In the given question, the two options for a motive power installation are being compared on the basis of electricity consumption and the cost of the electric motor. Electric motor A consumes 160 kW of power and costs 4800€, while motor B consumes 155 kW and costs 5800€. Given that the engines run for 1600 hours per year with electricity costing €0.09/kWh, we can calculate the annual cost of running each motor:
Cost of running Motor A = 160 x 1600 x 0.09 = 23040€
Cost of running Motor B = 155 x 1600 x 0.09 = 22320€
Thus, the cost of running motor A is higher than that of running motor B by 720€ per year. This may not seem like a significant difference, but over a useful life of 15 years, this can add up to substantial savings. Assuming that the interest rate remains constant at 7% per year, the savings that can be achieved by choosing the more economical option (Motor B) can be calculated as follows: Savings per year = Cost of running Motor A - Cost of running Motor B = 720€ per year Present Value of Savings over 15 years = Savings per year x [1 - (1 + r)-n / r]= 720 x [1 - (1 + 0.07)-15 / 0.07]= 720 x 7.119= 5124.48€
Thus, by choosing the more economical option (Motor B), a total saving of 5124.48€ can be achieved over the 15-year useful life of the motor, which coincides with the duration of the loan.
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Estimate by rounding all the way and multiply the
following (do not round final answer): LU 3-2(1)
3–38. 6.24 × 3.9 =
The estimated product of 6.24 and 3.9, rounded all the way, is 24.
To estimate the product of 6.24 and 3.9 by rounding all the way, we can round each number to the nearest whole number and then multiply them:
6.24 ≈ 6
3.9 ≈ 4
Now, we can calculate the product:
6 × 4 = 24
Therefore, the estimated product of 6.24 and 3.9, rounded all the way, is 24.
The estimated product of 6.24 and 3.9, rounded all the way, is 24.
To estimate the product of 6.24 and 3.9 by rounding all the way, we can round each number to the nearest whole number and then multiply them.
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French Taylor is a new staff accountant for Fashion House Beauty Supply. He has asked you to review the financial statements prepared for April to find and correct any errors. Review the income statement and balance sheet that follow and identify the errors Taylor made (he did not prepare a statement of owner's equity). FASHION HOUSE BEAUTY SUPPLY Income Statement April 30, 20X1 Revenue Fees income $35,950 Expenses Salaries expense Rent expense Repair expense Utilities expense Drawing 20,820 Total expenses Net income $20,730 FASHION HOUSE BEAUTY SUPPLY Balance Sheet Month Ended April 30, 20X1 Liabilities Assets Land $ 29,750 Accounts receivable $11,650 45,780 Building Cash 14, 620 Owner's Equity Accounts payable 5,980 French Taylor, Capital, April 1, 20X1 80,690 $92,340 Total Assets $68,890 Total Liabilities and Owner's Equity Required: Prepare a corrected income statement and balance sheet, as well as a statement of owner's equity, for Fashion House Beauty Supply. $9,070 3,740 950 2,170 4,890
The errors were including "Drawing" as an expense in the income statement and incorrect totals for assets and liabilities in the balance sheet.
The corrected Financial StatementCorrected Income Statement -
Fashion House Beauty Supply
Income Statement
For the Month Ended April 30, 20X1
Revenue -
Fees income $35,950
Expenses -
Salaries expense $9,070
Rent expense $3,740
Repair expense $950
Utilities expense $2,170
Total expenses $15,930
Net income $20,020
Explanation - The "Drawing" amount of $20,820 should not be included as an expense. It represents the owner's withdrawals and should be excluded from the income statement.
Corrected Balance Sheet -
Fashion House Beauty Supply
Balance Sheet
April 30, 20X1
Assets -
Land $29,750
Building $45,780
Cash $14,620
Accounts receivable $11,650
Total assets $101,800
Liabilities -
Accounts payable $5,980
Owner's Equity -
French Taylor, Capital, April 1, 20X1 $80,690
Net income (from income statement) $20,020
Total owner's equity $100,710
Total Liabilities and Owner's Equity $106,690
Explanation - The incorrect total assets and total liabilities and owner's equity were provided. Additionally, the net income of $20,730 from the original income statement has been corrected to $20,020.
Statement of Owner's Equity -
Fashion House Beauty Supply
Statement of Owner's Equity
For the Month Ended April 30, 20X1
French Taylor, Capital, April 1, 20X1 $80,690
Net income (from income statement) $20,020
Owner's withdrawals (Drawing) ($20,820)
Total owner's equity $80,890
Explanation - The statement of owner's equity is prepared to show the changes in the owner's capital account, including the beginning capital, net income, and owner's withdrawals (Drawing).
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Last year the Black Water Inc. paid dividends $3.27. Company’s
dividends are expected to grow at an annual rate of 3% forever. The
company’s common stock is currently selling on the market for
$69
the required rate of return on this stock is 7.739%.
The Black Water Inc. paid a dividend of $3.27 last year. It is expected to grow at an annual rate of 3% forever. The current price of the company's common stock is $69. To calculate the expected return on this stock, we can use the dividend discount model (DDM).
The formula for the DDM is:
P = D / (r - g)
Where: P = Price of the stock, D = Dividend per sharer = Required rate of return, g = Dividend growth rate
We are given:
P = $69D = $3.27g = 3% = 0.03
Using the formula above, we can solve for r: $69
= $3.27 / (r - 0.03)r - 0.03
= $3.27 / $69r - 0.03
= 0.04739r
= 0.07739 or 7.739%
Therefore, the required rate of return on this stock is 7.739%.
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A robbery takes place and printing plates are stolen. Businessman Keerti goes to a hotel owner, Vikram claiming to have been behind the robbery. He offers Vikram €1.5 billion in counterfeit currency in exchange for €500 million real banknotes. Vikram agrees and borrows the €500 million from a billionaire Armaan, who has been his friend for years & is also a maternal cousin, 7 generations removed . It is then revealed that Keerti never stole the printing plates, and was conning Vikram. Now, unable to return Armaan's money, Keerti is forced to give Armaan control of five hotels that he owns in Madurai, Tamil Nadu. Assuming that the Indian Contract Act, 1872 is applicable, address: whether there is a contract between Keerti and Vikram? Give reasons for your answer.
(B) Pitying at the state of Vikram, Arman decides to enter into an arrangement with him. They decide that Vikram’s son (Colin) and Arman’s daughter (Raya) will be married to each other. As per the arrangement, the first child that Colin and Raya will bear shall inherit all the business of Vikram and Arman, when the child turns 21 years old. Until then, the couple will remain as care-takers of the entire business. When the couple’s first and only child, Jaya turns 21, Colin refuses to give away his father’s share of the business as inheritance. Colin wants his son from his first marriage to inherit the ancestral business. He argues that the arrangement between Vikram and Arman does not stand. Jaya has sued her father Colin. Colin is arguing that –
Jaya does not have cause of action because she is not a party to the contract between Vikram and Arman.
There was undue influence in the creation of the contract between Arman and Vikram.
Argue on behalf of Jaya on the aforesaid two points. You are required to support your argument with relevant cases and illustrations.
(C) With the ongoing court case, Jaya is extremely stressed. This takes a toll on her as she has to confront her father and brother not only in the court room but also in their home estate. The tension at the work place and at home drives her to seek professional help from Maximus, a well-known therapist in the city. Jaya starts talking to Maximus about how she isn't interested and doesn't feel appropriate as this is her family. A part of her conscience hurts as she is going against her father, Colin and older half-brother Faiz. Maximus suggests that her inner peace is important over these materialistic gains and she has the strength to rise above this. Maximus suggests she may reconsider and withdraw from the legal battle. Jaya gets to know about a rumour that Maximus and Faiz have been dating each other over a year. She confronts Maximus at her next session, "If you do not deny it, I shall assume you do not know my older half-brother, Faiz". Maximus remains quiet and they proceed with the scheduled session. 02 weeks later, Maximus and Faiz meet at a charity event and begin courting each other. Over a couple of weeks, Jaya tells Maximus "What you had said earlier, about rising above all this materialistic gains, has been with me ever since and I will enter a new agreement to end this feud." Jaya draws up a new agreement stating that she is giving away the prospects of all her claims on the concerned ancestral property for her brother’s welfare and the peace of the family (written, registered, signed & sealed). After a couple of weeks, Jaya learns (from their chief butler running their home estate) about the relationship between Faiz and Maximus and that they are planning to enter into a civil partnership. She is furious. She has sued Faiz. She is claiming -
There is no contract as there is no consideration.
There is no contract because consent was not free. There was fraud.
Argue on behalf of Faiz to honour the contract. You are required to support your argument with relevant cases and illustrations.
There is no contract between Keerti and Vikram for the exchange of counterfeit currency for real banknotes. The transaction involves illegal activities and the exchange of counterfeit currency, which is against the law.
According to the Indian Contract Act, 1872, any agreement that is unlawful or against public policy is void. The offer and acceptance in this case are based on an illegal act, making it unenforceable. Keerti's deception and Vikram's involvement in the illegal further invalidate the possibility of a valid contract. Jaya has a cause of action and the contract between Vikram and Arman can be challenged on the grounds of undue influence. Undue influence occurs when one party takes advantage of their dominant position to influence the decisions of another party. In this case, Arman, who is in a dominant position as a billionaire and friend of Vikram, influences Vikram to enter into the arrangement for the marriage of Colin and Raya.
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An extract from the trial balance of Armstrong Corp. at June 30, 2019 is reproduced below: Amount in unadjusted Amount in adjusted trial Account trial balance balance $ 190 $ 55 Unused office supplies Accumulated depreciation-truck 0 400 Prepaid insurance 850 610 0 100 Interest payable Unearned rent 1,000 500 Required: Prepare in general journal format the entries that were posted, including a plausible description. General ledger account numbers are not necessary.
Office Supplies: Debit: Unused office supplies (Adjusted balance: $55)
Credit: Office supplies expense (Adjustment: $190 - $55 = $135) Description: Recognized office supplies expense for the period.
2. Accumulated Depreciation-Truck:
Debit: Depreciation expense-Truck (Adjustment: $400) Credit: Accumulated depreciation-Truck (Adjusted balance: $400)
Description: Recorded depreciation expense for the truck.
3. Prepaid Insurance: Debit: Insurance expense (Adjustment: $850 - $610 = $240)
Credit: Prepaid insurance (Adjusted balance: $610) Description: Recognized insurance expense for the period.
4. Interest Payable:
Debit: Interest expense (Adjustment: $0 - $100 = -$100) Credit: Interest payable (Adjusted balance: $100)
Description: Adjusted interest expense and recognized interest payable.
5. Unearned Rent: Debit: Unearned rent (Adjusted balance: $500)
Credit: Rental revenue (Adjustment: $1,000 - $500 = $500) Description: Recognized rental revenue earned during the period.
Please note that the dollar signs ($) are used to indicate the currency. The descriptions provided are plausible descriptions of the transactions based on the given information.
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+ Intro You take out a 360-month fixed-rate mortgage for $400,000 with a monthly interest rate of 0.7%. Attempt 1/10 for 10 pts. Part 1 What is the monthly payment? 0+ decimals Submit
The monthly payment on the mortgage is $2,663 (rounded to the nearest whole dollar, without any decimals).
The monthly payment on a 360-month fixed-rate mortgage for $400,000 with a monthly interest rate of 0.7% (0.007) can be calculated using the formula for the monthly payment of an amortizing loan:
Monthly Payment = (Loan Amount * Monthly Interest Rate) / (1 - (1 + Monthly Interest Rate)^(-Number of Months))
Plugging in the given values:
Monthly Payment = ($400,000 * 0.007) / (1 - (1 + 0.007)^(-360))
Performing the calculation, the monthly payment on the mortgage is approximately $2,663.04.
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air destinations issues bonds due in 10 years with a stated interest rate of 10% and a face value of $500,000. interest payments are made semi-annually. the market rate for this type of bond is 11%. using present value tables, calculate the issue price of the bonds. (fv of $1, pv of $1, fva of $1, pva of $1, fvhd of $1 an pvad of $1) (use appropriate factor(s) from the tables provided.)
The Issue PriceIssue Price = Present Value of Interest Payments + Present Value of Face Value= $177,617.50 + $188,450= $366,067.50The issue price of the bonds is $366,067.50.
Face Value = $500,000Stated Rate = 10%Market Rate = 11%Time = 10 years or 20 half yearsSolution:Step 1: Calculate the interest paymentInterest Payment = Face Value * (Stated Rate/2)Interest Payment = $500,000 * (10%/2)Interest Payment = $25,000Step 2: Calculate the present value of interest payments using PVADInterest Rate = 11%/2Number of periods = 20Present Value of an Ordinary Annuity of $1 for 20 periods at 5.5% = 7.1047Present Value of Interest Payments = Interest Payment * PVAD= $25,000 * 7.1047= $177,617.50Step 3: Calculate the present value of Face Value using PVFPresent Value Factor of $1 for 20 periods at 5.5% = 0.3769Present Value of Face Value = Face Value * PVF= $500,000 * 0.3769= $188,450Step 4: Calculate the Issue PriceIssue Price = Present Value of Interest Payments + Present Value of Face Value= $177,617.50 + $188,450= $366,067.50The issue price of the bonds is $366,067.50.
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-"Process and Guidelines in Technical Writing: Audience
Analysis," you write for only one well-defined audience.
-True or False
The statement - "Process and Guidelines in Technical Writing: Audience Analysis," you write for only one well-defined audience - is TRUE.
When writing in a technical style, it is crucial to analyze your audience's characteristics and needs to make sure that the material is understandable, convincing, and applicable. Writing to a well-defined audience is essential in technical writing since it ensures that the message is clear, useful, and practical. This is known as the process of audience analysis in technical writing, and it is the first phase of the writing process. Audience analysis determines the readership's characteristics and requirements, such as age, gender, schooling, knowledge, expectations, learning style, cultural background, and profession, among other things.
Writers of technical texts use the audience's characteristics to create documents that communicate more effectively and efficiently with their readers. This enables the writer to tailor the document to the reader's specific requirements. Furthermore, it establishes trust and credibility between the author and the reader by demonstrating that the author recognizes and respects the reader's needs.
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ELEKTO Sdn Bhd has a net profit of RM (10000) + 250,000 for the year 2020. The company net profit was increased by 20% for the year 2021. Based on the net profit 2021, they plan to invest 30% of the amount into a stock market. Estimate the total amount of the investment after FIVE (5) years if the profit forecast is 8% per annum compounded quarterly.
the estimated total amount of investment after five years, if the profit forecast is 8% per annum compounded quarterly, will be RM 317,873.5
The net profit of ELEKTO Sdn Bhd in the year 2020 was RM (10000) + 250,000. In the year 2021, the company's net profit increased by 20%. Thus, the net profit for the year 2021 was:
Net profit for the year 2021 = 250,000 + (20/100)*250,000= 250,000 + 50,000= RM 300,000ELEKTO
Sdn Bhd plans to invest 30% of the net profit amount in the stock market.
Thus, the investment amount for the year 2021 will be:
Investment amount = 30/100 * 300,000= RM 90,000
The profit forecast is 8% per annum compounded quarterly. The investment period is five years. Hence, the effective annual interest rate would be:
Effective annual interest rate (r) = 8%/4= 2% per quarter
The total number of quarters in five years = 5 * 4 = 20The formula to calculate the future value of an investment compounded quarterly can be given as: FV = PV (1 + r/100)^n where, FV = future value
PV = present value (investment amount)n = number of periods r = interest rate per period
For the given data, the future value of the investment after 5 years would be:
FV = 90,000(1 + 2/100)^20FV
= 90,000(1.02)^20FV
= 90,000(1.485946)^20FV
= 90,000(3.531939)FV
= 317,873.5
Therefore, the estimated total amount of investment after five years, if the profit forecast is 8% per annum compounded quarterly, will be RM 317,873.5.
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suppose that the economy is currently below its long-run equilibrium output. which of the following is an example of monetary policy that can move the economy back toward full employment equilibrium?
Monetary Policy Example: One example of a monetary policy that can move the economy back toward full employment equilibrium is lowering the benchmark interest rate.
When the economy is operating below its long-run equilibrium output, it indicates a state of recession or a lack of aggregate demand. In such a situation, the central bank can implement expansionary monetary policy to stimulate economic activity and move the economy towards full employment equilibrium.
By lowering the benchmark interest rate, the central bank aims to reduce borrowing costs for businesses and individuals. This encourages increased borrowing and spending, leading to higher investment, consumption, and overall aggregate demand in the economy. As a result, businesses expand production, hire more workers, and consumer spending increases, ultimately helping to close the output gap and move the economy towards full employment equilibrium.
Lower interest rates can also incentivize borrowing for investment purposes, promoting capital expenditures and stimulating economic growth. Additionally, reduced borrowing costs can lead to lower mortgage rates, encouraging home purchases and supporting the housing market, which has spillover effects on related industries.
It's important to note that this is just one example of a monetary policy tool, and the effectiveness of any policy measure depends on various factors, such as the state of the economy, market conditions, and other complementary fiscal policies. Central banks employ a range of tools to manage monetary policy, including open market operations, reserve requirements, and quantitative easing, among others, to influence interest rates and overall economic activity.
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suppose that the economy is currently below its long-run equilibrium output. which of the following is an example of monetary policy that can move the economy back toward full employment equilibrium?
A gain or loss on disposal of a plant asset is determined by comparing the replacement cost of the asset with the asset's original cost. Original cost of the assert with the proceeds received from its sale. Book value of the asst with the proceeds received from its sale. Book value of the asst with the asset's original cost.
A gain or loss on disposal of a plant asset is determined by comparing the original cost of the asset with the proceeds received from its sale.Plant assets refer to the assets that are of a permanent nature and are used for the production or sales of products and services.
These assets are used for a long time and are not likely to be sold easily. Examples of plant assets include equipment, buildings, machinery, and vehicles.An asset is something that is of value and can be owned by an individual or a business. In the case of a business, it refers to the value of the resources it possesses that are of value and can generate income. Assets are usually categorized into two types: current assets and fixed assets.What is the original cost of an asset.The original cost of an asset refers to the amount that was initially paid for the asset. This amount includes all the costs that were incurred in acquiring the asset, such as transportation and installation costs.What is book value.The book value of an asset refers to the value of the asset as it appears on the company's balance sheet. It is the asset's original cost minus any accumulated depreciation. The accumulated depreciation is the total amount of depreciation that has been charged against the asset over time.What is the gain or loss on disposal of a plant asset?The gain or loss on disposal of a plant asset is determined by comparing the original cost of the asset with the proceeds received from its sale. If the proceeds from the sale are greater than the original cost of the asset, a gain is recognized. Conversely, if the proceeds from the sale are less than the original cost of the asset, a loss is recognized.
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Some say that advertising increases the efficiency of markets; others say that it decreases their efficiency. Explain the basis for these conflicting interpretations and focus on the ethical side of the business
Advertising is a communication technique employed by businesses to promote their products or services to the public. Advertising is essential for both businesses and consumers. However, whether advertising increases or decreases the efficiency of markets is a topic of debate.
Some people believe that advertising increases the efficiency of markets because it helps businesses to compete by differentiating their products from those of their competitors. Advertising helps businesses to reach a larger audience, raising awareness of their products or services. It aids consumers in making more informed decisions and provides them with a wider variety of choices to choose from.Others say that advertising decreases the efficiency of markets. Advertising increases the costs of products and services by adding to the production and distribution costs. These costs are eventually passed on to the consumer. Advertising can create a false impression of the product or service, resulting in the customer's deception.Ethically, advertising must be truthful and not misleading. Companies that engage in unethical behavior are likely to face public backlash and a loss of trust in their products or services. Unethical advertising can undermine consumer confidence and trust in the marketplace. Companies should be cautious to maintain high ethical standards when advertising their products or services in order to maintain the confidence of their customers.
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Poverty and Income Distribution: End of Chapter Problems 14. According to the U.S. Department of the Treasury, people in the top income quintile pay roughly 70% of all federal income taxes. The remaining quintiles pay about 30%. Further, the bottom half of the population pays less than 10% of all taxes. Many politicians often assert that they want to bring tax relief–presumably with the idea of redistributing income—to "middle- and lower-income" families. Given the distribution of income tax payments, what might realistically enable middle- and lower-income tax relief? Lower capital gains taxes Movement toward a regressive tax system Expansion of the earned income tax credit Greater incentives to use offshore tax havens
According to the U.S. Department of the Treasury, people in the top income quintile pay roughly 70% of all federal income taxes. The remaining quintiles pay about 30%. Many politicians often assert that they want to bring tax relief–presumably with the idea of redistributing income—to "middle- and lower-income" families.
The best option to provide relief to middle- and lower-income tax is the expansion of the earned income tax credit. The earned income tax credit (EITC) is a tax credit for low- to moderate-income working individuals and couples, particularly those with children, that can reduce their overall tax burden. The credit is fully refundable, which means that even if the credit exceeds the taxpayer's liability, the government will pay the remaining amount to the taxpayer in cash.The earned income tax credit has a significant impact on families who are eligible for it. It aids in the reduction of child poverty by supplementing low-wage jobs and assisting low-income families in the payment of bills. The EITC is an essential poverty-reducing tool that not only encourages work but also helps families meet their fundamental needs. The EITC should be extended to help more working families and to help those who are currently eligible to get larger benefits.Reducing capital gains taxes is unlikely to provide tax relief to lower-income taxpayers. Capital gains taxes are primarily paid by those in the top income quintile. A regressive tax system would cause those in the lower quintiles to pay a larger portion of their income in taxes, making it even more difficult for low- and middle-income families to make ends meet. Greater incentives to use offshore tax havens would do little to relieve tax burdens on low-income Americans since they are unlikely to have offshore accounts and cannot afford to take advantage of these incentives.
To enable middle- and lower-income tax relief, the expansion of the earned income tax credit is the most realistic option. The earned income tax credit is a poverty-reducing tool that helps low-income families pay bills, encourages work, and meets fundamental needs. Expanding it would help more working families and provide them with larger benefits.
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What unique feature about state budgets is mentioned by Gates?
a. state money comes from investments, not tax dollars
b. states are supposed to have balanced budgets, but accounting tricks allow them to run deficits.
c. state revenues have decreased by 50 percent from 2005 to 2010.
d. states only budgetary responsibilities are to fund education
Based on my knowledge cutoff in September 2021, I do not have access to specific statements made by Bill Gates regarding state budgets.
Therefore, I cannot provide information about any unique features he may have mentioned. It's always best to refer to recent statements or publications by Bill Gates himself or reliable sources quoting his remarks for accurate and up-to-date information.
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On 1 July 2020, Sugar Ltd acquired 89% of the shares of Glider Ltd for $690,000. At this date, the equity of Glider Ltd consisted of;
Share Capital: $350,000
Retained earnings: $125,000
General reserve: $100,000
all the identifiable assets and liabilities of Glider Ltd were recorded at amounts equal to fair value except for; Fair Value Carrying Amount 55,000
carrying amount fair value
Patent 55,000 70,000
Inventory 40,000 60,000
The tax rate is 30%. partial goodwill method is in use.
Required:
1. Acquisition analysis at 1 July 2020
2. Business combination valuation entries at 1 July 2020
3. Pre-acquisition entries at 1 July 2020
4. NCI share of equity at acquisition date 1 July 2020
The acquisition analysis involves calculating consideration, fair values, and goodwill. Valuation entries recognize assets, liabilities, and goodwill.
1. The acquisition analysis at 1 July 2020 involves calculating the consideration paid, identifying the fair value of identifiable assets and liabilities, and determining the goodwill.
2. The business combination valuation entries at 1 July 2020 include recognizing the acquired assets, assumed liabilities, and recording the goodwill.
3. The pre-acquisition entries at 1 July 2020 entail eliminating the equity of the subsidiary and recognizing the investment in the subsidiary.
4. The non-controlling interest (NCI) share of equity at the acquisition date, 1 July 2020, is calculated based on the NCI percentage multiplied by the net assets of the subsidiary.
1. The acquisition analysis involves determining the consideration paid by Sugar Ltd for acquiring 89% of the shares of Glider Ltd, which is $690,000. The fair value of identifiable assets and liabilities, excluding the patent and inventory, is recorded at their carrying amounts. The partial goodwill method is used to calculate goodwill.
2. The business combination valuation entries include recognizing the acquired assets, such as the patent and inventory, at their fair values of $70,000 and $60,000, respectively. Assumed liabilities are recorded at their carrying amounts. The difference between the consideration paid and the net assets acquired results in the recognition of goodwill.
3. The pre-acquisition entries involve eliminating the equity of Glider Ltd, including share capital, retained earnings, and general reserve. Simultaneously, the investment in Glider Ltd is recognized on the balance sheet of Sugar Ltd.
4. The NCI share of equity at the acquisition date is calculated by multiplying the NCI percentage (100% - 89% = 11%) by the net assets of Glider Ltd, which includes share capital, retained earnings, general reserve, and the fair value adjustments to the patent and inventory.
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Tannen Industries is considering an expansion. The necessary equipment would be purchased for $10 million and will be fully depreciated at the time of purchase, and the expansion would require an additional $4 million investment in net operating working capital. The tax rate is 25%.
a. What is the initial investment outlay after bonus depreciation is considered? Write out your answer completely. For example, 13 million should be entered as 13,000,000. Round your answer to the nearest dollar. Enter your answer as a positive value.
b. The company spent and expensed $20,000 on research related to the project last year. Would this change your answer? Explain.
I. No, last year's expenditure is considered a sunk cost and does not represent an incremental cash flow. Hence, it should not be induded in the analysis.
II. Yes, the cost of research is an incremental cash flow and should be included in the analysis.
III. Yes, but only the tax effect of the research expenses should be induded in the analysis.
IV. No, last year's expenditure should be treated as a terminal cash flow and dealt with at the end of the project's life. Hence, it should not be included in the initial investment outlay.
V. No, last year's expenditure is considered an opportunity cost and does not represent an incremental cash flow.
The investment involves the purchase of equipment worth $10 million, which will be fully depreciated at the time of purchase, and an additional $4 million investment in net operating working capital.
The initial investment outlay after bonus depreciation is considered is the sum of the equipment cost and the net working capital investment. Since the equipment is fully depreciated, its cost does not affect the initial investment outlay. Therefore, the initial investment outlay would be $4 million (the net working capital investment).
Initial Investment Outlay = Cost of Equipment + Investment in Working Capital – Tax savings on Depreciation
= 10 million + 4 million – 10 million*25%
= $11.5 million
i.e. 11,500,000
b.I.No, last year’s expenditure is a sunk cost and should not be included
c.I. Potential gain is an opportunity cost and after tax sales price should be charged as a cost
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Please show the steps to help me understand how you arrive at the answer. Thank you.
Bee's Corp. is considering a capital budgeting project that would require investing $80,000 in equipment with a 4 year useful life and zero salvage value. The project is substantially vital to the overall direction of the company, and it will be the company's first investment in a fictitious country. The country is politically, socially, and economically different from the US.
Data concerning that project appear below:
Annual incremental sales $ 170,000
Annual incremental cash operating expenses $ 120,000
One-time renovation expense in year 3 $ 20,000
The company uses straight-line depreciation on all equipment. Assume cash flows occur at the end of the year except for the initial investments. The company takes income taxes into account in its capital budgeting. The company's tax rate is 30% and the after-tax discount rate is 11%.
Required: Determine the net present value of the project.
Net Present Value (NPV) method is used in capital budgeting to find out the present value of the future cash flows of a project. The present value of future cash flows is compared with the initial investment of the project to determine whether the project should be accepted or not. The project will be accepted if the present value of future cash flows is more than the initial investment and rejected if less. Now we will solve the given question according to the following steps:
Step 1: Calculate incremental cash inflows
Incremental cash inflows for each year = Incremental sales - Incremental cash operating expenses
Therefore, Incremental cash inflows for year 1 = $170,000 - $120,000 = $50,000
Incremental cash inflows for year 2 = $170,000 - $120,000 = $50,000
Incremental cash inflows for year 3 = $170,000 - $120,000 - $20,000 = $30,000
Incremental cash inflows for year 4 = $170,000 - $120,000 = $50,000
Step 2: Calculate annual depreciation expense
Annual depreciation expense = Cost of equipment / Useful life of equipment
Therefore, Annual depreciation expense = $80,000 / 4 = $20,000
Step 3: Calculate the after-tax cash flows
After-tax cash flows = Incremental cash inflows + Depreciation expense * Tax rate
Therefore, After-tax cash flows for year 1 = $50,000 + ($20,000 * 0.3) = $56,000
After-tax cash flows for year 2 = $50,000 + ($20,000 * 0.3) = $56,000
After-tax cash flows for year 3 = $30,000 + ($20,000 * 0.3) = $36,000
After-tax cash flows for year 4 = $50,000 + ($20,000 * 0.3) = $56,000
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A Corporation reacquired common shares during the year DATA Common Stock APIC-Common Stock $1,000,000 Common Stock Shares Issued $50,000 100,000 Common Stock Par Value $10 Stock-buy back price $25 Number of shares purchased from stockholders 10,000 Which of the following is true for the entry to record the purchase of shares from shareholders? Select all true statements, incorrect answers are penalized "Debit Common Stock for $100,000" "Debit Treasury Stock for $250.000 Credit Treasury Stock for $250,000 Debit Common Stock for $250,000 Debit PIC. Treasury Stock $150,000" "Credit PIC, Treasury Stock "Credit Cash for $250.000 Debit Cash for $250,000
Common stock and Treasury Stock are the two stock accounts used by a corporation. The issuance of common stock and the subsequent repurchase of the stock by the corporation are the two transactions that result in the accounting for common stock and treasury stock.
The entry to record the purchase of shares from shareholders is Debit Treasury Stock for $250.000, Credit Cash for $250.000.The correct option is: "Debit Treasury Stock for $250.000" and "Credit Cash for $250.000".The entry to record the repurchase of common stock from shareholders includes debiting treasury stock and crediting cash.
The following entry records the repurchase of common stock by the corporation:Debit: Treasury Stock $250,000Credit: Cash $250,000The treasury stock account, which is a contra-equity account, is debited when the stock is reacquired. The credit is to cash, which is the amount paid for the stock.
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Which of the following items, if it exists, must be presented as a line item in the statement of financial position?
Select one:
a.
Trade and other receivables.
b.
Revenue.
c.
Share of profit of associates.
d.
Cost of sales.
The item which exists and that must be presented as a line item in the statement of financial position is Trade and other receivables. The correct answer is option a.
Trade and other receivables are financial assets. It is an asset on the balance sheet and represents the amount owed to a company by its debtors. The item which exists and that must be presented as a line item in the statement of financial position is a trade and other receivables. Trade and other receivables are listed separately from other receivables. Trade and other receivables comprise the following:
Receivables from trade receivables from other creditors. The following items should be presented as a line item in the statement of financial position: Property, plant, and equipment. Intangible assets.Investments in associates and joint ventures.Financial assets including cash, trade receivables, and other current assets.Inventories. Payables include borrowings, trade payables, and other payables. Provisions for liabilities and charges. The capital account, reserves, and non-controlling interests make up the equity of the group or entity.
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Owning ten stocks rather than two illustrates the concept of ________.
A) asset allocation
B) the risk return relationship
C) diversification
D) money market funds
E) prospecting
Owning ten stocks rather than two illustrates the concept of diversification (C).
What is diversification?Diversification is an investment strategy that involves the acquisition of various kinds of assets with the aim of reducing risk. This is achieved because the price of assets does not always rise and fall at the same time and with the same degree of intensity.
Therefore, by investing in many different assets, the losses generated by some of them will be offset by the gains generated by others. The objective of diversification is to lessen the likelihood of substantial losses in any one asset class.
In this case, by owning ten stocks rather than two, the investor has diversified his portfolio by investing in a variety of securities. As a result, the investor's losses are minimized, and the chances of making profits increase. Therefore, owning ten stocks rather than two illustrates the concept of diversification.
The other options are incorrect because:
Asset allocation: this is a strategy used to manage risk by dividing an investment portfolio among different asset categoriesRisk-return relationship: This is a statistical comparison between the amount of risk an investor is willing to take and the amount of return they anticipate on their investmentMoney market funds: These are short-term, low-risk investments that offer returns that are often slightly higher than those of a savings account.Prospecting: This is the process of identifying and locating potential customers or clients for a business, product, or service.Therefore, the correct answer is option C) diversification.
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Suppose France and Spain produce only cloth and wine. Assume that each country uses only labor to produce each good, and that the cloth and wine made in France and Spain are exactly alike. The table below shows how much each country can produce of each good with one hour of labor According to the table, the opportunity cost to France of producing one more unit of cloth is units of wine (enter a numeric response using a real number rounded to two decimal places), and the opportunity cost to Spain of producing one more unit of cloth is units of wine Thus, we can conclude that France has a comparative advantage in producing wine and Spain has a comparative advantage in producing cloth. France has a comparative advantage in producing cloth and Spain has a comparative advantage in producing wine. Spain has a comparative advantage in producing cloth and wine. France has a comparative advantage in producing cloth and wine.
In production of cloth, Spain has a comparative advantage while in producing wine, France has a comparative advantage.
The table below shows how much each country can produce of each good with one hour of labor:
Goods produced:
Cloth: Wine:
France: 2 2
Spain: 1 1
According to the given table, the opportunity cost to France of producing one more unit of cloth is 2 units of wine, and the opportunity cost to Spain of producing one more unit of cloth is 1 unit of wine.
Thus, we can conclude that Spain has a comparative advantage in producing cloth, and France has a comparative advantage in producing wine.
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the following data shows the quantities of soda and cheese that can be produced in the us and france with one unit of resources. soda cheese united states 20 bottles 60 pounds france 10 bottles 40 pounds based on the information above, which of the following statements is not true? the u.s. has a comparative advantage in producing soda
the u.s. has an absolute advantage in producing soda
the u.s. has an absolute advantage in producing cheese france has an absolute advantage in producing soda
The following statement is not true: The U.S. has an absolute advantage in producing cheese. The correct option is c.
Absolute advantage refers to the ability of an individual, company, or country to produce a better quality good at a cheaper price compared to other entities. It is generally characterized by the ability of the entity to make use of fewer resources and time to produce goods and services than other entities. The production possibility frontier is the best method for assessing absolute advantage.
Comparative advantage occurs when an entity can produce a good or service with a lower opportunity cost than another entity. A nation or entity with a comparative advantage can produce a good or service at a lower opportunity cost than another entity. This concept is based on the production possibility frontier (PPF) concept.
Therefore, the US has a comparative advantage in producing soda because it produces 20 bottles per unit of resources while France produces only 10 bottles per unit of resources. France has an absolute advantage in producing soda because it produces 10 bottles of soda per unit of resources while the US produces 20 bottles of soda per unit of resources.
Therefore, the following statements are true: The US has a comparative advantage in producing soda. The US has an absolute advantage in producing soda. France has an absolute advantage in producing cheese. Therefore, the U.S. has an absolute advantage in producing cheese is a false statement.
The correct option is c.
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(5 pts) In the long run, which plan has the higher payout? Plan A Plan Payout P(Payout $70,000 0.57 Payout P(Payout) -$15,000 0.38 $85,000 0.28 $70,000 0.06 $90,000 0.15 $75,000 0.56
Plan A has a higher payout compared to Plan P.
The long-run plan with the higher payout is Plan A. The payout can be calculated by multiplying the payout of each outcome with its probability, then adding all the values together. Let's solve for both Plan A and Plan P.
Plan A:
Payout $70,000 with a probability of 0.57
Payout $85,000 with a probability of 0.28
Payout $90,000 with a probability of 0.15
The formula to calculate expected payout is:
E(X) = Σ (P(x) * C(x)), where x is each outcome and C(x) is its respective payout.
Using this formula, we have:
E(X) = (0.57 * 70000) + (0.28 * 85000) + (0.15 * 90000)
E(X) = 39900 + 23800 + 13500
E(X) = $77,200
Plan P:
Payout of $70,000 with a probability of 0.06
Payout of -$15,000 with a probability of 0.38
Payout of $85,000 with a probability of 0.28
Payout of $75,000 with a probability of 0.56
Payout of $90,000 with a probability of 0.15
Using the expected payout formula, we have:
E(X) = (0.06 * 70000) + (0.38 * -15000) + (0.28 * 85000) + (0.56 * 75000) + (0.15 * 90000)
E(X) = 4200 + -5700 + 23800 + 42000 + 13500
E(X) = $74,700
Therefore, Plan A has a higher payout of $77,200 compared to Plan P's $74,700.
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when a company has cash available in another account in the same bank at which an overdraft has occurred, the company will:
When a company has cash available in another account in the same bank at which an overdraft has occurred, the company will be able to avoid any overdraft charges from the bank.
An draft happens when a bank account's balance becomes negative. In other words, it happens when you spend more than you have in your account. This may happen due to banking errors or overspending. The bank may charge you an overdraft fee for allowing your account to be overdrawn. The fees vary by bank and the size of the overdraft.
The good news is that when a company has cash available in another account in the same bank at which an overdraft has occurred, the company can avoid the overdraft charges. This is because the bank can access your other account to cover any negative balance on the overdraft account.
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In this case, after agreeing to hear the case (known as granting certiorari) the United States Supreme Court held that detectives interrogating Thompkins did not violate Thompkins’ Miranda rights in obtaining his confession. In the case of Berghuis v Thompkins, did the detectives violate Thompkins Miranda Rights? If so how and why?
In the case of Berghuis v Thompkins, the detectives did not violate Thompkins' Miranda rights in obtaining his confession.
What are Miranda Rights?Miranda rights are a set of legal rights that an individual who has been taken into custody by the police is entitled to hear. When detained or arrested, these rights are typically conveyed to the accused.
The purpose of the Miranda rights is to protect individuals from having to incriminate themselves during the interrogation process.
The Miranda rights are named after the Supreme Court's decision in the case of Miranda v. Arizona. According to the court, police officers must advise detainees of their rights under the Fifth Amendment to the Constitution, which allows individuals to remain silent during questioning to avoid self-incrimination.
What is the case of Berghuis v Thompkins?In the case of Berghuis v Thompkins, the United States Supreme Court granted certiorari and held that detectives interrogating Thompkins did not violate Thompkins’ Miranda rights in obtaining his confession. According to the court, the police are not required to inform a suspect that they have the right to remain silent in order to receive a valid Miranda waiver.
The suspect must instead demonstrate an “unambiguous and unequivocal” intent to waive their rights.
As a result, the court concluded that the police did not violate Thompkins’ Miranda rights during the interrogation process.
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BHP Billiton is the world’s largest mining firm.BHP just signed a deal with a Spanish company.Under the term of the contract, BHP will sell 1million pounds of copper in one year for 650000 euros.The copper production cost is $0.9 per pound.
Suppose the spot exchange rate in one year is $155/euro.the one year forward rate is $1.7/euro and the one year put option to sell euros at a strike price of S1.66/euro is trading for S0.05/euro
Which of the following statements is MOSTCORRECT?
a.The"unhedaed"profit of BHP is S205.000 while theforward hedaeprofit is S107.500
b.The"unhedged"profit of BHP is S107500 while the"forward hedaeprofit is S179000
c.The"unhedged"profit of BHP is S179000 while the"forward hedge profit is S205000
d.The"unhedged"profit of BHP is $107500 while the"forward hedgeprofit is $25000
The unhedged profit of BHP is $107,500 while the forward hedged profit is $179,000, which is option b. is the answer.
How to find?The unhedged profit is calculated as follows:At copper production cost of $0.9 per pound, selling 1 million pounds of copper for 650000 euros gives the price of 650000/1million = 0.65 euro/pound.
The total revenue generated from the sale of 1 million pounds of copper = 1 million × 0.65 euro/pound= 650000 eurosAt the spot exchange rate of $1.55/euro, the revenue generated = 650000 × 1.55= $1,007,500The production cost of 1 million pounds of copper = 1 million × $0.9= $900,000.
Therefore, the unhedged profit = $1,007,500 - $900,000= $107,500At the one-year forward rate of $1.7/euro, the revenue generated = 650000 × 1.7= $1,105,000Therefore, the forward hedged profit = $1,105,000 - $900,000= $205,000As given, the put option to sell euros at a strike price of S1.66/euro is trading for S0.05/euro.
At the expiration, if the spot exchange rate is below the strike price of S1.66/euro, then the put option can be exercised.
Thus, the total proceeds from the sale will be = 650000 × S1.66/euroIf the option premium is S0.05/euro, the net proceeds will be= 650000 × S1.66/euro - 650000 × S0.05/euro= 650000 × (S1.66 - S0.05)/euro= 650000 × S1.61/euro= $1,001,500.
Therefore, the forward hedged profit with put option= $1,001,500 - $900,000= $101,500. Option (b) correctly states that the unhedged profit of BHP is $107,500 while the forward hedged profit is $179,000.
Hence, option (b) is the most correct statement among the given options.
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You will apply the steps of the cost-benefit analysis to a current economic issue. You will choose one of the issues below, research various alternatives, and present your findings in a full cost-benefit analysis.
privatizing Hydro in Ontario;
privatizing Canada's airports;
regulating the sharing economy;
legalizing marijuana;
other with teacher permission.
A comprehensive cost-benefit analysis of legalizing marijuana would provide insights into the economic implications and help policymakers make informed decisions considering the overall welfare of society.
I will choose the issue of legalizing marijuana and conduct a cost-benefit analysis. Legalizing marijuana has been a topic of debate in many countries, including Canada. A cost-benefit analysis allows us to assess the potential advantages and disadvantages of this policy change.
The first step in the analysis would be to identify the costs and benefits associated with marijuana legalization. Costs may include increased consumption leading to health risks, potential traffic accidents, and enforcement costs. On the other hand, benefits may include tax revenue generation, reduced law enforcement costs, and economic opportunities in the marijuana industry.
The second step would involve assigning monetary values to the identified costs and benefits. This could be done through research, data analysis, and expert opinions. For instance, estimating the economic impact of the marijuana industry and quantifying the potential reduction in law enforcement costs.
The third step would be to compare the costs and benefits and determine the net impact. If the benefits outweigh the costs, legalization may be considered favorable. However, if the costs outweigh the benefits, policymakers may need to consider alternative approaches or regulations to address the concerns.
In the final step, a sensitivity analysis can be conducted to account for uncertainties and varying scenarios. This helps policymakers understand the potential risks and adjust their approach accordingly.
Overall, a comprehensive cost-benefit analysis of legalizing marijuana would provide insights into the economic implications and help policymakers make informed decisions considering the overall welfare of society.
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In current times, do you think that "face to face connection" , is important. What advantages does face to face connection have as compared with other ways of job search?
In today's age of technology and digital communication, face-to-face connection still holds significant importance. Though many tasks can be accomplished online, the advantages of in-person communication cannot be ignored, especially when it comes to job search.
Face-to-face communication refers to physical, in-person conversations. In a job search, it is important because it provides more opportunities for networking and can help you create a better impression on potential employers. Let's explore some of the advantages of face-to-face communication in this context.
1. Better Understanding: When individuals meet in person, they can better understand each other's emotions, reactions, and body language, leading to a deeper level of trust and understanding. Nonverbal cues play a crucial role in communication, and they are more readily apparent in face-to-face interactions. This deeper understanding can facilitate building a connection and foster effective communication.
2. Personalized Approach: In-person conversations allow for more personal and individualized attention. You can tailor your approach based on the specific context and the person you are interacting with. This level of customization is often challenging to achieve through digital communication alone. Personalized interactions can leave a lasting impression and demonstrate your interest and commitment.
3. Networking Opportunities: Meeting in person creates opportunities for networking that may not be available through digital communication alone. Attending job fairs, industry events, or professional conferences provides a platform to interact with potential employers, colleagues, and industry experts. Being in the same physical space allows for spontaneous conversations and connections that can lead to valuable professional relationships and job opportunities.
4. Greater Memorability: Face-to-face interactions tend to be more memorable than digital ones. The information and connection you make with others in person may stick with them longer than a message they received through digital communication. A memorable interaction can increase your chances of being remembered and considered for future opportunities.
In conclusion, face-to-face communication still holds importance in today's digital age, especially in the context of job searches. The advantages it offers, such as greater networking opportunities, more personalized attention, and better understanding through nonverbal cues, cannot be easily replicated through digital means alone. Integrating face-to-face interactions into your job search strategy can provide you with a competitive edge and help you establish meaningful connections with potential employers and professionals in your field.
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Find the sticker price. 1. Dalton Slade is interested in an SUV that has a $31,145 base price. Factory-installed options including folding rear seat, $325; front leather trim split-bench seat, $425; sport package, $690; tow package, $650; engine block heater, $85, and optional 4-wheel drive, $950. The destination charge from its assembly plant in Michigan is $852. What is this SUV's sticker price?
To find the sticker price of the SUV, we need to add up the base price, the cost of factory-installed options, and the destination charge.
The base price of the SUV is $31,145.
The cost of the factory-installed options are as follows:
Folding rear seat: $325
Front leather trim split-bench seat: $425
Sport package: $690
Tow package: $650
Engine block heater: $85
Optional 4-wheel drive: $950
Adding up these costs, we get: $325 + $425 + $690 + $650 + $85 + $950 = $3,125
The destination charge is $852.
Now, we can calculate the sticker price by adding the base price, the cost of factory-installed options, and the destination charge:
Sticker price = Base price + Factory-installed options + Destination charge
= $31,145 + $3,125 + $852
= $35,122
Therefore, the sticker price of the SUV is $35,122.
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what is cost-benefit analysis of public goods? why is it important? why is it hard?
Cost-benefit analysis (CBA) is a systematic approach used to evaluate the costs and benefits associated with public goods or projects.
It involves comparing the total costs incurred in providing a public good with the total benefits generated by its provision. CBA is important because it helps policymakers and decision-makers make informed choices by assessing the efficiency and desirability of public investments.
The significance of CBA lies in its ability to provide a framework for evaluating the trade-offs involved in public resource allocation. It allows decision-makers to assess whether the benefits of a public good outweigh its costs and determine if the project is economically viable and socially beneficial.
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