The History of the Backhoe
August 6th 2008 07:30 pm By Web Development in India
Today backhoes are commonly found on almost every construction job. It is hard to imagine any dirt moving job without some backhoe work.
Backhoes are compact and easy to maneuver. One of the reasons they are so popular is the ability to quickly do small jobs otherwise done by hand. Rubber tires give it mobility to handle material and load out unused spoil from excavations. They can also work around obstructions and in tight areas.
The commonly seen tractor with a front bucket and a rear mounted backhoe was first built in 1953 by a British company known as JCB. In fact, for years a backhoe tractor was known as a JCB no matter who built them. In 1957, Case Tractor Company bought out the original manufacturer. With the acquisition by Case came many improvements to the original design.
After the acquisition was complete, Case engineer Elton Long and his team brought in resources from throughout the company to finish development of an integrated loader/backhoe under a very tight deadline. By early spring, Case had successfully merged technologies to create the Case 320, the first fully integrated loader/backhoe made and warranted by one company.
Many people think the term back hoe refers to the fact that the digging attachment is located on the rear of the tractor. However, the term originally referred to the action of the bucket. The digging operation is carried out by using hydraulic power to pull the bucket back towards the tractor.
Now, the backhoe can be even more versatile with a backhoe attachment for your Bobcat or other skid steer loader. Industrial Products and Equipment has now made arrangements with the manufacturer to market a simple yet very efficient dirt moving machine.
The skid loader backhoe attachment, quickly converts the skid steer into a excavator or trencher. With the addition of a thumb, your loader can also be used to carry and place heavy and bulky items. If you need to transport, the dirt from a trenching operation, the bucket can be quickly swapped using the loaders quick attach feature.
While a traditional tractor style backhoe is highly maneuverable, nothing beats a skid steer loader for getting into small tight places. Having a simple quick connect back hoe will add a great deal of versatility to your machine.
Do you ever wonder why fire truck manufacturers offer prepayment discounts? And the financial implications of prepaying your fire truck? This article helps you understand why they offer discounts and how to analyze them.
Why fire truck manufacturers offer prepayment discounts.
The first question I get asked from hundreds of fire departments is: Why do manufacturers even offer a prepayment discount? It seems like they are losing money. Well, they’re not and I’ll explain why in this article.
It’s the timing of the money.
Manufacturers spend a lot of money for wages, parts, and overhead during the construction of your fire truck. They won’t get paid back this money until you pay them at delivery. So, the manufacturer has to borrow this money during construction and pays interest on this money.
So, they offer a prepayment discount.
By offering a prepayment discount, the manufacturer is trying to entice you, the customer, to be the bank during construction. They are basically borrowing from you and “paying” you a discount instead of paying interest to their local bank. Usually, that discount is less than what they would have to pay the bank for interest.
What should you consider before prepaying your fire truck?
There are 2 parts to this question. There is a financial part - does it make financial sense to prepay the truck or, in other words, am I ahead money-wise when prepaying? Then, there is the personal comfort part that needs to be considered. Let’s start with the second part.
Neither a lender nor borrower be.
This is old advice but applies when you are asked to lend your fire truck manufacturer the money to build your fire truck.
You need to answer the following very hard questions in your mind: Are you OK lending money to the manufacturer? Are you OK with the fact that you are taking on the risk of losing the money? What will I do if the manufacturer goes bankrupt? Or delays my delivery?
These are questions that only you can answer for yourself. Regardless if the discount is a great financial deal or not, if you can’t get comfortable with the fact you’re lending money (and taking the risk along with it), don’t do it. It will drive you crazy. Lending isn’t for people who want safe.
So, is it a good deal?
The other part of the prepayment analysis is about measuring if the prepayment makes financial sense. Is it a good deal?
The answer is: It depends. Each discount and situation is different.
How prepayment analysis goes wrong.
The basic measurement if the prepayment is a good financial deal is: can you earn more money (or pay less interest if you need to borrow) than what the manufacturer is offering you as a discount? Most fire departments miss that part of the analysis. They think the discount is free. It’s not.
I’ve seen situations where the department actually loses money by prepaying a truck. Or where the discount of tens of thousands of dollars actually benefited the department by only a few hundred dollars.
I am out of time in this article but will explore how you measure the true costs and savings of prepaying your fire truck in the article Fire Truck prepayments: Is it a good deal?
In this article we will also discuss:
Revenue
Expenditure
The use of goods and services in order to earn revenue is the expense.
Hendriksen opines, “expenses are the using or consuming of goods and services in the process of obtaining revenues”.
American Accounting Association, Committee on concepts and standards, defines as under:
“Expense is the expired cost, directly or indirectly related to given fiscal period, of the flow of goods or services into the market and of related operations.”
(a) Expenditure incurred during the fiscal period and related to same accounting period becomes an expense i.e. expired cost of that period.
(b) Expenditure incurred during the previous accounting period but related to current accounting period becomes an expense i.e. expired cost of the current accounting period e.g. prepaid expenses.
(c) Expenditure related to the current accounting period but not paid becomes outstanding expenses.
Expenditure is usually of two types:
(a) Capital expenditure; and
(b) Revenue expenditure.
Capital Expenditure
Capital expenditure consists of expenditure, the benefit of which is not fully enjoyed in one accounting period but spread over several accounting periods. It includes assets acquired for the purpose of earning income or increasing the earning capacity of the business or effecting economy in the operation of an asset. These are not meant for sale. Expenditure incurred for improving assets and extending an existing asset is also capital expenditure.
The sum of invoice price, freight and insurance charges, installation and erection cost and custom duty etc. will be capitalized in the books of a firm. These capital items appear on the assets side of Balance Sheet.
Examples:
(a) Interest on capital paid during the period of construction of Company (u/s 208 of Indian Companies Act)
(b) Expenditure in connection with or incidental to the purchase or installation of an asset.
(c) Acquisition of new assets.
(d) Expenditure incurred for putting the old asset purchased, into working condition.
(e) Additions and extensions to existing assets.
(f) Interest and financing charges paid, brokerage and commission paid.
(g) Betterment of fixed assets or improvement of an asset to produce more, to improve its earning capacity or to reduce its operating expenses or to increase the life of asset.
The cost of assets will be written off by way of depreciation over a period of its life. The amount of depreciation is a revenue expenditure and is debited to profit and loss account. The reason for charging depreciation to revenue i.e. profit and loss account is that the asset is used for earning revenue. Hence the depreciation is charged to profit and loss account. Thus, the benefit of capital expenditure does not exhaust in one year but extends over a number of years of its use or life of the asset.
Revenue Expenditure
Revenue expenditure consists of expenditure incurred in one period of the accounting, the full benefit of which is enjoyed in that period only. This does not increase the earning capacity of the business but it is incurred in order to maintain the existing earning capacity of the business. It includes all expenses which arise in normal course of business. The benefit of such expenditure is for a short period, say, one year only and it is not to be carried forward to the next year. The expenditure is of a recurring nature i.e. incurred every year.
Examples:
(a) Purchase of raw materials for conversion into finished goods.
(b) Selling and distribution expenses incurred for sale of finished goods e.g. sales office expenses, delivery expenses, advertisement charges, et(%
(c) Establishment expenses like salaries, wages, rent, rates, taxes, insurance, depreciation on office equipment.
(d) Depreciation of plant, machinery and equipment.
(e) Expenses incurred in order to maintain the existing fixed assets in an efficient and workable state such’ as repairs to building, repairs to plant, white-washing and painting of building.
All these items appear on the debit side of trading and profit and loss account, in case of trading concerns or income and expenditure account, in case of non-trading concerns.
Deferred Revenue Expenditure (DRE)
Deferred Revenue Expenditure is a revenue expenditure which has been incurred during one accounting year which is applicable either wholly or in part to further accounting years. According to Prof. A.W. Johnson, “Deferred Revenue Expenditure includes those non-recurring expenses, which are expected to be of financial nature, distributed to several accounting periods of indeterminate total length. These are of revenue nature but are deferred or postponed. It is of quasi- capital nature.”
In simpler words, we can say that Deferred Revenue Expenses are those expenses, the benefit of which may be extended to a number of years, say, 3 to 5 years. These are to be charged to profit and loss account, over a period of 3 to 5 years depending upon the benefit accrued.
Sometimes losses may be suffered of an exceptional nature e.g. loss of an asset (uninsured) due to accident or fire; confiscation of property in a foreign country etc. It is worth noting that the amount which has not been debited to the profit and loss account of the current year is shown in the balance sheet on the assets side and it is known as fictitious asset.
Development expenditure
In certain units like mines, plantations and housing colonies initially heavy expenditure has to be incurred and it is only after sometime, say three to five years, that the earnings will follow. Such heavy and initial expenditure is known as ‘development expenditure’ and treated as capital expenditure.
Purpose of Distinction
Profit and Loss Account is debited with revenue expenditure and credited with revenue income (i.e. sales income and from other sources). If the revenue income is higher than revenue expenditure, it will be a profit and if it is less than revenue expenditure, it will be a loss. Capital expenditure is shown on the assets side of Balance Sheet. Capital and liabilities are shown on the liabilities side of Balance Sheet. The purpose of distinction is to give “True and fair” view of the accounts and financial position of the firm.
