中级财务会计I(双语)课程ch06课件.ppt

1、6-16-2Intermediate AccountingIFRS EditionKieso,Weygandt,and Warfield 6-31.Identify accounting topics where the time value of money is relevant.2.Distinguish between simple and compound interest.3.Use appropriate compound interest tables.4.Identify variables fundamental to solving interest problems.5

2、.Solve future and present value of 1 problems.6.Solve future value of ordinary and annuity due problems.7.Solve present value of ordinary and annuity due problems.8.Solve present value problems related to deferred annuities and bonds.9.Apply expected cash flows to present value measurement.6-46-5A r

3、elationship between time and money.A dollar received today is worth more than a dollar promised at some time in the future.Time Value of Money6-61.Notes 2.Leases 3.Pensions and Other Postretirement Benefits 4.Long-Term AssetsApplications to Accounting Topics:5.Shared-Based Compensation6.Business Com

4、binations7.Disclosures8.Environmental Liabilities6-7Payment for the use of money.Excess cash received or repaid over the amount borrowed(principal).The Nature of Interest6-8Interest computed on the principal only.Simple InterestIllustration:KC borrows$20,000 for 3 years at a rate of 7%per year.Compu

5、te the total interest to be paid for the 3 years.Many regulatory frameworks require disclosure of interest rates on an annual basis.Interest=p x i x n=$20,000 x .07 x 3=$4,2006-9Interest computed on the principal only.Simple InterestInterest=p x i x n=$20,000 x .07 x 1=$1,400Illustration:KC borrows$

6、20,000 for 3 years at a rate of 7%per year.Compute the total interest to be paid for the 1 year.6-10Interest computed on the principal only.Simple InterestIllustration:On March 31,2011,KC borrows$20,000 for 3 years at a rate of 7%per year.Compute the total interest to be paid for the year ended Dec.

7、31,2011.Interest=p x i x n=$20,000 x .07 x 9/12=$1,0506-11Compound InterestComputes interest onprincipal andinterest earned that has not been paid or withdrawn.Most business situations use compound interest.6-12Illustration:Tomalczyk Company deposits$10,000 in the Last National Bank,where it will ea

8、rn simple interest of 9%per year.It deposits another$10,000 in the First State Bank,where it will earn compound interest of 9%per year compounded annually.In both cases,Tomalczyk will not withdraw any interest until 3 years from the date of deposit.Year 1$10,000.00 x 9%$900.00$10,900.00Year 2$10,900

9、.00 x 9%$981.00$11,881.00Year 3$11,881.00 x 9%$1,069.29$12,950.29Illustration 6-1 Simple vs.Compound Interest6-13Table 1-Future Value of 1Table 2-Present Value of 1Table 3-Future Value of an Ordinary Annuity of 1Table 4-Present Value of an Ordinary Annuity of 1Table 5-Present Value of an Annuity Due

10、 of 1Compound Interest TablesNumber of Periods=number of years x the number of compounding periods per year.Compounding Period Interest Rate=annual rate divided by the number of compounding periods per year.6-14How much principal plus interest a dollar accumulates to at the end of each of five perio

11、ds,at three different rates of compound interest.Illustration 6-2Excerpt from Table 6-1Compound Interest6-15Formula to determine the future value factor(FVF)for 1:Where:=future value factor for n periods at i interest n=number of periods i=rate of interest for a single periodFVFn,iCompound Interest6

12、-16Determine the number of periods by multiplying the number of years involved by the number of compounding periods per year.Illustration 6-4Frequency of CompoundingCompound Interest6-179%annual interest compounded daily provides a 9.42%yield.Effective Yield for a$10,000 investment.Illustration 6-5C

13、omparison of Different Compounding PeriodsCompound Interest6-18Rate of InterestNumber of Time PeriodsFuture ValuePresent ValueFundamental VariablesIllustration 6-66-19Unknown Future ValueTwo CategoriesUnknown Present ValueIllustration 6-66-20Value at a future date of a given amount invested,assuming

14、 compound interest.FV =future valuePV=present value(principal or single sum)=future value factor for n periods at i interestFVFn,iWhere:Future Value of a Single Sum6-21Illustration:Bruegger Co.wants to determine the future value of$50,000 invested for 5 years compounded annually at an interest rate

15、of 11%.=$84,253Illustration 6-76-22What table do we use?Alternate CalculationIllustration:Bruegger Co.wants to determine the future value of$50,000 invested for 5 years compounded annually at an interest rate of 11%.Illustration 6-76-23What factor do we use?$50,000Present ValueFactorFuture Valuex 1.

16、68506=$84,253Alternate Calculationi=11%n=56-24BE6-1:Bob Anderson invested$15,000 today in a fund that earns 8%compounded annually.To what amount will the investment grow in 3 years?0123456Present Value$15,000 What table do we use?Future Value?6-25Present ValueFactorFuture Value$15,000 x 1.25971=$18,

17、896i=8%n=36-26PROOFBE6-1:Bob Anderson invested$15,000 today in a fund that earns 8%compounded annually.To what amount will the investment grow in 3 years?6-27BE6-1:Bob Anderson invested$15,000 today in a fund that earns 8%compounded semiannually.To what amount will the investment grow in 3 years?012

18、3456Present Value$15,000 What table do we use?Future Value?6-28Present ValueFactorFuture Value$15,000 x 1.26532=$18,980What factor?i=4%n=66-29Value now of a given amount to be paid or received in the future,assuming compound interest.Present Value of a Single SumWhere:FV =future valuePV=present valu

19、e(principal or single sum)=present value factor for n periods at i interestPVFn,i6-30Illustration:What is the present value of$84,253 to be received or paid in 5 years discounted at 11%compounded annually?=$50,000Illustration 6-116-31What table do we use?Illustration:What is the present value of$84,

20、253 to be received or paid in 5 years discounted at 11%compounded annually?Alternate CalculationIllustration 6-116-32$84,253Future ValueFactorPresent Valuex .59345=$50,000What factor?i=11%n=56-33BE6-2:Caroline and Clifford need$25,000 in 4 years.What amount must they invest today if their investment

21、 earns 12%compounded annually?0123456Present Value?What table do we use?Future Value$25,0006-34$25,000Future ValueFactorPresent Valuex .63552=$15,888What factor?i=12%n=46-350123456Present Value?Future Value$25,000What table do we use?BE6-2:Caroline and Clifford need$25,000 in 4 years.What amount mus

22、t they invest today if their investment earns 12%compounded quarterly?6-36$25,000Future ValueFactorPresent Valuex .62317=$15,579i=3%n=166-37Solving for Other UnknownsExampleComputation of the Number of PeriodsThe Village of Somonauk wants to accumulate$70,000 for the construction of a veterans monum

23、ent in the town square.At the beginning of the current year,the Village deposited$47,811 in a memorial fund that earns 10%interest compounded annually.How many years will it take to accumulate$70,000 in the memorial fund?Illustration 6-136-38ExampleComputation of the Number of PeriodsIllustration 6-

24、14Using the future value factor of 1.46410,refer to Table 6-1 and read down the 10%column to find that factor in the 4-period row.6-39ExampleComputation of the Number of PeriodsUsing the present value factor of.68301,refer to Table 6-2 and read down the 10%column to find that factor in the 4-period

25、row.Illustration 6-146-40Solving for Other UnknownsExampleComputation of the Number of PeriodsThe Village of Somonauk wants to accumulate$70,000 for the construction of a veterans monument in the town square.At the beginning of the current year,the Village deposited$47,811 in a memorial fund that ea

26、rns 10%interest compounded annually.How many years will it take to accumulate$70,000 in the memorial fund?Illustration 6-136-41Solving for Other UnknownsExampleComputation of the Interest RateIllustration 6-15Advanced Design,Inc.needs 1,409,870 for basic research 5 years from now.The company current

27、ly has 800,000 to invest for that purpose.At what rate of interest must it invest the 800,000 to fund basic research projects of 1,409,870,5 years from now?6-42Illustration 6-16Using the future value factor of 1.76234,refer to Table 6-1 and read across the 5-period row to find the factor.ExampleComp

28、utation of the Interest Rate6-43Illustration 6-16Using the present value factor of.56743,refer to Table 6-2 and read across the 5-period row to find the factor.ExampleComputation of the Interest Rate6-44(1)Periodic payments or receipts(called rents)of the same amount,(2)Same-length interval between

29、such rents,and(3)Compounding of interest once each interval.Annuity requires:Ordinary Annuity-rents occur at the end of each period.Annuity Due-rents occur at the beginning of each period.Two Types6-45Future Value of an Ordinary AnnuityRents occur at the end of each period.No interest during 1st per

30、iod.01Present Value2345678$20,00020,00020,00020,00020,00020,00020,00020,000Future Value6-46Illustration:Assume that$1 is deposited at the end of each of 5 years(an ordinary annuity)and earns 12%interest compounded annually.Following is the computation of the future value,using the“future value of 1”

31、table(Table 6-1)for each of the five$1 rents.Illustration 6-176-47 R=periodic rent FVF-OA =future value factor of an ordinary annuity i =rate of interest per period n=number of compounding periodsA formula provides a more efficient way of expressing the future value of an ordinary annuity of 1.Where

32、:n,i6-48Illustration:What is the future value of five$5,000 deposits made at the end of each of the next 5 years,earning interest of 12%?=$31,764.25Illustration 6-196-49Illustration:What is the future value of five$5,000 deposits made at the end of each of the next 5 years,earning interest of 12%?Wh

33、at table do we use?Alternate CalculationIllustration 6-196-50$5,000DepositsFactorPresent Valuex 6.35285=$31,764What factor?i=12%n=56-51BE6-13:Gomez Inc.will deposit$30,000 in a 12%fund at the end of each year for 8 years beginning December 31,2010.What amount will be in the fund immediately after th

34、e last deposit?01Present ValueWhat table do we use?2345678$30,00030,00030,00030,00030,00030,00030,00030,000Future Value6-52DepositFactorFuture Value$30,000 x 12.29969=$368,991i=12%n=86-53Future Value of an Annuity DueRents occur at the beginning of each period.Interest will accumulate during 1st per

35、iod.Annuity Due has one more interest period than Ordinary Annuity.Factor=multiply future value of an ordinary annuity factor by 1 plus the interest rate.01234567820,00020,00020,00020,00020,00020,00020,000$20,000Future Value6-54Illustration 6-21Comparison of Ordinary Annuity with an Annuity Due6-55I

36、llustration:Assume that you plan to accumulate$14,000 for a down payment on a condominium apartment 5 years from now.For the next 5 years,you earn an annual return of 8%compounded semiannually.How much should you deposit at the end of each 6-month period?R=$1,166.07Illustration 6-24Computation of Re

37、nt6-56Computation of RentIllustration 6-24$14,000=$1,166.0712.00611Alternate Calculation6-57Illustration:Suppose that a companys goal is to accumulate$117,332 by making periodic deposits of$20,000 at the end of each year,which will earn 8%compounded annually while accumulating.How many deposits must

38、 it make?Illustration 6-25Computation of Number of Periodic Rents5.866606-58Illustration:Mr.Goodwrench deposits$2,500 today in a savings account that earns 9%interest.He plans to deposit$2,500 every year for a total of 30 years.How much cash will Mr.Goodwrench accumulate in his retirement savings ac

39、count,when he retires in 30 years?Illustration 6-27Computation of Future Value6-59Illustration:Bayou Inc.will deposit$20,000 in a 12%fund at the beginning of each year for 8 years beginning January 1,Year 1.What amount will be in the fund at the end of Year 8?01Present ValueWhat table do we use?2345

40、678$20,00020,00020,00020,00020,00020,00020,00020,000Future Value6-60DepositFactorFuture Value12.29969 x 1.12 =13.775652i=12%n=8$20,000 x 13.775652=$275,5136-61Present Value of an Ordinary AnnuityPresent value of a series of equal amounts to be withdrawn or received at equal intervals.Periodic rents

41、occur at the end of the period.01Present Value2341920$100,000100,000100,000100,000100,000.100,0006-62Illustration:Assume that$1 is to be received at the end of each of 5 periods,as separate amounts,and earns 12%interest compounded annually.Illustration 6-286-63A formula provides a more efficient way

42、 of expressing the present value of an ordinary annuity of 1.Where:6-64Illustration:What is the present value of rental receipts of$6,000 each,to be received at the end of each of the next 5 years when discounted at 12%?Illustration 6-306-65Illustration:Jaime Yuen wins$2,000,000 in the state lottery

43、.She will be paid$100,000 at the end of each year for the next 20 years.How much has she actually won?Assume an appropriate interest rate of 8%.01Present ValueWhat table do we use?2341920$100,000100,000100,000100,000100,000.100,0006-66$100,000ReceiptsFactorPresent Valuex 9.81815=$981,815i=5%n=206-67

44、Present Value of an Annuity DuePresent value of a series of equal amounts to be withdrawn or received at equal intervals.Periodic rents occur at the beginning of the period.01Present Value2341920$100,000100,000100,000100,000100,000.100,0006-68Illustration 6-31Comparison of Ordinary Annuity with an A

45、nnuity Due6-69Illustration:Space Odyssey,Inc.,rents a communications satellite for 4 years with annual rental payments of$4.8 million to be made at the beginning of each year.If the relevant annual interest rate is 11%,what is the present value of the rental obligations?Illustration 6-336-70Illustra

46、tion:Jaime Yuen wins$2,000,000 in the state lottery.She will be paid$100,000 at the beginning of each year for the next 20 years.How much has she actually won?Assume an appropriate interest rate of 8%.01Present ValueWhat table do we use?2341920$100,000100,000100,000100,000100,000.100,0006-71$100,000

47、ReceiptsFactorPresent Valuex 10.60360=$1,060,360i=8%n=206-72Illustration:Assume you receive a statement from MasterCard with a balance due of$528.77.You may pay it off in 12 equal monthly payments of$50 each,with the first payment due one month from now.What rate of interest would you be paying?Comp

48、utation of the Interest RateReferring to Table 6-4 and reading across the 12-period row,you find 10.57534 in the 2%column.Since 2%is a monthly rate,the nominal annual rate of interest is 24%(12 x 2%).The effective annual rate is 26.82413%(1+.02)-1.12 6-73Rents begin after a specified number of perio

49、ds.Future Value-Calculation same as the future value of an annuity not deferred.Present Value-Must recognize the interest that accrues during the deferral period.012341920100,000100,000100,000.Future ValuePresent ValueDeferred Annuities6-74Two Cash Flows:Periodic interest payments(annuity).Principal

50、 paid at maturity(single-sum).01234910140,000140,000140,000$140,000.140,000140,0002,000,000Valuation of Long-Term Bonds6-75BE6-15:Wong Inc.issues HK$2,000,000 of 7%bonds due in 10 years with interest payable at year-end.The current market rate of interest for bonds of similar risk is 8%.What amount