Present Value Concepts and Measurement DONALD E.KIESO JERRY J.WEYGANDI TERRY D.WARFIELD Intermediate Chapter 6 Accounting Intermediate Accounting 12th Edition Kieso,Weygandt,and Warfield wwn Chapter 6-1
Chapter 6-1 Intermediate Accounting 12th Edition Kieso, Weygandt, and Warfield
Learning Objectives 1.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.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. Chapter 6-2
Chapter 6-2
Accounting and the Time Value of Money Basic Time More Value Single-Sum Present Value Annuities Complex Problems Measurement Concepts Situations Applications Future value 0 Future value 0 Deferred Expected The nature of of a single of ordinary annuities cash flow interest sum annuity Valuation of illustration Simple 0 Present value o Future value long-term of a single of annuity due interest bonds sum 0 Examples of Compound 0 Effective- interest 0 Solving for FV of annuity interest Present value Fundamental other method of unknowns of ordinary bond variables annuity discount/ Present value premium of annuity due amortization Chapter Examples of 6-3 PV of annuity
Chapter 6-3
Basic Time Value Concepts Time Value of Money In accounting (and finance),the term indicates that a dollar received today is worth more than a dollar promised at some time in the future. Chapter 6-4 LO 1 Identify accounting topics where the time value of money is relevant
Chapter 6-4 In accounting (and finance), the term indicates that a dollar received today is worth more than a dollar promised at some time in the future. Time Value of Money
Basic Time Value Concepts Applications to Accounting Topics: 1.Notes 5.Sinking Funds 2.Leases 6.Business Combinations 3.Pensions and Other 7.Disclosures Postretirement 8.Installment Contracts Benefits 4.Long-Term Assets Chapter 6-5 LO 1 Identify accounting topics where the time value of money is relevant
Chapter 6-5 1. Notes 2. Leases 3. Pensions and Other Postretirement Benefits 4. Long-Term Assets Applications to Accounting Topics: 5. Sinking Funds 6. Business Combinations 7. Disclosures 8. Installment Contracts