Answer:
The simple rate of return is 0.178 or 17.8%
Explanation:
From the given question, we solve for the simple rate return on this investment
Solution
Recall that, the simple rate of return is defined as:
The simple rate of return = The operating net cash savings / Cash net investment
Thus,
The operating net cash savings = $164000 and
The cash net investment = $980000- $60000 = $920000
Then,
The Simple rate of return = $164000 / $920000 = 0.178 i.e. 17.8%
Therefore the simple rate of return on this investment is 0.178 or 17.8%
The simple rate of return for Linwood's new equipment investment is approximately 6.7%. Thus, option (b) is correct.
Let's calculate it step-by-step:
The cost of the new equipment: $980,000Annual savings in cash operating costs: $164,000The useful life of the new equipment: 10 yearsTo calculate the simple rate of return, we use the formula:
Simple Rate of Return = (Annual Incremental Net Operating Income) / Initial InvestmentSince the new equipment has no salvage value, the annual depreciation is:
Annual Depreciation = Initial Investment / Useful Life = $980,000 / 10 = $98,000Next, we calculate the annual incremental net operating income:
Annual Incremental Net Operating Income = Annual Cost Savings - Annual Depreciation = $164,000 - $98,000 = $66,000Finally, the simple rate of return is:
Simple Rate of Return = $66,000 / $980,000 ≈ 6.7%Complete Question:
Linwood is making an equipment change at his company. An old piece of equipment, with a salvage value of $60,000, is being replaced by new equipment. The new equipment costs $980,000 and would have a 10-year useful life and no salvage value. By replacing the equipment, Linwood will save $164,000 per year in cash operating costs. The simple rate of return on this investment is:
a. 7.2%
b. 6.7%
c. 16.7%
d. 17.8%
The following materials standards have been established for a particular product: Standard quantity per unit of output 1.7 meters Standard price $19.80 per meter The following data pertain to operations concerning the product for the last month: Actual materials purchased 5,800 meters Actual cost of materials purchased $113,680 Actual materials used in production 5,100 meters Actual output 3,200 units What is the material quantity variance:
Answer:
$6,732 F
Explanation:
SQ = 1.7 meters per unit × 3,200 units = 5,440 meters
Materials quantity variance = (AQ - SQ) × SP
= (5,100 meters - 5,440 meters) × $19.80 per meter
= (-340 meters) × $19.80 per meter
= $6,732 F
Therefore the material quantity variance is
$6,732 F
Your Competitive Intelligence team is predicting that the Baldwin Company will invest in adding capacity to their Beetle product this year. Assume Baldwin's product Beetle invests in increasing its capacity by 10% this year. Because of this new information, your company anticipates all other products in the Core segment will increase their capacity by the same amount. How much can the industry produce in the Core segment the next year
Answer: 13,288 units
Explanation:
I attached a table showing the production capacities since it was missing.
Since your company believes that all core products will increase capacity by the same amount, we can solve for this by,
= (1,200 + 1,450 + 1,040 + 1,050 + 100 + 1,200) * ( 1 + 0.1)
= 6,040 * 1.1
= 6,644
A tricky part of this question is that you have to remember that Baldwin can produce twice this as they could have a 2nd shift.
That means the value will become,
= 6,644 * 2
= 13,288 units
The industry can produce 13,288 units in the Core segment the next year.
When a company enters a foreign market, it can use either expatriates or local nationals as their salespersons. Please compare the advantages and disadvantages between expatriates and local national salespersons. GE Nuclear Energy is a world-leading provider of advanced reactor technology and nuclear services. If GE wants to sell their nuclear reactor to a new Vietnamese nuclear power plant, should it use expatriates or local national salespersons
Answer:
Explanation:
1. Using expatriates may present the challenge of communicating the product or services in a way that appeal to the foreign market, because this expatriate may not be used to this business environment, although they may be advantageous if they alone have the specialised knowledge to sell the product.
Also, if we are to use local salespersons if they lack technical and specialized knowledge of the product it may be a problem, although local salespersons stand a better chance of understanding the local market.
2. It is best if General Electric company use expatriates to sell their nuclear reactor to a new Vietnamese nuclear power plant because this type of sales involves specialized knowledge.
Concord Corporation is planning to sell 500 boxes of ceramic tile, with production estimated at 470 boxes during May. Each box of tile requires 44 pounds of clay mix and a 0.25 hour of direct labor. Clay mix costs $0.40 per pound and employees of the company are paid $17 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Concord has 4600 pounds of clay mix in beginning inventory and wants to have 5000 pounds in ending inventory.
What is the total amount to be budgeted for manufacturing overhead for the month?
Rector Company manufactures a line of lightweight running shoes. CEO Mark Rector estimated that the company would incur $2,500,000 in manufacturing overhead during the coming year. When Rector Company uses direct labor hours as its manufacturing overhead application base, predetermined overhead rate is $10.00/DLH and when it uses machine hours as its manufacturing overhead application base, predetermined overhead rate is $6.25/MH. Additionally, he estimated the company would operate at a level requiring 250,000 direct labor hours and 400,000 machine hours. At the end of the year, Rector Company had worked 245,000 direct labor hours, used 410,000 machine hours, and incurred $2,515,000 in manufacturing overhead.
If Rector Company used direct labor hours as its manufacturing overhead application base, how much overhead was applied to jobs during the year?
Answer:
Allocated MOH= $2,450,000
Explanation:
Giving the following information:
The predetermined overhead rate is $10.00/DLH
Actual direct labor hours= 245,000 direct labor hours
We were provided with the predetermined overhead rate, we need to allocate overhead to the period based on actual direct labor hours:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 10*245,000
Allocated MOH= $2,450,000
Final answer:
When using direct labor hours as the manufacturing overhead application base, the total overhead applied to jobs during the year amounts to $2,450,000.
Explanation:
Overhead: When using direct labor hours as the manufacturing overhead application base, the predetermined overhead rate is $10.00/DLH. To calculate the overhead applied to jobs during the year, multiply the predetermined overhead rate by the actual number of direct labor hours worked. In this case, with 245,000 direct labor hours worked, the overhead applied would be $2,450,000.
The following are budgeted data:January February March Sales in units 16,600 23,200 19,600Production in units 19,600 20,600 19,300One pound of material is required for each finished unit. The inventory of materials at the end of each month should equal 25% of the following month's production needs. Purchases of raw materials for February would be budgeted to be:
Answer:
The purchases of raw material for February are budgeted to be 20275 pounds.
Explanation:
The opening inventory of raw material in February should be equal to 25% of the production requirement for the month of February. Thus, the opening balance of raw material is,
Opening balance- Raw material = 0.25 * 20600 = 5150 pounds
Similarly, the closing inventory for raw material for the month of February should be equal to the 25% of production requirement for the month of March. Thus, the closing inventory of raw material in the month of February is,
Closing balance = 0.25 * 19300 = 4825 pounds
Purchases of raw material should be enough to produce enough units to meet February's production requirement after using the opening inventory of raw material along with having enough desired closing inventory of raw material. So, the purchases of raw material are,
Purchases = Closing inventory + Production - Opening Inventory
Purchases = 4825 + 20600 - 5150
Purchases = 20275 pounds
Assume that the managers of Wolves Entertainment Corporation act in the best interests of its shareholders by following the primary goal of the firm as defined by finance. Which of the following capital structures (mix of debt and equity) should the firm’s managers choose? Question 10 options: 1) Stock Price=$20.00 Debt/Assets=40% Equity/Assets=60% Dividends=$1.25 2) Stock Price=$25.00 Debt/Assets=50% Equity/Assets=50% Dividends=$1.75 3) Stock Price=$30.00 Debt/Assets=60% Equity/Assets=40% Dividends=$1.65 4) Stock Price=$26.00 Debt/Assets=70% Equity/Assets=30% Dividends=$1.55
Answer:
The correct option is Stock Price=$30.00 Debt/Assets=60% Equity/Assets=40% Dividends=$1.65
Explanation:
The primary goal of the firm as defined by finance is the maximization of shareholders' wealth.This translates to enhancing the company's performance to an extent that share price is at the optimum possible.
In other words,the shareholders' wealth maximization option is that which gives the highest price per share,which is the third option:Stock Price=$30.00 Debt/Assets=60% Equity/Assets=40% Dividends=$1.65
Auditing standards define ________ as the magnitude of misstatements that individually, or when aggregated with other misstatements, could reasonably be expected to influence the economic decisions of users made on the basis of the financial statements.
A) fraud
B) inherent risk
C) materiality
D) significant
We obtain the following 2018 forecasts of selected financial statement line items for Journey Company. $ millions in 2017 Actual 2018 Est. Net Sales $708,554 $740,439 Marketable securities 67,096 62,096 Long-term debt 346,558 308,437 Treasury stock (deducted from equity) 51,174 51,174 Cash generated by operations 57,696 Cash used for investing (14,908) Cash used for financing (54,660) Total net change in cash (11,872) Cash at beginning of period 51,141 Cash at end of period $39,269
Does forecasted cash deviate from the normal level for this company?
Answer:
The forecasted cash is lower than the normal level (5.3% vs 7.22% of total sales). This results in a -26.59% change in the normal cash level.
Explanation:
2017 Actual 2018 Est. Net
Sales $708,554 $740,439
Marketable securities 67,096 62,096
Long-term debt 346,558 308,437
Treasury stock (deducted from equity) 51,174 51,174
Cash generated by operations 57,696
Cash used for investing (14,908)
Cash used for financing (54,660)
Total net change in cash (11,872)
Cash at beginning of period 51,141
Cash at end of period $39,269
the normal cash level for this company = $51,141 (ending cash 2017 or beginning cash 2018) / $708,554 (total sales 2017) = 7.22%
the cash level for 2018 = $39,269 (budgeted cash at end of 2018) / $740,439 (budgeted total sales 2018) = 5.3%
so the forecasted cash is lower than the normal level (5.3% vs 7.22% of total sales)
the percent change = (5.3% - 7.22%) / 7.22% = -26.59%
Based on the provided information, it is impossible to definitively say whether the 2018 forecasted cash deviates from the normal level for Journey Company. Additional information involving 2018 estimates for cash generation and usage is necessary to carry out a thorough analysis.
Explanation:The analysis of a company's cash level involves a detailed study of its financial statements. In the Journey Company's case, we base our analysis on how the forecasted cash for 2018 deviates from the previously recorded amounts. For a start, the cash at the end of the 2017 period was $39,269 million. However, no estimated cash at the end of 2018 is provided. If we consider the cash generation and usage, the cash generated by operations in 2017 amounted to $57,696 million, while the cash used for investing and financing were $14,908 million and $54,660 million respectively. These figures ended in a total net change in cash of $-11,872 million in 2017. Nevertheless, without 2018 estimates for these cash in/out-flows, it is impossible to definitively say whether the 2018 forecasted cash deviates from the normal level without additional data. In conclusion, more information on the 2018 cash flows would be needed to make a thorough analysis on this issue.
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2017 Sold $1,351,700 of merchandise (that had cost $981,800) on credit, terms n/30. Wrote off $21,500 of uncollectible accounts receivable. Received $670,400 cash in payment of accounts receivable. In adjusting the accounts on December 31, the company estimated that 3.00% of accounts receivable will be uncollectible. 2018 Sold $1,586,800 of merchandise on credit (that had cost $1,326,300), terms n/30. Wrote off $25,300 of uncollectible accounts receivable. Received $1,182,900 cash in payment of accounts receivable. In adjusting the accounts on December 31, the company estimated that 3.00% of accounts receivable will be uncollectible. Required: Prepare journal entries to record Liang’s 2017 and 2018 summarized transactions and its year-end adjustments to record bad debts expense. (The company uses the perpetual inventory system and it applies the allowance method for its accounts receivable.) (Round your intermediate calculations to the nearest dollar amount.)
Answer and Explanation:
The Journal entry is shown below:-
1. Accounts receivable Dr, $1,351,700
To Sales revenue $1,351,700
(Being merchandise on credit is recorded)
Cost of goods sold Dr, $981,800
To Merchandise inventory $981,800
(Being cost of goods sold is recorded)
2. Allowance for Uncollectible accounts Dr, $21,500
To Accounts receivable $21,500
(Being Uncollectible accounts is receivable is recorded)
3. Cash account Dr, $670,400
To Accounts receivable $670,400
(Being cash is recorded)
4. Bad debts expenses Dr, $41,294
To Allowance for uncollectible accounts $41,294
(Being bad debt expenses is recorded)
Working Note
Accounts receivable ($1,351,700 - $21,500 - $670,400) $659,800
Required balance 3% $19,794
Add: Debit balance $21,500
Bad debt expenses $41,294
5. Accounts receivable Dr, $1,586,800
To Sales revenue $1,586,800
(Being merchandise on credit is recorded)
Cost of goods sold Dr, $1,326,300
To Merchandise inventory $1,326,300
(Being cost of goods sold is recorded)
6. Allowance for Uncollectible accounts Dr, $25,300
To Accounts receivable $25,300
(Being uncollectible accounts receivable is recorded)
7. Cash account Dr,$1,182,900
To Accounts receivable $1,182,900
(Being cash is recorded)
8. Bad debts expenses Dr, $36,658
To Allowance for uncollectible accounts $36,658
(Being bad debt expenses is recorded)
Working Note
Accounts receivable-Gross $659,800
Add: Sales $1,586,800
Less: Collections $1,182,900
Less: Amount write off $25,300
Balance $1,038,400
Required balance 3% $31,152
Allowance Balance $19,794
Less: Amount written off $25,300
Debit balance $5,506
Add: Required balance $31,152
Bad debts expenses $36,658
To record Liang’s transactions and adjustments for bad debts expense for 2017 and 2018, journal entries need to be made for sales on credit, cost of goods sold, uncollectible accounts write-offs, cash collections, and bad debt expense adjustments using the allowance method for accounts receivable.
Journal Entries for 2017 and 2018
The journal entries to record the summarized transactions and year-end adjustments for bad debts expense using the allowance method for accounts receivable for 2017 and 2018 are as follows:
2017 Transactions
Sales on Credit: Debit Accounts Receivable $1,351,700; Credit Sales $1,351,700.Cost of Goods Sold: Debit Cost of Goods Sold $981,800; Credit Inventory $981,800.Write-Off: Debit Allowance for Doubtful Accounts $21,500; Credit Accounts Receivable $21,500.Cash Collection: Debit Cash $670,400; Credit Accounts Receivable $670,400.Year-End Adjustment: To record the estimated uncollectible accounts, calculate 3% of the ending balance of accounts receivable after write-offs and cash collection, then Debit Bad Debt Expense and Credit Allowance for Doubtful Accounts by the calculated amount.2018 Transactions
Sales on Credit: Debit Accounts Receivable $1,586,800; Credit Sales $1,586,800.Cost of Goods Sold: Debit Cost of Goods Sold $1,326,300; Credit Inventory $1,326,300.Write-Off: Debit Allowance for Doubtful Accounts $25,300; Credit Accounts Receivable $25,300.Cash Collection: Debit Cash $1,182,900; Credit Accounts Receivable $1,182,900.Year-End Adjustment: Similarly, compute 3% of the ending balance of accounts receivable for 2018 and make the necessary adjustment by Debiting Bad Debt Expense and Crediting Allowance for Doubtful Accounts.Please note, the actual figures for year-end adjustment will depend on the ending balance of accounts receivable when these calculations are made. The provided examples are for illustrative purposes only.
Inflation, recession, and high interest rates are economic events which are characterized as Select one: a. Unsystematic risk that can be diversified away. b. Company-specific risk that can be diversified away. c. Systematic risk that can be diversified away. d. Market risk that cannot be diversified away. e. Diversifiable risk that can be diversified away.
Answer:
D.
Explanation:
Market Risks can be defined as the possibility of losses that the investor may face in investment because of the changes in the market factors. These market factors possess the power that influences the whole financial markets. It is also known as 'systematic risk.' Such risks can not be diversified.
The sources that lead to market risks are inflation, high-interest rates, recession, natural disasters, terrorist attacks, commodity risk, etc.
So, from the given options the correct one is D.
WP Corporation produces products X, Y, and Z from a single raw material input in a joint production process. Budgeted data for the next month is as follows:
Product X Product Y Product Z
Units produced 1,900 2,400 3,400
Per unit sales value at split-off $17.00 $21.00 $19.00
Added processing costs per unit $2.00 $4.00 $4.00
Per unit sales value if processed further $22.00 $22.00 $27.00
The cost of the joint raw material input is $72,000.
Which of the products should be processed beyond the split-off point?
Answer:
Products X and Z
Explanation:
Coronado Industries is preparing its direct labor budget for May. Projections for the month are that 23400 units are to be produced and that direct labor time is three hours per unit. If the labor cost per hour is $12, what is the total budgeted direct labor cost for May
Answer:
$842,400
Explanation:
The direct labor cost given is a function number of hours needed to produce a unit, the number of units to product and the cost per labor hour.
The total budgeted direct labor cost is the product of these elements. Given that a unit requires 3 hours, the total number of hours required to produce 23400 units
= 23400 * 3
= 70200 hours
If the labor cost per hour is $12, the total budgeted direct labor cost for May
= 70200 * $12
= $842,400
Answer:
$842,400
Explanation:
Cost of labor which is incurred to produce a specific product is known as direct labor cost of that product. It is charged directly to the product cost as this cost is purely incurred in the production that specific product.
As per given Data
Projected units = 23,400
Hours per unit = 3 hours
Labor cost per hour = $12 per hour
Budgeted Direct labor hour = Projected units x Hours per unit x Labor cost per hour
Budgeted Direct labor hour = 23,400 units x 3 hours x $12 per hour
Budgeted Direct labor hour = $842,400
Lightning Semiconductors produces 400,000 hi-tech computer chips per month. Each chip uses a component that Lightning makes in-house. The variable costs to make the component are $1.30 per unit, and the fixed costs are $1,300,000 per month. The company has been approached by a foreign producer who can supply the component, within acceptable quality standards, for $1.20 each. The fixed costs are unavoidable, and Lightning would have no other use for the facilities currently employed in making the component. What would be the effect on operating income if the company decides to outsource?
Answer:
an increase in operating income of $ 40,000.
Explanation:
Consider the Savings and Costs that arise with the outsource decision.
Note : Fixed Costs are incurred whether or not outsource decision is made ( unavoidable) and are therefore irrelevant for this decision.
Savings :
Variable Costs ( 400,000 × $1.30) 520,000
Costs :
Purchase Price ( 400,000 × $1.20) (480,000)
Effect : Net Income / (loss) 40,000
If the Company decides to outsource there will be an increase in operating income of $ 40,000.
Walberg Associates, antique dealers, purchased goods for $38,100. Terms of the purchase were FOB shipping point, and the cost of transporting the goods to Walberg Associates's warehouse was $1,500. Walberg Associates insured the shipment at a cost of $210. Prior to putting the goods up for sale, they cleaned and refurbished them at a cost of $550. Determine the cost of inventory.
Answer:
$40,360
Explanation:
Data provided
Inventory price = $38,100
Transportation cost = $1,500
Shipment insurance = $210
Cleaning and refurbishing = $550
According to the situation the computation of total cost of inventory is shown below:-
Total cost of inventory = Inventory price + Transportation cost + Shipment insurance + Cleaning and refurbishing
= $38,100 + $1,500 + $210 + $550
= $40,360
Therefore for computing the total cost of inventory we simply applied the above formula.
Final answer:
The total cost of inventory for Walberg Associates is $40,360, calculated by adding the purchase cost, transportation, insurance, and refurbishing expenses together.
Explanation:
The cost of inventory for Walberg Associates, including the purchase price, transportation, insurance, and refurbishing costs, can be calculated as follows:
Cost of goods: $38,100Transportation costs (FOB shipping point): $1,500Insurance cost for the shipment: $210Cost to clean and refurbish the goods: $550To determine the total cost of inventory, we add up these expenses:
Total Cost of Inventory = $38,100 + $1,500 + $210 + $550
Total Cost of Inventory = $40,360
Therefore, the cost of inventory that should be recorded by Walberg Associates is $40,360.
In a recent annual report, Rosh Corporation disclosed that 60,000,000 shares of common stock have been authorized. At the beginning of the fiscal year, a total of 36,356,357 shares had been issued and the number of shares in treasury stock was 7,171,269. During the year, 558,765 additional shares were issued, and the number of treasury shares increased by 3,034,188. Determine the number of shares outstanding at the end of the year. (Amounts to be deducted should be indicated by a minus sign.)
Answer:
33,880,934 stocks
Explanation:
total number of authorized stocks = 60,000,000
stocks issued at beginning of the year = 36,356,357
treasury stocks at beginning of the year = 7,171,269
net change in total stocks outstanding = additional shares issued - increase in treasury stocks = 558,765 - 3,034,188 = -2,475,423
total number of stocks outstanding = outstanding stocks at the beginning of the year + net change in stocks outstanding = 36,356,357 -2,475,423 = 33,880,934 stocks
During November, TaskMaster purchased 184,000 pounds of direct materials at a total cost of $331,200. The total factory wages for November were $38,000, 90% of which were for direct labor. TaskMaster manufactured 22,000 units of product during November using 162,000 pounds of direct materials and 6,000 direct labor hours. What is the direct materials efficiency variance for November
Question
TaskMaster Enterprises employs a standard cost system in which direct materials inventory is carried at standard cost. TaskMaster has established the following standards for the prime costs of one unit of product.
Standard Standard Standard
Quantity Price Cost
Direct Materials 8 1.50 per pound $12.00
Direct Labor 0.25 6.20 per hour $1.55
13.55
During November, TaskMaster purchased 184,000 pounds of direct materials at a total cost of $331,200. The total factory wages for November were $38,000, 90% of which were for direct labor. TaskMaster manufactured 22,000 units of product during November using 162,000 pounds of direct materials and 6,000 direct labor hours. What is the direct materials efficiency variance for November
Answer:
Efficiency Variance $21,000 favorable
Explanation:
Direct material efficiency( usage variance) occurs when the actual quantity used used to achieve a given output is more or less than the standard quantity allowed to achieve same.
It will be computed as follows:
Pounds
22,000 units should have used (22,000 × 8) 176,000
but did use (actual quantity) 162,000
Efficiency variance (in pounds) 14000 favorable
Standard price × $1.50
Efficiency Variance $21,000 favorable
Lake Incorporated purchased all of the outstanding stock of Huron Company paying $967,000 cash. Lake assumed all of the liabilities of Huron. Book values and fair values of acquired assets and liabilities were: Book Value Fair Value Current assets (net) $ 130,900 $ 124,200 Property, plant, equipment) 619,000 757,000 Liabilities 151,700 177,000 Lake would record goodwill of: Multiple Choice $368,800. $0. $262,800. $85,800.
Answer:
Goodwill is $262,800
Explanation:
Goodwill is the excess of purchase consideration over fair value of net assets
Fair value of net assets is the fair value of total assets minus fair value of total liabilities
Fair value of total assets=$124,200+$757,000=$881,200
fair value of total liabilities=$177,000
fair value of net assets=$881,200 -$177,000=$704,200
Goodwill=purchase consideration-net assets
purchase consideration is $967,000
fair value of net assets $704,200
goodwill=$967,000-$704,200
goodwill=$262,800
The correct option is the third option in the multiple choices
hich one of the following statements is correct? Question 13 options: A longer payback period is preferred over a shorter payback period. The payback rule states that you should accept a project if the payback period is less than one year. The payback period ignores the time value of money. The payback rule is biased in favor of long-term projects. The payback period considers the timing and amount of all of a project's cash flows.
Answer:
The payback period ignores the time value of money.
Explanation:
The Payback period calculates the amount of time it takes to recover the amount invested in a project from its cumulative cash flows.
The shorter the payback period, the more desirable a project is.
The company determines the maximum pay back period, it can be a year or more than a year of even less.
The Payback period doesn't account for the time value of money. The discounted playback period corrects for this limitation.
The Payback period method ignores cash flows after the payback period has been reached.
I hope my answer helps you
In-process research and development acquired in a business combination is Select one: A. credited to the Equity Investment account. B. recorded as indefinite-lived intangible assets, subject to amortization. C. expensed, consistent with the accounting treatment of a firm's own R & D expenditures. D. recorded as an indefinite-lived intangible asset, and annually tested for impairment.
Answer:
D. recorded as an indefinite-lived intangible asset, and annually tested for impairment.
Explanation:
In-process research and development acquired in a business combination is recorded as an indefinite-lived intangible asset, and annually tested for impairment.
In-process research and development costs are essential part of the financial income statement, it assist investors to make good, well-informed and tangible investment decisions in a newly acquired company.
D. Recorded as an indefinite-lived intangible asset, and annually tested for impairment, consistent with accounting standards for intangible assets.
In-process research and development (IPR&D) acquired in a business combination is accounted for as follows:
D. Recorded as an indefinite-lived intangible asset, and annually tested for impairment.
Here's why:
1. Indefinite-Lived Intangible Asset: IPR&D represents the value associated with ongoing research and development projects that have not yet reached the point of commercialization or technological feasibility. It is recognized as an indefinite-lived intangible asset because its future benefits are not constrained by a specific time period. This is in contrast to definite-lived intangible assets, which have a finite useful life and are subject to amortization.
2. Annual Impairment Testing: While IPR&D is initially recognized as an indefinite-lived asset, it is subject to annual impairment testing. This means that, at least annually, the company must assess whether there has been any impairment in the value of the IPR&D asset. If there is an indication that the asset's value has decreased (e.g., the research project is no longer viable or promising), an impairment charge is recorded to reduce the asset's carrying value to its recoverable amount.
3. Consistency with Accounting Standards: The accounting treatment of IPR&D acquired in a business combination is consistent with international accounting standards (e.g., IFRS) and generally accepted accounting principles (GAAP) in many jurisdictions. It reflects the economic reality that IPR&D represents valuable intellectual property that can contribute to the company's future profitability once successfully developed.
In summary, IPR&D acquired in a business combination is initially recognized as an indefinite-lived intangible asset, and it is subject to annual impairment testing to ensure its carrying value accurately reflects its recoverable amount based on its expected future benefits. This accounting treatment aligns with the treatment of other intangible assets and financial reporting standards.
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A company exchanged land and cash of $4,500 for similar land. The book value and the fair value of the land were $89,800 and $101,500, respectively. Assuming that the exchange has commercial substance, the company would record land-new and a gain/(loss) of: Land Gain/(loss) a.$106,000 $0 b.$106,000 $11,700 c.$94,300 $0 d.$94,300 $11,700
Answer:
b.$106,000 $11,700
Explanation:
Given that
Fair value = $101,500
Land and cash = $4,500
Book value = $89,800
The computation of record land-new and a gain/(loss) is shown below:-
Record Land New = Fair Value + Land and cash
= $101,500 + $4,500
= $106,000
Gain (loss) = Fair Value - Book value
= $101,500 - $89,800
= $11,700
Therefore the record of land new is $106,000 and gain is $11,700
Whole milk is one of the joint products in a joint manufacturing process. Management is considering whether to sell the whole milk at the split-off point or to process it further into cheese. The following data have been gathered:
I. Selling price of the whole milk
II. Variable cost of processing the whole milk into cheese
III. The avoidable fixed costs of processing the whole milk into cheese
IV. The selling price of cheese
V. The joint cost of the process from which the whole milk is produced
Which of the above items are relevant in a decision of whether to sell the whole milk as is or process it further into cheese?
a. I, II, and IV
b. I, II, III, and IV
c. I, II, III, and V
d. I, III, and V
Answer:
Option (b) : I, II, III, and IV
Explanation:
As per the data given in the question,
In order to evaluate weather a product is sold at a split-off point or can be further processed, the joint processing costs that have already been obtained will have no effect on the decision because the costs and revenues that will be acquired and obtained after consideration will have to be decided whether to continue processing or not. The sunken cost is the cost of processing jointly. Therefore it will not affect the decision to process further or not.
Hence, Option (b) : I, II, III, and IV is correct answer
On January 4, 2019, Kiley Co. leased a building to Dodd Corp. for a ten-year term at an annual rental of $200,000. At the beginning of the lease, Kiley received $800,000 covering the first two years' rent of $400,000 and a security deposit of $400,000. This deposit will not be returned to Dodd upon expiration of the lease but will be applied to payment of rent for the last two years of the lease.What portion of the $800,000 should be shown as a current and long-term liability in Kiley's December 31, 2019 balance sheet? Current Liability Long-term Liabilitya. $0 $800,000b. $200,000 $400,000c. $400,000 $400,000d. $400,000 $200,000
Answer:
b. $200,000 $400,000
Explanation:
As it given that $800,000 received by Kiley, out of which $400,000 is the security deposit amount and remaining $400,000 represents the current year and the next year rent
So we assume $200,000 is the current year rent revenue and the other $200,000 represents the unearned rent revenue which is reflected as a current liability
And, the security amount is shown as a long term liability
During 2016, the Balboa Software Company incurred development costs of $2,000,000 related to a new software project. Of this amount, $400,000 was incurred after technological feasibility was achieved. The project was completed in the middle of the year and the product was available for release to customers on July 1. Year 2016 revenues from the sale of the new software were $500,000 and the company anticipated future additional revenues of $4,500,000. The economic life of the software is estimated at four years. Year 2016 amortization of software development costs should be:
Answer:
Software development to be recognized = Cost incurred after achievement of technological feasibility = $400,000
Explanation:
Useful life = 4 years
Annual amortization = $400,000 / 4 years = $100,000
Period of amortization in 2016 = July 1, 2016 to December 31, 2016 = 6 months
Year 2016 amortization = $100,000 × 6 months/12 months = $100,000 × 1/2 = $50,000
You are implementing a new server that will connect 10 client computers to the Internet to access a company application. None of these clients has anti-virus software installed. Assume there is a 90% chance that 50% of these systems will become infected with a virus after they connect to the Internet, and this virus will bring your network down for an entire 8-hour day. Anti-virus software would cost $500 a year for the organization. Assume that the impacted employees are paid $12 an hour. What is the Exposure Factor (EF) for this risk?
Answer:
Explanation:
Within the context of the project risk management system, performing these risk analyses are two different processes. Effective risk analysis and management are the basis of any project's success.
These two methods dominate the risk analysis technique
In almost all risks and for all projects, qualitative risk analysis is performed but quantitative risk analysis is more limited and they are based on the type of project or the risk involved.
The major difference between these two methods is their approach to the process.
Qualitative risk analysis is more biased and focuses on finding the risks which will measure the occurrence of a specific risk event during the project life cycle and also its impact on the overall process.
In qualitative risk analysis, the goal is to ascertain the severity, and then those data are recorded in a risk assessment matrix or any form of an intuitive graphical report can be used and these matrices are valuable to communicate the outstanding hazards to the stakeholders.
In Qualitative risk analysis, method risk is measured in terms of low moderate-high and extreme.
Quantitative risk analysis is unbiased as it needs verified data to analyze the risk effect in terms of money, resource consumption, and any delays in schedule.
Quantitative risk analysis assigns a numerical value to an extent risk.
If risk X has a 40% chance of happening based on the quantifiable data and 15% chance of causing a delay of A number of days. Hence it is totally dependent on the quantity and accuracy of data.
Since we look into the process and approach of both the methods and when it comes to choosing any one method for handling risk and considering your example:
I can say that in terms of assessing probability and prioritizing risk in very simpler terms which is easy to understand and to implement, qualitative risk analysis is better.
This method is easier to approach as we can easily identify areas that need special attention and can be employed at any stage of the project to handle risk.
Conclusively, I believe if you need to adopt one method (for your case and in general), go for qualitative. Although both methods are similar and which one is better cannot be clearly stated. Hence both analyses should be conducted in tandem which will give us the best possible insight into the risk involved and their possible impact.
Therefore, whatever is the size or the complexity of your project you will have everything with you that is best for your organization.
The following transactions were selected from the records of OceanView Company:
July 12 Sold merchandise to Customer R, who charged the $3,500 purchase on his Visa credit card. Visa charges OceanView a 2 percent credit card fee.
15 Sold merchandise to Customer S at an invoice price of $10,500; terms 4/10, n/30.
20 Sold merchandise to Customer T at an invoice price of $5,800; terms 4/10, n/30.
23 Collected payment from Customer S from July 15 sale.
Aug. 25 Collected payment from Customer T from July 20 sale.
Required:
a. Assuming that Sales Discounts and Credit Card Discounts are treated as contra-revenues, compute net sales for the two months ended August 31.
The net sales for the OceanView Company for the two months ending August 31, after taking into account credit card and sales discounts, is $19,310.
Explanation:In order to answer the question, we first need to determine the gross sales and sales discounts. The gross sales refers to the total amount of sales before any deductions. On the other hand, sales discounts are reductions in the selling price of merchandise sold to customers, which in this case includes both the credit card discount for Customer R and the cash discounts for Customer S and T.
On July 12, OceanView sold merchandise for $3,500 to Customer R. However, as Visa charges a 2% credit card fee, the discount from this sale amounts to $70 (= $3,500 * 2%).
On July 15, the merchandise was sold to Customer S for $10,500 with terms 4/10, n/30. This means that if the invoice is paid within 10 days, a 4% discount can be taken. Given that they paid on July 23, they were within the ten-day window, and the discount amounts to $420 (= $10,500 * 4%).
On July 20, the merchandise was sold to Customer T, again totaling $5,800 and with the same terms; however, since they paid on August 25, beyond the 10-day terms, no discount applies.
To find the net sales for the period ending August 31, we sum all the sales and subtract the total sales discount. Hence, net sales is calculated as [($3,500 + $10,500 + $5,800) - ($70 + $420)] = $19,310.
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OceanView Company's net sales for the two months ended August 31st are approximately $16,230.
Assuming Sales Discounts and Credit Card Discounts are contra-revenues, here's how to compute net sales for OceanView Company for the two months ended August 31st:
Sales Revenue:
Customer S: $10,500Customer T: $5,800Credit Card Fee:
Visa charges a 2% fee on the $3,500 purchase by Customer R.Credit Card Fee = $3,500 * 2% = $70 (This is a contra-revenue deduction)Sales Discounts:
We don't have enough information to determine if either customer S or T took advantage of the 4/10 discount terms. Without knowing the payment dates, we cannot calculate potential discounts.Net Sales Calculation:Net Sales = Gross Sales Revenue - Credit Card Fee (Since Sales Discounts are unknown)Net Sales = ($10,500 + $5,800) - $70Net Sales = $16,300 - $70Net Sales = $16,230Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $360,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $110,000 are allocated based on the number of employees. The costs of operating departments A and B are $188,000 and $282,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows
Support Production
Departments Departments
Maintenance Personnel
Department Department A B
Budgeted costs $360,000 $110,000 $188,000 $282,000
Budgeted maintenance-hours NA 880 1230 680
Number of employees 60 NA 290 630
Using the direct method, what amount of Maintenance Department costs will be allocated to Department B?
a. $100,398
b. $128,168
c. $87,742
d. $167,330
Answer:
b. $128,168
Explanation:
Hanung Corp
Service Departments
Maintenance Department Personnel Department
Costs $360,000 $110,000
Cost Driver budgeted maintenance-hours number of employees
Budgeted
Maintenance-hours NA 880
Number of employees 60 NA
Production Departments
Department A Department B
Budgeted Costs $188,000 $282,000
Budgeted
Maintenance-hours 1230 680
Number of employees 290 630
First we find the rate by dividing the total budgeted cost of Maintenance with the budgeted maintenance hours then we multiply it with the maintenance hours of Department to B to get Department B maintenance Costs.
Using the direct method, the amount of Maintenance Department costs will be allocated to Department B
=($ 360,000/ 1230+680 )*680=($ 360,000/ 1910 )*680=$ 128167.53
= $ 128167
So choice B is the correct answer.
Kramer Enterprises reports year-end information from 2015 as follows: Sales (160,000 units) $960,000 Cost of goods sold 640,000 Gross margin 320,000 Operating expenses 260,000 Operating income $60,000 Kramer is developing the 2016 budget. In 2016 the company would like to increase selling prices by 12.5%, and as a result expects a decrease in sales volume of 9%. All other operating expenses are expected to remain constant. Assume that cost of goods sold is a variable cost and that operating expenses are a fixed cost. What is budgeted sales for 2016
Answer:
Budgeted sales for 2016 is $982,800 (145,600 units)
Cost of goods sold: $582,400
Gross margin: $400,400
Operating expenses: $260,000 (fixed cost and remained constant)
Operating income: $140,400
Explanation:
In 2015:
Selling prices = $960,000/160,000 = $6
Cost of goods sold per unit = $640,000/160,000 = $4
In 2016, the company would like to increase selling prices by 12.5%, and as a result expects a decrease in sales volume of 9%.
Selling prices = $6 x (1 + 12.5%) = $6.75
Sales volume = 160,000 x (1-9%) = 145,600 units
Total sales = 145,600 x $6.75 = $982,800
Cost of goods sold = 145,600 x $4 = $582,400
Gross margin = $982,800 - $582,400 = $400,400
Operating expenses $260,000 (fixed cost and remained constant)
Operating income = Total sales - Cost of goods sold - Operating expenses = $982,800 - $582,400 - $260,000 = $140,400
Eduardo buys a delivery van (5-year MACRS property) to use in his flower store on June 18, 2019, at a cost of $18,000. On October 18, 2019, Eduardo takes advantage of a bankruptcy sale to purchase equipment for the flower store (7-year MACRS property) costing $34,000. Assuming that Eduardo does not wish to immediately expense any of the cost of the property purchased this year and elects not to claim bonus depreciation, what is his 2019 maximum allowable cost recovery deduction? Round your final answer to the nearest dollar amount.
Answer:
$16,500
Explanation:
When more than one asset is purchased for a lump sum, the basis of each is computed by apportioning the total cost based on the relative FMV of each asset. Lot #3 has a FMV that is 16.5% of the FMV of all of the lots purchased [$20,625 ÷ ($25,000 + $31,250 + $20,625 + $48,125)]. Thus, the basis of Lot #3 is $16,500 ($100,000 × 16.5%).
Rowland Perry, a headhunter in Manhattan, is required to find a capable candidate for the position of creative director for an ad agency. The creative director is a highly specialized position which requires the selected candidate to guide individual advertising campaigns for a diverse set of clients. Which of the following tools would help Rowland most in his search for a creative director?
1. Expert location system
2. Neural network
3. Data warehouse
4. Dash board
Answer:
The correct answer is 1. Expert location system
Explanation:
Expert location system is also referred to as Expertise Location Systems (ELS) that enable users to discover subject matter experts in order to to acquire or hire their knowledge.
From the given question, the tool that would help Rowland most in his search for a creative director is The Expert Location System( ELS)