Explanation:
In this case, the best thing to do is to try to see the challenge of dealing with the lack of critical decision making by the project sponsor, as an opportunity to make the project progress smoothly and reach its best potential.
For this, the ideal is to respect the costs and the deadlines, without exceeding the budgets and the time necessary to carry out the tasks.
The good relationship between the team is also essential for there to be the necessary fluidity for the project to take place organically and as planned. It is also necessary to be attentive to the project's indicators, since monitoring and control are essential to observe the progress of the achievement of goals and the overall performance of the project's progress.
Koczela Inc. has provided the following data for the month of May:
Inventories:
Beginning Ending
Work in process $ 25,000 $ 20,000
Finished goods $ 54,000 $ 58,000
Additional information:
Direct materials $ 65,000
Direct labor cost $ 95,000
Manufacturing overhead cost incurred $ 71,000
Manufacturing overhead cost applied to Work in Process $ 69,000
Any underapplied or overapplied manufacturing overhead is closed out to cost of goods sold.
The cost of goods manufactured for May is:___________
$229,000
$234,000
$231,000
$236,000
Answer:
$234,000
Explanation:
cost of goods manufactured = beginning work in process + direct materials + direct labor + manufacturing overhead cost applied - ending work in process
cost of goods manufactured = $25,000 + $65,000 + $95,000 + $69,000 - $20,000 = $234,000
cost of goods sold = beginning finished inventory + cost of goods manufactured - ending finished inventory + underapplied overhead
cost of goods sold = $54,000 + $234,000 - $58,000 + $2,000 = $232,000
On January 1, Beckman, Inc., acquires 60 percent of the outstanding stock of Calvin for $54,480. Calvin Co. has one recorded asset, a specialized production machine with a book value of $10,000 and no liabilities. The fair value of the machine is $78,000, and the remaining useful life is estimated to be 10 years. Any remaining excess fair value is attributable to an unrecorded process trade secret with an estimated future life of 4 years. Calvin’s total acquisition date fair value is $90,800.
At the end of the year, Calvin reports the following in its financial statements:
Revenues 65,550 Machine 13,590 Common stock 10,000
Expenses 29,250 Other assets 27,710 Retained earnings 31,300
Net income 36,300 Total assets 41,300 Total equity 41,300
Dividends paid 5,000
Required:
Determine the amounts that Beckman should report in its year-end consolidated financial statements for noncontrolling interest in subsidiary income, noncontrolling interest, Calvin’s machine (net of accumulated depreciation), and the process trade secret.
Answer:
Beckman noncontrolling interest in subsidiary income $10,520
Calvin Machine (net of accumulated depreciation) $71,200
Explanation:
To calculate noncontrolling interest in subsidiary's income;
Revenue $65,550
Expenses $39,250 (29,250 + $6,800 + $3,200)
Net Income $26,300
Noncontrolling percentage = 40%
NonControlling Income = $10,520
Depreciation of Machine = [tex]\frac{Fair value of Machine - Book value}{estimated useful life}[/tex]
[tex]\frac{78,000 - 10,000}{10 years}[/tex] = 6,800 per annum
Amortization of trade secrets = [tex]\frac{Fair Value Total - Machine value}{Useful life}[/tex]
Amortization of trade secrets = [tex]\frac{90,800 - 78,000}{4 years}[/tex]
= 3,200
[The following information applies to the questions displayed below.] Hudson Co. reports the contribution margin income statement for 2017. HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2017 Sales (11,300 units at $175 each) $ 1,977,500 Variable costs (11,300 units at $140 each) 1,582,000 Contribution margin $ 395,500 Fixed costs 315,000 Pretax income $ 80,500 Assume the company is considering investing in a new machine that will increase its fixed costs by $37,000 per year and decrease its variable costs by $8 per unit. Prepare a forecasted contribution margin income statement for 2018 assuming the company purchases this machine.
Answer:
Pretax income= $133,900
Explanation:
Giving the following information:
Selling price= $175
New unitary variable cost= $132
New fixed costs= 315,000 + 37,000= 352,000
Now, we can determine the new operating income:
Sales= 11,300*175= 1,977,500
Total variable cost= 11,300*132= (1,491,600)
Total contribution margin= 485,900
Fixed costs= (352,000)
Pretax income= 133,900
To prepare a budgeted balance sheet as of December 31, 2020, data is needed from the ______ December 31, 2019. income statement for the year ended
Answer and Explanation:
For preparing the budgeted balance sheet as of December 31,2020 we need to refer the data of balance sheet as of December 31,2019 so that the firm could get an idea.
Also by referring the income statement, statement of owner equity, profit and loss account we can get an idea so that it becomes easy for the company to prepare the budgeted balance sheet
Answer:
data is needed from the balanceh sheet as of
Messaging systems range from semi-public systems such as standard text messaging on mobile phones, to private systems that are closed to anyone outside of invited members.
A. True
B. False
Answer:
True.
Explanation:
Messaging systems range from semi-public systems such as standard text messaging on mobile phones, to private systems that are closed to anyone outside of invited members.
A messaging system can be defined as an electronic device which enables users to send text messages to one or more users depending on the configuration and it ranges from semi-public systems to private systems.
In a semi-public messaging system, messages can be sent between users with little or no restriction to who can send or receive these messages. An example is sending short standard text on mobile phones.
On the other hand, a private messaging system is a type of system that denies access to individuals outside of the group, only invited members are able to send and receive messages.
Assignment: Capital Budgeting Decisions Your company is considering undertaking a project to expand an existing product line. The required rate of return on the project is 8% and the maximum allowable payback period is 3 years.
time 0 1 2 3 4 5 6
Cash flow $ 10,000 2,400 4,800 3,200 3,200 2,800 2,400
Evaluate the project using each of the following methods. For each method, should the project be accepted or rejected? Justify your answer based on the method used to evaluate the project’s cash flows.
A. Payback period
B. Internal Rate of Return (IRR)
C. Simple Rate of Return
D. Net Present Value
Answer:
A. Payback period
payback period = 2.875 years, therefore, the project should be accepted because the payback period is less than 3 years.B. Internal Rate of Return (IRR)
IRR = 22.69%, therefore, the project should be accepted since the IRR is higher than the required rate of return (8%).C. Simple Rate of Return
simple rate of return = 18%, therefore, the project should be accepted because the simple rate of return is higher than the required rate of return.D. Net Present Value
NPV = $4,647.85 , therefore, the project should be accepted since the NPV is positive.Explanation:
year cash flow
0 -$10,000
1 $2,400
2 $4,800
3 $3,200
4 $3,200
5 $2,800
6 $2,400
discount rate 8%
I used a financial calculator to determine the NPV and IRR.
Payback period = $10,000 - $2,400 - $4,800 = $2,800 / $3,200 = 0.875
payback period = 2.875 years
simple rate of return:
average cash flow = ($2,400 + $4,800 + $3,200 + $3,200 + $2,800 + $2,400) / 6 = $3,467
depreciation expense per year = $10,000 / 6 = $1,667
simple rate of return = ($3,467 - $1,667) / $10,000 = 18%
Which of the following is an advantage of a partnership?
A.ease of starting and ending the business
B. Shared management and pooled skills
C. Unlimited liability
D. Little time commitment
Answer:
B
Explanation:
as if u share a business then the time and management is also shared
hope this helps
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The burn down chart for a team showed a peculiar trend. It started dropping rapidly at the beginning of the Sprint and then seemed to plateau in the middle. A day before the Sprint, the line dipped rapidly and reached the horizontal axis. Whiat is the most likely reason for this trend?
Answer:
Explanation:
In the scenario being described, it is the most likely that the team encountered a major blocking issue in the middle of the Sprint which was resolved only toward the end. This can be deduced from the graph due to it plateauing in the middle, which usually happens when tasks are not finishing, which ultimately causes a blocking issue and since the chart went back to normal afterwards, they most likely resolved the blocking issue.
A parent company exchanges 5,000 shares of its $2 par value common stock, with a market value of $10/share, for all of the shares owned by the subsidiary's shareholders, resulting in a $50,000 total purchase price. On the acquisition date, the subsidiary reported a book value of Stockholders' Equity of $37,500, comprised of $15,000 of Common Stock and $22,500 of Retained Earnings. An examination of the subsidiary's balance sheet revealed that book values were equal to fair values for all assets except for PPE (net), which has a book value of $20,000 and a fair value of $32,500.
a. Prepare the entry that the parent makes to record the investment.
b. Prepare the [E] and [A] consolidation entries.
Answer:
a. The entry that the parent makes to record the investment
Investment in Subsidiary $50,000 (debit)
Common Stocks $50,000 (credit)
b. Consolidation Entries
Common Stock (Subsidiary) $15,000 (debit)
Retained Earnings (Subsidiary) $35,000 (debit)
Investment in Subsidiary $50,000 (credit)
Explanation:
The entry that the parent makes to record the investment
Investment in Subsidiary $50,000 (debit)
Common Stocks $50,000 (credit)
Recognize the Investment in Subsidiary and recognize the Equity element : Common Stocks
Consolidation Entries
Common Stock (Subsidiary) $15,000 (debit)
Retained Earnings (Subsidiary) $35,000 (debit)
Investment in Subsidiary $50,000 (credit)
Eliminate Common Items and recognize Goodwill or Gain on Bargain Purchase if any.
The following cost behavior patterns describe anticipated manufacturing costs for 2013: raw material, $8.20/unit; direct labor, $11.20/unit; and manufacturing overhead, $386,400 + $9.20/unit. Required: If anticipated production for 2013 is 42,000 units, calculate the u
Answer:
Note: The missing part of the question is "using variable costing and absorption costing. Explain the difference"
Solution
According to variable costing, the unit cost based was
= $8.20 + $11.20 + $9.20
= $28.6
According to absorption costing,
Total Manufacturing costs= Direct material + Direct labor + Overhead
= $8.20 + $11.20 + ($386,400/42,000 units) + $9.20
= $8.20 + $11.20 + $9.2 + $9.2
= $37.8
The difference between the variable costing and the absorption cost is because the product costing using variable costing method only includes variable costs.
Mary buys an annuity that promises to pay her $1,500 at the end of each of the next 20 years. The appropriate interest rate is 7.5%. What is the value of this 20-year annuity today?
Answer:
PV= $15,291.74
Explanation:
Giving the following information:
Annual cash flow= $1,5000
Number of years= 20
Interest rate= 7.5%
To calculate the present value, first, we need to determine the future value using the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual cash flow
FV= {1,500*[(1.075^20) - 1]} / 0.075
FV= $64,957.02
Now, we can calculate the present value:
PV= FV/(1+i)^n
PV= 64,957.02/(1.075^20)
PV= $15,291.74
This question explores the calculation of the unemployment rate. You will be provided some imperfect employment data for four different countries and asked to identify the unemployment rate. Task 1: The population of Asartaland is 95. Of these 95 individuals, 75 are in the labor force and 65 are employed. What is the unemployment rate in Asartaland
Answer:
Unemployment rate= 0.13= 13%
Explanation:
Giving the following information:
Of these 95 individuals, 75 are in the labor force and 65 are employed.
To calculate the unemployment rate, we need to use the following formula:
Unemployment rate= unmeployed population / labor force
Unemployment rate= 10/75
Unemployment rate= 0.13
Suppose you have $1,500 and plan to purchase a 5-year certificate of deposit (CD) that pays 3.5% interest, compounded annually. How much will you have when the CD matures
Answer:
$ 1,781.53
Explanation:
The future value of the 5-year CD can be determined by using the future value formula stated below:
FV=PV*(1+r)^n
FV is the future value which is expected future amount after 5 years
PV is the initial amount used in purchasing the CD i.e $1500
r is the rate of return on the CD on an annual basis which is 3.5%
n is the number of years the investment would last which is 5 years
FV=$1500*(1+3.5%)^5
FV=$1500*1.187686306
FV=$ 1,781.53
Job 910 was recently completed. The following data have been recorded on its job cost sheet: Direct materials $ 2,429 Direct labor-hours 74 labor-hours Direct labor wage rate $ 17 per labor-hour Machine-hours 135 machine-hours The Corporation applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $18 per machine-hour. The total cost that would be recorded on the job cost sheet for Job 910 would be:
Answer:
Total Job Cost is $6,117
Explanation:
The total cost of the Job 910 is as under:
Direct Material Cost $2,429
Direct Labor Cost (74 Labor Hrs * $17 per Labor Hour) $1,258
Applied overhead (135 Machine Hrs * $18 per Machine Hr) $2,430
Total Job Cost $6,117
Analysis reveals that a company had a net increase in cash of $21,430 for the current year. Net cash provided by operating activities was $19,300; net cash used in investing activities was $10,650 and net cash provided by financing activities was $12,780. If the year-end cash balance is $25,950, the beginning cash balance was:
Answer:
i thinktheanswer would be 87 or 98 few dw
Explanation:
Mercury Company reports depreciation expense of $40,000 for Year 2. Also, equipment costing $150,000 was sold for its book value in Year 2. There were no other equipment purchases or sales during the year. The following selected information is available for Mercury Company from its comparative balance sheet. Compute the cash received from the sale of the equipment. At December 31 Year 2 Year 1 Equipment $ 600,000 $ 750,000 Accumulated Depreciation-Equipment 428,000 500,000
Answer:
Mercury Company
Sale of Equipment account:
Equipment $150,000
Acc. Depreciation 112,000
Book value $38,000
Cash received $38,000
Explanation:
a) Data and Calculations:
Equipment Account:
Beginning balance $750,000
Ending balance 600,000
Sale of equipment $150,000
Accumulated Depreciation - Equipment account:
Beginning balance $500,000
Depreciation expense 40,000
Ending balance 428,000
Sale of Equipment $112,000
b) The Cash received from the sale of Mercury Company's equipment is equal to the book value in Year 2 according to the question. Since the book value (value after accumulated depreciation) is $38,000, that means that the equipment was sold at $38,000 recording no profit or loss for the company on the sale.
Choose three distinct but related business functions (e.g., inventory control, purchasing, payroll, accounting, etc.). Write a short paper describing how interfacing the information systems of these three functions can improve an organization’s performance.
Answer:
The three functions can be described as follows:
i) Inventory control
ii) Procurement
iii) Sales
Explanation:
Following are the description of the given points:
In point (i):
It is also the center of the operational activities, in which it would be accountable to always get rid of a perfect product inventory and thus not have an untouched inventory in the storage facility.
In point (ii):
This is the first step for just a brand until it hits the end user. It is sourcing, which most appropriate and progressed necessity for both the manufacturing of the company.
In point (iii):
For the business, it primarily provides, a large number of alternative considerations. However, certain expenses it control, including the expense of keeping as well as the wastefulness in raw resources, all will be determined from selling price.
What represents a difference in the process by which a monopolistic competitor and a monopolist make their respective decisions about quantity and price?
Answer:
There is no need for the monopolists to have the fear for entry
Explanation:
So, this particular problem or question is what is the part of economics known as the microeconomics. So, let us take the definitions of some important terms in the question which is going to assist us in solving this particular problem or question.
=> MONOPOLISTIC COMPETITOR: the term monopolistic competitor will also mean to say imperfect competitor. That is to say the kind of competition in which sellers or competitors compete in order for them to get some kind of advantage over the prices of goods and services in the market. The demand curve thus now has a download slope.
=> MONOPOLIST: Monopolists have advantage over the price of products or services in the market.
On September 1, the company acquired five acres of land with a building that will be used as a warehouse. Tristar paid $120,000 in cash for the property. According to appraisals, the land had a fair value of $85,400 and the building had a fair value of $54,600. On September 1, Tristar signed a $42,000 noninterest-bearing note to purchase equipment. The $42,000 payment is due on September 1, 2022. Assume that 9% is a reasonable interest rate. On September 15, a truck was donated to the corporation. Similar trucks were selling for $2,700. On September 18, the company paid its lawyer $4,000 for organizing the corporation. On October 10, Tristar purchased maintenance equipment for cash. The purchase price was $17,000 and $600 in freight charges also were paid. On December 2, Tristar acquired various items of office equipment. The company was short of cash and could not pay the $5,700 normal cash price. The supplier agreed to accept 200 shares of the company's no-par common stock in exchange for the equipment. The fair value of the stock is not readily determinable. On December 10, the company acquired a tract of land at a cost of $22,000. It paid $3,000 down and signed a 11% note with both principal and interest due in one year. Eleven percent is an appropriate rate of interest for this note.
Required:
Prepare journal entries to record each of the above transactions.
Answer and Explanation:
The Journal entries is shown below:-
1. Land Dr, $73,200 (($85,400 ÷ (85,400 + 54,600)) × $120,000)
Building Dr, $46,800 ($54,600 ÷ (85,400 + 54,600)) × $120,000
To Cash $120,000
(Being cash paid is recorded)
2. Equipment Dr, $38,532.06 ($42,000 × 0.91743)
Discount on Note Payable Dr, $3,4687.94 ($3,780 × 0.91743)
To Note Payable $42,000
(Being equipment is recorded)
3. Truck Dr, $2,700
To Sales revenue $2,700
(Being truck is recorded)
4. Organisation cost Exp enses Dr, $4,000
To Cash $4,000
(Being cash paid is recorded)
5. Maintenance Equipment Dr, $17,600
To Cash $17,600
(Being cash paid is recorded)
6. Office Equipment Dr, $5,700
To Common Stock $5,700
(Being office equipment is recorded)
7. Land Dr, $22,000
To Cash $3,000
To Note Payable $19,000
(Being cash paid is recorded)
Computing and Recording Proceeds from the Sale of PPE The following information was provided in the 2018 10-K of Hilton Worldwide Holdings, Inc.
2018 2017
Property and equipment, gross $678 $642
Accumulated depreciation (385) (360)
Property and equipment, net 293 282
Note 7 also revealed that depreciation expense on property and equipment totaled $43 million in 2018. The cash flow statement reported that expenditures for property and equipment totaled $58 million in 2018 and that there was no gain or loss on the sale of property and equipment during the year.
Required:
Using the information provided, prepare a journal entry to record the sale of property and equipment in 2018.
Answer:
Cash $4
Accumulated Depreciation $18
To Property & equipment $22
(Being the sale of the property and equipment is recorded)
Explanation:
The journal entry is shown below:
Cash $4
Accumulated Depreciation $18
To Property & equipment $22
(Being the sale of the property and equipment is recorded)
For recording this we debited the cash and accumulated depreciation as it increased the assets and reduced the accumulated depreciation balance and credited the property & equipment as it decreased the assets
The workings are as follows
For PPE
PPE Beginning Balance Beginning $642
Add: Purchases during the year $58
Less: PPE Ending Balance Ending ($678)
Cost of the sold equipment $22
For Accumulated depreciation
Beginning Accumulated Depreciation $360
Add: Depreciation expense 2018 $43
Less: Ending Accumulated Depreciation ($385)
Accumulated Depreciation left $18
Here, we need to first compute the amount of the Property and equipment and the Accumulated depreciation to allow us prepare the journal entry to record the sale of property and equipment in 2018.
For the Property and equipment computation
Particulars Amount
PPE Beginning Balance Beginning $642
Add: Purchases during the year $58
Less: PPE Ending Balance Ending ($678)
Cost of the sold equipment $22
For the Accumulated depreciation computation
Particulars Amount
Beginning Accumulated Depreciation $360
Add: Depreciation expense 2018 $43
Less: Ending Accumulated Depreciation ($385)
Accumulated Depreciation balance $18
Date Account titles and Explanation Debit Credit
Cash $4
Accumulated Depreciation $18
To Property & equipment $22
(Being the sale of the property and equipment is recorded)
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Exercise F The luggage department of Sampson Company has revenues of $1,000,000; variable expenses of $250,000; direct fixed costs of $500,000; and allocated, indirect fixed costs of $300,000 in an average year. If the company eliminates this department, what would be the effect on net income
Answer:
Decrease by $250,000
Explanation:
Calculation for what would be the effect on net income.
We would be using Differential Analysis method to find the effect on the net income
Differential Analysis
Continue with Luggage Department; Eliminate Luggage Department; Effect on Income
Sales
1,000,000 0 -1,000,000
Variable cost
-250,000 0 250,000
Direct fixed costs
-500,000 0 500,000
Indirect fixed costs
-300,000 -300,000 0
Net Income
-$50,000 -$300,000 -$250,000
Therefore in a situation where the luggage department is eliminated, the income would decrease by $250,000
Statfeld Company's income statement for the current month shows that the company sold 300,000 units of its product and earned a net operating income of $450,000, Management is very pleased with the result and believes the company's financial position is strong because sales would have to go down by 40% from the current level before losses would occur. Management further believes that if the company runs a new TV commercial at a cost of $50,000 per month, sales volume next month could grow by 20% from the current sales level without the need to lower the sales price. If this action is taken, what will be the increase decrease in the next month's net operating income from the current month?
a. Increase of $175,000
b. Increase of $40,000
c. Increase of $225,000
d. Decrease by $50,000
e. None of the above.
Answer:
b. Increase of $40,000
Explanation:
Incremental Analysis of the Operating Profit arising from new TV commercial
Hint : Consider Incremental amounts Only
Operating Income ( $450,000 × 20 %) $90,000
Less Cost of new TV commercial ($50,000)
Incremental Income / (loss) $40,000
Conclusion :
There will be an increase in next month's net operating income from the current month of $40,000 .
Maria, the landlord, refuses to fix a small leak in the roof that was there prior to the current tenant. Juan, the current tenant, has just discovered the leak after a heavy rain. The consequence is that black mold has been forming in the attic for quite some time. Juan still has significant time remaining on his lease. Juan has notified Maria in writing of the mold and leak issue but has received no response. He is concerned about the premises becoming unsafe to live in. It has been 14 days since he emailed her his notification. What are all of Juan’s options if Maria declines to do the repairs? Please discuss all remedies Juan may seek. Please remember to reference the contract and text to support your analysis.
Answer:
Please see answers below
Explanation:
Joan may as well put a call through to Maria in addition to his previous mail. Several remedial options are available to Juan and each has its own merits and demerits. It is proper for the tenant to consider each options carefully and seek legal opinion where necessary. However, if Maria declines to do the repairs, Juan may seek the following remedies
• Repair and deduct remedy . In this type of remedy, a tenant may deduct money that is equivalent of a month's rent to cover the cost of the repair or defect. Rental unit 156 covers a condition whether faulty or substandard rented unit could affect the tenant's health and safety. Since the landlord has refused to do the repair, she is guilty of implied warranty of habitability which includes leak in the roof, gas leak, no running water etc. Also, the tenant may not have to file a lawsuit against the landlord since this type of remedy has legal aid. Other conditions attached in addition to the above are ; the repairs cannot cost more than a month's rent, the tenant cannot use the repair and deduct remedy more that twice in any 12 month period, tenant must have informed the landlord in writing and through calls of the faulty area that requires repair. His family or pets must not be the cause of the faulty area that needed to be repaired etc.
• The abandonment remedy . Here, the tenant could move out of the faulty unit or defective rental unit due to its substandard condition which could affect his health and safety. Where the tenant uses the abandonment remedy judiciously, he is not liable to pay any other rent once he has abandoned or moved out of the defective rental unit. The conditions attached are that; the defects must be serious and directly related to the tenant's health and safety, the tenant or his family must not be the cause of the faulty space that requires repair. Moreover, the tenant must have informed the landlord whether in writing or orally telephone calls of the defects that requires repair.
• The rent withholding remedy. Legally, a tenant could withhold house rent if the landlord fails to take care of serious defects that negates the implied warranty of habitability. Conditions attached to this type of remedy are; the defects to be repaired must have threatened the tenant's safety and wellbeing. Again, the faulty or defective unit must be such that it becomes uninhabitable for the tenant . The tenant, his family or pets must not be the cause of the defects that requires repairs. The tenant must have also notified the landlord either through phone calls on in writing, amongst others.
• The tenant could also file a lawsuit against the landlord to recover the cost expended to fixing the faulty repairs where the landlord was not willing to do so. Conditions that must be met before this option could stand in the court of law are; the rental unit has serious defect that is not safe for living. A housing inspector has inspected the house and found to be short of minimum requirements for habitable place etc. A tenant may seek this type of redress where the option for out of court settlement has failed with the landlord.
Advika is a resident of India who exports hand-dyed fabrics to other nations. Since India has an exchange control system, what does this mean for Advika
Answer: The Reserve Bank of India keeps all of Advika’s foreign currency for her.
Explanation:
When a country uses exchange controls, it limits the amount of foreign currency that can come into a country. This is usually done to ensure stability in the money market of the country as well as to improve the balance of payments for the country.
One way of implementing exchange control is for all foreign currency to go through the Central bank of the country. Should a citizen need access to foreign currency, they would need to apply to the central bank to access it. With India having an exchange control system, the Reserve Bank of India keeps all foreign currency and Advika would have to apply for it should she need it.
The standard deviation of return on investment A is 25%, while the standard deviation of return on investment B is 20%. If the correlation coefficient between the returns on A and B is −0.260, the covariance of returns on A and B is _________. Multiple Choice –0.2080 –0.0130 0.0130 0.2080
Answer: –0.0130
Explanation:
Correlation given the variance and the standard deviation of the two returns can be calculated by;
Correlation coefficient = Covariance of returns on investment A and B / (Standard deviation of return on investment A * Standard deviation of return on investment B).
Rearranging the formula, Covariance becomes;
Covariance of returns on investment A and B = Correlation coefficient * (Standard deviation of return on investment A * Standard deviation of return on investment B)
Covariance of returns on investment A and B = -0.260 * 0.25 * 0.20
Covariance of returns on investment A and B = –0.0130
Playa Inc. owns 85 percent of Seashore Inc. During 20X8, Playa sold goods with a 25 percent gross profit to Seashore. Seashore sold all of these goods in 20X8. How should 20X8 consolidated income statement items be adjusted g
Answer:
Debit the Cost of Sales and,
Credit the Revenue.
Explanation:
Transactions that occur within a group of companies must be eliminated. Playa is a Parent (85%) and Seashore Inc is a Subsidiary.
The effect of the Sale by Playa to Seashore is that Group Cost of Sales and Revenue would be over-valued by the price of intragroup sale.
Thus, the adjustment for this intragroup sale, is to Debit the Cost of Sales and Credit the Revenue.
On the first day of 2016, Holthausen COmpany acquired the assets of Leftwich Company including several intangible assests. These include a patent on Ledtwicj's primary product, a device called a plentiscope. Leftwich carried the patent on its book for $1,500, but Holthausen believes that the fair value is $200,000. The patent expires in seven years, but companies can be expected to develop competing patents within three years. Holthausen believes that, with expected technlogical improvements, the product is marketable for a t least 20 years.
The registration of the trademark for the Leftwich name is scheduled to expire in 15 years. However, the Leftwich brand name, which Holthausen believes is worth $500,000, could be applied to related products for many years beyond that.
As part of the acquisition, Leftwich's principal researcher left the company. As part of the acquisition, he signed a five-year noncompetition agreement that prevents him from developing competing products. Holthausen paid the scientist $300,000 to sign the agreement.
a. What amount should be capitalized for each of teh identifiable intangible assets?
b. What amount of amortization expense should Holthausen record in 2016 for each asset?
Answer:
Holthausen Company and Leftwich Company
Intangible Assets:
a) Amount to be capitalized:
1) Patent: $200,000
2) Trademark: $500,000
3) Non-competition Agreement: $300,000
b) Amount of Amortization Expense for 2016:
1) Patent: $200,000/7 years = $28,571.43
2) Trademark: $500,000/15 years = $33,333,33
3) Non-competition Agreement: $300,000/5 = $60,000
Explanation:
The fair values of the "plentiscope" patent and Leftwich's branded trademark should be capitalized as intangible assets, while the cost of the non-competition agreement with Leftwich's principal researcher should be capitalized.
For the amortization of the Leftwich-connected intangibles, we have adopted the straight-line method, in the absence of any prescribed method. The patent expiration in 7 years was used as the basis for its useful life, despite Holthausen belief that the product could be marketable for at least 20 years.
The trademark was amortized over its remaining useful life of 15 years as given, while the non-competition agreement was amortized for 5 years when the agreement remains effective.
Jackpot Mining Company operates a copper mine in central Montana. The company paid $1,150,000 in 2021 for the mining site and spent an additional $630,000 to prepare the mine for extraction of the copper. After the copper is extracted in approximately four years, the company is required to restore the land to its original condition, including repaving of roads and replacing a greenbelt. The company has provided the following three cash flow possibilities for the restoration costs: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
Cash flow Probability
1 $330,000 25%
2 430,000 40%
3 630,000 35%
To aid extraction, Jackpot purchased some new equipment on July 1, 2021, for $150,000. After the copper is removed from this mine, the equipment will be sold. The credit-adjusted, risk-free rate of interest is 10%.
Required:
a. Determine the cost of the copper mine.
b. Prepare the journal entries to record the acquisition costs.
Answer:
a. Determine the cost of the copper mine.
$2,104,430b. Prepare the journal entries to record the acquisition costs.
Date X, 2021, acquisition of copper mine
Dr Copper mine 2,104,430
Cr Cash 1,780,000
Cr Asset retirement liability 324,430
July 1, 2021, acquisition of mining equipment
Dr Equipment 150,000
Cr Cash 150,000
Explanation:
estimated restoration costs = ($330,000 x .25) + ($430,000 x .4) + ($630,000 x .35) = $475,000
now we must adjust the restoration cost and determine its present value = $475,000 x 0.68301 (present value factor, 10%, 4 periods) = $324,430
total cost of copper mine = purchase cost + preparation costs + restoration costs = $1,150,000 + $630,000 + $324,430 = $2,104,430
The inflation rate over the past year was 1.8 percent. If an investment had a real return of 7.2 percent, what was the nominal return on the investment
Answer:
9.13%
Explanation:
The computation of the nominal return on the investment is shown below:
As we know that
Nominal interest rate = {(1 + real interest rate) × (1 + inflation rate)} - 1
= {(1 + 0.072) × (1 + 0.018)} - 1
= (1.072 × 1.018) - 1
= 9.13%
Hence, the nominal interest rate could be find out by applying the above formula i.e by considering the real interest rate and the inflation rate
WACC and Cost of Common Equity
Kahn Inc. has a target capital structure of 45% common equity and 55% debt to fund its $10 billion in operating assets. Furthermore, Kahn Inc. has a WACC of 12%, a before-tax cost of debt of 10%, and a tax rate of 25%. The company's retained earnings are adequate to provide the common equity portion of its capital budget. Its expected dividend next year (D1) is $3, and the current stock price is $34.
A. What is the company's expected growth rate?
B. If the firm's net income is expected to be $1.6 billion, what portion of its net income is the firm expected to pay out as dividends?
Answer:
A. What is the company's expected growth rate?
current stock price = expected dividend / (required rate of return - growth rate)
$34 = $3 / (12% - g)
12% - g = $3 / $34 = 8.82%
growth rate = 12% - 8.82% = 3.18%
B. If the firm's net income is expected to be $1.6 billion, what portion of its net income is the firm expected to pay out as dividends?
WACC = (equity x Re) + [debt x cost of debt x (1 - tax rate)]
12% = (45% x Re) + (55% x 10% x 0.75) = 0.45Re + 4.125%
0.45Re = 12% - 4.125% = 7.875%
Re = 7.875% / .45 = 17.5%
growth rate = (net income / equity) x (1 - dividend payout ratio)
3.18% = ($1.6 billion / $4.5 billion) x (1 - dividend payout ratio)
3.18% = 0.3556 x (1 - dividend payout ratio)
1 - dividend payout ratio = 3.18 / 0.3556 = 0.089
dividend payout ratio = 1 - 0.089 = 0.911
this means that the company distribute 91.1% of its net income to its stockholders