International Accounting Standard Mib Water For All Essay

International Accounting Standard Mib Water For All - Essay Example With a daily average of 150-350 vendors, the company estimated that each consumer will need at least 1-litre clean drinking water on a daily basis. Within the first year, the company planned to acquire 50 water filters. After conducting an extensive market research, MIBW4A introduced its purified water products priced at USD 0.08 per liter. By only attracting 12% of the potential consumers, the company estimated daily average sales of 450,000 liters of clean water. Within the first year of operation, MIBW4A relies on hired expertise services from Blue Future Ltd to supply them with slow sand filters. However, to reduce the cost of capital, the company plans to manufacture their own filters at a cost of USD 250 per sand filter by the second year of operation. This would be more economical as it is relatively cheaper than importing each filter at USD 400. Other capital expenditures to be met by the company are associated with the acquisition of trucks and motorcycles to aid in ferrying equipment and technical staff to their workstations. By the end of the third year, the team planned to have 150 motorcycles at a cost of USD 2,500 per motor. In addition, MIBW4A planned to have 12 service trucks in good working condition by the beginning of the third year (Salzman, 2012, p.5). To determine the unit water pricing, it was essential for MIBW4A to depreciate their capital expenditures at the effective market cost of capital, which was helpful in determining the unit cost of distributed water.... Within the first year, the company planned to acquire 50 water filters. By the end of three years of operation, MIBW4A estimates their customer base to reach 3000, thus calling for acquisition of more filters in the subsequent years. After conducting an extensive market research, MIBW4A introduced its purified water products priced at USD 0.08 per litre. By only attracting 12% of the potential consumers, the company estimated daily average sales of 450,000 litres of clean water. Within the first year of operation, MIBW4A relies on hired expertise services from Blue Future Ltd to supply them with slow sand filters. However, to reduce the cost of capital, the company plans to manufacture their own filters at a cost of USD 250 per sand filter by the second year of operation. This would be more economical as it is relatively cheaper than importing each filter at USD 400. Other capital expenditures to be met by the company are associated with acquisition of trucks and motorcycles to aid i n ferrying equipments and technical staff to their work stations. By the end of third year, the team planned to have 150 motorcycles at a cost of USD 2,500 per motor. In addition, MIBW4A planned to have 12 service trucks in good working condition by the beginning of the third year (Salzman, 2012, p.5). To determine the unit water pricing, it was essential for MIBW4A to depreciate their capital expenditures at the effective market cost of capital, which was helpful in determining the unit cost of distributed water. All the capital expenditure items are expected to have a 15 year economic life span. The team used a straight line depreciation method to allocate equal depreciation costs to each item over its economic time. MIBW4A