Exercise 12-13 Microsoft Edge edugen wileyplus.com/edugen/shared/assignment/test

Question

Exercise 12-13 Microsoft Edge edugen wileyplus.com/edugen/shared/assignment/test/qprint.uni Exercise 12-13 The following income statements and other information are available for the Schneider Company: 2013 2012 2014 Sales $385,500,000 $250,700,000 $181,900,000 Less cost of goods sold 212,025,000 120,336,000 87,312,000 Gross margin 173,475,000 130,364,000 94,588,000 Selling and administrative costs 26,985,000 25,070,000 18,190,000 15,420,000 2,535,000 Research and development 9,095,000 Income from operations 131,070,000 92,759,000 67,303,000 Less taxes on income 39,321,000 27,827,700 20,190,900 $91,749,000 $64,931,300 $47,112,100 Net income Total assets $711,800,000 $662,800,000 $434,800,000 Noninterest-bearing current liabilities 136,200,000 1,070,000 98,050,000 Cost of capital 12% 12% 12% Calculate EVA for 2014. Assume that for purposes of calculating EVA, the company capitalizes research and development expenditures and amortizes them over three years, including the year they are incurred. For external reporting purposes, research and development is expensed in the year incurred, as indicated in the income statements above. (Round answer to the nearest whole dollar, e.g. 5,725) EVA for 2014 $C Question Attempts: 0 of 5 used Copyright 2000-2015 by John Wiley & anies. All rights re 9:21 PM 26/20

Explanation / Answer

2014 2013 2012 Capitalization or R&D Expenses $      15,420,000.00 $    12,535,000.00 $       9,095,000.00 Amortization: 2012 Cost $        3,031,666.67 $       3,031,666.67 $       3,031,666.67 2013 ost             4,178,333.33 $       4,178,333.33 2014 Cost $        5,140,000.00 Total Amortization $      12,350,000.00 $       7,210,000.00 $       3,031,666.67 Revised Income Statement Year 2014 2013 2012 Net Income After Tax $      91,749,000.00 $    64,931,300.00 $    47,112,100.00 Add Research and Development cost $      15,420,000.00 $    12,535,000.00 $       9,095,000.00 Less: Amortization $    (12,350,000.00) $    (7,210,000.00) $    (3,031,666.67) Operating Profit $      94,819,000.00 $    70,256,300.00 $    53,175,433.33 Capital: Total Assets $    711,800,000.00 $ 662,800,000.00 $ 434,800,000.00 Add: Capitalization of R&D expenses $      37,050,000.00 $    21,630,000.00 $       9,095,000.00 Less: Amortization $      (8,171,666.67) $    (4,178,333.33) $    (3,031,666.67) Net Assets $    740,678,333.33 $ 680,251,666.67 $ 440,863,333.33 Less: Liabilities $    136,200,000.00 $    11,070,000.00 $    98,050,000.00 Owners Equity $    604,478,333.33 $ 669,181,666.67 $ 342,813,333.33 Required rate of return 12% 12% 12% Expected return $      72,537,400.00 $    80,301,800.00 $    41,137,600.00 EVA (Actual return - Expected return $      22,281,600.00 $ (10,045,500.00) $    12,037,833.33

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