Answer:
Dr goodwill impairment $34200
Cr goodwill $34200
Explanation:
The fact that the fair value of Blossom’s net identifiable assets is less than the carrying value is a strong indication that the goodwill has been impaired and the impairment is computed thus:
Goodwill impairment=Fair value of net assets-carrying value
fair value of net assets=$820,800
Carrying value of net assets=$855,000
goodwill impairment=$855,000-$820,800=$34200
The double entries would be a debit to goodwill impairment loss account in the statement of profit or loss and a credit to goodwill.
You purchase a Treasury inflation-protected note with an original principal amount of $1,000,000 and a 2.8% annual coupon (paid semiannually). What will the first coupon payment be if the semiannual inflation over the first 6 months is 1.4%?
Answer:
$14,159.60
Explanation:
Inflation-adjusted principal = Principal * (1+inflation)
Inflation-adjusted principal = 1,000,000 * (1+1.14%)
Inflation-adjusted principal = 1,000,000 * 1.0114
Inflation-adjusted principal = $1,011,400
Now, the coupon rate is given as 2.8% or 1.4% semi annually.
Coupon Payment = Coupon rate * Inflation-Adjusted Principal
Coupon Payment = 1.4% * $1,011,400
Coupon Payment = $14,159.60
Therefore, the first coupon payment is $14,159.60
Chiller Company has credit sales of $5.60 million for year 2013. Chiller estimates that 1.32% of the credit sales will not be collected. Historically, 4% of outstanding accounts receivable is uncollectible. On December 31, 2013, the company's Allowance for Doubtful Accounts has an unadjusted credit balance of $3,561. Chiller prepared a schedule of its December 31, 2013, accounts receivable by age. Based on past experience, it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized here:
Answer:
$59,045.80
Explanation:
The following information was missing:
Accounts Receivable total $1,565,170
Assuming the company uses the percent of accounts receivable method, what is the amount that Chiller will enter as the Bad Debt Expense in the December 31 adjusting journal entry?
total uncollectible debt = $1,565,170 x 4% = $62,606.80
since the account balance of the allowance for doubtful accounts is $3,561 (credit), the adjusting entry should be:
December 31, 2013, bad debt expense
Dr Bad debt expense (= $62,606.80 - $3,561) 59,045.80
Cr Allowance for doubtful accounts 59,045.80
Open market operations are typically repurchase agreements. What does this tell you about the likely volume of defensive open market operations relative to the volume of dynamic open market operations?
Answer: • Defensive operations are usually common and that the dynamic open market operations is smaller than the volume of the defensive open market operations.
Explanation:
Open market operations is when treasury bills and securities are on sale in an economy. It is typically bought by the central bank to ensure that money is available in an economy.
Open market operations are typically repurchase agreements tells us that defensive operations are usually common and that the dynamic open market operations is smaller than the volume of the defensive open market operations.
provides its employees two weeks of paid vacation per year. As of December 31, 70 employees have earned two weeks of vacation time to be taken the following year. If the average weekly salary for these employees is $890, what is the required journal entry to accrue compensated absences?
Answer and Explanation:
The journal entry is shown below:
Salary and Wages Expense Dr. $124,600 (70 employees × 2 weeks × $890)
To Salaries and wages payable $124,600
(Being the compensation absences accrued)
For recording this we debited the salary and wages expense and credited the salaries and wages payable as it increased the expenses and liabilities.
The firm is currently an all-equity firm with assets worth $250 million and 100 million shares outstanding. The firm plans to borrow $100 million and use these funds to repurchase shares. The firm’s marginal corporate tax is 20%, and it plans to keep its outstanding debt equal to $100 million permanently. What is the lowest price per share the firm can offer and have shareholders tender their shares? A) $3.50 B) $1.50 C) $1.70 D) $2.50 E) $2.70
Answer:
C) $1.70
Explanation:
The value of the firm after the debt would be = 250 million + (20% * 100 million) = $270 million
Value of equity = Total value of firm - Value of debt
Value of equity = $270 million - $100 million
Value of equity = $170 million
The total number of share outstanding is 100 million shares
Hence, he should offer the shares at = $170 million / 100 million shares = $1.7 per share
Consider the following cash flows of two projects for Fontana Rubber Parts Company. Assume the discount rate for Fontana Rubber Parts is 14%.
Year Dry Prepreg Solvent Prepreg.
0 -$30,000 -$90,000
1 10,000 28,000
2 10,000 28,000
3 10,000 28,000
4 10,000 28,000
5 10,000 28,000
a. Calculate NPV, IRR, MIRR, payback, and discounted payback for each project
b. Assuming the projects are independent, which one(s) would you recommend?
c. If the projects are mutually exclusive, which would you recommend?
Answer:
Year Dry Prepreg discounted cash flow
0 -$30,000 -$30,000
1 10,000 8,772
2 10,000 7,695
3 10,000 6,750
4 10,000 5,921
5 10,000 5,194
Year Solvent Prepreg. discounted cash flow
0 -$90,000 -$90,000
1 28,000 24,561
2 28,000 21,545
3 28,000 18,899
4 28,000 16,578
5 28,000 14,542
a. Calculate NPV, IRR, MIRR, payback, and discounted payback for each project
Dry Prepreg
NPV = $4,330
IRR = 19.86%
MIRR = 17.12%
payback = 3 years
discounted payback = 4.17 years
Solvent Prepreg
NPV = $6,130
IRR = 16.80%
MIRR = 15.51%
payback = 3.21 years
discounted payback = 4.58 years
b. Assuming the projects are independent, which one(s) would you recommend?
both projects, since their NPV is positivec. If the projects are mutually exclusive, which would you recommend?
Dry prepreg becuase its IRR, MIRR are higher, and its payback and discounted payback periods are shorter.
When the corporation declares a stock dividend, a stockholder's percentage ownership in the stock of the corporation:_______
A) will increase
B) can increase or decrease
C) will decrease
D) remains unchanged
Capital Budgeting Criteria: Mutually exclusive Projects
A firm with a WACC of 10% is considering the following mutually exclusive projects:
Project A Project B
1 - $400 - $600
2 $55 $300
3 $55 $300
4 $55 $50
5 $225 $50
6 $225 $49
Which project would you recommend? Explain.
Answer:
Project A would be chosen because the NPV is higher. It means that project A would be more profitable than project B.
Explanation:
To determine which project would be recommended, we have to determine the NPV of each project.
Net present value is the present value of after tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
For project A
Cash flow in year 1 = $-400
Cash flow each year from year 2 to 4 = $55
Cash flow each year from year 5 to 6 = $225
I = 10%
NPV = $27.42
For project B
Cash flow in year 1 = $-600
Cash flow each year from year 2 to 3 = $300
Cash flow each year from year 4 to 5 = $50
Cash flow in year 6 = $49
I = 10%
NPV = $20.73
Project A would be chosen because the NPV is higher
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Identify at least four factors that affect a bond’s yield. Briefly explain the effect that each factor has on the yield.
Answer:
Four factors that effect a bond yield are:
1. Interest rates
2. Inflation
3. The yield curve
4. economic growth
Explanation:
Four factors that affect a bond yield are:
1. Interest rates: higher interest rates by the bank often leads to rises in corporate bond yields.
2. Inflation: with high inflation level in the economy, in which prices of commodity increases, the credit risk also increases, this results in positive pressure on yields.
3. The yield curve: this gives or predicts the economic situation in terms of growth and output. Therefore, this leads to investors to put their capital in either short-term securities or long-term bonds which effects bonds in general.
4. economic growth: this leads to increased revenues and profits for companies, and in turn results in lower yields on bonds.
Write a 500-750-word analysis of the significance of the three Matrices regarding their relevance for strategic planning. Describe the key information for each of the three matrices and how information from each will influence recommendations for strategic plans to improve the position of the company. Without prematurely determining and formalizing strategic goals and objectives, begin thinking about possible strategies to capitalize and add value to the organization based on the analysis of this information.
Answer:
Strategic planning is important for any company as it helps the company to strategically position itself in the industry. S W O T analysis is a tool that helps the company to do this. S W O T analysis is an attempt to reflect upon the strengths, weaknesses, opportunities and threats that the company face in its short period as well as long period functioning.
The airline industry offers an air source of transport to passengers and freight. A strength in this business can be a possibility to earn high income through its operations. It is not a kind of business that anyone can undertake as it requires huge investment. If investment is made and the required logistics is applied, then there is a chance for making huge profits. This is a strength. Also the unique patterns of services, the facilities that the airliner provides etc can be viewed as it's strengths. On the other hand weaknesses can be lack of infrastructure facilities, inefficient work force, high spoilage rate which is the rate of passengers missing their flights and subsequently returned money, highly competitive market etc.
Opportunities mean that aspects that help the company to ensure a continued growth. The world is becoming a global village. This scenario demands modes of transport that cater to the needs of the people who travel around the world. Businesses are operating on a trans national mode. Tourism sector is evolving into newer versions. All these situations can be viewed as opportunities for the airline company. On the other end, a threat at the moment is the the pandemic, which has hit the tourism sector badly, rising fuel price, government intervention etc can be considered as threats.
BCG matrix is developed by Boston Consulting Group. It based it's analysis on the development of four categories based on industry attractiveness indicating the growth rate of that industry and competitive position or relative market share. Higher the market share, higher will be the cash returns.There are four quadrants into which firm brands are classified, namely dogs, cash cows, stars and question marks.
Companies that hold low market shares compared to their competitors are categorized into the first classification. Companies that operate in a slowly growing market are also included in this category. If an airliner is classified into a poor dog category, strategic choices would be retrenchment or liquidation. Cash cows are the profitable brands. As the name suggests they should be milked to provide as much cash as possible. Cash cows need investment not to induce growth but to maintain their current market share. Strategic choices would be product development or diversification.
Stars operate in high growth industries. Also companies that have high market share are also included in this category. A company should invest on these primary units as they have the potential to become cash cows. But if the company can not catch up with the technical innovations, star would turn into poor dog. Strategic choices would be vertical integration, horizontal integration or market penetration. Question marks are the brands that need closer attention. They are loss making companies in fast growing markets holding low market share and consuming large amount of cash. Here strategic choices would be product development or divestiture.
The internal external matrix is based on an analysis of factors relevant to internal and external situations. Graphically represented analysis suggest grow and build or hold and maintain or harvest or exit strategies.
SFX Paintball Games, Inc., and Truck & Trailer Delivery Corporation sign an agreement that provides for the payment of "$1,000 by whichever party commits a material breach of the contract that creates damages difficult to estimate but approximately $1,000." This is
Answer:
A liquidated damages clause.
Explanation:
The liquidated damage clause is the clause in which the party who has breach the contract or who has delay the completion of the contract has to pay the damages for the liquidation of the contract
here in the given situation, since the company has an agreement with the other party and if anyone party breach the contract then the price they paid would be $1,000 approx
Therefore this represents the liquidated damages clause
Sox Corporation purchased a 30% interest in Hack Corporation for $1,525,000 on January 1, 2021. On November 1, 2021, Hack declared and paid $1.1 million in dividends. On December 31, Hack reported a net loss of $4.0 million for the year. What amount of loss should Sox report on its income statement for 2021 relative to its investment in Hack
Answer:
$1,200,000
Explanation:
SOX Corporation purchased a 30% interest for $1,525,000
On November 1, 2021, Hack declared and paid $1,100,000 million in dividends
Hence, Carrying value = $1,525,000 - 30%($1,100,000)
Carrying value = $1,525,000 - $330,000
Carrying value = $1,195,000
Net loss given during the year reported by Hack is $4,000,000
Hence, Net Loss of SOX is $4,000,000 * 30%
Net Loss = $1,200,000
Therefore, the net loss to be recognized in the Income statement is $1,200,000
"Preferred stock is issued with an "anti-dilutive" covenant. If the corporation declares a 5% stock dividend, which statements are TRUE?"
Answer: B. I and IV
Explanation:
Anti-Dilutive clauses are made to ensure that when new common shares are issued, they do not reduce the value of the shares already there because new shares being issued reduces the value of individual shares.
To do this, when new shares are issued or dividends declared, the conversion price is reduced and the conversion ratio is increased so that the preferred stocks can be diluted into more shares thus keeping their value intact.
Repudiation is a form of breach of contract which always entitles the innocent party to cancel the contract.a. Trueb. False
Answer: True
Explanation:
Repudiation of a contract means that one party is unwilling or has resigned not to perform their duties as expressed in the contract.
As this is the basis for which the contract was entered to, refusing to do it entitles the other party to cancel the contract as it no longer serves its purpose.
The shift from mass marketing to targeted marketing, and the corresponding use of a larger, richer mix of communication channels and promotion tools ________.
Answer:
Poses a problem for marketers
Explanation:
When there is a shift from mass marketing to a more targeted approach, there will be a need for different promotional tools to reach each target audience.
For example use of social media to get to youths, use of magazines and newspapers to get to the more mature customers.
If the promotional tools become many with different messages, customers tend to get confused about what the product can offer them.
They will tend to move to other companies that communicate clearly the benefits of their products.
Select the correct statement from the following,assuming Carmichael Company had a favorable direct materials price variance of $3,000 and an unfavorable direct materials usage variance of $2,000.
A) The total direct materials variance is $1,000 unfavorable.
B) The total direct materials variance is $5,000 favorable.
C) The total direct materials variance is $5,000 unfavorable.
D) The total direct materials variance is $1,000 favorable.
Answer:
Total direct material variance= $1,000 favorable
Explanation:
Giving the following information:
Company had a favorable direct materials price variance of $3,000 and an unfavorable direct materials usage variance of $2,000.
To calculate the total direct material variance, we need to use the following formula:
Total direct material variance= price variance +/- quantity variance
Total direct material variance= 3,000 - 2,000
Total direct material variance= $1,000 favorable
ou are using earned value analysis to track your project's progress. In your project, earned value is higher than planned value and actual value. That means the project is _____ schedule and _____ budget.
Answer:
B. ahead of; under
Explanation:
Earned value analysis is the process to check the status of the project and the analysis, evaluation is to be done. It can be done between the earned value with the actual cost incurred and with the planned value
Here Planned value refers to the value i.e. to be permitted and to be completed within the prescribed time. Here earned value is compared with the planned value to check the variance schedule of the project
Here the actual value is the value that is actually spent or incurred till date. Here the earned value compared with the actual value so that any variance related to cost could be checked
And, the earned value is the value of the work completed till date. It could be in terms of costing and scheduling.
So if the earned value is more than the planned value and the actual value so the project is ahead and it is under budget
hence, option B is correct
How much would Israel’s nominal GDP growth be next year if it experienced real GDP growth next year the same as its average over the past 50 years, with an inflation rate of 3% and population growth of 1%?
Answer:
Nominal GDP growth = 7.25%
Explanation:
Given:
Inflation rate = 3%
Population growth = 1%
Note:
Growth rate in real GDP (Not given) = 3.25%
Find:
Nominal GDP growth
Computation:
Nominal GDP growth = Inflation rate + Population growth + Growth rate in real GDP
Nominal GDP growth = 3% + 1% + 3.25%
Nominal GDP growth = 7.25%
In 2014 Randall suffered bodily injury while at work. In 2016, Randall won a workers' compensation claim and prevailed in an injury lawsuit, both in connection with the 2014 injury. Randall received the following in 2016 as settlement:
Punitive damages $150,000
Workers' compensation 50,000
Reimbursement for medical expenses 25,000
Compensation for emotional distress 15,000
What amount of the settlement should be excluded from Randall's 2017 gross income?
a. $165,000.
b. $90,000.
c. $60,000.
d. $75,000.
Answer:
d. $75,000.
Explanation:
Calculation for the amount of the settlement that should be excluded from Randall's 2017 gross income.
The amount of the settlement excluded from Randall's 2017 gross income will be the addition of the following:
Workers' compensation $50,000
Compensation for emotional distress $15,000
Medical expenses of $10,000
=$75,000
Therefore the amount of $75,000 will be the amount of the settlement that should be excluded from Randall's 2017 gross income.
Review the Globe to determine Baldwin's current strategy. How will they seek a competitive advantage
This question is incomplete, the complete question is;
Review the Inquirer to determine Baldwin's current strategy. How will they seek a competitive advantage?
From the following list, select the top five sources of competitive advantage that Baldwin would be most likely to pursue. Select: 5 Save Answer Add additional products Offer attractive credit terms Accept lower plant utilization and higher capacities to insure sufficient capacity is available to meet demand Reduce cost of goods through TQM initiatives Seek high plant utilization, even if it risks occasional small stock outs Increase demand through TQM initiatives Seek excellent product designs, high awareness, and high accessibility Seek high automation levels Seek the lowest price in their target market while maintaining a competitive contribution margin Reduce labor costs through training and recruitment.
Answer:
1) Reduce labor costs through training and recruitment
2) Seek the lowest price in their target market while maintaining a competitive contribution margin
3) Reduce cost of goods through TQM initiatives
4) Seek excellent product designs, high awareness, and high accessibility
5) Seek high plant utilization, even if it risks occasional small stock outs
Explanations
The top resources that will help Baldwin to attain competitive advantage are shown below
Reduce labor costs through training and recruitment- Lower labor costs would help Baldwin maintain higher profit levels, giving Baldwin an edge over its competitors. This would be an example of a Cost Leadership strategy.
Seek the lowest price in their target market while maintaining a competitive contribution margin- Baldwin can focus on target markets and offer its products/ services at the lowest prices with competitive. This would help Baldwin get a very good reach and hold on the target markets, and would get ahead of its customers in the process. This would be an example of a Focus strategy.
Reduce cost of goods through TQM initiatives- Lower cost of goods would mean higher profits for Baldwin, giving it a competitive edge. This would be an example of a Cost Leadership strategy.
Seek excellent product designs, high awareness, and high accessibility- With excellent product designs, high awareness and accessibility, Baldwin would be able to make its products stand out from its competitors' products. When customers see a product which is different from others, which offers good benefits and which is easily available, they definitely get interested in that product and may even pay a little more to buy the product. This is an example of a Differential strategy.
Seek high plant utilization, even if it risks occasional small stock outs- With high plant utilization, Baldwin can optimize its fixed costs, thereby lowering total costs which shall give it a competitive edge. This again would be an example of a Cost Leadership strategy. Losses due to occasional small stock outs would be compensated by high plant utilization.
If cost of goods sold under FIFO was $8,000 and was $10,000 under LIFO, assuming a tax rate of 40%, how much tax savings resulted from using LIFO
Answer:
$800
Explanation:
The computation of the tax saving from using LIFO is shown below:
= Cost of goods sold under LIFO × tax rate - Cost of goods sold under FIFO × tax rate
= $10,000 × 40% - $8,000 × 40%
= $4,000 - $3,200
= $800
By applying the above formula, the tax saving resulted from using the LIFO is $800 and the same is to be considered
Sunland Company reported the following information for the current year: Sales (64000 units) $1280000, direct materials and direct labor $640000, other variable costs $64000, and fixed costs $360000. What is Sunland’s contribution margin ratio?
Answer:
45%
Explanation:
Given the following :
Sales unit = 64000
Sales revenue = $1,280,000
Direct materials and directly labor = $640,000
Other variable cost = $64,000
Fixed cost = $360,000
Contribution margin ratio:
(Sales revenue - variable expenses) / sales revenue
Total variable expenses = (Direct materials and directly labor + other variable expenses)
Total variable expenses = (640000 + 64000) = $704,000
Contribution margin ratio :
$(1,280,000 - 704,000) / $1,280,000
$576,000 / $1,280,000
= 0.45
0.45 * 100 = 45%
How do you short term goals differ from long-term goals
Answer:
Short term goals differ from long term goals because long term goals tend to take longer than short term goals.
Explanation:
Hope this helps!
True or false: When considering the elimination of a segment, management should look at more than the segment's performance report.
Answer:Yes
Explanation:Yes
A firm with a cost of capital of 7% is considering two projects (they are not mutually exclusive), one expected to return 9% and a second expected to return 9.5%. Which projects should it pursue
Answer:
pursue both projects
Explanation:
The projects are not mutually exclusive thus the choice of one project does not hold back the pursuant of another (can occur at the same time).
Projects which provide a return above their cost of capital must be pursued as they are less risky.
Both projects provide the return above the costs of capital and should be pursued.
Which of the following is an advantage of pursuing an unrelated diversification strategy over a related diversification strategy?
a. There is greater coordination between business units.
b. Functional competencies would be useful in many different industries.
c. There are higher bureaucratic costs.
d. The company doesn't need coordination between business units.
Answer:
Correct Answer:
b. Functional competencies would be useful in many different industries.
Explanation:
This is because, the competencies of the organization could be useful leading to its application in many different industries. For example, a company into plastic manufacturing could diversify into electric bicycle manufacturing. Their competency in plastic manufacturing could come handy due to the parts of the bicycle being manufactured made up of plastics also.
When using the simple EOQ model to determine optimal order quantity, which of the following is true?
A. Order quantity increases as order cost per order decreases
B. Order quantity decreases as order cost per order increases
C. Order quantity increases as holding cost per unit per year decreases
D. Order quantity decreases as holding cost per unit per year decreases
Answer:
C. Order quantity increases as holding cost per unit per year decreases
Explanation:
the formula for calculating economic order quantity (EOQ) is:
EOQ = √(2SD/H)
S = cost per orderD = annual demandH = holding cost per unitIf holding cost per unit (H) decreases, the EOQ will increase. Whenever you are dividing, if the denominator decreases, the result will be larger.
Benace Parts and Supply makes a variety of car parts. The company produces A90 parts each year. Each A90 sells for and has a contribution margin of . Currently, of fixed manufacturing overhead is allocated to the A90 product line. If Benace Parts and Supply discontinues the A90 product line, of fixed manufacturing overhead costs would be avoided. What would be the impact on total operating income if the A90 product line were to be discontinued?
Answer:
The total Operating income will decrease by $5,000
Explanation:
Note that some word are missing and are inserted as written below:
"Benace Parts and Supply makes a variety of car parts. The company produces 6,000 A90 parts each year. Each A90 sells for $7 and has a contribution margin of $2. Currently, $16,000 of fixed manufacturing overhead is allocated to the A90 product line. If Benace Parts and Supply discontinues the A90 product line, $7,000 of fixed manufacturing overhead costs would be avoided. What would be the impact on total operating income if the A90 product line were to be discontinued? "
Solution:
Loss of Contribution margin if the A90 product line discontinued = Units * Contribution margin per unit
= 6,000 units * $2
= $12,000
Saving of avoidable fixed Overhead = $7,000
Decrease in Total Operating Income = Loss of Contribution margin - Saving of avoidable fixed Overhead
= $12,000 - $7.000
= $5,000 (Decrease)
Hence, the total Operating income will decrease by $5,000
The firm has total fixed costs of $40 and a constant marginal cost of $2 per unit. We can conclude that
Here's the full question;
The firm has total fixed costs of $40 and a constant marginal cost of $2 per unit. We can conclude that
a. firms will exit this market.
b. firms will enter this market.
c. this firm is operating at its efficient scale.
d. this market is in long-run equilibrium
Answer:
d. this market is in long-run equilibrium
Explanation:
Long-run equilibrium occurs when a firm records a marginal revenue that is equal to its marginal costs.
In the firm above we noticed that the firm has total fixed costs of $40 and a constant marginal cost of $2 per unit, by multiplying the marginal cost of $2 by 20 units (20*2) as found in the attached image, we arrived at a value which equals the total fixed cost.
The appropriate discount rate for the following cash flows is 9 percent compounded quarterly. Year Cash Flow 1 $700 2 700 3 0 4 1,100 What is the present value of the cash flows
Answer:
Total present value= $2,010.65
Explanation:
Giving the following information:
Cf1= 700
Cf2= 700
Cf3= 0
Cf4= 1,100
Discount rate= 9%
To calculate the present value, we need to use the following formula on each cash flow:
PV= FV/(1+i)^n
Cf1= 700/1.09= 642.20
Cf2= 700/1.09^2= 589.18
Cf3= 0
Cf4= 1,100/1.09^4= 779.27
Total present value= $2,010.65