accounting question

Use the model to assess the sensitivity of the impairment test results by simply changing the assumptions entered on the“Assumptions” worksheet and observing the changes in the projected cash flows and the indicated impairment write-down amount, if any.  Before you complete Scenario #1, make sure all of your Assumptions match their original values as seen in Exhibit #1.  

Scenario #1
Assumption Name:	Revised Assumption:
Curtailment	9%
Revenue per KWh	.0551
Variable labor inflation	5.3%
Limestone consumption (tons) per MWh	0.35

What are the total future cash flows based on the revised assumptions in Scenario #1?

2 points   

QUESTION 2

Based on the assumptions in Scenario #1, the asset is impaired.

 True

 False

1 points   

QUESTION 3

Use the model to assess the sensitivity of the impairment test results by simply changing the assumptions entered on the “Assumptions” worksheet and observing the changes in the projected cash flows and the indicated impairment write-down amount, if any.  Before you complete Scenario #1, make sure all of your Assumptions match their original values as seen in Exhibit #1.  

Scenario #1
Assumption Name:	Revised Assumption:
Curtailment	9%
Revenue per KWh	.0551
Variable labor inflation	5.3%
Limestone consumption (tons) per MWh	0.35

If the asset is impaired, what is the required write down based on the revised assumptions in Scenario #1 (answer as a positive number)? If a write down is not required, answer 0.

2 points   

QUESTION 4

Use the model to assess the sensitivity of the impairment test results by simply changing the assumptions entered on the “Assumptions” worksheet and observing the changes in the projected cash flows and the indicated impairment write-down amount, if any.  Before you complete Scenario #2, make sure all of your Assumptions match their original values as seen in Exhibit #1.  

Scenario #2
Assumption Name:	Revised Assumption:
Limestone cost per ton	17
Fixed labor cost	940,000
Maintenance inflation	4.7%
Asset retirement inflation	3.5%

What are the total future cash flows based on the revised assumptions in Scenario #2?

2 points   

QUESTION 5

Based on the assumptions in Scenario #2, the asset is impaired.

 True

 False

1 points   

QUESTION 6

Use the model to assess the sensitivity of the impairment test results by simply changing the assumptions entered on the “Assumptions” worksheet and observing the changes in the projected cash flows and the indicated impairment write-down amount, if any.  Before you complete Scenario #2, make sure all of your Assumptions match their original values as seen in Exhibit #1.  

Scenario #2
Assumption Name:	Revised Assumption:
Limestone cost per ton	17
Fixed labor cost	940,000
Maintenance inflation	4.7%
Asset retirement inflation	3.5%

If the asset is impaired, what is the required write down based on the revised assumptions in Scenario #2 (answer as a positive number)? If a write down is not required, answer 0.

2 points   

QUESTION 7

Use the model to assess the sensitivity of the impairment test results by simply changing the assumptions entered on the “Assumptions” worksheet and observing the changes in the projected cash flows and the indicated impairment write-down amount, if any.  Before you complete Scenario #3, make sure all of your Assumptions match their original values as seen in Exhibit #1.  

Scenario #3
Assumption Name:	Revised Assumption:
Fuel cost per ton	35
Property tax inflation	6.2%
Other costs	199,000
Discount rate	11%

What are the total future cash flows based on the revised assumptions in Scenario #3? 

2 points   

QUESTION 8

Based on the assumptions in Scenario #3, the asset is impaired.

 True

 False

1 points   

QUESTION 9

Use the model to assess the sensitivity of the impairment test results by simply changing the assumptions entered on the “Assumptions” worksheet and observing the changes in the projected cash flows and the indicated impairment write-down amount, if any.  Before you complete Scenario #3, make sure all of your Assumptions match their original values as seen in Exhibit #1.  

Scenario #3
Assumption Name:	Revised Assumption:
Fuel cost per ton	35
Property tax inflation	6.2%
Other costs	199,000
Discount rate	11%

If the asset is impaired, what is the required write down based on the revised assumptions in Scenario #3 (answer as a positive number)? If a write down is not required, answer 0.

2 points   

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