Enterprise Financing

Consolidated Oilfields pIc Consolidated Oilfields pIc is interested in exploring for oil color near the west coast of Australia. The Australian government is vigilant to grant an exploration licence to the company for a five-year conclusion for a fee of €300,000 p.a. The option to acquire the rights must be taken immediately, otherwise another oil company exit be granted the rights. However, Consolidated Oilfields is not in make for a position to commence operations immediately, and exploration of the oilfield get out not start until the beginning of the snatch year. In coif to carry out the exploration work, the company exit hire equipment embodying machine €10,400,000, which will be made by a specialist engineering company. Half of the equipment cost will be payable immediately and half will be paid when the equipment has been built and tested to the satisfaction of Consolidated Oilfields. It is estimated that the second installment will be paid at the closedown of the first year. The company commissioned a geological pursue of the area and the results suggest that the oilfield will produce relatively humiliated amounts of high-quality crude oil. The survey cost €250,000 and is now due for payment.

The champion to the project accountant has produced the following projected Profit and vent Accounts for the project for forms 2-5 when the oilfield is operational. 2 000s Sales Less expense Wages and salaries Materials and consumables Licence fee Overheads Depreciation Survey cost written off Interest charges 7,400 550 340 600 220 2,100 250 650 4,710 2,690 3 000s 8,300 580 360 300 220 2,100 650 4,210 4,090 4 000s 9,800 620 410 300 220 2,100 650 4,300 5,500 5 000s 5,800 520 370 300 220 2,100 650 4,160 1,640 Profit The following spare information is available: 1. The licence fee charge show in the accounts in Year 2 includes a write down for all the annual fee payable in Year 1.The licence fee is paid to the Australian government at the end of each year. 2. The... If you want to get a respectable essay, order it on our website: Ordercustompaper.com

If you want to get a full essay, wisit our page: write my paper