<3.4 FINAL ACCOUNTS>

--PURPOSE--

--INVESTORS--

These are EXTERNAL ACCOUNTS that are PUBLIC and are mainly intended for POTENTIAL/EXISTING INVESTORS, in order for them to:
- - - - Assess the value of the business and their investment in it.
        Establish whether the business is becoming more or less profitable.
        Determine what share of the profits investors are receiving (dividend).
        Decide whether the business has potential for growth.
        As potential investors, compare these details with those from other businesses before making a decision to buy shares in a company.
        As actual investors, decide whether to consider selling all or part of their holding.
- NOTE: These accounts are NOT USED BY MANAGEMENT, instead they use much more detailed information.

--FOR LOCAL COMMUNITY--

The LOCAL COMMUNITY (LEADERS) may be interested in these accounts as it can

• See if the business is profitable and likely to expand, which could be good for the local economy.

• Determine whether the business is making losses and whether this could lead to closure.

--LIMITATIONS--

--ONE SET IS USELESS--

In order to IDENTIFY TRENDS in profitability, performance compared to rivals etc... a SERIES OF ACCOUNTS OVER TIME is needed.

--DIFFERENT INDUSTRIES--

Effective assessment of a business performance can only be made in comparison with other firms ENGAGED IN SIMILAR ACTIVITIES.

--OMMISSIONS--

Accounts DO NOT MEASURE ITEMS WHICH CAN NOT BE EXPRESSED IN MONETARY TERMS such as....
- - - - THE STATE OF TECHNOLOGY IN THE BUSINESS.
        Some business's are very tech-savvy and are introducing new technology to improve efficiency and productivity, whilst some often larger traditional firm's are still using outdated methods, impacting productivity in the future.
      - THE ABILITY AND SKILLS OF THE MANAGEMENT TEAM.
        Would you reconsider investing in Tesla if Elon Musk stepped down as CEO? What about Apple stocks when Steve Jobs died? or god forbid Mr. Bounous, left Bounomics.com? of course you would yet the value of management is not included in final accounts even though it clearly impacts its success.
      - THE REPUTATION OF THE BUSINESS
        Some firms use CSR an good after sales services etc... to build up very good reputations and brand loyalty which ensures a lifetime of repeat purchases, which can indicate great growth potential, yet this value is not included in final accounts.
      - THE CREATIVITY OF THE STAFF
        Would you reconsider investing in TES now that you know how innovative🤔and creative the teaching staff are? Surely you would think about selling your shares in Liverpool if Mighty Mo Salah left? The value that these creative workers bring to the company are not included in the final accounts.

We can apply the importance of these items directly to the financial data for EPL football teams which consistently value Man Utd higher than Liverpool in terms of 'SIZE of REVENUE' however as most football fans know this doesn't mean that Man Utd is currently a good investment compared to Liverpool, as this data does not include the above items as applied below.

--TASK--

Imagine (Just roll with it!) that you wish to convince people to invest in TES rather than TAS, which has a much higher revenue. You decide to highlight how the omissions from the TAS accounts in terms of the 4 mentioned above actually means TES is the better investment for the future.
"I know that TAS has consistently earned higher revenue than TES however their financial data omits many important items that make them a far more riskier prospect than TES, for example, in terms of the 'state of technology' employed by both schools...., as such this will certainly increase sales and profits, in addition...."

--HEADLINE INFO ONLY--

Business accounts will ONLY PUBLISH THE MINIMUM INFORMATION REQUIRED BY LAW. Managers would not be impressed with their accountants if they published accounts data that was very detailed and specific, beyond legal requirements, as this could help their competitors. So published accounts are a summary and they do not tell the whole story about a business.

--HISTORIC IN NATURE--

Accounts only report "WHAT HAS HAPPENED?" NOT "WHAT IS GOING TO HAPPEN?" as such accounts CAN BE UP TO SIX MONTHS OUT OF DATE AT THE TIME OF PUBLICATION and they NEVER CONTAIN FUTURE FINANCIAL PLANS OR BUDGETS – as these are not legally required.

--'WINDOW DRESSING'--

'WINDOW DRESSING' usually involves MANIPULATING FINANCIAL STATEMENTS AT THE END OF AN ACCOUNTING PERIOD TO MAKE THE COMPANY APPEAR MORE FINANCIALLY SOUND than it actually is.
- - - LEGAL METHODS INCLUDE:
      - DELAYING PAYMENTS: A company delays paying suppliers until the next accounting period to show higher cash reserves.
        BOOSTING SALES: Offering heavy discounts or promotions to increase sales at the end of a quarter.
        TAKING SHORT TERM LOANS: Taking a loan just before the reporting date to increase cash on hand and repaying it after.
    - ILLEGAL METHODS INCLUDE:
      - FICTITIOUS SALES: Recording fake sales to boost revenue figures.
        ASSET INFLATION: Overstating the value of assets like inventory or property so that you get lower interest rates on loans secured agaianst these assets, lowerig your costs. See TRUMP

--'CREATIVE ACCOUNTING'--

'CREATIVE ACCOUNTING' refers to USING ACCOUNTING LOOPHOLES and 'FLEXIBLE INTERPRETATIONS' of ACCOUNTING RULES to present financial statements in a more favorable way.
- - - LEGAL METHODS INCLUDE:
      - DEPRECIATION METHODS: A firm may switch from straight-line depreciation to accelerated depreciation to reduce taxable profits in the short term. (We cover this later on)
        LEASING vs. BUYING: Structuring leases as operating leases instead of capital leases to keep liabilities off the balance sheet.
    - ILLEGAL METHODS INCLUDE:
      - OFF-BALANCE-SHEET-FINANCING: Hiding your debts/liabilities in subsidiary companies (e.g., ENRON SCANDAL, MAN. CITY????), so it looks like you have little debt.
        MANIPULATING REVENUE RECOGNITION: Recording revenue before it is actually earned.
        CHANNEL STUFFING: Pushing excessive stock to distributors and recording it as sales even if it hasn't yet been sold in order to inflate sales figures temporarily.

--TASK--

Your getting desperate now so you resort to SLANDER in order to convince people to invest in TES rather than TAS, by alleging that TAS regularly use both legal and illegal forms of window dressing and creative accounting in their accounts to make them look favourable. (Use at least one legal and one illegal example for both in your answer)
"Don't quote me on this but a reliable source (😉,😉) has told me that our main rivals regularly uses both legal and illegal forms of window dressing and creative accounting in their accounts. They use window dressing by...., and they use creative accounting by..., so care to reconsider???"

--FINAL ACCOUNTS--

--THE PROFIT & LOSS ACCOUNT--

--DEFINITION/USE--

THE PROFIT & LOSS ACCOUNT (AKA the 'INCOME STATEMENT') shows the gross and operating profit of the company, detailing how the operating profit and profit before interest and tax is split up ('Appropriated') between dividends to shareholders and retained profits.

THE TRADING ACCOUNT SECTION:

THE TRADING ACCOUNT is the first section of the P&L account and shows the DIFFERENCE BETWEEN THE MONEY EARNED FROM THE SALE OF GOODS ('SALES REVENUE') and the DIRECT COSTS OF THOSE GOODS SOLD. The result is referred to as 'GROSS PROFIT'.

+ SALES REVENUE $3060

SALES REVENUE refers to the SELLING PRICE * QUANTITY SOLD
For example if the price is $10 and you sell 200 units your total revenue is $2000 ($10 * 200)
Sales revenue is also known as 'TURNOVER'.

- COST OF GOODS SOLD (COGS) ($1,840)

The COST OF GOODS SOLD (COGS) refers to the DIRECT COSTS of the goods that ARE ACTUALLY SOLD, meaning the DIRECT COST OF UNSOLD GOODS (STOCK AKA 'INVENTORY' REMAINING) is NOT INCLUDED.
Another way to determine the cost of goods actually sold is to say that it is the cost of the OPENING STOCK + PURCHASES - CLOSING STOCK.
For example if you start with 100 apples, and you purchase an additional 50, then if you closing stock is 70 apples it means you must have sold 80 apples)
"The cost of what we had at the start of the day ('Opening stock') plus the cost of any new additions we made ('Purchases'), minus the cost of what we have left at the end of the day ('Closing stock'), must refer to the cost of the amount we actually sold ('COGS')"

= GROSS PROFIT $1,220

GROSS PROFIT = SALES REVENUE - COGS
NOTE: Gross profit CANNOT BE NEGATIVE, as you always sell your goods for a higher price than it costs rights?

THE P & L SECTION:

The profit and loss account (or the profit statement) shows the net profit (or loss) of a business at the end of a trading period.
Net profit is the financial surplus from sales revenues after all costs and expenses are accounted for.
Hence, net profit is the actual profit earned from a firm's normal trading activities. The gross profit is used to deduct all expenses to calculate the value of net profit:

- EXPENSES ($580)

EXPENSES refer to the INDIRECT or FIXED costs of production, such as administration charges, management salaries, insurance premiums (for buildings, vehicles and stock), rent of land and property and stationery costs. Note: EXPENSES are often called 'OVERHEADS'.
DEPRECIATION of fixed assets is also included here, see below for details.

= NET PROF. BEFORE TAX & INTEREST $640

NET PROFIT BF. INT. & TAX = SALES REVENUE - COGS - EXPENSES
NET PROFIT BF. INT. & TAX = GROSS PROFIT - EXPENSES
NET PROFIT BF. INT. & TAX = 'OPERATING PROFIT'

- INTEREST ($80)

INTEREST refers to the costs a business incurs for borrowing money. These are the payments made to lenders for any loans or debt the company has taken on, such as bank loans or bonds.

= NET PROFIT BEFORE TAX (EBT) $560

- TAX ($112)

TAX refers to 'CORPORATE INCOME TAX', which is levied by the government on the company's net profits before tax.

= NET PROFIT AFTER TAX & INTEREST $448

Also known as 'THE BOTTOM LINE' refers to the final profit left after subtracting all operating expenses, interest, and taxes from the revenue. This figure represents the profit available to the business for distribution or reinvestment.

THE APPROPRIATION SECTION:

An appropriation account is a record of how an organization distributes its NET PROFIT AFTER TAX & INTEREST among its partners, shareholders, and departments.
For example, a company's appropriation account shows how its profits are divided and retained, while a government's appropriation account shows how funds are allocated to specific projects and departments.

DIVIDENDS ($200)

DIVIDENDS refers to the amount of net profit after interest and tax that is distributed to the owners (shareholders) of the company. The proportion of net profit (after interest and tax) allocated to shareholders is based on the decision of the Board of Directors and is approved at the company's Annual General Meeting.
It is usual for dividends to be paid bi-annually. An interim dividend is paid approximately midway through the year and then the final dividend is declared and paid at the end of the firm's fiscal year.

RETAINED PROFIT $248

RETAINED PROFITS refers to the net profit after interest and tax which is kept by the business for its own use as an internal source of finance, such as reinvesting in the company or to expand its operations. Note that for non-profit organizations, the term retained surplus is used instead. In any case, this figure is transferred to the 'Equity' section of the firm's balance sheet and recorded as 'retained earnings.'

--TASK--

Using the infographic below construct a P & L account for Starbucks

--PAST PAPER TASK--

Calculating X and Y in Table 3, prepare a profit and loss account for WC for 2022 (show all your working):

--TASK--

Now that you have picked up some of the key terms and concepts watch this episode of Dragon's den and see if you can work out what the heck is going on! Can you figure out their financial position is? What fundamental accounting error did they make?
The section related to finance begins HERE

--THE BALANCE SHEET--

--DEFINITION--

The BALANCE SHEET (AKA 'THE STATEMENT OF FINANCIAL POSITION') refers to a document that CONSISTS OF TWO PARTS THAT NOT SUPRISINGLY 'BALANCE' (ARE 'EQUAL')
- - - The first part shows the $-value of "What a company owns?" (termed 'ASSETS').
    - ...and the second part shows "How it funded the purchase of these assets?", in other words, "Where did the finance come from to pay for these assets?", Was it from borrowing? (termed 'LIABIITIES') or was it from money received from selling shares, and/or was it from savings from previous years profits (termed 'SHAREHOLDER'S EQUITY')?
Regardless of how it funded these assets it is clear that the following relationship must be true!
ASSETS = LIABILITIES + EQUITY

--STRUCTURE--

Given the above relationship we structure a balance sheet in a vertical format like the transition below.

--WORKED EXAMPLE--

--CURRENT ASSETS: $480

CURRENT ASSETS refer to assets (Which are things of value that the firm already owns) that ARE LIKELY TO BE TURNED INTO CASH WITHIN 12 MONTHS such as CASH, STOCKS, and the value of money owed by DEBTORS.
CASH $250
DEBTORS $30
STOCKS $200

--NON-CURRENT ASSETS: $2,000

NON-CURRENT ASSETS refer to assets that are UNLIKELY TO BE USED (turned to cash for spending) WITHIN 12 MONTHS.
- PROPERTY, PLANT, EQUIPMENT... $2,200
- DEPRECIATION* ($200)

--TOTAL ASSETS: $2,480

TOTAL ASSETS = CURRENT + NON-CURRENT ASSETS $2,480
Note that later we will discuss some very valuable assets that ARE NOT INCLUDED that make a business worth a lot more than what the balance sheet tells you.

--CURRENT LIABILITIES: $320

CURRENT LIABILITIES refer to LIABILITIES (Which are things of value that the firm owes) THAT MUST BE REPAID WITHIN 12 MONTHS such as BANK OVERDRAFTS, and the value of money owed to CREDITORS....
BANK OVERDRAFT $15
CREDITORS $250
SHORT TERM LOANS $55

--NON-CURRENT LIABILITIES: $500

NON-CURRENT LIABILITIES (Long-term liabilities) refer to liabilities that are NOT DUE TO BE REPAID FOR AT LEAST 12 MONTHS such as MORTGAGES, and BANK LOANS....
LOANS/MORTAGES $500

--TOTAL LIABILITIES: $820

TOTAL LIABILITIES = CURRENT + NON-CURRENT LIABILITIES

--NET ASSETS: $1,660

NET ASSETS = TOTAL ASSETS - TOTAL LIABILITIES
NET-ASSETS are equal to the REMAINING VALUE OF THE ASSETS AFTER ALL DEBTS HAVE BEEN PAID, in other words its the value of what owners would receive, should the company be LIQUIDATED (Which is when the company assets are turned into cash), which is also termed SHAREHOLDER EQUITY and is calculated by using the formula:
"Net Assets = What You Own! − What You Owe!"
"Net Assets = How much the owners would get if they sold everything and paid off all debts!"
NET ASSETS = (NON-CURRENT ASSETS + CURRENT ASSETS) -
(NON-CURRENT LIABILITIES + CURRENT LIABILITIES)
NET ASSETS = TOTAL ASSETS - TOTAL LIABILITIES
NET ASSETS = SHAREHOLDER EQUITY

--SHAREHOLDER EQUITY: $1,660

In a company, EQUITY means the PART OF THE BUSINESS THAT BELONGS TO THE SHAREHOLDERS after all debts are paid. It includes:
SHARE CAPITAL $1,000
RETAINED EARNINGS $660

--EXTRA RELATIONSHIP--

--Did you see it?--

ASSETS = LIABILITIES + SHAREHOLDER FUNDS

This formula is intuitive. That's because a company has to pay for all the things it owns (ASSETS) by either borrowing money (taking on LIABILITIES) or taking it from investors (ISSUING SHARES) or using its savings (RETAINED PROFITS).
Below are some examples of how changes will impact both sides equally and they will ALWAYS BALANCE EACH SIDE OUT:
- ...If a biz takes out a 10-year, $5,000 loan from a bank, 2 things happen
  - - - 1)...its ASSETS will INCREASE BY +$5,000 (Cash account, inititally).
      - 2)...its LIABILITIES (specifically, the long-term debt account) will also INCREASE BY +$5,000, balancing the two sides of the equation.
- ...If the company takes +$10,000 from investors via the issue of shares,...
  - - - 1)...its ASSETS will INCREASE BY +$10000 (Again, cash account, initially),
      - 2)...at the same time its SHAREHOLDER EQUITY will INCREASE BY +$10,000.
- ...If a firm generates +$20,000 profits and 'DOESN'T GIVE DIVIDENDS'
  - - - 1)...its ASSETS will INCREASE BY +$20,000 (Cash account initially)
      - 2)...and as this is RETAINED PROFIT then SHAREHOLDER EQUITY will also INCREASE BY +$20,000.
Therefore we can conclude that...
ASSETS = LIABILITIES + SHAREHOLDER FUNDS /or/
SHAREHOLDER FUNDS = ASSETS - LIABILITIES

--INTANGIBLE ASSETS--

--DEFINITION--

INTANGIBLE ASSETS refer to NON-PHYSICAL FIXED ASSETS that HAVE THE ABILITY TO EARN SUBSTANTIAL REVENUE for a business.
NOTE: These assets ARE NOT INCLUDED in the BALANCE SHEET despite having, in some cases, immense value.

--BRANDING--

BRAND RECOGNITION has a value as it creates brand loyalty and helps drive sales which is long lasting and in many cases worth billions.
But it ignored on the balance sheet.😭

--PATENTS--

PATENTS PROVIDE LEGAL PROTECTION FOR INVENTORS, preventing others from copying their creation for a fixed number of years.
For example, compact discs were patented by Philips, the electronics giant. PATENTS ACT AS AN INCENTIVE FOR FIRMS TO INNOVATE. If competitors can simply copy the invention, there would be no need for them to spend large amounts of money on research and development.

--COPYRIGHTS©--

COPYRIGHTS© PROVIDE LEGAL PROTECTION FOR THE ORIGINAL ARTISTIC WORK of the CREATOR, such as an AUTHOR, PHOTOGRAPHER, PAINTER or MUSICIAN etc.... Anyone wishing to reproduce or modify the artist's work must first seek permission from the copyright holder, usually for a fee.

--REGISTERED TRADEMARKS®--

REGISTERED TRADEMARKS refer to a SYMBOL, WORD, PHRASE, LOGO, or DESIGN that has been LEGALLY REGISTERED with a government authority TO IDENTIFY AND DISTINGUUSH A COMPANY'S GOOD OR SERVICE from it's competitors. Once registered, the TRADEMARK HOLDER has EXCLUSIVE RIGHTS TO USE IT, preventing others from using a similar mark without permission. Registered trademarks are denoted by the ® symbol, indicating that the trademark is officially protected by law. note:
In contrast, an unregistered trademark uses the ™ symbol, which provides limited legal protection.

Below is the most interesting trademark video I could find Sozzzzzzzzzz!!!!

--QUICK QUESTION--

According to the video do you think Bounomics would be granted a registered trademark (Note that its already trademarked)?

--GOODWILL--

GOODWILL refers to the EXCESS PAYMENT that is paid for a business BEYOND THE MARKET VALUE OF ITS NET 'TANGIBLE' ASSETS. This EXCESS reflects the value of THE OMMISSIONS and INTANGIBLE ASSETS mentioned above.
For example, when Amazon purchased Whole foods in 2017, it paid $13bn, despite the fact that its physical assets only represented 30% of this amount. In other words the goodwill payment was worth a massive $10bn, which was attributed to the reputation, and growth potential of the brand.

--DEPRECIATION METHODS (HL)--

--INITIAL THOUGHTS--

Firstly, because it is LIKELY DAMAGED, in terms of a CRACKED SCREEN, STAINS, CHIPS, REDUCED BATTERY CAPACITY etc...., in other words it has suffered the usual WEAR and TEAR that occurs naturally when it is used.
Secondly, it is already LACKING THE NEW FEATURES of the LATEST VERSIONS which you can't possibly live without. In other words it is now OBSOLETE (Not used any more) in many customers eyes.

--TASK--

Look at the advert below and explain why one of the iPhone 13's is priced at NT$8,000 and another at NT$12,000. In your answer mention and define 'Wear and tear' and 'Obsoleteness'.
"The reason why a 2nd hand iPhone 13 can be resold for as low as NT$8,000 and NT$12,000, is clearly due to...., we can see that...."

--DEFINITON--

Now imagine the iPhone was a company-owned phone given to staff, clearly this would now be considered a NON-CURRENT ASSETS similar to company owned VEHICLES, COMPUTERS, MACHINERY etc....
So business assets also lose their value through WEAR & TEAR and OBSOLETENESS, which LOWERS ('DEPRECIATES') THEIR RESALE VALUES. This clearly impacts the net assets of the firm, so how is this loss of value measured and reflected in the balance sheet?
We know from above that the value of this depreciation impacts the value of 'EXPENSES' in THE P&L ACCOUNT as well as the NON-CURRENT ASSETS in THE BALANCE SHEET, so it is very important.
NOTE: The depreciation $-value is ADDED to the EXPENSE in the P & L account, and DEDUCTED FROM the previous $-value of the NON CURRENT ASSETS in the balance sheet.
There exist numerous methods to measure this fall in value and two of the most commonly used methods are the STRAIGHT-LINE METHOD, and the UNIT OF PRODUCTION METHOD, both of which have both PROS and CONS.

--TASK--

TES issues each staff member a Lenovo ThinkPad (i5) at the beginning of their employment (As of 2024), explain why its value impacts both the P & L account and the balance sheet.
"The reason why the issue of a 'brand-new' Lenovo ThinkPad to newly-arriving teachers at TES impacts the both the school's P&L account and the balance sheet, is that, firstly..."

--STRAIGHT LINE--

--DEFINITION--

The STRAIGHT LINE METHOD uses TIME as the basis of the assets value; and reduces the value of the noncurrent asset by the same monetary value each year throughout its useful life. It assumes that the asset's utility DECLINES EVENLY over its useful life. For example th
WHAT INFO DO WE NEED?
- - - - PURCHASE PRICE
      - RESALE PRICE
      - EXPECTED LIFESPAN OF USE (IN YEARS)
WHAT IS THE FORMULA?
- ANNUAL DEPRECIATION = PURCHASE PRICE LESS RESALE PRICE / EXPECTED LIFESPAN OF USE (IN YEARS)

--EXAMPLE--

WORKED EXAMPLE:

- A car is bought for $25,000, and is expected to be resold for $5000 after 5 years of use. So the ANNUAL DEPRECIATION = $25,000 - $5,000 / 5 = $4000 PER YEAR, for 5 yrs.

--PROS & CONS--

(+) SIMPLE TO CALCULATE
(+) LESS TIME-CONSUMING
(+) MOST COMMON
(+) ACCOUNTS FOR LIFESPAN
(-) ASSET USAGE IGNORED

--UNITS OF OUTPUT--

--DEFINITION--

The UNITS OF PRODUCTION METHOD uses USAGE as the basis of the assets value. This is calculated by firstly working out DEPRECIATION PER UNIT then DEPRECIATION PER YEAR.
In order to work out the DEPRECIATION PER UNIT an EXPECTED UNITS OF USE PER YEAR is firstly established e.g. the purchased car is expected to manage 10,000 miles per year.
WHAT INFO DO WE NEED?
- - - - PURCHASE PRICE
        RESALE PRICE
        EXPECTED UNITS OVER LIFESPAN

WHAT IS THE FORMULA?

- - - - DEPRECIATION PER UNIT = PURCAHSE PRICE LESS RESALE VALUE / EXPECTED UNITS OVER LIFETIME
        ANNUAL DEPRECIATION = DEPRECIATION PER UNIT * ACTUAL NUMBER OF UNITS PRODUCED IN THAT YEAR

--EXAMPLE--

WORKED EXAMPLE:
- A car is bought for $25,000, and is expected to be resold for $5000 after 5 years of use and the car is able to do about 10,000 miles per year, meaning it's expected lifetime units are 50.000.
- In the 1st year it does 8000 miles, so how much has it depreciated?
- DEPRECIATION PER UNIT (MILE) = $25,000 - $5,000 / 50,000 miles = $0.40 per mile, so ANNUAL DEPRECIATION after the first year is $0.40 * $8000 = $3,200 and the BOOK VALUE entered

--PROS & CONS--

(-) DIFFICULT TO CALCULATE
(-) TIME CONSUMING
(-) LESS COMMONLY USED
(+) ACCOUNTS FOR LIFESPAN
(+) ACCOUNTS FOR ASSET USAGE

--SO MANY COOL TASKS--

--'BONEYARD' RELATED TASK--

Complete the Edpuzzle below related to 'THE DEPRECIATION OF AIRPLANES' Trust me its very interesting and it will help you grasp the straight-line and units of output depreciation methods;)

--TEACHER RELATED TASK--

- The average lifespan of a IBDP Business Mgt. teacher is about 10 years before they have a mental breakdown or become so outdated due to new teaching methods that they are simply made obsolete. (Say nothing!!!!😠)
- So using the straight-line method, If a teacher costs about $100,000, and is expected to be moved on to a new school for $20,000 after 5 years of teaching, what is the annual depreciation entered into the P&L? and what is the net book value of the teacher entered into the balance sheet after 3 years?

--TEACHER RELATED TASK--

- Given that the EXPECTED UNITS OVER LIFESPAN of a Business Mgt. teacher as measured in hours teaching, is 4000 hours (400 per year). If a teacher costs about $100,000, and is expected to be moved on to a new school for $20,000 and teaches 1000 hours in his first year, 8,000 in his second year and $6,000 in his 3rd year, what is the annual depreciation entered into the P&L in year 3? and what is the net book value of the teacher entered into the balance sheet after 3 years?

--FOOTBALL RELATED TASK--

Yes another football-themed example!

--USED CAR RELATED TASK--

Imagine you are the proud owner of a petrol-using, 1997/R, red, Ford Fiesta Hatchback 1.1 classic 5-door, with registration number 'ET17 EJD', with 150,000 miles on the clock. You wish to sell you car, so go to www.webuyanycar.com, and see how much you can get for it. For personal details use the postcode and number below, and input the mileage and your own email address.
How is this number calculated?, you may ask, is it the straight-line method? Read this https://www.webuyanycar.com/how-to-beat-depreciation/ to find out.
Note they will send you an answer that is LIKELY TO BE MORE than what you can really sell it for as in reality they WORK OUT VALUE BASED ON NOT JUST AGE, but OTHER FACTORS such as SERVICE HISTORY, MILEAGE, NUMBER OF PREVIOUS OWNERS etc.. See HERE, and info on HOW TO BE DEPRECIATION can be found HERE

Watch this video about plane 'Boneyards and answer the following:

What is the expected lifespan of an airplane?
What is the unit used to measure the lifespan of airplanes?
Boeing 747 has a lifespan of how many pressurisation cycles?
- - Which is roughly how many flight hours?
Why do short-haul planes age more than long-haul planes?
Why do carriers generally sell of their planes mid lifespan?
If a Boeing 747 purchase price is $400m and its lifespan is 30 years and it will be resold to Drake for $100m after 15, what is its book value using the straight-line method at the end of it's 5th year of flying?
If we measure the usage of the Boeing 747 in terms of flight hours which is 150,000 for it's entire lifespan what is the depreciation per unit?
If the actual hours used over the lifespan works out at 10,000, 9000, 8000, 7000, and 6000 for the first 5 years what is the book value at the end of the 5th year?

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