We divide the present worth by the present worth factor for an annuity to find the equivalent annual cost:
Equivalent Annual Cost = PW / A/P, 20%, 10
To determine the equivalent annual cost of the equipment, we can use the concept of annual worth or annual equivalent cost. It represents the annual cost that would be equivalent to the total costs and salvage value associated with the equipment over its lifespan.
First, we need to calculate the present worth of the total costs and salvage value. We can use the present worth formula:
PW = P - (A/P, i, n) - S
Where:
PW = Present worth
P = Purchase price of the equipment
A/P, i, n = Present worth factor for an annuity
S = Salvage value
Given:
Purchase price (P) = $1,200,000
Operating costs = $320,000 per year
Salvage value (S) = $182,000
MARR (i) = 20%
Lifespan (n) = 10 years
Calculating the present worth of the costs and salvage value:
PW = $1,200,000 - ($320,000/A/P, 20%, 10) - $182,000
Next, we need to calculate the present worth factor (A/P, i, n) using the MARR and lifespan:
A/P, 20%, 10 = (1 - (1 + i)^(-n))/i
Plugging in the values:
A/P, 20%, 10 = (1 - (1 + 0.20)^(-10))/0.20
With these calculations, we can determine the present worth and find the equivalent annual cost:
PW = $1,200,000 - ($320,000/A/P, 20%, 10) - $182,000
Finally, we divide the present worth by the present worth factor for an annuity to find the equivalent annual cost:
Equivalent Annual Cost = PW / A/P, 20%, 10
Solving this equation will give us the equivalent annual cost of the equipment.
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Find an article online that addresses fraud within a company (for example: "Bookkeeper caught embezzling from local plumbing company"). Respond to the following questions. Please answer in paragraph format in one to two pages. Include a link to the article at the end of the paper.
What items on the balance sheet were affected by this fraud?
Based on the seven elements of internal control from the lecture, discuss what controls might have been missing.
What steps could have been taken to prevent the fraud that was perpetrated?
When fraud occurs within a company, various items on the balance sheet can be affected depending on the nature of the fraud. Some common items that may be impacted include cash and cash equivalents, accounts receivable, inventory, and retained earnings.
In terms of the seven elements of internal control, several controls might have been missing to allow the fraud to occur. These elements include the control environment, risk assessment, control activities, information and communication, monitoring, control activities over financial reporting, and control activities over safeguarding assets.
To prevent the fraud that was perpetrated, several steps could have been taken. Firstly, implementing strong internal controls and segregation of duties is essential. This means ensuring that different individuals are responsible for key financial tasks such as recordkeeping, authorization, and reconciliation.
Implementing effective monitoring systems, such as regular reviews and analysis of financial statements and transactional data, can help detect unusual patterns or discrepancies.
Overall, preventing fraud requires a combination of strong internal controls, ethical practices, regular monitoring, and employee awareness. By implementing these measures, companies can reduce the risk of fraudulent activities and protect their assets and financial integrity.
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You wish to invest $10,000 in the ABC Company. You have a choice of either buying company shares
of common stock or 10-year non-callable bonds issued by the company.
Give 2 reasons (and only 21) why you would prefer to invest in ABC bonds rather than in ABC stocks.
Explain your answers.
The XYZ Company is looking for $10 Million in additional capital to finance the construction of a new
plant. Its manager is hesitating between raising the $10 Million in additional long-term debt or in
additional common equity. Give 2 reasons (and only 2!) why XYZ would prefer financipg the plant
with long-term debt rather than equity. Explain your answers.
Reasons to prefer investing in ABC bonds rather than ABC stocks:
1. Fixed Income and Stability: Bonds provide a fixed income stream in the form of regular interest payments. This provides stability and predictability of returns, especially for investors who prefer a steady income without the volatility associated with stock prices. By investing in bonds, you can have a clearer understanding of the cash flow you will receive over the bond's maturity period.
2. Preservation of Capital: Bonds are considered less risky than stocks as they represent a debt obligation of the issuer. In the event of a company's bankruptcy or financial distress, bondholders have a higher priority claim on the company's assets compared to common stockholders. This means that bondholders have a greater likelihood of recovering their initial investment, making bonds a more secure investment option.
Reasons for XYZ to prefer financing the plant with long-term debt rather than equity:
1. Tax Advantage: Interest payments on debt are tax-deductible expenses, while dividends paid to equity shareholders are not. By opting for long-term debt financing, XYZ can benefit from the tax shield provided by the interest expense deduction, which reduces the overall tax liability of the company. This can result in higher after-tax profits compared to financing through equity.
2. Retaining Ownership Control: By choosing long-term debt financing, XYZ can maintain its existing ownership structure and control over the company. Equity financing, such as issuing additional common shares, dilutes the ownership stake of existing shareholders and may result in loss of control. If the management wants to retain decision-making power and avoid dilution of ownership, long-term debt can be a preferred choice for financing the plant.
It's important to note that these reasons are general considerations, and the specific circumstances and financial goals of an investor or company should be thoroughly assessed before making any investment or financing decisions.
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Arya owns a portfolio consisting of Stock X and Stock Y. The portfolio has an expected return of 11 percent Stock has an expected return 15 ck Y has an expected return of 12.6 percent. What is the portfolio weight of Stock Y?
Arya owns a portfolio consisting of Stock X and Stock Y. The portfolio has an expected return of 11 percent. Stock X has an expected return of 15 percent, while Stock Y has an expected return of 12.6 percent.
The portfolio weight of Stock Y is 0.545 (55%).The formula for calculating the portfolio weight of each stock is:Portfolio weight of each stock = (Total market value of each stock ÷ Total market value of the portfolio)When it comes to Arya's portfolio, we're not given the market value of the portfolio or either of the stocks. As a result, we can't just calculate the portfolio weights right away.
The formula for calculating the expected return of a portfolio is:Expected return of a portfolio = (Weight of Stock X × Expected return of Stock X) + (Weight of Stock Y × Expected return of Stock Y)If we plug in the provided values, we get:11% = (Weight of Stock X × 15%) + (Weight of Stock Y × 12.6%)We can solve for the weight of Stock Y as follows:0.11 = 0.15W + 0.126(1 - W)0.11 = 0.15W + 0.126 - 0.126W0.11 - 0.126 = - 0.024W- 0.016 = - 0.024W0.016 ÷ 0.024 = W0.667 = W.
Therefore, the portfolio weight of Stock X is 1 - 0.667 = 0.333 (33.3%), and the portfolio weight of Stock Y is 0.667 (66.7%). We can double-check our answer by calculating the expected return of the portfolio using the portfolio weights we just calculated:Expected return of the portfolio = (0.333 × 15%) + (0.667 × 12.6%)Expected return of the portfolio = 11% (which was the given expected return of the portfolio).Thus, the portfolio weight of Stock Y is 0.545 (55%).
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In the absence of external shocks or government policy an economy would: A. Still experience business cycle fluctuations because of internal market forces.
B. Not experience business cycle fluctuations.
C. Not be able to expand production and output.
D. Still experience business cycle fluctuations because of factors such as wars and tax policy.
In the absence of external shocks or government policy, an economy would still experience business cycle fluctuations because of internal market forces. option A is the answer.
These forces are cyclical changes that occur in the economy naturally due to market conditions. Internal market forces can cause business cycles fluctuations as the economy moves through its various stages of growth and contraction. As consumers increase demand for goods and services, producers must increase their output. Eventually, demand will exceed supply, causing prices to rise, and reducing demand while supply increases.
This then leads to a decrease in output until prices fall to a point where demand once again exceeds supply. Business cycles are a natural part of the economy, and they tend to occur in an upward trend over the long term, reflecting growth and expansion in output, jobs, and income. While external shocks, such as wars, natural disasters, or changes in government policy, can impact the economy's stability, internal market forces are the primary drivers of business cycles.
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Describe and persuade on the importance and rationale for maintaining an ethical culture within the entire organization. Think about methods that could be used to motivate ethical business practices. (5 slides) 2. Recommend tactical methods that might be used within each of their areas. ( 5 slides)
Maintaining an ethical culture is crucial for the long-term success and sustainability of any organization. By fostering a strong ethical culture, companies can build trust, enhance their reputation, attract top talent, and mitigate risks. Employing tactical methods in various areas of the organization ensures that ethical standards are consistently upheld and continuously improved upon.
Slide 1: Importance of Maintaining an Ethical Culture
Introduction to the importance of ethics in business
Ethical culture sets the foundation for a positive and sustainable organizational environment
Builds trust among employees, customers, and stakeholders
Enhances the company's reputation and brand image
Slide 2: Rationale for Maintaining an Ethical Culture
Compliance with laws and regulations
Mitigating risks and avoiding legal issues
Fostering employee morale and engagement
Attracting and retaining top talent
Improving customer loyalty and satisfaction
Slide 3: Methods to Motivate Ethical Business Practices
Clear Code of Ethics: Establishing a comprehensive code of ethics that outlines expected behaviors and consequences for violations.
Ethical Leadership: Encouraging leaders to lead by example, demonstrating integrity, and making ethical decisions.
Training and Education: Providing regular ethics training programs to educate employees on ethical practices and dilemmas.
Rewards and Recognition: Recognizing and rewarding employees who exhibit ethical behavior and making it part of the performance evaluation process.
Open Communication: Encouraging employees to report unethical behavior without fear of retaliation through confidential reporting channels.
Slide 4: Tactical Methods for Maintaining Ethical Culture in Various Areas
Human Resources: Implementing rigorous screening processes, conducting background checks, and promoting diversity and inclusion.
Operations and Supply Chain: Ensuring transparency in sourcing, maintaining fair labor practices, and promoting environmentally sustainable operations.
Finance and Accounting: Establishing robust internal controls, conducting regular audits, and promoting accurate financial reporting.
Marketing and Sales: Avoiding misleading advertising, providing accurate product information, and adhering to fair competition practices.
Customer Service: Prioritizing customer satisfaction, handling complaints ethically, and respecting customer privacy.
Slide 5: Continual Improvement and Accountability
Regular Evaluation: Conducting ethical audits and assessments to identify areas of improvement.
Whistleblower Protection: Implementing policies to protect employees who report unethical behavior.
Ethical Decision-Making Frameworks: Providing guidelines and resources for employees to make ethical decisions.
Regular Communication: Ensuring ongoing communication about the importance of ethics and the organization's commitment to maintaining an ethical culture.
Accountability: Holding employees accountable for their actions, addressing ethical violations promptly and appropriately.
Conclusion: Maintaining an ethical culture is crucial for the long-term success and sustainability of any organization. By fostering a strong ethical culture, companies can build trust, enhance their reputation, attract top talent, and mitigate risks. Employing tactical methods in various areas of the organization ensures that ethical standards are consistently upheld and continuously improved upon.
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Suppose a hedge fund has a 2 and 20 tee arrangement and a net asset value (NAV) of $150 million at the beginning of the year. The high-water mark was $160 million at the beginning of the year. The NAV increased to $190 million at the end of the year, before fees. If management fees are distributed annually based on the NAV at the beginning of the year, what are the total annual fees including both management and incentive fees for this year? A. $3.2 million B. $5.4 million C. $8.4 million D. $11.2 million
option (c) $8.4 million is the correct answer for The total annual fees, including both management and incentive fees, for this year's amount.
In a 2 and 20 fee arrangement, the management fee is typically a fixed percentage of the net asset value (NAV) at the beginning of the year, and the incentive fee is a percentage of the profits earned by the hedge fund.
In this case, the NAV at the beginning of the year was $150 million, and the high-water mark (the highest NAV achieved) was $160 million. The NAV increased to $190 million at the end of the year.
First, let's calculate the management fee. The management fee is based on the NAV at the beginning of the year, which is $150 million. With a 2% management fee, the annual management fee is
2%* $150 million = $3 million.
Next, let's calculate the incentive fee.
The incentive fee is based on the profits earned, which is the difference between the end-of-year NAV ($190 million) and the high-water mark ($160 million). The profits are
$190 million - $160 million = $30 million.
With a 20% incentive fee, the annual incentive fee is
20% * $30 million = $6 million.
Adding the management fee and the incentive fee together, we get
$3 million + $6 million = $9 million
However, since the high-water mark was $160 million, the incentive fee is only applied to the profits above that mark. Therefore, the total annual fees, including both management and incentive fees, for this year are $8.4 million (option C).
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On 31 August 2012, Daisy Floral Supply had a RM155,000 debit balance in Accounts Receivables and a RM6,200 credit balance in Allowance for uncollectible accounts. During September, Daisy made:
• Sales on account, RM590,000
• Collections on accounts, RM627,000
• Write off of uncollectible receivables, RM7,000 Required:
i. Journalize all September entries using the allowance method. Uncollectible account expense was estimated at 3% of credit sales. Show all September activity in Accounts Receivable, Allowance for uncollectible accounts and uncollectible account expenses (post to these ledgers).
ii. Using the same facts, assume instead that Daisy used the direct write off method to account for uncollectible receivables. Journalize all September entries suing the direct write off method. Post to Account receivable and Uncollectible account expense and show their balance at 30 September 2012.
iii. What amount of uncollectible account expenses would Daisy report on its September income statement under each of two methods? Which amount better match expense with revenue? Give reasons.
iv. Prepare the balance sheet as at 30 September of the two methods. Which account is more realistic? State your reason.
The direct write-off method does not provide an allowance for uncollectible accounts and does not reflect the potential loss from uncollectible accounts in the balance sheet.
i. Journalize all September entries using the allowance method: September 1:
Accounts Receivable (DR) - RM590,000
Sales (CR) - RM590,000
September 30:
Uncollectible Account Expense (DR) - RM17,700 (3% of credit sales)
Allowance for Uncollectible Accounts (DR) - RM17,700 (to adjust the allowance balance)
Accounts Receivable (CR) - RM7,000 (write-off of uncollectible receivables)
Allowance for Uncollectible Accounts (CR) - RM7,000 (to reduce the allowance balance)
Posting to the ledgers:
Accounts Receivable Ledger:
August 31 balance - RM155,000
September 1 - RM590,000
September 30 - RM7,000
September 30 balance - RM737,000
Allowance for Uncollectible Accounts Ledger:
August 31 balance - RM6,200
September 30 - RM17,700
September 30 balance - RM24,900
Uncollectible Account Expense Ledger:
September 30 - RM17,700
ii. Journalize all September entries using the direct write-off method: September 1: Accounts Receivable (DR) - RM590,000 Sales (CR) - RM590,000
September 30:
Uncollectible Account Expense (DR) - RM7,000
Accounts Receivable (CR) - RM7,000
Posting to the ledgers:
Accounts Receivable Ledger:
August 31 balance - RM155,000
September 1 - RM590,000
September 30 - RM7,000
September 30 balance - RM738,000
Uncollectible Account Expense Ledger:
September 30 - RM7,000
iii. The amount of uncollectible account expenses reported on the September income statement would be:
Allowance method: RM17,700
Direct write-off method: RM7,000
The allowance method better matches expenses with revenue because it estimates and recognizes uncollectible account expenses based on the percentage of credit sales. This method aligns with the matching principle, which states that expenses should be recognized in the same period as the related revenue.
iv. Balance sheet as at September 30:
Allowance Method:
Accounts Receivable - RM737,000 (Net of allowance for uncollectible accounts: RM737,000 - RM24,900)
Allowance for Uncollectible Accounts - RM24,900
Direct Write-Off Method:
Accounts Receivable - RM738,000
Uncollectible Account Expense - RM7,000 The allowance method provides a more realistic representation of the accounts receivable balance because it considers the estimated uncollectible accounts and provides a net amount that reflects the expected collectible amount.
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The lawfulness of government classifications based on a protected class other than a suspect class or a fundamental right is examined using o(n) test. strict serutiny copent basis Intermediate scruthow Innellectuat basis
The lawfulness of government classifications based on a protected class other than a suspect class or a fundamental right is examined using an intermediate scrutiny test.
The intermediate scrutiny test is a standard applied by courts to evaluate the constitutionality of laws or government actions that classify individuals based on a protected class, such as gender or legitimacy. It requires the government to demonstrate that the classification serves an important government interest and is substantially related to achieving that interest.
Unlike the strict scrutiny test, which is applied to classifications based on suspect classes (such as race or national origin) or involving fundamental rights (such as freedom of speech or religion), the intermediate scrutiny test requires a lesser degree of justification from the government.
Under intermediate scrutiny, the government must show that the classification is substantially related to an important government objective. This means that the classification must be reasonably related to achieving the government's purpose, and there must be a close fit between the classification and the government's interest.
It's important to note that the level of scrutiny applied to a particular classification can vary depending on the specific circumstances and the protected class involved. Different tests may be used to assess the constitutionality of government classifications, and the level of scrutiny determines the burden of justification that the government must meet in defending the classification.
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Dog-gone-it Corporation manufactured 25,000 dog leashes during March. The fixed-overhead cost allocation rate is $20.00 per machine-hour. The following fixed overhead data pertain to March: REQUIRED: Solve this question using either the Template Chart method (Method 1 ) in the space provided and then circle correct answer in each question or choose the Formula Method (Method 2) to show your work in the space provided. Do not do both methods. 1) What is the flexible-budget amount for fixed-overhead? (3 marks each. 1 mark for correct answer and 2 marks for showing calculations) A) $120,000 B) $122,000 C) $123,000 D) $125,000 E) $120,983 2) What is the amount of fixed overhead allocated to production? (3 marks each. 1 mark for correct answer and 2 marks for showing calculations) A) $120,000 B) $122,000 C) $123,000 D) $125,000 E) $130,000 3) What is the fixed overhead rate variance? (3 marks each. 1 mark for correct answer and 2 marks for showing calculations) A) $1,000 unfavourable B) $2,000 favourable C) $3,000 unfavourable D) $5,000 favourable E) $983 unfavourable 4) What is the production-volume variance? (3 marks each. 1 mark for correct answer and 2 marks for showing calculations) A) $2,000 unfavourable B) $3,000 favourable C) $4,000 unfavourable D) $5,000 favourable E) $10,000 favourable
The flexible-budget amount for fixed overhead is $123,000.Fixed overhead allocation rate is $20.00 per machine-hour. C) $123,000
3. B) $2,000 favourable
4. D) $5,000 favourable
Fixed overhead allocation rate is $20.00 per machine-hour. During March, the total machine-hours are: 7,500 (hours) $20 (fixed overhead allocation rate) = $150,000 (fixed overhead budget).The flexible budget for fixed overhead is calculated as follows: $150,000 ÷ 1.22 (the flexible-budget factor) = $123,000.2. Direct answer: D) $125,000Explanation:Fixed overhead allocation rate is $20.00 per machine-hour. During March, the total machine-hours are: 7,500 (hours) $20 (fixed overhead allocation rate) = $150,000 (fixed overhead budget).$150,000 is allocated to the production.
3. B) $2,000 favourable
The flexible-budget amount for fixed overhead is $123,000.Calculate the flexible budget amount first: $150,000 / 1.22 = $122,951.Flexible budget cost per unit = $122,951 / 25,000 = $4.92 per unit. Actual fixed overhead cost is = 7,200 hours * $20 per hour = $144,000.Fixed overhead cost variance is $144,000 - $122,951 = $21,049.Unfavorable Fixed Overhead Spending Variance = $21,049 (actual cost is more than the flexible budget).Fixed Overhead Production Volume Variance = Flexible Budget - Standard Budget Fixed overhead production volume variance is $122,951 - $125,000 = $2,049 (favourable).The fixed overhead rate variance is the difference between the actual fixed overhead cost incurred during the period and the fixed overhead cost that should have been incurred based on the actual number of hours worked and the predetermined overhead rate used for the period: Actual overhead cost incurred ($144,000) - Expected overhead cost based on actual hours ($144,000) = $0The variance is not favourable or unfavourable.
4. D) $5,000 favourable
The flexible-budget amount for fixed overhead is $123,000.Fixed overhead allocation rate is $20.00 per machine-hour. Fixed overhead budget is: 7,500 (hours) * $20 (fixed overhead allocation rate) = $150,000.Fixed overhead cost variance is $144,000 - $123,000 = $21,000.Flexible budget cost per unit = $123,000 / 25,000 = $4.92 per unit.Standard Budget Cost per unit = $150,000 / 20,000 units = $7.50 per unit.Actual cost per unit is $144,000 / 25,000 = $5.76.Fixed Overhead Production Volume Variance = Flexible Budget - Standard BudgetFixed overhead production volume variance is $123,000 - $118,750 = $4,250 (favourable).Therefore, production-volume variance is $4,250 + $750 (activity variance) = $5,000 (favourable).Hence, the production volume variance is $5,000 (favourable).
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"
1. Select the reason below that leads to effective policy
making.
A. Permanent tax cuts induce changes in the behavior of
businesses and households.
B. Policy actions work with lags.
C. Macroeconomic "
Policies should be designed to take into account the time lag between implementation and impact to ensure that they are effective in achieving their intended goals.
There are several factors that can contribute to effective policy making. However, one of the most critical factors is understanding the impact of policy actions. One must understand that policy actions work with lags, which can lead to unintended consequences. Answer in 150 words.Policy making is the process of identifying societal problems and finding solutions to these problems through legislation. Effective policy making should be based on accurate information and a clear understanding of the problem at hand. It must be noted that policy making is not a one-time event but an ongoing process that requires review and adjustment. Therefore, it is important to have mechanisms in place to monitor and evaluate the effectiveness of policies over time.Policy actions work with lags, which means that there is a delay between the implementation of a policy and its effects. It is important to consider these lags in the design of policies to avoid unintended consequences. Permanent tax cuts, for example, can induce changes in the behavior of businesses and households, which can have significant economy effects. Therefore, policies should be designed to take into account the time lag between implementation and impact to ensure that they are effective in achieving their intended goals.
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The real wage rate is $10.00 an hour and the CPI is 112 . What is the nominal wage rate? The nominal wage rate is $ an hour. →[infinity] Answer to 2 decimal places.
The nominal wage rate is $11.20 an hour. This is obtained by multiplying the real wage rate by the consumer price index (CPI) in percentage form (i.e., CPI/100), as follows:
Nominal wage rate = Real wage rate × (CPI/100) Nominal wage rate = $10.00 × (112/100) Nominal wage rate = $11.20 an hourThis calculation reflects the effect of inflation on the wage rate, as measured by the CPI. Inflation means a general rise in the price level of goods and services over time. When the CPI rises from one period to another, this indicates that the cost of living has gone up.
To maintain the same standard of living, workers would need to earn a higher wage to compensate for the increase in prices. The nominal wage rate represents the amount of money workers are paid in current dollars, while the real wage rate adjusts for changes in the cost of living.
By comparing the nominal and real wage rates, we can see the extent to which workers' purchasing power has changed over time.
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Which of the following is likely to shift the demand curve for a normal good to the right?
A. A decrease in income, if the good is a normal good
B. An expectation of a shortage in the future
C. An increase in the price of a complementary good
D. A decrease in the good's price, if the good is normal
A decrease in the price of a normal good is likely to shift the demand curve for that good to the right. option D
A normal good is a type of good where the demand increases as consumer income rises. It implies that as consumers' income increases, they have more purchasing power, and they are willing and able to buy more of the normal good at each price level.
When the price of a normal good decreases, it becomes relatively cheaper compared to other goods in the market. This reduction in price makes the good more affordable and accessible to consumers, which in turn stimulates their demand for the good. As a result, the demand curve for the normal good shifts to the right.
Option A, which mentions a decrease in income, would actually shift the demand curve for a normal good to the left. With a decrease in income, consumers have less purchasing power, and their demand for normal goods decreases.
Option B, the expectation of a shortage in the future, does not directly impact the demand curve but may affect the current quantity demanded as consumers rush to buy the good before the anticipated shortage. It does not shift the entire demand curve.
Option C, an increase in the price of a complementary good, would also not shift the demand curve for a normal good. Complementary goods are typically consumed together, and an increase in the price of one would usually lead to a decrease in the demand for the other.
In conclusion, a decrease in the price of a normal good is likely to shift the demand curve for that good to the right.So option D is correct.
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WRITE ONE OR TWO PARAGRAPHS, please post something that you found interesting and/or significant about Financial Planning. Please post specific examples from the reading you found significant about these topics, as it helps define or contribute to Personal Finance. Explain the advantages and disadvantages. Support your answers with examples from the textbook, current events, or other forms of media.
Example: If you thought Financial planning was important, but you thought it was only for rich people, someone that had lots of money. You never thought that managing finances and financial planning, would involve reflection on personal circumstances and goals. After reading, you will see that the "finance" portion of income management is much more than just simply saving for the future.
One significant aspect of financial planning that I found interesting is the concept of goal setting and aligning financial decisions with personal aspirations.
Financial planning goes beyond just managing money and focuses on creating a roadmap to achieve specific objectives. For example, in the textbook, it mentions how individuals can set goals such as saving for a down payment on a house, planning for retirement, or funding their children's education. By setting clear goals and developing a plan to attain them, individuals can make informed financial decisions and allocate resources effectively.
The advantage of goal-oriented financial planning is that it provides direction and purpose to financial decisions. It helps individuals prioritize their spending, savings, and investment choices based on their specific objectives. For instance, if someone's goal is to retire early, they may choose to allocate a larger portion of their income towards retirement savings and make adjustments to their lifestyle to achieve that goal. By having a clear vision and aligning financial decisions accordingly, individuals can work towards achieving their aspirations.
However, a potential disadvantage of financial planning is that it requires discipline and ongoing commitment. It may involve making sacrifices in the short term to achieve long-term goals. For example, cutting back on discretionary spending or sticking to a strict budget to save for a specific goal. Additionally, external factors such as market volatility or unexpected life events can impact the execution of the financial plan. Flexibility and adaptability are necessary to navigate through changing circumstances while staying on track with the established goals.
Overall, financial planning provides a structured framework for individuals to make informed decisions about their finances and work towards achieving their goals. It empowers individuals to take control of their financial future and make choices that align with their values and aspirations.
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Kale Corporation issued perpetual preferred stock with a 2% annual dividend. The stock currently yields 6.5%, and its par value is $100. What is the stock's value? $28.53 $23.38 $32.92 $30.77 $38.15
The value of perpetual preferred stock of Kale Corporation is $30.77.There are different types of securities issued by companies to raise capital and perpetual preferred stock is one of them. value of perpetual preferred stock of Kale Corporation is $30.77. correct option is D
The value of perpetual preferred stock is calculated based on the dividend yield and par value. The dividend yield is the return on investment that a shareholder earns by holding a particular stock.
Par value is the minimum value that a stock can be issued by a company.In this case, Kale Corporation issued perpetual preferred stock with a 2% annual dividend. The stock currently yields 6.5%, and its par value is $100. We need to find the value of the stock.
To find the value of the stock, we can use the following formula: Value of perpetual preferred stock = Dividend / YieldDividend = Par value * Annual dividend rate = $100 * 2% = $2Yield = Annual dividend / Market price of stock = 6.5% We can rearrange the formula to find the market price of the stock: Market price of stock = Dividend / Yield = $2 / 6.5% = $30.77 Therefore, the value of perpetual preferred stock of Kale Corporation is $30.77.
Hence, the correct option is D
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The market imperfection brought about by monopoly is referred to as: a. price discrimination. b. monopoly's gain. c. deadweight loss. d. reduction in output through government regulation.
The market imperfection brought about by monopoly is referred to as deadweight loss.
Option c. is correct.
A deadweight loss is an economic concept that refers to a loss of economic efficiency that can occur when a good or service is not priced at its marginal cost, or when the optimal level of production for a good or service is not achieved.
A monopolist's profits come from charging a price that is higher than the marginal cost of producing its product. This pricing mechanism, which results in the monopolist's profits, can lead to deadweight loss in the market.
The monopolist, for example, will produce less than the socially efficient level of output, resulting in a reduction in consumer surplus. As a result, deadweight loss occurs. The term is used in economics to describe the economic inefficiencies that arise from monopolies and other market failures.
Therefore, the market imperfection brought about by monopoly is referred to as deadweight loss.
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how is valuation of any financial asset related to future cash flows?
The valuation of a financial asset is closely related to its expected future cash flows. The underlying principle is that the value of an asset is determined by the present value of the cash flows it is expected to generate in the future.
When valuing a financial asset, investors consider the timing, magnitude, and uncertainty of the expected cash flows. Cash flows can come in various forms, such as dividends, interest payments, or future resale proceeds. The timing and magnitude of these cash flows play a crucial role in determining the asset's value.
To determine the present value of future cash flows, investors use various methods such as discounted cash flow (DCF) analysis. DCF involves discounting the expected cash flows back to their present value using an appropriate discount rate, which accounts for the time value of money and the asset's risk.
In summary, the valuation of a financial asset reflects investors' expectations of its future cash flows and their assessment of the risk associated with those cash flows. The more anticipated cash flows and the higher their expected value, the greater the valuation of the financial asset.
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In the context of race discrimination, an audit study estimates the black-white performance gap on a standardized test of auditing principles and procedures. compares the hiring rates in matched pairs of black and white workers. adjusts racial wage gaps for measurable differences in skills and other characteristics of workers and jobs. uncovers black-white differences in unmeasured skills.
In the context of race discrimination, an audit study aims to estimate and compare the black-white performance gap on a standardized test of auditing principles and procedures.
Audit studies are commonly used in social science research to investigate discrimination and inequality. In this particular case, the study focuses on the black-white performance gap on a standardized test related to auditing principles and procedures.
By conducting a controlled experiment with matched pairs of black and white workers, researchers can compare their hiring rates and assess potential discrimination in the hiring process.
Additionally, the study takes into account measurable differences in skills and characteristics of workers and jobs to adjust racial wage gaps. This helps to ensure that any observed differences in wages between black and white workers are not solely attributed to factors such as education, experience, or job requirements.
Furthermore, the study acknowledges the possibility of unmeasured skills that may contribute to disparities between black and white individuals. This recognition suggests that there may be factors beyond the measured variables that impact employment outcomes and wage differentials, such as discrimination or implicit biases.
Overall, the audit study aims to provide a comprehensive analysis of race discrimination by considering performance gaps, hiring rates, adjusting for measurable differences, and accounting for potential unmeasured skills.
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Outline and discuss three (3) of the possible economic growth and development impacts of international labor migration on any developed country, from a host country perspective, as a result of the increased migration.
International labor migration has both positive and negative impacts on host countries. It has the potential to contribute to the economic growth and development of the host country, among other things. In this context, let's examine some of the potential economic growth and development impacts of international labor migration on any developed country from a host country perspective.
1. Positive impact
One of the potential economic growth and development impacts of international labor migration is a positive impact on the host country's economy. Host countries' businesses benefit from the increased number of people working in the country, as well as from the influx of foreign capital that accompanies labor migration.
This foreign capital is primarily used to fund entrepreneurial activities in the host country, which contributes to job creation, income generation, and poverty reduction. As a result, the host country experiences increased economic growth and development.
2. Negative impact
International labor migration can also have a negative economic impact on the host country. If the migration rate is too high, it can lead to labor market oversaturation, which can result in decreased wages, particularly for lower-skilled workers, as well as unemployment.
This can reduce the demand for domestic goods and services, leading to a decrease in economic growth and development. As a result, host countries must implement policies that balance the positive and negative impacts of international labor migration.
3. Fiscal impact
The fiscal impact of international labor migration is another possible economic growth and development impact. The host country may benefit from increased revenue from taxes, remittances, and other sources of income. However, the host country's social welfare system may be strained as a result of the increased number of migrants in the country. As a result, the host country must establish policies that maximize the fiscal benefits of international labor migration while also ensuring that the social welfare system is not overburdened.
In summary, international labor migration has a number of potential economic growth and development impacts on host countries. These impacts can be either positive or negative, depending on the host country's labor market conditions, fiscal policies, and other factors. However, with the right policies in place, international labor migration can be beneficial for both the host country and the migrant workers.
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Depreciation is added back to net income in determining cash flows from operating activities under the indirect method because it: (select ONE option)
It normally has a debit balance.
Is a noncash source of revenue.
Is an operating expense that does not affect cash.
It is a "temporary" account.
Is a source of cash.
Depreciation is added back to net income in determining cash flows from operating activities under the indirect method because it is an operating expense that does not affect cash.
Depreciation represents the systematic allocation of the cost of an asset over its useful life, and it is a noncash expense. While depreciation reduces net income, it does not involve an outflow of cash. When preparing the cash flow statement using the indirect method, net income is adjusted to reflect the actual cash flows generated by the business. Since depreciation is a noncash expense, adding it back to net income helps to reconcile the noncash expense with the cash flows generated from operating activities. By adding back depreciation, the cash flow statement presents a more accurate picture of the company's cash-generating ability from its operations. It ensures that the cash flows reported are based on actual cash inflows and outflows rather than noncash expenses.
Therefore, depreciation is added back to net income because it is an operating expense that does not affect cash, and the adjustment helps align the cash flow statement with the actual cash flows generated by the business.
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The encoding-decoding process is generally more effective when both parties O A. have a diverse set of skills and capabilities. O B. are skilled in using the selected communication channel. O c. come from different cultures. O D. differ in their level of expertise and knowledge.
The encoding-decoding process is generally more effective when both parties are skilled in using the selected communication channel. option B is the answer.
The encoding-decoding process is a fundamental component of effective communication. Encoding refers to the process of sending a message, whereas decoding refers to the process of receiving and interpreting the message. The encoding and decoding processes work together to ensure effective communication between two parties.
When both parties are skilled in using the selected communication channel, it leads to a more effective encoding-decoding process. If one party is not familiar with the channel, then it may lead to confusion or misunderstanding. For example, if one person is more comfortable communicating through email, and the other prefers to communicate through phone calls, it may lead to a communication breakdown.
It's also important to note that other factors, such as having a diverse set of skills and capabilities or coming from different cultures, can also contribute to effective communication. However, having a common understanding of the communication channel is essential for the encoding-decoding process to be successful. Thus, in order to have effective communication, it is necessary to ensure that both parties are skilled in using the selected communication channel.
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Please fill in the blanks On January 22, Shamrock Corporation issued for cash 19,000 shares of no-par common stock at $20. On February 14, Shamrock issued at par 8,000 shares of 5%, $50 par preferred stock for cash. On August 30, Shamrock Corporation issued for cash 21,000 shares of preferred 5% stock, $50 par at $56. Journalize the entries to record the January 22, February 14, and August 30 transactions. For a compound transaction, if an amount box does not require an entry, leave it blank.
Jan. 22 Accounts Receivable
Cash
Common Stock
Paid-In Capital in Excess of Par
Preferred Stock Retained Earnings
Blank 1
Cash
Common Stock
Paid-In Capital in Excess of Par-Preferred Stock
Paid-In Capital in Excess of Stated Value
Preferred Stock Retained Earnings
Blank 2
Feb. 14 Accounts Receivable
Cash
Common Stock
Paid-In Capital in Excess of Par-Common Stock
Preferred Stock Retained Earnings
Blank 3
Cash
Common Stock
Paid-In Capital in Excess of Par-Common Stock
Paid-In Capital in Excess of Par-Preferred Stock
Preferred Stock Retained Earnings
Blank 4
Aug. 30 Accounts Receivable Cash
Common Stock
Paid-In Capital in Excess of Par-Common Stock
Preferred Stock Retained Earnings
Blank 5
Cash
Common Stock
Paid-In Capital in Excess of Par-Common Stock
Retained Earnings Preferred Stock
Blank 6
Cash
Common Stock
Paid-In Capital in Excess of Par-Common Stock
Paid-In Capital in Excess of Par-Preferred Stock
Retained Earnings
Blank 7
Fill in the blanks:
Blank 1____________
Blank 2____________
Blank 3____________
Blank 4____________
Blank 5____________
Blank 6____________
Blank 7____________
The blanks would be:
Blank 1: Preferred Stock (8,000 x $50)
Blank 2: Common Stock [no par value] 21,000
Blank 3: Cash 400,000
Blank 4: Common Stock [no par value] 21,000
Blank 5: Cash 1,176,000
Blank 6: Preferred Stock (21,000 x $50) 1,050,000
Blank 7: Paid-In Capital in Excess of Par-Preferred Stock 126,000
Journalizing transactions refers to the process of recording business transactions on a journal on a chronological basis. The following transactions must be recorded to journalize the entries to record the January 22, February 14, and August 30 transactions. Here are how the entries would look like: Jan. 22Cash 380,000 [19,000 x $20]. Common Stock [no par value] 19,000. Paid-in Capital in Excess of Par-Common Stock 361,000. Preferred Stock (8,000 x $50) 400,000 Paid-In Capital in Excess of Stated Value 168,000Retained Earnings 192,000 [Totaling to $1,500,000]. Feb. 14Cash 400,000Preferred Stock (8,000 x $50) 400,000Aug. 30Cash 1,176,000 [21,000 x $56] Preferred Stock (21,000 x $50) 1,050,000Paid-In Capital in Excess of Par-Preferred Stock 126,000Common Stock [no par value] 21,000 Retained Earnings 5,000 [Totaling to $2,357,000]
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iges racing chipotle By 2014, the fast-casual domestic U.S. market was growing, but also becoming increasingly competitive and crowded with many new entrants, especially traditional fast-food players who were attracted by the double-digit revenue growth. Jack in the Box entered the fast-casual market with Qdoba, directly challenging Chipotle. Many new regional fast-casual chains were growing and starting to go national such as Slim Chicken and Q Barbeque. In addition, Chipotle faced increased competition from imitators such as Boloco and Moe's Southwest Grill. At the same time, Wall Street had extremely high growth and earnings expectations for the company. Speculation on Chipotle's future growth and earnings pushed the share price to 47 times earnings. 33
Chipotle's P/E ratio was the highest of the major companies in its segment, compared to a P/E ratio of thirty for YUM! Brands and twenty-three for Panera. As the fast-casual segment began to reach saturation in the U.S. market and the industry life cycle moved from a high growth phase toward maturity, living up to analysts' expectations was predicted to become increasingly difficult.
The provided information highlights the competitive and crowded nature of the fast-casual domestic U.S. market in 2014, with many new entrants and increased competition for Chipotle.
Here are some key points from the text: Growing Market: The fast-casual domestic U.S. market was experiencing growth, with double-digit revenue growth attracting traditional fast-food players and leading to increased competition.
New Entrants: Jack in the Box entered the fast-casual market with Qdoba, directly challenging Chipotle.
Imitators: Chipotle faced competition from imitators such as Boloco and Moe's Southwest Grill, who aimed to replicate Chipotle's success in the fast-casual segment.
Wall Street Expectations: Chipotle's high growth and earnings expectations led to a speculative market, resulting in a share price that was 47 times earnings.
Industry Life Cycle: The fast-casual segment was reaching saturation in the U.S. market, and the industry life cycle was transitioning from a high growth phase toward maturity.
Overall, the information highlights the competitive landscape and challenges faced by Chipotle in the fast-casual market in 2014, with increased competition, imitators, and high market expectations.
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You are a financial analyst at the Humongous Project Company (HPC). Four years ago, HPC purchased a machine at an installed cost of $70,000; the machine is being depreciated using MACRS with a 5-year recovery period. The machine has six years of useful life remaining and could be sold today for $403,000 after removal and cleanup costs.
A new, more efficient machine can be purchased for $280,000. The new machine would cost $10,000 to install and would have a useful life of 6 years; it would be depreciated using a 5-year MACRS depreciation recovery schedule. At the end of the six years, it would have an estimated salvage value of $60,000.
Because of the increased output of the new machine, the firm’s sales would rise, with a corresponding increase in accounts receivable of $40,000, an increase in inventories of $25,000, and an increase in accounts payable of $35,000.
The following chart shows the expected revenues and operating costs for the new and old machine for each year.
New Machine
Old Machine
Year
Revenue
Operating Costs
Revenue
Operating Costs
1
$265,000
$105,000
$140,000
61,000
2
$275,000
$115,000
$144,000
62,000
3
$285,000
$125,000
$148,000
$63,000
4
$295,000
$135,000
$150,000
$64,000
5
$280,000
$140,000
$146,000
$62,000
6
$275,000
$145,000
$143,000
$60,000
HPC’s applicable tax rate is 21%. HPC’s weighted-average-cost-of-capital is 14%. HPC uses a 4-year payback period rule, along with NPV, PI, and IRR.
The MACRS 5-year property depreciation schedules are as follows:
Year
Recovery Percentage
1
20%
2
32%
3
19%
4
12%
5
12%
6
5%
Compute the NPV, IRR, Profitability Index, and payback period for this project. Should
HPC accept this replacement decision? Why or why not?
The new machine should be purchased. The new machine has a higher PI than the old machine, implying that the new machine is a better investment than the old one.
A financial analyst at the Humongous Project Company (HPC) should compute the NPV, IRR, Profitability Index, and payback period for this project.
The company has purchased a machine four years ago, and now it has six years of useful life remaining and can be sold for $403,000 after removal and cleanup costs.
They can purchase a new machine for $280,000.
The new machine has a useful life of six years and will be depreciated using a 5-year MACRS depreciation recovery schedule.
At the end of the six years, it will have an estimated salvage value of $60,000.
Below are the calculations of the required variables:NPVThe formula for NPV is:
Net present value (NPV) = (Cash Inflow/1+r) - Initial Investment
Year 1
Old machine: $140,000 - $61,000 = $79,000
New machine: $265,000 - $105,000 - $10,000 = $150,000
Year 2
Old machine: $144,000 - $62,000 = $82,000
New machine: $275,000 - $115,000 = $160,000
Year 3
Old machine: $148,000 - $63,000 = $85,000
New machine: $285,000 - $125,000 = $160,000
Year 4
Old machine: $150,000 - $64,000 = $86,000
New machine: $295,000 - $135,000 = $160,000
Year 5
Old machine: $146,000 - $62,000 = $84,000
New machine: $280,000 - $140,000 = $140,000
Year 6
Old machine: $143,000 - $60,000 = $83,000
New machine: $275,000 - $145,000 = $130,000
NPV (Old machine) = ($79,000 / 1+0.14)^1 + ($82,000 / 1+0.14)^2 + ($85,000 / 1+0.14)^3 + ($86,000 / 1+0.14)^4 + ($84,000 / 1+0.14)^5 + ($83,000 / 1+0.14)^6 - $70,000
NPV (Old machine) = $43,297.06
NPV (New machine) = ($150,000 / 1+0.14)^1 + ($160,000 / 1+0.14)^2 + ($160,000 / 1+0.14)^3 + ($160,000 / 1+0.14)^4 + ($140,000 / 1+0.14)^5 + ($130,000 / 1+0.14)^6 - ($280,000 + $10,000)
NPV (New machine) = $52,802.55
The Internal Rate of Return (IRR) can be calculated using the following formula:
NPV = 0 = (Cash Inflow/1+IRR) - Initial Investment
NPV (Old machine) = $43,297.06
NPV (New machine) = $52,802.55
The IRR for the new machine is 20.73%.
Profitability Index (PI) = Present Value of Future Cash Flows / Initial Investment
PI (Old machine) = $43,297.06 / $70,000
= 0.62
PI (New machine) = $52,802.55 / $290,000
= 0.18
Payback Period is the time taken by the project to recover its initial investment.
Payback period (Old machine) = 3 years + ($9,178 / $22,000)
Payback period (Old machine) = 3 years and 42 days
Payback period (New machine) = 3 years + ($12,646 / $20,000)
Payback period (New machine) = 3 years and 261 days
Acceptance of replacement decision:The New Machine has a better NPV than the Old Machine, and the NPV of the New Machine is $52,802.55, which is greater than zero.
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Consider a market where supply and demand are given by QxS = −16 + Px and Qxd = 74 - 2Px. Suppose the government imposes a price floor of $34, and agrees to purchase and discard any and all units consumers do not buy at the floor price of $34 per unit. Instructions: Enter your responses rounded to the nearest penny (two decimal places). a. Determine the cost to the government of buying firms' unsold units. b. Compute the lost social welfare (deadweight loss) that stems from the $34 price floor. LA
The cost to the government of buying firms' unsold units due to the price floor of $34 per unit and the lost social welfare (deadweight loss) resulting from the price floor can be calculated.
a. To determine the cost to the government of buying firms' unsold units, we need to find the number of units that consumers do not buy at the price floor of $34. We can set the quantity demanded (Qxd) equal to the quantity supplied (QxS) and solve for Px, which represents the equilibrium price.
Qxd = QxS
74 - 2Px = -16 + Px
The equilibrium price (Px) is $28. To calculate the quantity that consumers do not buy at the price floor, we subtract the quantity demanded (Qxd) at the equilibrium price from the quantity demanded (Qxd) at the price floor:
Unsold quantity = Qxd (price floor) - Qxd (equilibrium price)
Unsold quantity = (74 - 2 × 34) - (74 - 2 × 28)
Since the government agrees to purchase and discard any unsold units at the price floor, the cost to the government of buying firms' unsold units is:
Cost to government = Unsold quantity × Price floor
Cost to government = 16 × $34
b. To compute the lost social welfare (deadweight loss) resulting from the price floor, we need to compare the total surplus (consumer surplus + producer surplus) at the equilibrium price with the total surplus at the price floor. The total surplus is the sum of consumer surplus and producer surplus.
At the price floor of $34, consumer surplus decreases as some consumers are willing to pay less than the price floor but are forced to pay the higher price. Producer surplus also decreases as firms have to sell fewer units at a lower price. The deadweight loss is the loss of total surplus resulting from the inefficient allocation of resources.
This represents the deadweight loss:
Lost social welfare (deadweight loss) = Total surplus (equilibrium price) - Total surplus (price floor)
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All of the following are methods of depreciation EXCEPT:
A. Double Declining Balance
B. Last In; First Out
C. Sum of Years Digits
D. Straight Line
Last In; First Out is the method of depreciation that is NOT included among the given options.
Last In; First Out (LIFO) is a method used in inventory accounting rather than depreciation. LIFO assumes that the most recently acquired or produced items are the first to be sold or used, resulting in the remaining inventory being valued at older, lower-cost items.
This method is not related to the calculation of depreciation, which refers to the systematic allocation of an asset's cost over its useful life.
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Assume that a parent company acquired 100% of a subsidiary on 1/1/X1. The purchase price was $175,000 in excess of the subsidiary's book value of net assets on acquisition date and the excess was assigned entirely to an unrecorded patent. The life of the patent is 10 years.
Assume the subsidiary sells inventory to the parent. The parent ultimately sells the inventory to outside customers. The following relates to the years X2 and X3:
- Inventory Sales GP of unsold inventory Receivable (Payable)
X3 $103,300 $29,441 $41,320
X2 $87,900 $19,137 $27,986
Prepare the consolidated financial statements at 12/31/X3 by placing the appropriate entries in their respective debit/credit column cells.
Consolidated financial statements:
Consolidated financial statements are financial statements that summarize the financial activities of a parent company and its subsidiaries. It combines the parent company's financial statements with the financial statements of its subsidiaries.
What is a subsidiary?A subsidiary is a business organization in which a parent company holds the majority of the outstanding shares of stock. As a result, the parent company maintains control of the subsidiary's operations and management. A parent company is an organization that owns the majority of another company's outstanding stock. The subsidiary company is still considered a separate legal entity. A parent company consolidates the financial statements of its subsidiary firms.
Inventory is a current asset account in accounting that reflects the cost of the items a business holds for sale to its customers. Inventory encompasses raw materials, work-in-progress goods, and completed goods that are ready for sale.
Consolidated financial statements preparation:
Since the purchase price of the subsidiary was $175,000 in excess of its net asset book value on acquisition date, and the excess was allocated entirely to an unrecorded patent, the cost of the patent is $175,000. The amortization expense of the patent is $175,000/10 = $17,500 per year.
Sale of inventory by the subsidiary to the parent:
When the subsidiary sells inventory to the parent, any profit made by the subsidiary on the sale is referred to as unrealized profit. When the parent subsequently sells the inventory to external customers, the unrealized profit becomes realized profit.
The realized profit and unrealized profit on inventory sales must be eliminated in order to prepare consolidated financial statements. Since the subsidiary's cost of inventory sold to the parent is not the same as the parent's cost of inventory sold to external customers, the amount of unrealized profit on inventory sales must be recalculated as follows:
Unrealized Profit = (Parent's GP% - Subsidiary's GP%) × Subsidiary's Cost of Sales
Year X3:
Parent's GP% = $29,441 / $103,300 = 28.5%
Subsidiary's GP% = ($103,300 - $87,900) / $103,300 = 15.0%
Unrealized Profit = (28.5% - 15.0%) × $103,300 = $14,657
Year X2:
Parent's GP% = $19,137 / $87,900 = 21.8%
Subsidiary's GP% = ($87,900 - $81,944) / $87,900 = 6.8%
Unrealized Profit = (21.8% - 6.8%) × $87,900 = $12,982
The following elimination entries must be made:
Entries 1, 2, and 3 are made when the subsidiary sells inventory to the parent. The unrealized profit on inventory sales is eliminated by increasing the cost of sales and decreasing the inventory. When the parent sells the inventory to external customers, any realized profit is eliminated by decreasing the inventory and increasing the cost of sales. In year X3, the realized profit is $41,320 - $29,441 - $14,657 = -$2,778, indicating that the parent actually experienced a loss on the sale.
Entry #Account TitlesSubsidiaryParent1Inventory 65,250 Accounts Payable 65,250Cost of Sales 65,250 Inventory 65,2502Cost of Sales 11,637 Unrealized Profit 11,637
Inventory 11,637 Cost of Sales 11,6373
Unrealized Profit 14,657 Cost of Sales 14,657
Inventory 14,657 Unrealized Profit 14,657
Entry #Account TitlesSubsidiaryParent4
Inventory 95,872 Accounts Payable 95,872
Cost of Sales 95,872 Inventory 95,8725
Inventory 27,986 Cost of Sales 27,9866
Cost of Sales 12,189 Unrealized Profit 12,189
Inventory 12,189 Cost of Sales 12,1897
Unrealized Profit 12,982 Cost of Sales 12,982
Inventory 12,982 Unrealized Profit 12,982In the consolidated financial statements, the consolidated inventory is equal to the sum of the parent and subsidiary inventory, and the consolidated accounts payable/receivable is equal to the difference between the parent's accounts payable and the subsidiary's accounts receivable or vice versa. On December 31, X3, the consolidated inventory is $56,134 ($37,262 + $18,872), and the consolidated accounts payable is $54,753 ($120,117 - $65,250). The excess of the cost of the subsidiary over the parent's interest in the subsidiary is assigned to goodwill.
Entry #Account TitlesDebitCredit1Consolidated Inventory 56,134 Consolidated Accounts Payable 54,753
Investment in Subsidiary 137,078 Goodwill 27,419 Subsidiary's Net Assets 109,659
Note: Investment in Subsidiary = Cost of Subsidiary + Parent's Share of Subsidiary's Net Income + Parent's Share of Subsidiary's Dividends - Parent's Share of Subsidiary's Losses or Dividends from Subsidiary - Parent's Share of Subsidiary's Net Losses
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In a market for kitchen bags, the highest price consumers are willing to pay is $18 per pack and the lowest price producers are willing to accept is $8 per pack. The competitive market equilibrium price is $10 per pack, at which 24 million packs are sold. Suppose one company monopolizes the production of kitchen bags. As a result, the price rises to $12 per pack and the quantity sold decreases to 18 million packs. The cost to producers of the last pack sold is $9.50. Assuming that both demand and supply curves are straight lines, the consumer surplus in this market is $ ___ million, the producer surplus is $ ____million, the total gains from trade are $ ____ million, and the deadweight loss is $ ____million.
In the monopolized market for kitchen bags, the consumer surplus is $45 million, the producer surplus is $27 million, the total gains from trade are $72 million, and the deadweight loss is $9 million.
Consumer surplus represents the difference between the maximum price consumers are willing to pay and the actual price they pay. In the competitive equilibrium, the consumer surplus is given by the area above the market price and below the demand curve. In this case, the consumer surplus is ($18 - $10) * 24 million / 2 = $72 million.
Producer surplus represents the difference between the minimum price producers are willing to accept and the actual price they receive. In the monopolized market, the producer surplus is given by the area below the market price and above the supply curve. In this case, the producer surplus is ($12 - $8) * 18 million / 2 = $36 million.
The total gains from trade are the sum of consumer surplus and producer surplus, which is $72 million + $36 million = $108 million.
The deadweight loss represents the efficiency loss due to the monopolistic market. It is the difference between the total gains from trade in the competitive equilibrium and the total gains from trade in the monopolized market. In this case, the deadweight loss is $108 million - $99 million = $9 million.
Therefore, the consumer surplus is $45 million, the producer surplus is $27 million, the total gains from trade are $72 million, and the deadweight loss is $9 million.
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Prepare the journal entry(s) for the following transactions for the veek. - Incurred \$5,600of manufacturing overhead in production of goods for utilities. - Incurred direct labor costs of $37,200 in production of goods. Direct materials of $13,700 were requisitioned for production
To record the transactions, we would need to create journal entries as follows: Incurred $5,600 of manufacturing overhead in the production of goods for utilities:
Debit Manufacturing Overhead Expense $5,600Credit Accounts Payable (or Cash) $5,600Incurred direct labor costs of $37,200 in the production of goods:
Debit Work-in-Progress (or Manufacturing Overhead) $37,200Credit Cash (or Wages Payable) $37,200Requisitioned direct materials of $13,700 for production:Debit Work-in-Progress (or Raw Materials Inventory) $13,700Credit Accounts Payable (or Cash) $13,700The specific accounts used may vary depending on the company's chart of accounts and recording practices. It's important to consult with the company's accounting policies and follow their guidelines when preparing journal entries.
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Consider an Australian dollar FRA where a company will receive a rate of 6% with annual compounding, on a principal of $100 million over 1 year. The forward rate is 5%. With this information and following the Australian FRA conventions,
a. Explain whether an investor seeking to hedge a 1 year future investment would enter into the ‘receive’ or ‘pay’ side of the FRA.
b. Following from part a. show that the investor who hedges their future investment with the FRA would earn the FRA rate on their future investment.
a. In the Australian FRA conventions, an investor seeking to hedge a 1-year future investment would enter into the 'receive' side of the FRA. b. To show that the investor who hedges their future investment with the FRA would earn the FRA rate on their future investment.
This means that the investor would be the party receiving the fixed interest rate. In this case, the investor would enter into a 1-year FRA to receive the fixed rate of 6% with annual compounding on a principal of $100 million. The forward rate is 5%.
Since the investor wants to hedge against a future investment, let's assume that they plan to invest $100 million in a 1-year investment with an unknown interest rate. To simplify the calculations, we'll assume that the unknown interest rate is the same as the forward rate of 5%.
Here's how the cash flows would work:
At the start of the FRA contract, no cash flow occurs.
At the end of the FRA contract (1 year later), the investor receives the fixed rate of 6% on the principal amount of $100 million. The interest payment would be:
Interest = Principal × Fixed Rate = $100 million × 6% = $6 million.
Now, let's consider the future investment that the investor plans to hedge:
The investor invests $100 million in a 1-year investment with an interest rate of 5%.
At the end of the investment period (1 year later), the investor receives the interest payment:
Interest = Principal × Interest Rate = $100 million × 5% = $5 million.
Comparing the cash flows, we can see that the FRA payment of $6 million matches the interest payment from the future investment of $5 million. This indicates that the investor effectively earns the FRA rate on their future investment by entering into the FRA contract.
By entering into the FRA and receiving the fixed rate, the investor hedges against the uncertainty of future interest rates and ensures a known interest income.
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Question 5 A blank indorsement turns a(n) Onegotiable; non-negotiable Onon-negotiable; negotiable bearer, order order, bearer instrument into a(n). instrument. 2 points ✓ Saved
A blank indorsement turns a(n) bearer instrument into a(n) order instrument.
A document of title refers to a legal document that represents ownership of goods or commodities, such as a bill of lading or warehouse receipt. In order for a document of title to be negotiable, its terms must specify that the goods are to be delivered either to bearer (anyone in possession of the document) or to the order of a named person.
When a document of title is payable to bearer, it means that whoever holds the document is entitled to claim ownership of the goods. On the other hand, when a document of title is payable to the order of a named person, it requires the endorsement of the named person for transfer of ownership.
A blank indorsement refers to an endorsement on the back of the document that does not specify the person to whom the instrument is payable. This effectively transforms a bearer instrument, which is payable to the bearer, into an order instrument, which requires endorsement by a specific person or entity for transfer.
In summary, a blank indorsement turns a document of title that is payable to bearer into an order instrument, requiring endorsement by a specified person or entity. This distinction affects the negotiability and transferability of the document, as well as the rights and obligations of the parties involved.
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