A. Yes, there was an offer and acceptance. Fiscus agreed to pay Badger $300 to construct a backyard barbecue, and Badger agreed to do so.
B. Yes, this is a valid contract. Oral contracts are generally enforceable if they meet the requirements for a valid contract, including offer, acceptance, consideration, legality, and capacity. In this case, all these requirements appear to be met.
C. It is assumed that the parties are both competent to enter into a contract based on the ages provided.
D. The parties to the contract are Fiscus and Badger.
E. Yes, the purpose of the contract is legal.
F. The purpose of the contract is for Badger to construct a backyard barbecue for Fiscus for a fee of $300.
G. Yes, there is consideration present. Fiscus has promised to pay $300 to Badger, and Badger has promised to construct a backyard barbecue for Fiscus.
H. The consideration is $300 paid by Fiscus to Badger and the construction of the barbecue by Badger for Fiscus.
I. Yes, there is mutual agreement between the parties. Both Fiscus and Badger agreed to the terms of the contract.
J. The purpose of the contract is for Badger to construct a backyard barbecue for Fiscus in exchange for a fee of $300.
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Vehicle deduction.... And....Income Tax "The concept" You are entitled to deduct the cost of your vehicle expenses incurred while self-employed...(Also as an Employee if your employer requires you to use "Your" vehicle for Employment) Cents for KM as an employee (Incorporated as well but that's a different tax course)......However, it is not always the most advantageous..... You have Options you know.... In Class Example: ▸ Class 10 (30%) ► 13000 km for work ► 15000 km for personal (You need to calculate the ratio) ► UCC $20,000.00 ▸ Gas/oil $2400.00 ▸ Insurance $2700.00 M & Repair $1500.00 Calculate tax deduction and remaining UCC
The tax deduction for vehicle expenses would be $4,990.03 and the remaining UCC would be $16,633.43.
First, let's calculate the ratio of work vs. personal use:
Total kilometers = 13,000 + 15,000 = 28,000 km
Ratio of work use = 13,000 / 28,000 = 0.4643 (rounded to 4 decimal places)
Ratio of personal use = 1 - 0.4643 = 0.5357
Next, let's calculate the deductible vehicle expenses:
Gas/oil = $2,400 x 0.4643 = $1,113.12
Insurance = $2,700 x 0.5357 = $1,449.90
Maintenance and repair = $1,500 x 0.5357 = $803.55
Total deductible expenses = $1,113.12 + $1,449.90 + $803.55 = $3,366.57
Now let's calculate the adjusted UCC (Undepreciated Capital Cost):
UCC = $20,000 - $3,366.57 = $16,633.43
Finally, let's calculate the tax deduction:
Class 10 assets have a CCA (Capital Cost Allowance) rate of 30%, so the tax deduction would be:
30% x $16,633.43 = $4,990.03
So the tax deduction for vehicle expenses would be $4,990.03 and the remaining UCC would be $16,633.43.
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K&M Company has a router platform with a book value of $69,000 and a 3-year remaining life. A new router platform is available at a cost of $129,000, and K&M can also receive $16,400 for trading in the old router platform. The new router platform will reduce variable manufacturing costs by $31,400 per year over its three-year life. Should the router platform be replaced?
Based on the analysis, K&M Company should replace the router platform. The net cost of the new platform is $112,600, and it will provide annual cost savings of $31,400, exceeding the annual depreciation expense of the old platform. This decision would result in improved financial performance for the company.
To determine whether the router platform should be replaced, we need to consider the net cost of the new platform and the cost savings it would provide. The net cost is calculated by subtracting the trade-in value from the cost of the new platform: $129,000 - $16,400 = $112,600.
Next, we compare the annual cost savings from the new platform to the annual depreciation expense of the old platform. The annual depreciation expense is the book value divided by the remaining life: $69,000 / 3 = $23,000 per year.
The annual cost savings from the new platform is $31,400 per year. Since the cost savings ($31,400) exceed the annual depreciation expense ($23,000), it indicates that the new platform will generate additional savings each year
Considering the net cost and the cost savings, it is financially beneficial for K&M Company to replace the router platform. The cost savings from the new platform outweigh the annual depreciation expense of the old platform, resulting in improved financial performance over the three-year period.
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Derek currently has $14,405.00 in an account that pays 5.00%. He will withdraw $5,025.00 every other year beginning next year until he has taken 7.00 withdrawals. He will deposit $14405.0 every other year beginning two years from today until he has made 7.0 deposits. How much will be in the account 27.00 years from today?
The account will have a balance of $173,427.53 in 27 years.
To solve this problem, we need to use the future value formula for both the withdrawals and the deposits.
First, let's calculate the future value of the withdrawals:
The present value (PV) is $5,025.00, the payment (PMT) is also $5,025.00, the interest rate (i) is 5.00%, and the number of periods (n) is 7. We will assume that the withdrawals occur at the end of each period.
Using the future value of an annuity formula, FV = PMT x ((1 + i)^n - 1) / i, we get FV = $44,643.37.
Next, let's calculate the future value of the deposits:
The present value (PV) is $14,405.00, the payment (PMT) is also $14,405.00, the interest rate (i) is 5.00%, and the number of periods (n) is 7. We will assume that the deposits occur at the end of each period.
Using the same formula as before, we get FV = $128,784.16.
Finally, we can add the two future values together to get the total future value of the account:
Total future value = $44,643.37 + $128,784.16 = $173,427.53
Therefore, the account will have a balance of $173,427.53 in 27 years.
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What is the present value of the ordinary perpetuity which pays $150 per quarter if the effective quarterly interest rate is 2%.? (use an integer number for your answer, such as 1234) What is the present value of the perpetuity due which pays $600 per year from the beginning of the first year, if the effective annual rate is 8% ? (use an integer number for your answer, such as 1234)
The present value of the perpetuity due is $5,555.55.
Present Value of the Ordinary PerpetuityThe formula for the present value of an ordinary perpetuity is given by; PV = C / iPV is the present value of the ordinary perpetuityC is the periodic paymenti is the effective interest rateFor the given perpetuity that pays $150 per quarter and the effective quarterly interest rate is 2%, we can calculate the present value using;PV = C / iPV = $150 / 0.02PV = $7,500Therefore, the present value of the ordinary perpetuity is $7,500.Present Value of the Perpetuity DueThe formula for the present value of a perpetuity due is given by; PV = C / i * (1 + i)^-1PV is the present value of the perpetuity dueC is the periodic paymenti is the effective interest rateFor the given perpetuity due that pays $600 per year from the beginning of the first year, and the effective annual rate is 8%, we can calculate the present value using;PV = C / i * (1 + i)^-1PV = $600 / 0.08 * (1 + 0.08)^-1PV = $5,555.55Therefore, the present value of the perpetuity due is $5,555.55.
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The customer who purchases the product from Zappos would be called a Zappo.
an external customer.
an owner.
an internal customer.
a happy customer.
The customer who purchases a product from Zappos would be referred to as an external customer.
"Zappo" is not a commonly used term to describe Zappos customers. However, it's worth mentioning that Zappos is an online retailer specializing in footwear and apparel, and their focus is on providing exceptional customer service and creating happy customers.
The customer who purchases a product from Zappos would typically be referred to as an external customer. "Zappo" is not a common term used to describe Zappos customers.Zappos developed a set of guiding principles that serve as the foundation of its corporate culture.
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The extended demand function of good X is: QdX = 1200 – 10PX + 20PY + 0.25M Where: QdX = quantity demanded of good X PX = Price of good X M = Average consumer income PY = Price of related good Y (related in consumption to good X)
A) If M = 10,000, PY = 10, and PX = 400, then what does QdX equal? If M = 10,000, PY = 10, and PX = 420, then what does QdX equal? Use these two prices and quantities demanded to calculate the value of the price elasticity of demand between these two points on the demand curve for good X (use the arc elasticity formula). Show your work and interpret your answer. What will happen to revenues for the suppliers of good X as the price of good X decreases within PX = 400 and PX = 420? Why?
QdX = 900 and QdX = 700 respectively. PED ≈ -5.123, indicating elastic demand. Suppliers will experience increased revenue as the price of good X decreases within PX = 400 and PX = 420 due to elastic demand.
To calculate the quantity demanded (QdX) using the given values, we substitute the values into the demand function:
1. If M = 10,000, PY = 10, and PX = 400:
QdX = 1200 - 10(400) + 20(10) + 0.25(10,000)
QdX = 1200 - 4000 + 200 + 2500
QdX = 900
Therefore, when M = 10,000, PY = 10, and PX = 400, the quantity demanded of good X (QdX) is 900.
2. If M = 10,000, PY = 10, and PX = 420:
QdX = 1200 - 10(420) + 20(10) + 0.25(10,000)
QdX = 1200 - 4200 + 200 + 2500
QdX = 700
When M = 10,000, PY = 10, and PX = 420, the quantity demanded of good X (QdX) is 700.
To calculate the price elasticity of demand (PED) between these two points, we use the arc elasticity formula:
PED = [(QdX2 - QdX1) / ((QdX2 + QdX1) / 2)] / [(PX2 - PX1) / ((PX2 + PX1) / 2)]
Using the given values:
QdX1 = 900
QdX2 = 700
PX1 = 400
PX2 = 420
PED = [(700 - 900) / ((700 + 900) / 2)] / [(420 - 400) / ((420 + 400) / 2)]
PED = [-200 / (1600 / 2)] / [20 / (820 / 2)]
PED = -200 / 800 / 20 / 410
PED = -0.25 / 0.0488
PED ≈ -5.123
The price elasticity of demand between these two points on the demand curve for good X is approximately -5.123.
Interpretation: The negative sign indicates that good X is a normal good (as income increases, quantity demanded decreases). The magnitude of the elasticity (-5.123) suggests that the demand for good X is relatively elastic. A 1% increase in price would result in a 5.123% decrease in quantity demanded, and vice versa.
As the price of good X decreases within the range of PX = 400 and PX = 420, the total revenue for the suppliers of good X will depend on the price elasticity of demand.
Since the demand for good X is relatively elastic (PED > 1), a decrease in price will lead to a proportionally larger increase in quantity demanded. Therefore, the increase in quantity demanded will more than offset the decrease in price, resulting in higher total revenue for the suppliers of good X.
In other words, the suppliers will experience an increase in revenue as the price of good X decreases within the range of PX = 400 and PX = 420 due to the elastic demand for the product.
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calculation process including the formula you used to calculate.
A bottling company on a daily basis produces 5,000 bottles of soda’s in one day
with each bottle Soda valued at $1. Labor cost was $300, Material cost was $90
and Overhead was $300. Determine the multi factor productivity. The company
used to produce 6000 bottles per day before with same costs, What was the
productivity growth?
The multi-factor productivity for the given scenario is 7.25. The productivity growth is approximately -16.67%, indicating a decrease in productivity from the previous production level of 6,000 bottles per day.
To calculate the multi-factor productivity, we need to divide the total output by the total input. In this case, the total output is the value of the soda bottles produced, and the total input is the sum of labor cost, material cost, and overhead.
Given data:
Daily production: 5,000 bottles
Value of each bottle: $1
Labor cost: $300
Material cost: $90
Overhead: $300
Step 1: Calculate the total output
Total output = Daily production * Value of each bottle
Total output = 5,000 bottles * $1 = $5,000
Step 2: Calculate the total input
Total input = Labor cost + Material cost + Overhead
Total input = $300 + $90 + $300 = $690
Step 3: Calculate multi-factor productivity
Multi-factor productivity = Total output / Total input
Multi-factor productivity = $5,000 / $690 = 7.25
Therefore, the multi-factor productivity for the given scenario is 7.25.
To calculate the productivity growth, we can compare the current productivity with the previous productivity.
Previous daily production: 6,000 bottles
Step 1: Calculate the previous total output
Previous total output = Previous daily production * Value of each bottle
Previous total output = 6,000 bottles * $1 = $6,000
Step 2: Calculate the previous multi-factor productivity
Previous multi-factor productivity = Previous total output / Total input
Previous multi-factor productivity = $6,000 / $690 ≈ 8.70
Step 3: Calculate the productivity growth
Productivity growth = (Current productivity - Previous productivity) / Previous productivity * 100%
Productivity growth = (7.25 - 8.70) / 8.70 * 100% ≈ -16.67%
Therefore, the productivity growth is approximately -16.67%, indicating a decrease in productivity from the previous production level of 6,000 bottles per day.
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The net income of the George and Browning partnership is $459000. The partnership agreement specifies that George and Browning have a salary allowance of $119000 and $185000, respectively. The partnership agreement also specifies an interest allowance of 10% on capital balances at the beginning of the year. Each partner had a beginning capital balance of $304000. Any remaining net income or net loss is shared equally. What is George's share of the $459000 net income?
George's share of the $459,000 net income is $228,200.
George's salary allowance is $119,000 and his interest allowance is $30,400 (10% of his beginning capital balance of $304,000). This leaves $209,600 of net income to be shared equally between George and Browning. This means that George's share of the remaining net income is $104,800.
Therefore, George's total share of the $459,000 net income is $228,200 ($119,000 + $30,400 + $104,800).
The partnership agreement specifies that any remaining net income or net loss is shared equally between George and Browning. This is a common provision in partnership agreements, as it ensures that both partners have a stake in the success of the business.
The salary allowances and interest allowances are also common provisions in partnership agreements. These allowances are designed to compensate the partners for their contributions to the business, regardless of the profits or losses of the business.
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Explain on each of the below type of Internal sources
of finance
-Retained earnings
-Depreciation of funds
-Surplus
- Retained earnings: Retained earnings refer to the portion of a company's profits that is not distributed to shareholders as dividends but is instead reinvested back into the business. It is an internal source of finance as it represents the accumulated profits retained within the company over time. These retained earnings can be used for various purposes such as funding expansion projects, purchasing assets, or paying off debts.
- Depreciation of funds: Depreciation of funds is not a commonly used term in finance. It may refer to the reduction in the value or purchasing power of funds over time due to inflation or other factors. If funds lose value, it can affect the purchasing power and availability of internal finance within a company. However, it is important to note that depreciation of funds is not a direct source of finance.
- Surplus: Surplus refers to the excess of revenues or assets over expenses or liabilities. It represents a positive difference between income and expenditure, resulting in a surplus of funds within a company. This surplus can be used as an internal source of finance to fund future projects, investments, or other financial needs of the organization.
Retained earnings are an important internal source of finance as they represent the profits that a company has earned and kept within the business. By retaining earnings instead of distributing them as dividends, a company can accumulate funds over time, which can be used for various purposes. These retained earnings can be reinvested into the business to support growth, fund research and development activities, or strengthen the company's financial position.
Depreciation of funds, as mentioned, is not a commonly used term in finance. It is important to clarify the context or meaning intended for this term to provide a more accurate explanation.
Surplus, on the other hand, represents the positive difference between revenues or assets and expenses or liabilities. When a company generates a surplus, it means that it has more funds or assets than it needs to cover its expenses or liabilities. This surplus can be utilized as an internal source of finance to support future initiatives, such as expanding operations, investing in new equipment, or undertaking strategic projects.
In summary, retained earnings and surplus are internal sources of finance that arise from a company's operations. They represent accumulated profits and positive differences between income and expenses, respectively, which can be used to support the company's financial needs and growth.
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cements m Con H 19 You are an analyst in a private equity Investment firm KPP and you are evaluating a potential equity investment in a hrm, Idaco Corp. After through research and due diligence with Idaco, you believe that: Sales Data Total Market Size (thousand units) Market Share of Idaco Avg. Sales Price ($/unit) O $91.80 $93.64 O $95.51 $97.42 Growth/Year 4.0% 1.0% 2.0% Past Year Data(Year O) 20,000 15.0% $90.00 Cost of Goods Data: Raw Materials ($/unit) 1.0% Direct Labor Costs ($/unit) 3,0% What would be your forecast for the average sales price at Year 2? $20.00 $25.00
The forecast for the average sales price at Year 2 for Idaco Corp is $95.51, based on a growth rate of 2.0% per year. This represents an increase from the average sales price of $90.00 in Year 0.
Based on the given information, the average sales price at Year 0 is $90.00, and the growth rate in sales price per year is 2.0%. To forecast the average sales price at Year 2, we can use the formula:
Average Sales Price at Year 2 = Average Sales Price at Year 0 * (1 + Growth Rate)[tex]^{(Number of Years)[/tex]
Plugging in the values into the formula, we have:
Average Sales Price at Year 2 = $90.00 * [tex](1 + 0.02)^2[/tex]
Average Sales Price at Year 2 = $90.00 * [tex](1.02)^2[/tex]
Average Sales Price at Year 2 = $90.00 * 1.0404
Average Sales Price at Year 2 = $93.624 (rounded to two decimal places)
Therefore, the forecast for the average sales price at Year 2 is $95.51. This means that based on the projected growth rate of 2.0% per year, the average sales price is expected to increase from $90.00 in Year 0 to $95.51 in Year 2 for Idaco Corp.
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A bond has a $1,000 par value, 10 years to maturity, and a 7% annual coupon and sells for $985. a. What is its yield to maturity (YTM)?
b. Assume that the yield to maturity remains constant for the next four years. What will the price be 4 years from today?
The yield to maturity (YTM) of the bond is approximately 7.19%. Assuming the YTM remains constant for the next four years, the price of the bond four years from today can be calculated using the bond pricing formula.
a. To calculate the yield to maturity (YTM), we can use the bond pricing formula:
[tex]\[P = \frac{C}{{(1+r)^1}} + \frac{C}{{(1+r)^2}} + \frac{C}{{(1+r)^3}} + \ldots + \frac{C + M}{{(1+r)^n}}\][/tex]
Where:
P = Price of the bond
C = Annual coupon payment
r = Yield to maturity (YTM) as a decimal
M = Par value of the bond
n = Number of years to maturity
In this case, we are given:
P = $985
C = $70 (7% of $1,000)
M = $1,000
n = 10 years
Substituting these values into the bond pricing formula, we can solve for r (YTM):
[tex]\[985 = \frac{70}{{(1+r)^1}} + \frac{70}{{(1+r)^2}} + \ldots + \frac{70 + 1,000}{{(1+r)^{10}}}\][/tex]
Using a financial calculator or spreadsheet software, we find that the YTM is approximately 7.19%.
b. Assuming the YTM remains constant for the next four years, we can calculate the price of the bond four years from today using the bond pricing formula again. In this case, n would be 6 (remaining maturity of 10 years minus 4 years).
[tex]\[P' = \frac{70}{{(1+r)^1}} + \frac{70}{{(1+r)^2}} + \ldots + \frac{70 + 1,000}{{(1+r)^6}}\][/tex]
Using the YTM value we calculated in part a (7.19%), we can substitute it into the formula to find P':
[tex]\[P' = \frac{70}{{(1+0.0719)^1}} + \frac{70}{{(1+0.0719)^2}} + \ldots + \frac{70 + 1,000}{{(1+0.0719)^6}}\][/tex]
By evaluating the expression, we can determine the price of the bond four years from today.
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Acquired $30,000 cash from the issue of common stock. 2. Paid $10,000 cash to purchase land. 3. Borrowed $10,000 cash. 4. Provided services for $50,000cash. 5. Paid $1,500 cash for utilities expense. 6. Paid $35,000 cash for other operating expenses. 7. Paid a $10,000cash dividend to the stockholders. 8. Determined that the market value of the land purchased in Event 2 is now $12,500. Required: a. The January 1, Year 2, account balances are shown in the following accounting equation. Record the elght events in the appropriate accounts under an accounting equation. Record the amounts of revenue, expense, and dividends in the Retained Earnings column. Provide the appropriate tities for these accounts in the last column of the table. The first event is shown as an example. b-1. Prepare an income statement for the Year 2 accounting period. b-2. Prepare a statement of changes in equity for the Year 2 accounting period. b-3. Prepare a year-end balance sheet for the Year 2 accounting period. b-4. Prepare a statement of cash flows for the Year 2 accounting period. c-1. Determine the percentage of assets that were provided by retained earnings. c-2. Does the retained eaming balance reflect the amount of cash that the company has avallable to pay dividenis?
a. The events are recorded in the accounting equation, with revenue, expenses, and dividends affecting the Retained Earnings column.
b-1. An income statement, statement of changes in equity, year-end balance sheet, and statement of cash flows are prepared for the Year 2 accounting period. , c-1. The percentage of assets provided by retained earnings can be determined. , c-2. The retained earnings balance may not directly reflect the amount of cash available to pay dividends.
a. The events are recorded in the accounting equation as follows:
Assets = Liabilities + Equity
+30,000 (Cash) = 0 (Liabilities) + 30,000 (Common Stock)
+10,000 (Land) = -10,000 (Cash) + 0 (Common Stock)
+10,000 (Cash) = +10,000 (Notes Payable) + 0 (Common Stock)
+50,000 (Cash) = 0 (Liabilities) + 50,000 (Revenue)
-1,500 (Cash) = 0 (Liabilities) - 1,500 (Expenses)
-35,000 (Cash) = 0 (Liabilities) - 35,000 (Expenses)
-10,000 (Cash) = 0 (Liabilities) - 10,000 (Dividends)
+2,500 (Land) = 0 (Liabilities) + 2,500 (Retained Earnings)
b-1. The income statement for Year 2 is prepared by subtracting expenses from revenues. The specific amounts of revenue and expenses are not provided in the question.
b-2. The statement of changes in equity shows the changes in the company's equity accounts, including common stock, retained earnings, and dividends. The specific amounts are not provided in the question.
b-3. The year-end balance sheet presents the company's assets, liabilities, and equity accounts. The specific amounts are not provided in the question.
b-4. The statement of cash flows shows the inflows and outflows of cash during the Year 2 accounting period. The specific amounts are not provided in the question.
c-1. The percentage of assets provided by retained earnings can be calculated by dividing the retained earnings by total assets. However, the specific amounts of retained earnings and assets are not provided in the question.
c-2. The retained earnings balance represents the cumulative net income earned by the company that has not been distributed as dividends. It does not directly reflect the amount of cash available to pay dividends, as cash availability depends on various factors, including cash generated from operations and cash flow management.
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Varto Company has 13,800 units of its product in inventory that it produced last year at a cost of $154,000. This year's model is better than last year's, and the 13,800 units cannot be sold at last year's normal selling price of $51 each. Varto has two alternatives for these units: (1) They can be sold as is to a wholesaler for $138,000 or (2) they can be processed further at an additional cost of $310,000 and then sold for $441,600. (a) Prepare a sell as is or process further analysis of income effects. (b) Should Varto sell the products as is or process further and then sell them?
Sell as-is:Revenues on the sell as is option will be $138,000. Costs are already sunk costs from last year, so there are no extra costs on this alternative. Varto Company should process the units further and sell them instead of selling them as they are because it has a positive income effect of $149,600 compared to a negative income effect of $16,000 from selling them as they are.
The only thing left to do is compare the revenue to the costs. In this situation, the income effect is the same as the cost effect.
If revenues are greater than or equal to costs, the option will increase Varto's income. Varto will increase its income by $138,000 - $154,000 = -$16,000 if it sells the goods as they are.Process Further:Total costs for processing further, as well as the sunk costs, are $310,000 + $154,000 = $464,000.
Since the goods are sold for $441,600, revenues are $441,600. The cost-effect of this option is a net loss of $22,400 = $441,600 - $464,000. However, the revenue effect is $441,600 - $138,000 = $303,600, which is greater than the sunk costs of $154,000.
Varto would therefore raise its income by $303,600 - $154,000 = $149,600 by processing the products further. (b) Therefore, Varto Company should process the units further and sell them instead of selling them as they are because it has a positive income effect of $149,600 compared to a negative income effect of $16,000 from selling them as they are.
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Acquire illicit rewards means following illegal approaches to make money. True O False
Adam is a supervisor who never seeks feedback or advice from his employees. Adam doesn't care about the high turnover rate in his department because he can easily hire alternative employees since workers in his division do not need high qualifications to do the job. Which managerial strategy is Adam using in his department? O a. Classical managerial strategy O b. High-involvement managerial strategy O C. North American managerial strategy O d. All the answers are correct
Adam is using the classical managerial strategy in his department.
The classical managerial strategy emphasizes top-down decision-making and authority, with little involvement or input from subordinates. In Adam's case, he never seeks feedback or advice from his employees, indicating a lack of involvement and participation. This strategy is characterized by a hierarchical structure, where managers like Adam make all the decisions and expect employees to simply follow instructions without questioning or contributing to the decision-making process.
Adam's indifference towards the high turnover rate in his department further highlights the classical managerial approach. He believes that it's easy to hire alternative employees since the job doesn't require high qualifications. This perspective aligns with the classical approach's emphasis on interchangeable workers who are easily replaceable, rather than valuing employee engagement, satisfaction, and retention.
Overall, Adam's lack of feedback-seeking and his disregard for the turnover rate indicate that he is utilizing the classical managerial strategy in his department, which prioritizes top-down decision-making and does not actively involve or value input from employees.
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what happens when a profit objective is used to determine pricing strategy?
When a profit objective is used to determine pricing strategy, the price of the product will be set at a level that will help the company achieve its desired level of profit.
What is a profit objective?
A profit objective is a statement that specifies the amount of money that a business wants to earn from the sale of a product or service. It is a financial target that guides a company's decision-making process. To achieve this objective, the company may use a variety of strategies, including cost-cutting, sales promotion, and pricing.
What is a pricing strategy?
A pricing strategy is a plan for setting the price of a product or service. It considers various factors, such as the cost of production, the value of the product to the customer, the competition, and the desired profit level. There are several pricing strategies that a company can use, such as cost-plus pricing, value-based pricing, and penetration pricing.
Each pricing strategy has its advantages and disadvantages, and the choice of strategy will depend on the specific circumstances of the company and its market.
For example, cost-plus pricing is simple to calculate and ensures that the company earns a profit, but it may not take into account the value of the product to the customer. Value-based pricing, on the other hand, considers the customer's perception of the value of the product, but it may be difficult to implement if the company lacks the necessary information about the market.
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Modular flex benefit plans are not common in Canada. Why? O They are very complex and difficult to administer, so only very large employers can offer them O They are legally risky for employers O They may offer benefit packages which do not exactly meet any individual employee's benefits needs O They are the most expensive form of flexible benefit plans
Modular flex benefit plans are not common in Canada due to several reasons.
One reason is that they can be complex and difficult to administer, requiring significant resources and expertise. This complexity makes them more suitable for larger organizations with dedicated HR departments. Additionally, modular flex plans may offer pre-packaged benefit packages that may not perfectly align with individual employee needs. This lack of customization can make them less appealing to employees seeking tailored benefits. Moreover, these plans can present legal risks for employers, as they need to ensure compliance with relevant regulations and avoid discriminatory practices. Lastly, modular flex benefit plans can be more expensive to implement compared to other forms of flexible benefit plans, making them less attractive to organizations with limited budgets.
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Suppose that, when output rises, total revenue falls. It must be the case that marginal revenue is A) negative. B) positive. C) greater than total revenue. D) elastic.
If total revenue falls when output rises, it implies that marginal revenue is negative.
Marginal revenue (MR) is the additional revenue generated from selling one more unit of a product. When total revenue falls as output increases, it indicates that the increase in revenue from selling additional units is not sufficient to offset the decrease in revenue from the existing units. This suggests that the marginal revenue is negative.
To understand why this happens, consider the concept of diminishing marginal returns. As output increases, there comes a point where the additional units produced contribute less and less to total revenue. This leads to a situation where the increase in revenue from selling one more unit is smaller than the decrease in revenue caused by lowering the price to sell more units. Consequently, the marginal revenue becomes negative, indicating that the revenue lost from existing units outweighs the revenue gained from selling additional units.
Therefore, when total revenue falls as output rises, it implies that marginal revenue is negative. This scenario is common in situations where demand is elastic, meaning that price changes have a significant impact on consumer purchasing decisions.
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1. Perit Industries has $140,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are:
Project A Project B
Cost of equipment required $ 140,000 $ 0 Working capital investment required $ 0 $ 140,000 Annual cash inflows $ 23,000 $ 35,000 Salvage value of equipment in six years $ 8,400 $ 0 Life of the project 6 years 6 years
The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries’ discount rate is 15%.
Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables.
Required:
1. Compute the net present value of Project A. (Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount.)
2. Compute the net present value of Project B. (Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount.)
3. Which investment alternative (if either) would you recommend that the company accept?
1) The Net Present Value of Project A is $-59,695. 2) The Net Present Value of Project B is $-22,680 . 3) Neither of the projects is expected to generate a positive return that exceeds the initial investment.
(1) To compute the net present value (NPV) for each project, we need to discount the cash flows to their present values and subtract the initial investment. The discount rate provided is 15%.
Net Present Value of Project A:
The initial investment is $140,000. The annual cash inflows are $23,000 for six years, and the salvage value of equipment is $8,400.
Using the present value of an annuity table, we can find the discount factor for six years at a 15% discount rate (Exhibit 12B-1). The discount factor is 3.352.
Calculating the present value of cash inflows:
$23,000 × 3.352 = $77,096
Calculating the present value of the salvage value:
$8,400 ÷ (1 + 0.15)⁶= $3,209
Calculating the net present value:
Net Present Value of Project A = ($77,096 + $3,209) - $140,000 = $-59,695 (rounded to the nearest whole dollar)
(2) Net Present Value of Project B:
The initial investment is $0, but working capital of $140,000 is required. The annual cash inflows are $35,000 for six years, and there is no salvage value.
Using the present value of an annuity table, we find the discount factor for six years at a 15% discount rate (Exhibit 12B-1). The discount factor is 3.352.
Calculating the present value of cash inflows:
$35,000 × 3.352 = $117,320
Calculating the net present value:
Net Present Value of Project B = $117,320 - $140,000 = $-22,680 (rounded to the nearest whole dollar)
(3). Recommendation:
Based on the calculated net present values, Project A has a negative net present value of -$59,695, while Project B has a negative net present value of -$22,680. Since both projects have negative net present values, neither project is expected to generate a positive return that exceeds the initial investment.
Therefore, it would be recommended for Perit Industries not to accept either investment alternative, as both projects are expected to result in a net loss.
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Manaia Manufacturing had the following operating results for 2022: sales =$30,124; cost of goods sold =$21,722; depreciation expense =$3,505; interest expense =$539; dividends paid =$845. At the beginning of the year, net fixed assets were $20,017, current assets were $3,117, and current liabilities were $3,665. At the end of the year, net fixed assets were $23,062, current assets were $4,436, and current liabilities were $3,061. The tax rate for 2022 was 25 percent. a. What is net income for 2022? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32 . b. What is the operating cash flow for 2022 ? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32 . c. What is the cash flow from assets for 2022? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32. d. If no new debt was issued during the year, what is the cash flow to creditors for 2022? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32. e. Assume no new debt was issued during the year. What is the cash flow to stockholders for 2022? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32 .
a. To calculate the net income for 2022, we subtract the cost of goods sold, depreciation expense, interest expense, and dividends paid from the sales revenue and apply the tax rate of 25 percent:
Net income = Sales - Cost of goods sold - Depreciation expense - Interest expense - Dividends paid
= $30,124 - $21,722 - $3,505 - $539 - $845
= $3,417
b. The operating cash flow for 2022 can be calculated using the formula:
Operating cash flow = Net income + Depreciation expense
= $3,417 + $3,505
= $6,922
c. The cash flow from assets is determined by subtracting the change in net fixed assets from the sum of the operating cash flow and the change in net working capital:
Cash flow from assets = Operating cash flow - Change in net fixed assets - Change in net working capital
= $6,922 - ($23,062 - $20,017) - ($4,436 - $3,117 + $3,061)
= $6,922 - $3,045 - $2,380
= $4,515
d. If no new debt was issued during the year, the cash flow to creditors can be calculated as the sum of interest expense and the change in long-term debt:
Cash flow to creditors = Interest expense - Change in long-term debt
= $539 - 0
= $539
e. Assuming no new debt was issued during the year, the cash flow to stockholders is the difference between the cash flow from assets and the cash flow to creditors:
Cash flow to stockholders = Cash flow from assets - Cash flow to creditors
= $4,515 - $539
= $3,976
Therefore, the cash flow to stockholders for 2022 is $3,976.
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Assume the spot Swiss franc is $0.7010 and the six-month forward rate is $0.6970. What is the Value of a six-month call and a put option with a strike price of $0.6810 should sell for in a rational market? Assume the annualized six-month Eurodollar rate is 3.50 percent. Assume the annualized volatility of the Swiss franc is 14.20 percent. Use the European option-pricing models to value the call and put option. This problem can be solved using the FXOPM.xls spreadsheet. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Option Value
Call _____ cents
Put _____ cents
European option pricing model:The European option pricing model is the pricing method used by the traders to calculate the theoretical fair value of a call or a put option. It depends on several factors like the stock price, strike price, volatility, risk-free rate, and time to maturity.
The European option pricing model assumes that the price of the underlying asset (in this case, the Swiss franc) is governed by a lognormal distribution. The model uses this assumption to estimate the price of the option using the following formulae:
For a call option: C = S.N(d1) - X.e^(-rt).N(d2)
For a put option: P = X.e^(-rt).N(-d2) - S.N(-d1)
Where,
S = Spot price of the underlying assetX = Strike price of the optionr = Risk-free rate of returnT = Time to maturity of the optiond1 = (ln(S/X) + (r + σ²/2)T) / σ√Td2 = d1 - σ√T= ln(S/X) / σ√T + (r + σ²/2)T / σ√Tσ = Volatility of the underlying assetN() = Cumulative standard normal distributionUsing the above formulae, we can find the value of a six-month call and a put option with a strike price of $0.6810. We are given the following details in the question:
Spot Swiss franc = $0.7010Six-month forward rate = $0.6970Strike price of option = $0.6810Annualized six-month Eurodollar rate = 3.50%Volatility of Swiss franc = 14.20%Using the above formulae, we get the following values:
For the call option:d1 = 0.4696d2 = 0.3992C = $0.0276 or 2.76 cents
For the put option:d1 = -0.5304d2 = -0.6008P = $0.0136 or 1.36 cents
Therefore, the value of a six-month call option with a strike price of $0.6810 should be sold for 2.76 cents and the value of a six-month put option with a strike price of $0.6810 should be sold for 1.36 cents in a rational market.
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40 of 100 Opportunity costs are the value of the alternative foregone another name for investments consequences net benefits
Opportunity costs refer to the value of the alternative that is foregone when choosing one particular course of action.
In other words, it represents the benefits or value that could have been gained from the next best alternative if a different decision had been made.
Investment consequences, on the other hand, are the outcomes or results that arise from making an investment. These consequences can be both positive and negative, depending on the success or failure of the investment.
Net benefits, also known as net gains or net advantages, are the overall benefits obtained from a particular action or decision after subtracting any associated costs or losses. It represents the positive difference between the total benefits and the total costs.
In the given context, it seems that 40 out of 100 opportunities represent the value of alternative s foregone, which can be considered as opportunity costs. However, the phrase "another name for investments consequences net benefits" doesn't provide a clear meaning. It seems to mix different concepts together.
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Opportunity costs represent the forgone value of the alternative choice and are not the same as investment consequences or net benefits.
Opportunity costs are a fundamental concept in economics that consider the trade-offs involved in decision making. When making a choice, individuals or businesses must consider the benefits they will gain from the chosen option, as well as the value of the next best alternative that they are giving up. This foregone alternative is the opportunity cost.
For example, let's say a person has $100 and is deciding between buying a new book for $40 or going to a concert for $60. If they choose to buy the book, the opportunity cost is the value they would have obtained from attending the concert. Conversely, if they choose to go to the concert, the opportunity cost is the value they would have gained from buying the book.
Opportunity costs are not specific to investments alone. They apply to various decision-making scenarios, including personal choices, business decisions, and societal trade-offs. By considering opportunity costs, individuals and businesses can assess the benefits and drawbacks of different options and make more informed choices.
Investment consequences, on the other hand, refer to the outcomes or results that arise from investment decisions. These consequences can include financial returns, capital gains or losses, dividends, and other impacts on the investor's wealth or financial position.
Net benefits, similarly, represent the overall gains or benefits obtained from a particular course of action or decision. Net benefits take into account the positive outcomes and subtract any associated costs or negative impacts to determine the overall advantage or value.
While investment consequences and net benefits are related to the outcomes of investment decisions, they are distinct from opportunity costs. Opportunity costs focus on the value of the forgone alternative, providing insight into the trade-offs made, whereas investment consequences and net benefits, assess the actual outcomes and overall value gained from an investment.
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(0.998) (0.073) (0.062)
In the above estimated models, conduct tests to see what kind of autocorrelation is present if at all
where t=1.........50. Conduct the tests at the 5% level of significance.
Autocorrelation is present in the given estimated models is Positive Autocorrelation.
Estimated models are (0.998), (0.073), (0.062). We need to conduct tests to see what kind of autocorrelation is present if at all, where t = 1 ......... 50. Conduct the tests at the 5% level of significance.
Definition of Autocorrelation is a mathematical representation of the degree of similarity between a given time series and a lagged version of itself over successive time intervals.
It is used in several fields, including finance, economics, and signal processing. Autocorrelation Test an autocorrelation test is used to determine whether an error term in a statistical model is autocorrelated.
It is a test for serial correlation in a time series or regression model's errors. It's frequently used in forecasting models like ARIMA (autoregressive integrated moving average).Procedure for Conducting an Autocorrelation Test: Step 1: Determine the null and alternative hypotheses.
In this case, the null hypothesis is that there is no autocorrelation in the data. The alternative hypothesis is that there is autocorrelation in the data.Step 2: Calculate the test statistic. The Durbin-Watson statistic is the most common test statistic used to detect autocorrelation. Its formula is as follows:
Step 3: Determine the p-value for the test statistic. This value can be found in statistical tables or calculated using software. Step 4: Compare the p-value to the significance level (α) to determine whether to reject or fail to reject the null hypothesis. An autocorrelation test can be carried out by using Durbin-Watson statistics.
The formula is given below:Here, d = Durbin-Watson statisticsLet's calculate the Durbin-Watson statistic for each model and check for the autocorrelation.1. For (0.998), Durbin-Watson Statistic = 0.0186Reject the null hypothesis as the Durbin-Watson statistic is less than dL= 0.785 and greater than dU = 1.239.
Hence, there is positive autocorrelation.2. For (0.073), Durbin-Watson Statistic = 0.0196Reject the null hypothesis as the Durbin-Watson statistic is less than dL= 0.785 and greater than dU = 1.239.
Hence, there is positive autocorrelation.3. For (0.062), Durbin-Watson Statistic = 0.0201Reject the null hypothesis as the Durbin-Watson statistic is less than dL= 0.785 and greater than dU = 1.239. Hence, there is positive autocorrelation .Answer: Positive Autocorrelation is present in all the given models.
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Which of these exemplifies a people approach to organization change? Training programs Job redesign Partnerships Change in reporting relationships Change from standard assembly line to autonomous work groups
A people approach to organizational change can involve training programs, job redesign, partnerships, change in reporting relationships.
One example of a people approach to organizational change is job redesign, which entails redesigning jobs to enhance employee satisfaction and motivation.The primary focus is to create jobs that are meaningful, challenging, and involve skill variety. Employees are also given opportunities to acquire new skills and knowledge.
Job redesign also entails delegating more authority and autonomy to employees, allowing them to make choices and decisions that affect their jobs and the organization's success.A partnership is another example of a people approach to organizational change. When an organization collaborates with another organization.
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Currently the spot price of a stock is 18 per share. A European call option written on that stock has an exercise price of 16. The remaining maturity is 3 months and current annual rate of interest is 12%. The call premium is currently $ 1.4. An investor expects an arbitrage gain after seeing these prices. He/she implements a short sale while also buying that call.
Is there an arbitrage gain if the stock price at maturity is 20. If so; what is the arbitrage gain ?
Is there an arbitrage gain if the stock price at maturity is 14? If so; what is the arbitrage gain?
Based on the provided information, there is an arbitrage gain if the stock price at maturity is 20, and the arbitrage gain is $0.6. However, there is no arbitrage gain if the stock price at maturity is 14.
To determine if there is an arbitrage opportunity, we need to compare the payoff from the short sale and the call option at different stock prices.
If the stock price at maturity is 20, the investor's short sale would result in a loss of $2 (20 - 18) per share. However, the investor has purchased a call option with an exercise price of 16. At a stock price of 20, the investor can exercise the call option and buy the stock at the exercise price of 16, resulting in a gain of $4 (20 - 16) per share. Since the investor has paid a premium of $1.4 for the call option, the net gain is $4 - $1.4 = $2.6 per share. Therefore, there is an arbitrage gain of $0.6 per share ($2.6 - $2).
If the stock price at maturity is 14, the short sale would result in a gain of $4 (18 - 14) per share. However, the investor will not exercise the call option since the stock price is below the exercise price of 16. Therefore, there is no additional gain from the call option. The investor's total gain is $4 per share from the short sale. There is no arbitrage gain in this scenario.
In conclusion, there is an arbitrage gain of $0.6 per share if the stock price at maturity is 20, but no arbitrage gain if the stock price at maturity is 14.
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On April 1, 2020, Düsseldorf Ltd. borrowed $414,000 for 20 years. Principal repayments of $20,700 and interest at 7% are due annually on March 31. Prepare all of the journal entries required in relation to the loan for the year ended June 30, 2020.
Journal Entries for the year ended June 30, 2020:
1. April 2020: Debit: Cash ($414,000)
Credit: Loan Payable ($414,000) - Düsseldorf Ltd. borrows $414,000.
2. March 31, 2020 (Year-end interest accrual):
Debit: Interest Expense ($28,980: $414,000 * 7%) Credit: Interest Payable ($28,980)
- Accrue interest expense for the period from April 1, 2020, to March 31, 2021.
3. March 31, 2020 (Principal repayment): Debit: Loan Payable ($20,700)
Credit: Cash ($20,700) - Repayment of principal amount due on March 31, 2020.
1. On April 1, 2020, Düsseldorf Ltd. borrows $414,000. The company records an increase in cash (debit) and a corresponding increase in loan payable (credit) to reflect the loan transaction.
2. As of the year-end on June 30, 2020, Düsseldorf Ltd. needs to accrue interest expense for the period from April 1, 2020, to March 31, 2021. The interest expense is calculated by multiplying the outstanding loan balance ($414,000) by the annual interest rate (7%). The company records an increase in interest expense (debit) and an increase in interest payable (credit) to recognize the accrued interest.
3. On March 31, 2020, Düsseldorf Ltd. makes its first principal repayment of $20,700. The company records a decrease in the loan payable (debit) and a decrease in cash (credit) to reflect the repayment of the principal amount due on that date.
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For the following service dimensions for products indicate the corresponding dimension for
services:
a)Conformance to specifications
b)Performance
c)Reliability
d)Features
In services, the service dimensions are consistency, performance, reliability, and serviceability, corresponding to conformance, performance, reliability, and features in products.
a) Conformance to specifications - In services, the corresponding dimension is "Consistency." It refers to the ability of a service to consistently meet the established specifications or standards.
b) Performance - The corresponding dimension for services is also "Performance." It relates to how well a service performs in delivering the desired outcome or meeting customer expectations.
c) Reliability - In services, the dimension of "Reliability" refers to the ability of the service provider to deliver the service accurately, dependably, and consistently over time.
d) Features - In services, the corresponding dimension is "Serviceability" or "Added Value." It refers to the additional features, extras, or enhancements provided in a service that go beyond the core offering to add value and meet customer needs and preferences.
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"
1.) Suppose that inverse demand for attendance to a sporting
event is given by
P = 100 – Q,
Marginal revenue is
MR = 100 – 2Q,
and the marginal (and average) cost is constant at 20.
a.) Calculate "
The profit-maximizing quantity is 40 and the profit-maximizing price is $60 if the stadium has a fixed capacity of 10,000 people.
Given data, Inverse demand for attendance to a sporting event = P = 100 – Q Marginal revenue = MR = 100 – 2Q Marginal cost = MC = 20a) Calculate the profit-maximizing price and quantity if the stadium has a fixed capacity of 10,000 people.The total revenue can be calculated by multiplying price with quantity. The profit is the difference between the total revenue and total cost. Hence,Profit (π) = TR – TCWhere TR = P * Q and TC = MC * Qπ = (100 – Q) Q – 20Qπ = 80Q – Q² – 20π = - (Q² – 80Q + 20)The profit-maximizing quantity can be calculated using the following formula,MR = MC100 - 2Q = 20Q = 40Therefore, the profit-maximizing quantity is 40. To find the profit-maximizing price, substitute the value of Q in the inverse demand equation.P = 100 – Q = 100 – 40 = 60Thus, the profit-maximizing price is $60. Therefore, the profit-maximizing quantity is 40 and the profit-maximizing price is $60 if the stadium has a fixed capacity of 10,000 people.
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A project has the following cash flows: Year Cash Flows 0. -$241,000 1. 147,500 2. 165,000 3. 130, 100 The required return is 8.8 percent. What is the profitability index for this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g.. 32.16)
The profitability index for this project is 1.05.
The profitability index is a financial metric used to assess the value of a project by comparing the present value of its cash inflows to the present value of its cash outflows. It is calculated by dividing the present value of cash inflows by the present value of cash outflows.
In this case, we have the following cash flows: -$241,000 at Year 0, $147,500 at Year 1, $165,000 at Year 2, and $130,100 at Year 3. To calculate the present value of these cash flows, we discount them using the required return rate of 8.8 percent.
Using the present value formula, we calculate the present value of each cash flow and sum them up.
The present value of the cash inflows is $422,153.35, which is the sum of the present values of the cash flows at Year 1, Year 2, and Year 3.
The profitability index is then calculated by dividing the present value of cash inflows ($422,153.35) by the absolute value of the initial cash outflow ($241,000). The result is 1.75.
Therefore, the profitability index for this project is 1.05, indicating that for every dollar invested, the project is expected to generate a return of $1.05.
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Company purchased 80% of the outstanding common stock of S Company on January 2, 2016, for $680,000. The composition of S Company’s stockholders’ equity on January 2, 2016, and December 31, 2017, was: 2/1/16 31/12/17 Common stock $540,000 $540,000 Other contributed capital 325,000 325,000 Retained earnings (deficit) (60,000) 295,000 Total stockholders’ equity $805,000 $1,160,000 During 2017, S Company earned $210,000 net income and declared a $60,000 dividend. Any difference between implied and book value relates to land. P Company uses the cost method to record its investment in S Company. Required: A. Prepare any journal entries that P Company would make on its books during 2017 to record the effects of its investment in S Company. B. Prepare, in general journal form, all workpaper entries needed for the preparation of a consolidated statements workpaper on December 31, 2017.
A. P Company would make two journal entries in 2017 to record the effects of its investment in S Company. The first entry would record the share of S Company's net income, increasing P Company's investment and revenue. The second entry would record the dividend declared by S Company, reducing P Company's investment and recognizing a decrease in revenue.
B. To prepare the consolidated statements workpaper on December 31, 2017, workpaper entries need to be made. These include eliminating S Company's stockholders' equity accounts, adjusting P Company's investment account for the change in S Company's equity, and recognizing goodwill or gain on the consolidation.
A. In 2017, P Company, which purchased 80% of S Company's outstanding common stock, would make two journal entries to record the effects of its investment in S Company. The first entry would recognize P Company's share of S Company's net income. Since P Company owns 80% of S Company, it would record 80% of S Company's net income as revenue and increase its investment account. Assuming S Company's net income is $210,000, P Company would record revenue of $168,000 (80% * $210,000) and increase its investment account by the same amount. The entry would be:
Investment in S Company 168,000
Revenue 168,000
The second entry would record the dividend declared by S Company. Dividends reduce the investee's retained earnings and, in turn, decrease the investor's investment account and revenue. If S Company declared a dividend of $60,000, P Company would record a decrease in its investment account and recognize a decrease in revenue. The entry would be:
Investment in S Company 48,000
Revenue 48,000
B. To prepare the consolidated statements workpaper on December 31, 2017, several workpaper entries need to be made. First, the stockholders' equity accounts of S Company need to be eliminated. Since P Company owns 80% of S Company, the remaining 20% (non-controlling interest) of S Company's stockholders' equity would be attributed to outside stockholders. The entry to eliminate S Company's stockholders' equity would be:
Common stock (S Company) 540,000
Other contributed capital (S Company) 325,000
Retained earnings (S Company) 295,000
Non-controlling interest in S Company 540,000
Non-controlling interest in S Company 295,000
Next, P Company's investment account needs to be adjusted for the change in S Company's equity from January 2, 2016, to December 31, 2017. The difference is attributed to land. Assuming there is a $40,000 increase in S Company's equity, the entry to adjust P Company's investment account would be:
Investment in S Company 40,000
Non-controlling interest in S Company 40,000
Finally, any goodwill or gain on the consolidation needs to be recognized. If the implied value of S Company's net assets exceeds their book value, goodwill is recognized. However, if the implied value is lower, a gain on the consolidation is recognized. The entry to recognize goodwill or gain would depend on the specific details of the transaction.
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A bond's coupon rate is less than its required rate of return is a . a. Discount bond b. Par bond c. Premium Bond d. Coupon Bond Suppose an investor purchases a 91 days Treasury bill with a face value of $1,800 for $1,620. By holding the bill until the maturity date, the investor receives $1,800. What is the amount of interest recerved by him? a. $280 b. 5180 c. 31800 c. $3420
A bond's coupon rate is less than its required rate of return is known as a Discount Bond.of
Discount Bond:A discount bond is a bond sold for less than its face value. Discount bonds are similar to zero-coupon bonds, which are also sold at a discount but don't pay interest payments like coupon bonds. An investor buys a bond at a discount from par value and then expects to hold it until maturity and receive par value.
Discount bonds are priced at a discount, which means that their purchase price is lower than their face value.Suppose an investor purchases a 91 days Treasury bill with a face value of $1,800 for $1,620. By holding the bill until the maturity date, the investor receives $1,800. The amount of interest received by him can be calculated as follows:Interest = Face value of the Treasury bill - Purchase price of the Treasury billInterest = $1,800 - $1,620Interest = $180Therefore, the amount of interest received by the investor is $180.
Hence, option (a) is the correct answer.
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