
Cost 15626.2 9769.7
Accumulated Depreciation -6484.7 -5546.5
Foreign currency adjustment
Net book value $9,141.50 $4,223.20
Spares
Cost 748 703.5
Accumulated Depreciation -345.5 -309.1
Net book value $402.50 $394.40
Depreciation expense
Aircraft and Engines 1091.1 991.5
Spares 51.5 51.2
ANALYSTS' ADJUSTMENTS
(2) Depreciation backlog (Tracing Back to adjust the faster depreciation rate)
Past rate of depreciation = 1525 accumulated deprec/207deprec =
Backlog is 7.3671*(268.73-207) = 454.39453 So new accumulated depreciation is
Current Adjusted
N Airways
2007 2008
3850 3383
-1525 -1363
148 251
$2,473.00 $2,271.00
255 244
-91 -84
$164.00 $160.00
207 182
11 13
$214.00 $96.00
ation rate)
7.3671497585 years
cumulated depreciation is
Adjusted
add 454.39
subtract 454.39
subtract 268.73-207 = 61.73 to reflect the higher rate of depreciation
DEPRECIATION TO COST RATIO
Q Airways N Airways
2007 2008 2007 2008
n disposal of aircraft?
An airline company, Q Airways , provides the following information on its finance and operating lea
Q Airways leases aircraft and plant and equipment under finance leases with expiry dates between
Most finance leases contain purchase options exercisable at the end of the lease term.
The Q has the right to negotiate extensions on most leases. The Q leases aircraft, building and plan
one and 35 years. The Q Group has the right to negotiate extensions on most leases.
FOOTNOTE DISCLOSURES FOR FINANCE AND OPERATING LEASES IN 2007 ANNUAL REPORT
$Million
Use this rate to capitalise the non-cancellable operating leases. Note any assumptions you make. Sh
just the non-cancellable operating leases?
The lease schedule of lease payments can be allocated to specific years on the following basis:
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
Present value
Interest rate
YEAR
1
2
3
4
5
6
7
8
CURRENT ASSETS/LIABILITIES
NON-CURRENT ASSETS/LIABILITIES
and operating leases:
term.
, building and plant and equipment under operating leases with expiry dates between
ses.
AL REPORT
Total operating
lease & rental Non-cancellable
Finance Lease commitments operating leases
175.9
$1,058.5
tions you make. Should the analyst capitalise the total operating lease and rental commitments or
ollowing basis:
Working
458.2 375.4/4 = 93.9
93.9 400.8/93.9 = 4.2706446457 which is 4 payments of 93.85 and one payment o
93.9
93.9
93.9
93.9
93.9
93.9
93.9
25
$1,234.40
(Finding rate)
321.8
2.0298
d one payment of 25.00
The rate of return that equates the present value with the cash flows is 4.2%, which is the interest r
9.6001
4.2%
1 2 3 4 5 6 7 8 9 10
458.2 93.9 93.9 93.9 93.9 93.9 93.9 93.9 93.9 25
439.731 86.483 82.997 79.652 76.441 73.36 70.403 67.565 64.842 16.568
477.444 101.95 106.24 110.7 115.35 120.19 125.24 130.5 135.98 37.724
1058
1461.3
XYZ Co issues 1 million convertible bonds of $1 each carrying nominal interest of 10%. Bondholde
$1 ordinary shares of the company on the date of their maturity in three years time instead of recei
CB
1,000,000 Cash/Bank
Nominal interest
10%
Similar bond without conversion interest 15%
Maturity 3 years
1 2 3 3
Nominal 100,000 100,000 100,000 1,000,000
Discount factor 15% 1.15 1.3225 1.520875 1.520875
PV 86,956.52 75,614.37 65,751.62 657,516.23
Total 885,838.74
Recognition
Cash/Bank 1,000,000
Liability-CB 885,838.74
Equity-Share Options 114,161.26
Subsequent Measurement
Interest expense will be charged using 15%.
The difference between interest paid and interest charged will be added to the liability
Interest expense liabilites
Year 1 ### =15%*885,838.74 918,714.56 =885,838.74+132,875.81-100,0
Year 2 ### =15%*918,714.56 956,521.74 =918,714.56+137,807.18-100,0
Year 3 ### ###
Liability-CB ###
Equity-Share Options 114,161.26
Share Capital ###
Share Premium 114,161.26
erest of 10%. Bondholders are entitled to convert their bonds into
ars time instead of receiving principle repayment.
=885,838.74+132,875.81-100,000
=918,714.56+137,807.18-100,000
y carried lower interest rate than ordinary debt because of the
ortunity cost of financing the debt was not being recognized
e entity did not present the fact that the entity had in effect issued
as part of the convertible debt arrangement.