time period assumption

Examples of time period assumption in the following topics:

• Critical reflection

  • Critical reflection attempts to deconstruct the learner's prior assumptions such as beliefs, value systems, attitudes, and social emotion in a rational way.
  • In the scenario, the learners are retired consultants who are familiar with the architectural time period which the company specializes in and younger full-time workers who strictly follow traditional architectural design methods.
  • This anti-technology feeling, therefore, forms their assumption and prevents them from accepting the use of AutoCAD.
  • Adult learners are usually tenacious in holding on to their assumptions, and even if they overcome the initial personal and social resistance to questioning their assumptions, their critical reflection does not become any less troubling (Cranton, 1994, p. 18).
  • The emancipatory domain is the place where learners can free themselves from any restrictions and actively question their assumptions.

• Disadvantages of the Payback Method

  • Payback period analysis ignores the time value of money and the value of cash flows in future periods.
  • The payback period is considered a method of analysis with serious limitations and qualifications for its use, because it does not account for the time value of money, risk, financing, or other important considerations, such as the opportunity cost.
  • An implicit assumption in the use of payback period is that returns to the investment continue after the payback period.
  • Payback ignores the time value of money.
  • Payback is the amount of time it takes to return an initial investment; however, it does not account for the time value of money, risk, financing, or other important considerations, such as the opportunity cost.

• Scenario breakdown of the Mezirow phases of transformation

  • A disorienting dilemma is triggered by a life crisis or major life transition, although it may also result from an accumulation of transformations in meaning schemes over a period of time (Mezirow, 1995, p. 50).
  • This kind of method can be used to identify the sources of their assumptions.
  • Identifying the assumptions is one of the primary steps of transformative learning.
  • The instructor could sense the frustration of the veteran architects and young full-time workers in having to learn how to use design software (AutoCAD).
  • A learner must become aware of their assumptions and make them explicit.

• Defining the Payback Method

  • The payback method is a method of evaluating a project by measuring the time it will take to recover the initial investment.
  • A $1000 investment which returned $500 per year would have a two year payback period.
  • In capital budgeting, the payback period refers to the period of time required for the return on an investment to "repay" the sum of the original investment.
  • An implicit assumption in the use of the payback method is that returns to the investment continue after the payback period.
  • The payback period is usually expressed in years.

• Discounted Payback

  • Discounted payback period is the amount of time to cover the cost, by adding positive discounted cash flow coming from the profits of the project.
  • Payback period in capital budgeting refers to the period of time required for the return on an investment to "repay" the sum of the original investment.
  • The payback period is considered a method of analysis with serious limitations and qualifications for its use, because it does not account for the time value of money, risk, financing, or other important considerations, such as the opportunity cost.
  • Compared to payback period, the discounted payback period takes the time value of money into consideration.
  • An implicit assumption in the use of payback period is that returns to the investment continue after the payback period.

• Cost Flow Assumptions

  • Inventory cost flow assumptions (e.g., FIFO) are necessary to determine the cost of goods sold and ending inventory.
  • Inventory cost flow assumptions are necessary to determine the cost of goods sold and ending inventory.
  • LIFO and weighted average cost flow assumptions may yield different end inventories and COGS in a perpetual inventory system than in a periodic inventory system due to the timing of the calculations.
  • In the perpetual system, some of the oldest units calculated in the periodic units-on-hand ending inventory may get expended during a near inventory exhausting individual sale.
  • Explain how a company's inventory cost flow assumptions dictate which method it will use for inventory valuation

• Classical Theory

  • During the period in which classical theory emerged, society was undergoing many changes.
  • During this time period, theorists developed the theory of value or price which allowed for further analysis of markets and wealth.

• Calculating Future Value

  • When calculating a future value (FV), you are calculating how much a given amount of money today will be worth some time in the future.
  • It is also important to remember that the interest rate and the periods must be in the same units.
  • That is, if the interest rate is 5% per year, one period is one year.
  • Unless the problem states otherwise, it is safe to make these assumptions - you will be told if there are payments during the 10 year period or if it is simple interest.
  • In order to get our total number of periods (t), we would multiply 12 months by 10 years, which equals 120 periods.

• Advantages of LIFO

  • Using LIFO accounting for inventory, a company generally pays lower taxes in periods of inflation.
  • Since the 1970s, some U.S. companies shifted towards the use of LIFO, which reduces their income taxes in times of inflation, but with International Financial Reporting Standards banning the use of LIFO, more companies have gone back to FIFO.
  • These methods are used to manage assumptions of cost flows related to inventory , stock repurchases (if purchased at different prices), and various other accounting purposes.
  • Since the 1970s, some U.S. companies shifted towards the use of LIFO, which reduces their income taxes in times of inflation, but with International Financial Reporting Standards banning the use of LIFO, more companies have gone back to FIFO.

• Impact of Inventory Method on Financial Statement Analysis

  • A perpetual system updates inventory every time a change in inventory occurs, and a periodic system updates inventory at the end of the accounting period.
  • Costs of inventory per unit or item are determined at the time made or acquired.
  • Some systems permit determining the costs of goods at the time acquired or made but assigning costs to goods sold under the assumption that the goods made or acquired last are sold first.
  • The LIFO reserve (an asset or contra-asset) represents the difference in cost of inventory under the FIFO and LIFO assumptions.
  • The calculated cost of goods on hand at the end of a period is the ratio of cost of goods acquired to the retail value of the goods times the retail value of goods on hand.