Please help with these 2 assignments ATC 74Writing Assignmen

Please help with these 2 assignments!

ATC 7.4Writing Assignment Definition of elements of financial statements Putting \"yum\" on people\'s faces around the world is the mission of Yum! Brands, Inc. Yum! ws spun off from PepsiCo in 1997. A spin-off occurs when a company separates its operations into two or more distinct companies. The company was originally composed of KFC, Pizza Hut, and Taco Bell and was operated as a part of PepsiCo prior to the spin-off. In 2015, Yum! had total assets of $8.08 billion, long-term debt of $3.05 billion, and total liabilities of $7.10 billion. Yum!\'s income before interest and taxes in 2015 was $1.92 billion. Its average interest rate on long-term debt ws approximately 4.4 percent. Required a. Assuming Yum! incurs interest expense mostly on its long-term debt, how much interest did Yum incur in 2015, assuming the average interest rate remains at 4.4 percent? Does the debt taxes? Explain. b. seem excessive compared with the amount of 2015 net income before interest and e. Assum d. Assume ing Yum! pays tax at the rate of 25 percent, what amount of tax will Yum! pay in 2015? you are the president of the company. Write a memo to the shareholders explaining why want to finance so much of its assets with debt rather than stockholders\' equity

Solution

Atc 7-4

A. The amount of expenditure on interest is 0.1342 billion

(3.05*0.044)

B. No debt doesn\'t seem excess has the total debt can be repaid with profit in less than 2 years.

C. Income before interest and tax. : 1.92

Interest. : 0.1342

Income before tax. : 1.7858

Tax @ 25%. : 0.44645

4. Memo to shareholders

Equity is expensive than the debt has the expectation of equity returns in more than the debt. Here, the debt of the company 0.38 times the total asset. The company here can easily increase its debt. Debt also gives us deduction in income tax.

ATC 6-4

Here the written down value of equipment is 4,00,000 for both the companies. But even though the wdv is same the equipments have different block which tells us that the historical cost of equipment are not same. Also the accumulated depreciation is different in both companies showing us either they follow different method of depreciation or the block was purchased at different dates. Therefore the amount of equipment is not same. This type of format help the stakeholders know that the equipment cost and also its value as on date.