A conflict of interest is a situation in which a person's personal interests could influence their judgment or decision-making in a professional setting.
A director owns a significant amount of stock in a company that is a competitor to the company they are a director of. This could create a conflict of interest if the director is involved in making decisions about the company's business dealings with the competitor.
The director could be tempted to make decisions that benefit their own financial interests, rather than the interests of the company they are a director of.
In this example, the director's personal interest (owning a significant amount of stock in a competitor) could influence their judgment or decision-making in a professional setting.
This could lead to the director making decisions that are not in the best interests of the company they are a director of.
For example, the director might be tempted to vote against a business deal with the competitor, even if the deal would be in the best interests of the company.
Conflicts of interest can be very serious, and they can have a negative impact on organizations and the people they serve.
It is important for directors and other professionals to be aware of the potential for conflicts of interest, and to take steps to avoid them.
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To achieve its objectives,labor may use all of the following except
A) picketing.
B) strikes.
C) boycotts.
D) lockouts.
E) collective bargaining.
Labor may use all of the following except lockouts to achieve its objectives.
Labor refers to human effort aimed at producing goods and services. Labor can be categorized into manual and intellectual labor. Manual labor is characterized by hands-on, physically demanding tasks. Intellectual labor, on the other hand, involves mental effort, such as critical thinking or decision-making.
A lockout refers to a situation where an employer bars employees from entering their workplace. A lockout is often used by employers during a labor dispute as a means of exerting pressure on the employees or their union.Collective bargaining is the process where employees negotiate with their employer or employer association to reach an agreement on the terms and conditions of their employment.A boycott is a type of protest where consumers refuse to purchase goods or services from a company or industry to express their dissatisfaction with the company's actions or policies.Picketing refers to a method used by employees during a labor dispute to protest or inform the public about their grievances against their employer.A strike refers to a work stoppage or refusal by employees to work in order to force their employer to address their grievances or demands.To learn more about Labor:
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The Coney Bath project did not contribute any revenue to iStar during fiscal year \( 2018 . \) True False
The statement "The Coney Bath project did not contribute any revenue to iStar during fiscal year (2018)" is false.
In 2018, iStar had multiple development projects underway, including the Coney Bath project, which contributed revenue to the company.
Let's dig in a bit deeper into the details:
iStar Inc. is a real estate investment trust (REIT) that invests in value-add commercial and residential properties, and targets three primary real estate verticals: ground lease, senior housing, and creative office. iStar has a varied portfolio of assets that they develop, own and operate.
In fiscal year 2018, the Coney Bath project did contribute revenue to iStar. The project was one of the multiple development projects iStar was undertaking that year.
Hence, the given statement is false and can be contradicted by the fact that iStar earned revenue from the Coney Bath project during the fiscal year 2018.
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For a two-stock portfolio, which correlation coefficient between the two stocks potentially offers the least reduction in risk (use only the figures provided below):
A. +1.5
B. +1
C. −1
D. −1.5
The correlation coefficient ranges between -1 and +1, representing the strength and direction of the linear relationship between two variables. A correlation coefficient of +1 indicates a perfect positive correlation, -1 indicates a perfect negative correlation, and 0 indicates no correlation.
To find the correlation coefficient that potentially offers the least reduction in risk for a two-stock portfolio, we need to consider a positive correlation. A positive correlation implies that the two stocks tend to move in the same direction.
Among the given options, the correlation coefficient of +1 would offer the least reduction in risk. A correlation coefficient of +1 suggests a perfect positive correlation, meaning that the two stocks move in perfect synchronization. When stocks are perfectly positively correlated, their movements are identical, resulting in the least amount of risk reduction in a portfolio.
Therefore, option B (+1) potentially offers the least reduction in risk for a two-stock portfolio.
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Which of the following statement regarding data migration is INCORRECT?
a.
The company should consider the depth of scope for transaction data
b.
Data extraction process involves taking data out of existing legacy systems and databases
c.
The process can also include moving whole data entities into the ERP system from areas that are being automated for the first time
d.
Data migration is transferring data directly from legacy system to integration system
The incorrect statement regarding data migration is:
d. Data migration is transferring data directly from the legacy system to the integration system.
Data migration involves the process of transferring data from one system or storage to another. However, the data migration process typically does not involve transferring data directly from the legacy system to the integration system. Instead, data extraction, transformation, and loading (ETL) processes are commonly used in data migration. The data is extracted from the legacy system, transformed to meet the requirements of the new system, and then loaded into the integration system. This ensures data consistency, integrity, and compatibility between the legacy and new systems.
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Which of the following statements is not always true? a. When output price rises, the long run increase in labour input use will be larger than the short run increase in labour input use. b. If a monopolist has zero marginal and fixed costs and faces a market demand curve with constant price elasticity -1, then any quantity is profit maximising. c. If labour and capital are perfect complements in production, short run supply curves involve a vertical segment. d. In two-input production models, constant returns to scale imply horizontal marginal cost curves
If labour and capital are perfect complements in production, short-run supply curves involve a vertical segment, this statement is not always true. So, C is the correct option.
The statement that is not always true is:c. If labour and capital are perfect complements in production, short run supply curves involve a vertical segment.
In the case where labor and capital are perfect complements in production, the short-run supply curve does not involve a vertical segment.
Perfect complements refer to inputs that are used together in fixed proportions, meaning that one unit of labor requires one unit of capital, and vice versa. In this scenario, the short-run supply curve will not be vertical.
The vertical segment in a short-run supply curve typically occurs when there is a fixed input, such as a fixed amount of capital or a binding production constraint. In such cases, the quantity supplied cannot change even if the price changes, resulting in a vertical segment of the supply curve.
Therefore, the statement that is not always true is c. If labour and capital are perfect complements in production, short-run supply curves involve a vertical segment.
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QQQ has just completed an Initial Public Offering (IPO). The firm sold 5 million shares at an offer price of $10 per share. In addition, the existing shareholders sold 500,000 shares and kept 1.5 million shares. The underwriting spread was $0.60 per share. The price of the stock closed at $12 per share at the end of the first day of trading. The firm incurred $150,000 in legal, administrative, and other costs.
1 What were the direct costs and underpricing cost of this public issue?
2 What were the flotation costs as a fraction of the funds raised?
3 What motivates underwriters to typically try and underprice an IPO? Briefly explain.
4 Is this issue a primary offering, a secondary offering, or both? Briefly explain the concepts of primary offering and secondary offering.
After the IPO, QQQ considers the long-term growth strategy and wants to explore the private placement to issue bonds in the future.
5 What is private placement? Briefly explain this concept and discuss its two advantages in financing.
1) The direct costs and underpricing cost of this public issue is $1,000,000.
2) flotation costs as a fraction of the funds raised is 6.9%.
1. The direct costs of this public issue include the legal, administrative, and other costs incurred by the firm, which amount to $150,000. The underpricing cost refers to the difference between the offer price and the closing price at the end of the first day of trading. In this case, the underpricing cost is calculated as ($12 - $10) * (5,000,000 + 500,000) = $1,000,000.
2. The flotation costs, which represent the total costs associated with issuing and selling securities, can be calculated as the sum of the direct costs and the underwriting spread. In this case, the flotation costs are $150,000 (direct costs) + ($0.60 * 5,500,000) (underwriting spread) = $150,000 + $3,300,000 = $3,450,000. The flotation costs as a fraction of the funds raised can be calculated as $3,450,000 / (5,000,000 * $10) = 0.069 or 6.9%.
3. Underwriters are typically motivated to underprice an IPO for several reasons. Firstly, underpricing helps to generate demand and attract investors to the IPO. A lower offer price can create a perception of immediate value and potential for capital gains, increasing the likelihood of successful sales. Secondly, underpricing can help build positive aftermarket performance, which enhances the reputation of the underwriters and encourages future business. Lastly, underwriters may want to mitigate the risk of being stuck with unsold shares, which could negatively impact their own profits and reputation.
4. This issue is a primary offering. A primary offering refers to the issuance of new securities by a company to raise funds directly from the market. In this case, QQQ sold 5 million shares at the offer price of $10 per share, raising funds for the company's own use. The sale of shares by existing shareholders (500,000 shares) is known as a secondary offering. Secondary offerings involve the sale of already existing shares by shareholders, and the proceeds go to the selling shareholders rather than the issuing company.
5. Private placement is a method of raising capital through the sale of securities directly to institutional investors or accredited individuals, without conducting a public offering. In a private placement, the securities are not offered to the general public but are instead sold privately to a limited number of investors. Private placements have two advantages in financing. Firstly, they offer flexibility in terms of structure, pricing, and negotiation compared to public offerings. Secondly, they involve lower compliance costs and regulatory requirements since they are not subject to the same level of scrutiny and disclosure as public offerings.
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olafur eliasson’s the weather project is an excellent example of
Olafur Eliasson's "The Weather Project" is an excellent example of immersive and experiential art. It merges art, technology, and environmental elements to create a captivating and interactive installation that engages viewers on multiple levels.
"The Weather Project" by Olafur Eliasson was a large-scale art installation exhibited at the Tate Modern in 2003. The installation consisted of a massive semi-circular sun created using artificial light, mirrors, and mist, set against a reflective ceiling.
The aim of the artwork was to simulate the experience of a sun setting over a foggy landscape, creating a mesmerizing and immersive environment for visitors.
The installation not only showcased Eliasson's artistic vision but also incorporated elements of environmental awareness and engagement. By using light, mirrors, and mist, the artist created an otherworldly atmosphere, blurring the boundaries between reality and illusion.
The reflective surface encouraged visitors to interact with the artwork, observing their own reflections and those of others. It generated a sense of community and collective experience, as people gathered to witness and engage with the spectacle.
"The Weather Project" exemplifies how art can transcend traditional mediums and directly involve the viewer. It encourages active participation, sensory engagement, and contemplation of natural phenomena.
By integrating technology and environmental elements, Eliasson created an immersive and thought-provoking experience that left a lasting impact on viewers.
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Wanetta has been named CEO of a popular sports apparel company. As CEO, she is tasked with setting the firms corporate strategy. Which of the following decision is Wanetta most likely to make?
A) How to achieve the highest levels of customer service
B) Which customer segments to target
C) What range of products the firm should offer
D) Whether to pursue a differntitation or cost leadership strategy
As the CEO of a sports apparel company, Wanetta's most likely decision to make would be D) Whether to pursue a differentiation or cost leadership strategy.
Choosing between a differentiation strategy or a cost leadership strategy involves considering factors such as market competition, customer preferences, and the company's available resources.
A differentiation strategy focuses on offering unique and distinct products or services that differentiate the company from its competitors. This strategy often involves emphasizing product quality, design, brand image, and customer experience. Wanetta may consider this option if the company has the capability to develop innovative products or has a strong brand image that can command premium pricing.
On the other hand, a cost leadership strategy aims to achieve a competitive advantage by becoming the lowest-cost producer or provider in the industry. This strategy typically involves optimizing operational efficiency, streamlining processes, and leveraging economies of scale.
Wanetta may opt for this strategy if the company can effectively reduce costs without compromising product quality or customer value.
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Suppose there is a perfectly competitive industry with a market demand curve that can be expressed as: Q
d =498−4⋅P where P is the market price and Q is the market quantity A single firm has total costs of production given by the equation TC=12q+15q ^2 −q ^3 . and marginal cost given by: MC=12+30q−3q^ 2 where q>0, is the quantity produced by a single firm 1. What output ( q in would be produced by the firm in long-run equilibrium? ( 1 mark) 2. How many firms ( N LA ) will be in the industry in long-run equilibrium? ( 2 marks) 3. Suppose in the short run, the number of firms (N SS ) is 20 and the market price, P SR =$24.5. What is a representative firm's short run profits? (2 marks)
In the long-run equilibrium of a perfectly competitive industry, firms will produce at the quantity where marginal cost (MC) equals the market price (P). Setting MC equal to the market price and solving for q, we have:
12 + 30q - 3q^2 = P
To find the market price, we substitute the market quantity (Q) from the demand curve equation into P:
Q = 498 - 4P
498 - 4P = Q
4P = 498 - Q
P = (498 - Q)/4
Substituting this expression for P into the MC equation, we can solve for q:
12 + 30q - 3q^2 = (498 - Q)/4
Simplifying the equation and rearranging, we find the output produced by the firm in long-run equilibrium, q*, which satisfies the market equilibrium condition.
In the long-run equilibrium of a perfectly competitive industry, the number of firms (N) is determined by the market supply and demand conditions. Each firm in the industry produces at the quantity q* (found in question 1) to maximize profits. The total market quantity Q is the sum of the quantities produced by each firm, so:
Q = N * q*
We can substitute the expression for q* from question 1 into this equation and solve for N, the number of firms in the long-run equilibrium.
In the short run, a representative firm's profits can be calculated by subtracting total costs (TC) from total revenue (TR). Total revenue is given by P * q, where P is the market price and q is the quantity produced by a single firm.
Using the given market price P SR and the quantity produced by a single firm q SR, we can calculate the representative firm's short-run profits as:
TR = P SR * q SR
Profit = TR - TC
Substituting the given equations for TC and MC, we can determine the representative firm's short-run profits.
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I need help with this please. I am doing the BP Oil spill
Analysis of Communication Issue
Identify problem/key issues and pinpoint critical areas for action.
Describe how problem has affected the organization.
Describe and assess actions taken.
The BP Oil spill was a significant communication issue that had a detrimental impact on the organization. This analysis focuses on identifying the key issues, highlighting critical areas for action, describing the effects on the organization, and assessing the actions taken in response to the problem.
The BP Oil spill, which occurred in 2010, was a catastrophic environmental disaster that resulted in a massive oil spill in the Gulf of Mexico. The key communication issue was the inadequate and ineffective response from BP in managing the crisis.
The critical areas for action included addressing the immediate environmental impact, containing the oil spill, mitigating the damage to marine life and ecosystems, and effectively communicating the company's efforts and accountability to the public.
The problem had a significant negative impact on BP as an organization. It led to extensive environmental damage, including the loss of marine life and habitats, economic losses for local communities dependent on fishing and tourism, and severe reputational damage for BP.
The company faced legal consequences, financial penalties, and a significant decline in public trust and credibility.
In response to the crisis, BP implemented various actions. They initiated cleanup operations, established a claims process for affected individuals and businesses, and invested in research and restoration efforts.
BP also engaged in communication campaigns to provide updates on the cleanup progress and demonstrate their commitment to long-term environmental sustainability.
However, the effectiveness of these actions and communication efforts was heavily criticized. Many stakeholders believed that BP's response was insufficient and lacked transparency. The company faced ongoing scrutiny and legal battles related to the spill.
Overall, the BP Oil spill had a profound and lasting impact on the organization, with consequences extending beyond the immediate environmental damage.
The communication issue highlighted the importance of effective crisis management, environmental stewardship, and transparent communication in mitigating the effects of such incidents and rebuilding trust with stakeholders.
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Problem 2-6 Corporate Taxes (LG2-3) Oakdale Fashions, Incorporated's, income statement is reported below. (Use corporate tax rate of 21 percent for your calculations.) Determine the firm's tax liability. Determine the firm's net income. Determine the firm's net income. Net income Determine the firm's average tax rate. Determine the firm's marginal tax rate. Problem 2-19 Debt versus Equity Financing (LG2-1) You are considering a stock investment in one of two firms (NoEquity, Incorporated, and NoDebt, Incorporated), both of which operate in the same industry and have identical EBITDA of $39.6 milion and operating income of $13.5 million. NoEquity, Incorporated, finances its $75 million in assets with $74 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. NoDebt, Incorporated, finances its $75 million in assets with no debt and $75 million in equity. Both firms pay a tax rate of 21 percent on their taxable income. Calculate the net income and return on assets-funders' investments-for the two firms, Note: Enter your dollar answers in millions of dollars. Round "Net income" answers to 3 decimal places and "Return on assets" answers to 2 decimal places.
Problem 2-6: Corporate Taxes . Oakdale Fashions, Incorporated's tax liability, we need their taxable income.
Unfortunately, the income statement is not provided, so we will assume that taxable income is equal to net income. Using the corporate tax rate of 21 percent, we can determine the tax liability by multiplying the taxable income by the tax rate. Subtracting the tax liability from the taxable income will give us the net income. The average tax rate is found by dividing the tax liability by the taxable income and multiplying by 100. The marginal tax rate is given as 21 percent.
In summary, the calculations for Oakdale Fashions, Incorporated are as follows:
Tax Liability = Taxable Income * Tax Rate (21%)
Net Income = Taxable Income - Tax Liability
Average Tax Rate = (Tax Liability / Taxable Income) * 100
Marginal Tax Rate = 21%
Problem 2-19: Debt versus Equity Financing
For NoEquity, Incorporated:
To determine the net income and return on assets, we start by calculating the interest expense using the debt amount ($74 million) and the 10 percent interest rate. Subtracting the interest expense from the operating income gives us the taxable income. Applying the 21 percent tax rate to the taxable income, we can find the net income. Finally, the return on assets is calculated by dividing the net income by the total assets ($75 million).
For NoDebt, Incorporated:
Since NoDebt, Incorporated has no debt, the interest expense is zero. Therefore, the taxable income is equal to the operating income. Applying the 21 percent tax rate, we can calculate the net income. The return on assets is found by dividing the net income by the total assets ($75 million).
In summary, the calculations for NoEquity, Incorporated and NoDebt, Incorporated are as follows:
NoEquity, Incorporated:
Interest Expense = Debt * Interest Rate
Taxable Income = Operating Income - Interest Expense
Net Income = Taxable Income - (Taxable Income * Tax Rate)
Return on Assets = Net Income / Total Assets
NoDebt, Incorporated:
Taxable Income = Operating Income
Net Income = Taxable Income - (Taxable Income * Tax Rate)
Return on Assets = Net Income / Total Assets
By performing these calculations, we can determine the specific dollar amounts for the tax liability, net income, and return on assets for Oakdale Fashions, Incorporated and the two firms, NoEquity, Incorporated and NoDebt, Incorporated, allowing for a comparison of their financial performance and profitability under different financing structures.
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Determine whether the stock performance of each of your foreign firms is influenced by the exchange rate movements of the firm’s local currency against the U.S. dollar. You can convert the foreign currency of concern to U.S. dollars and determine the exchange rate movements over the period in which you invested in the stock. Provide your assessment of the relationship between the currency’s exchange rate movements and the performance of the stock over the investment period. Do you see the same or different relationship between exchange rate and stock price during last year? Attempt to explain the relationship that you just found.
I can explain that the performance of international stocks can indeed be influenced by exchange rate fluctuations.
These impacts vary and can be complex, as they depend on several factors like the company's export-import ratio, industry, and specific market dynamics. Generally, a firm's stock performance may correlate with its local currency's exchange rate against the U.S. dollar. When a foreign currency strengthens against the dollar, it can increase the value of the firm's earnings in dollar terms, potentially raising its stock price. Conversely, a weakening local currency may depress the stock price. However, this relationship is not always straightforward. For instance, a weak local currency can benefit companies that export heavily, as it makes their products more competitive internationally. Hence, the interplay between exchange rates and stock performance can vary year by year, based on economic conditions and company-specific factors.
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The information strategy tool most used by business is: Select one: O a. Direct communication. O b. Lobbying. O c. Legal challenges. d. Political contributions.
The information strategy tool most commonly used by businesses is a. direct communication.
Direct communication is a widely utilized information strategy tool in the business world. It involves the exchange of information, ideas, and messages between individuals or groups directly, without intermediaries or third parties. This tool enables businesses to convey their messages, establish relationships, and gather feedback in a timely and targeted manner. Whether through face-to-face interactions, phone calls, emails, or video conferences, direct communication allows businesses to effectively disseminate information and build strong connections with their stakeholders.
Direct communication plays a crucial role in the success of businesses across various industries. By directly interacting with stakeholders such as customers, employees, suppliers, and investors, businesses can effectively communicate their objectives, strategies, and updates. Face-to-face communication is often considered the most powerful form, as it allows for non-verbal cues, active listening, and immediate feedback. However, technological advancements have expanded the scope of direct communication, with tools like email, video conferencing, and instant messaging enabling remote and efficient interactions.
Direct communication facilitates effective decision-making, problem-solving, and conflict resolution within organizations. It helps leaders convey their visions and goals, ensuring alignment among team members. It also allows for immediate clarification of doubts, reducing the chances of misinterpretation or misunderstanding. In customer-oriented businesses, direct communication helps gather feedback, address concerns, and build trust. By actively engaging with customers, businesses can gain insights into customer preferences, identify areas for improvement, and enhance their products or services accordingly.
Moreover, direct communication enables businesses to establish and maintain strong relationships with stakeholders. Personalized interactions help nurture trust and loyalty, fostering long-term partnerships. By actively listening to stakeholders' perspectives and addressing their needs, businesses can enhance their reputation and maintain a competitive edge. Effective direct communication also plays a vital role in crisis management, as it allows businesses to promptly address concerns and maintain transparency.
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For a two-firm industry, use a graph to show
that the total cost of production must necessarily increase when
marginal costs are not equal. PLEASE USE A GRAPH. PLEASE
EXPLAIN LABELS
In a two-firm industry, when marginal costs are not equal, the total cost of production must necessarily increase. This can be illustrated using a graph that shows the cost curves for the two firms.
In the graph, the horizontal axis represents the quantity of output produced, while the vertical axis represents the cost of production. Each firm's cost curve consists of two components: the average total cost (ATC) curve and the marginal cost (MC) curve. The ATC curve is U-shaped, reflecting economies of scale at low levels of output and diseconomies of scale at high levels of output. The MC curve, on the other hand, is upward-sloping and intersects the ATC curve at its lowest point.
When the two firms have equal marginal costs, their MC curves will overlap, indicating that they face the same cost of producing additional units of output. In this case, the total cost of production for the industry will be minimized because each firm is operating at its lowest average total cost. However, when the marginal costs are not equal, the MC curves will be different for each firm.
If one firm has a lower marginal cost than the other, its MC curve will be below the MC curve of the other firm. This means that the first firm can produce additional units of output at a lower cost compared to the second firm. As a result, the total cost of production for the industry will increase because the second firm will have to produce at a higher cost in order to match the output of the first firm.
In summary, when marginal costs are not equal in a two-firm industry, the total cost of production will increase. This can be observed in a graph where the MC curves for the two firms are not overlapping. The firm with a lower marginal cost can produce additional units of output at a lower cost, leading to an overall increase in the industry's total cost of production.
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A firm has multiple net cash inflow return options from an investment of $24 million. Find the best option that would be aligned with the principal goal of Financial Management. Show your calculations to support your selection. The required rate of return for the firm is 14.36 percent.
Option (i): Cash inflows at the end of Year-1 $5 million, Year-4 $12 million and Year-5 $8 million;
Option (ii): Cash inflows of $5.78 million at the beginning of each year for the next 4 years;
Option (iii): Cash inflows of $1.62 million at the end of each quarter for the next 4 years;
Option (iv): Cash inflows of $5.86 million at the end of each year for the next 4 years;
Option (v): Cash inflows of $0.4 million at the end of each month that will continue forever.
The best aligned with the principal goal of Financial Management is Option
Option (i).
To determine the best , we need to calculate the present value (PV) of each and select the one with the highest PV.
Option (i) cash inflows:
Year 1: $5 million
Year 4: $12 million
Year 5: $8 million
Using the required rate of return of 14.36%, we can calculate the present value for each year and sum them up:
PV1 = $5 million / (1 + 0.1436)¹ = $4.370 million
PV4 = $12 million / (1 + 0.1436)⁴ = $7.695 million
PV5 = $8 million / (1 + 0.1436)⁵ = $4.892 million
Total PV for Option (i) = PV1 + PV4 + PV5 = $4.370 million + $7.695 million + $4.892 million = $16.957 million
Now let's calculate the PV for the other s:
Option (ii): PV = $5.78 million / (1 + 0.1436) + $5.78 million / (1 + 0.1436)² + $5.78 million / (1 + 0.1436)³ + $5.78 million / (1 + 0.1436)⁴ = $16.141 million
Option (iii): Since the cash inflows occur quarterly, we need to adjust the required rate of return. The quarterly rate is 14.36% / 4 = 3.59%. PV = $1.62 million / (1 + 0.0359) + $1.62 million / (1 + 0.0359)² + $1.62 million / (1 + 0.0359)³ + $1.62 million / (1 + 0.0359)⁴ = $6.594 million
Option (iv): PV = $5.86 million / (1 + 0.1436) + $5.86 million / (1 + 0.1436)² + $5.86 million / (1 + 0.1436)³ + $5.86 million / (1 + 0.1436)⁴ = $16.062 million
Option (v): Since the cash inflows are perpetual, we can use the perpetuity formula. PV = $0.4 million / 0.1436 = $2.785 million
Comparing the PVs, we can see that Option (i) has the highest value of $16.957 million, making it the best aligned with the principal goal of Financial Management.
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Mercantilists believed that
A. the government should own the means of production.
B. establish trade unions.
C. promote trade. D. follow a policy of laissez-faire.
C. promote trade.
Mercantilists were proponents of an economic theory prevalent in the 16th to 18th centuries.
They believed that a nation's wealth and power could be increased through promoting trade. They advocated for policies such as protectionism, imposing tariffs and barriers to restrict imports, and encouraging exports. Their goal was to accumulate precious metals, such as gold and silver, through a favorable balance of trade. Mercantilists emphasized the importance of a strong domestic economy and believed in government intervention to achieve economic prosperity. They did not support laissez-faire, which advocates for minimal government interference in economic affairs, nor did they specifically advocate for the government to own the means of production or establish trade unions. Instead, their focus was on maximizing exports, limiting imports, and accumulating wealth for the nation.
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Scott Sinclair Inc. (SSI) is a merchandising company that sells binders, paper and other school
supplies. The company is planning its cash needs for the third quarter. In the past, SSI has had to
borrow money during the third quarter to support peak sales of back-to-school materials which occur
during August. The following information has been assembled to assist in preparing a cash budget
for the quarter:
a. Budgeted monthly income statements for July through October are as follows:
July August September October
Sales $40,000 $70,000 $50,000 $45,000
Cost of goods sold 24,000 42,000 30,000 27,000
Gross margin 16,000 28,000 20,000 18,000
Selling and administrative expenses:
Selling expense 7,200 11,700 8,500 7,300
Administrative expense* 5,600 7,200 6,100 5,900
Total expenses 12,800 18,900 14,600 13,200
Operating income $3,200 $9,100 $5,400 $4,800
*Includes $2,000 depreciation each month
b. Sales are 20% for cash and 80% on credit.
c. Credit sales are collected over a three-month period, with 10% collected in the month of sale, 70%
in the month following sale, and 20% in the second month following sale. May sales totaled
$30,000 and June sales totaled $36,000.
d. Inventory purchases occur evenly throughout the month (assume 30 days) and are paid for within
15 days. Accounts payable for inventory for inventory purchases at June 30 total $11,700.
e. The company maintains its ending inventory levels at 75% of the cost of the merchandise to be
sold in the following month’ sales. The inventory at June 30 is $18,000.
f. Equipment costing $4,500 will be purchased in July.
g. Dividends declared in a particular month are paid in the following month. Dividends of $2,000 are
expected to be declared in August.
h. The cash balance on June 30 is $10,000; the company must maintain a cash balance of at least
this amount at the end of each month.
i. The company has an agreement with a local bank that allows the company to borrow up to
$50,000. The interest rate on there loans is 12% per annum. All borrowing is done at the
beginning of a month. The company would, as far as it is able, repay the loan at the end of each
month. Interest must be paid at the end of each month based on the outstanding loans for that
month. There are no loans outstanding as at June 30.
Required: [YOU CAN USE EXCEL.] (15 marks)
1. Prepare a schedule of expected cash collections for July, August, and September and for the
quarter in total.
2. Prepare the following for merchandise inventory:
a. An inventory purchases budget for July, August, and September.
b. A schedule of cash disbursements for purchases for July, August, and September and for the
quarter in total.
3. Prepare a cash budget for July, August, and September and for the quarter in total.
1) Cash collections for each month based on the credit sales and their collection patterns. 2) purchases for each month based on the projected cost of goods sold and the desired ending inventory. 3) cash budget that incorporates cash collections, cash disbursements, and other cash activities.
To answer your question, I will provide a step-by-step breakdown of the required calculations and schedules based on the given information. Please note that for convenience, I will present the calculations in a text format. However, it's recommended to use spreadsheet software like Excel for better organization and presentation.
1. Schedule of Expected Cash Collections:
We need to determine the cash collections for each month based on the credit sales and their collection patterns.
July:
Cash from May sales: $30,000 × 10% = $3,000
Cash from June sales: $36,000 × 10% = $3,600
August:
Cash from May sales: $30,000 × 70% = $21,000
Cash from June sales: $36,000 × 70% = $25,200
Cash from July sales: $40,000 × 10% = $4,000
September:
Cash from June sales: $36,000 × 20% = $7,200
Cash from July sales: $40,000 × 70% = $28,000
Cash from August sales: $70,000 × 10% = $7,000
Total Cash Collections:
July: $3,000 + $3,600 = $6,600
August: $21,000 + $25,200 + $4,000 = $50,200
September: $7,200 + $28,000 + $7,000 = $42,200
2. Merchandise Inventory:
a. Inventory Purchases Budget:
We need to calculate the inventory purchases for each month based on the projected cost of goods sold and the desired ending inventory.
July:
Cost of goods sold: $24,000
Desired ending inventory: $40,000 × 75% = $30,000
Inventory purchases: $24,000 + $30,000 - $18,000 = $36,000
August:
Cost of goods sold: $42,000
Desired ending inventory: $50,000 × 75% = $37,500
Inventory purchases: $42,000 + $37,500 - $30,000 = $49,500
September:
Cost of goods sold: $30,000
Desired ending inventory: $45,000 × 75% = $33,750
Inventory purchases: $30,000 + $33,750 - $37,500 = $26,250
b. Schedule of Cash Disbursements for Purchases:
We need to calculate the cash disbursements for inventory purchases based on the payment terms.
July:
Inventory purchases: $36,000
Cash disbursements: $36,000 × (15/30) = $18,000
August:
Inventory purchases: $49,500
Cash disbursements: $49,500 × (15/30) = $24,750
September:
Inventory purchases: $26,250
Cash disbursements: $26,250 × (15/30) = $13,125
Total Cash Disbursements:
July: $18,000
August: $24,750
September: $13,125
3. Cash Budget:
We need to prepare a cash budget that incorporates cash collections, cash disbursements, and other cash activities.
July:
Beginning cash balance: $10,000
Cash collections: $6,600
Cash disbursements: $18,000 (Inventory purchases) + $4,500 (Equipment purchase)
Dividends: $0
Loan: $0
Ending cash balance: $10,000 + $6,600 - $22,500 = -$5,900
August:
Beginning cash balance: -$5,900
Cash collections: $50,200
Cash disbursements: $24,750 (Inventory purchases) + $2,000 (Dividends)
Dividends: $0
Loan: $0
Ending cash balance: -$5,900 + $50,200 - $26,750 = $17,550
September:
Beginning cash balance: $17,550
Cash collections: $42,200
Cash disbursements: $13,125 (Inventory purchases) + $2,000 (Dividends)
Dividends: $0
Loan: $0
Ending cash balance: $17,550 + $42,200 - $15,125 = $44,625
Quarter Total: July to September
Net cash inflow: $6,600 + $50,200 + $42,200 = $99,000
The cash budget provides a summary of the expected cash position for each month and for the quarter as a whole. It helps in identifying periods of cash surplus or shortfall, aiding in effective cash management and planning.
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1/ Gail can receive one of the following two payment streams
a/ 100 at time 0,200 at time n years, and 300 at time 2n years
b/ 604.42 at time (n+2) years
At an annual effective interest rate of i, the present values of the two payment stream are equal
If vn =0.7. calculate i , the annual effective rate of interest.
2/ The simple discount rate is 7% per year. Kevin makes a deposit of X now, which accumulates to 10,000 at the end of 8 years. Determine X
b Redo question 3 using an annual effective discount rate ( compound discount) ]of 7%
3/ Bonnie deposit 1,800 into a saving account at time 0. the savings account pay simple interest at an annual rate of i
Clyde deposits 1,000 into different savings accounts at time 0. Clyde's saving account pays interest at an annual effective rate of i.
Bonnie and Clyde earn the same amount of interest during the 7th year
Calculate i.
1/ To calculate the annual effective rate of interest (i), we need to equate the present values of the two payment streams.
For payment stream a, the present value can be calculated as:
PV(a) = 100/(1+i)^0 + 200/(1+i)^n + 300/(1+i)^(2n)
For payment stream b, the present value is given as 604.42/(1+i)^(n+2).
Setting PV(a) equal to PV(b), we have:
100/(1+i)^0 + 200/(1+i)^n + 300/(1+i)^(2n) = 604.42/(1+i)^(n+2)
Simplifying and rearranging the equation, we can solve for i.
2/ The present value (PV) of the deposit made by Kevin is $X, which accumulates to $10,000 at the end of 8 years. Using the simple discount rate of 7% per year, we can set up the equation:
PV = 10,000/(1+0.07)^8 = X
Solving for X, we can find the value of the deposit made by Kevin.
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Secondary credit provided by the Fed is designed for banks that
a.qualify for a lower interest than what is available under primary credit
b.are foreign
c.are in trouble and cannot obtain a loan from anyone else
d.want to borrow without putting up collateral
Secondary credit provided by the Fed is designed for banks that are in trouble and cannot obtain a loan from anyone else.
The right response is choice C: "are in a tough situation and can't get a credit from any other person."
Optional credit given by the Central bank is a loaning program intended for banks that are encountering monetary challenges and can't get assets from different sources. It fills in as a reinforcement or final hotel loaning office to help banks that are confronting impermanent liquidity issues.
Not at all like essential credit, which is reached out to monetarily sound banks at a foreordained loan fee, optional credit is presented at a higher financing cost to mirror the higher gamble related with pained banks. It isn't planned for banks that fit the bill for a lower financing cost, are unfamiliar, or need to get without security.
The Central bank plans to give brief help to banks in trouble, assisting them with tending to transient liquidity issues and keep up with their steadiness.
By offering optional credit, the Fed guarantees that banks approach reserves when they can't get advances from other monetary establishments because of their monetary condition or financial soundness.
It's critical to take note of that optional credit is dependent upon severe agreements, and banks should meet explicit qualification necessities to get to this sort of loaning office.
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ROI and Residual Income: Impact of a New Investment The Mustang Division of Detroit Motors had an operating income of $900,000 and net assets of $5,000,000. Detroit Motors has a target rate of 16 percent. (a) Compute the return on investment. (Round your answer to three decimal places.) (b) Compute the residual income. (c) The Mustang Division has an opportunity to increase operating income by $200,000 with an $850,000 investment in assets. 1. Compute the Mustang Division's return on investment if the project is undertaken. (Round your answer to three decimal places.) x 2. Compute the Mustang Division's residual income if the project is undertaken.
(a) The return on investment (ROI) for the Mustang Division of Detroit Motors is 18.000%.
(b) The residual income for the division is $100,000.
(c) If the Mustang Division undertakes the new project, the ROI will be 32.000% and the residual income will increase to $260,000.
(a) Return on investment (ROI) is calculated by dividing the operating income by the net assets. In this case, the operating income is $900,000 and the net assets are $5,000,000. Therefore, the ROI is calculated as 900,000 / 5,000,000 = 0.180 or 18.000% when rounded to three decimal places.
(b) Residual income is calculated by subtracting the target rate of return from the operating income and multiplying it by the net assets. The target rate of return is 16 percent, and the operating income is $900,000. The net assets are $5,000,000. Therefore, the residual income is (900,000 - (0.16 * 5,000,000)) = $100,000.
(c) If the Mustang Division undertakes the new project, the operating income will increase by $200,000 to a total of $1,100,000. The investment in assets for the project is $850,000. To calculate the new ROI, we divide the increased operating income by the sum of the net assets plus the investment in assets. Thus, the ROI for the project is 1,100,000 / (5,000,000 + 850,000) = 0.32 or 32.000% when rounded to three decimal places. The new residual income is calculated as (1,100,000 - (0.16 * (5,000,000 + 850,000))) = $260,000. Therefore, if the project is undertaken, the Mustang Division's ROI will increase to 32.000% and the residual income will increase to $260,000.
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naturalism differs from literary realism in that it is more
Naturalism, as a literary movement, does differ from literary realism in that it tends to take a more extreme and deterministic view of human behavior and the forces that shape individuals and society.
While both naturalism and realism seek to depict life and its complexities in a truthful and objective manner, naturalism goes further by emphasizing the influence of heredity, environment, and social circumstances on human behavior.
In naturalistic literature, characters are often depicted as victims of larger social, economic, and natural forces beyond their control. The emphasis is on portraying characters as products of their environment, driven by biological instincts, societal pressures, and external factors rather than personal agency or individual willpower.
Themes such as poverty, violence, social inequality, and the struggles of the working class are commonly explored in naturalistic works.
Additionally, naturalism tends to present a bleaker and more pessimistic view of human existence, often delving into darker aspects of life, such as crime, addiction, and human suffering.
The deterministic perspective of naturalism suggests that individuals are at the mercy of their circumstances and that their choices and actions are heavily influenced, if not predetermined, by their environment.
While realism aims to present an objective and accurate representation of reality, naturalism takes a more deterministic and often darker approach, highlighting the oppressive forces that shape human behavior and society.
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Draw the demand curve for a good whose price elasticity of
demand is equal to zero. Be sure to label both axes. Explain what
the graph represents.
The demand curve for a good whose price elasticity of demand is equal to zero is a perfectly inelastic demand curve.
The perfectly inelastic demand curve is vertical, i.e. it is straight and perpendicular to the horizontal axis. Such a demand curve means that no matter how much the price changes, there is no change in the quantity demanded. Therefore, the demand is totally unresponsive to price changes.
The x-axis of the graph represents quantity demanded, whereas the y-axis represents the price of the good. The graph shows that as the price of the good increases, the quantity demanded remains the same, and vice versa. In other words, the graph represents a situation in which the price of the good has no effect on the quantity demanded.
Therefore, we can conclude that the demand for goods whose price elasticity of demand is equal to zero is totally insensitive to changes in price. If the price of such goods changes, there will be no change in the quantity demanded, so the total revenue of sellers of such goods will not change.
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Question 4 16 Marks a) What are the main considerations when determining the taxable income of farmers? (4 marks) b) Mention 4 items that must be included in the farmers Livestock and produce reconciliation. (4 marks) c) Define in details tax planning (2 Marks) d) Define in details employees tax (2 Marks) e) Your friend Abner Katangolo wants to understand the basics of employee tax. As a tax expert, explain to your friend the meaning of remuneration and indicate two items which are specifically excluded from remuneration as per Schedule 2 of the income Tax Act (4 Marks). Additional information,, Namibian Tax should be considered.
When determining the taxable income of farmers, several main considerations need to be taken into account. These include the classification of income and expenses, the valuation of livestock and produce, the treatment of farming subsidies, and the eligibility for specific tax deductions.
In the farmers' Livestock and produce reconciliation, four essential items that must be included are the opening and closing balances of livestock and produce, the additions and disposals during the year, the adjustments for changes in valuation, and the calculation of the taxable income from farming activities.
Tax planning refers to the strategic management of financial affairs to minimize tax liabilities within the legal framework. Employee tax, also known as PAYE (Pay-As-You-Earn), is the tax deducted from an employee's remuneration by the employer on behalf of the tax authority. Remuneration includes various payments and benefits received by an employee, excluding certain items specified in Schedule 2 of the Income Tax Act.
When determining the taxable income of farmers, several main considerations come into play. Firstly, the classification of income and expenses is crucial. Farmers need to differentiate between income derived from farming activities and other sources. Farm income may include sales of livestock, produce, and agricultural products. Expenses incurred in operating the farm, such as feed, seed, fertilizer, and labor costs, should be properly accounted for.
Another important consideration is the valuation of livestock and produce. Farmers need to establish the value of their opening and closing livestock and produce balances accurately. This involves determining the market value or the cost of production, taking into account any changes in quantity or quality.
Tax planning involves the strategic management of financial affairs to minimize tax liabilities within the legal framework. It includes various techniques and strategies aimed at optimizing tax positions, such as timing income and deductions, utilizing tax credits and incentives, and structuring transactions in a tax-efficient manner. Effective tax planning can help individuals and businesses reduce their tax burdens and maximize their after-tax income or profits.
Employees tax, or PAYE (Pay-As-You-Earn), refers to the tax deducted from an employee's remuneration by the employer on behalf of the tax authority. Remuneration encompasses all forms of compensation received by an employee, including salaries, wages, bonuses, commissions, allowances, and benefits-in-kind. However, there are certain items excluded from remuneration as per Schedule 2 of the Income Tax Act. Two examples of excluded items are reimbursements of business expenses incurred on behalf of the employer and contributions to pension or retirement funds made by the employer on behalf of the employee.
In conclusion, determining the taxable income of farmers involves considering factors such as income classification, valuation of livestock and produce, treatment of subsidies, and eligibility for specific tax deductions. The farmers' Livestock and produce reconciliation should include opening and closing
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Which of the follows correctly ranks the major rules of liability
(Ultramares,
Section 552, foreseeability standard) in order from least broad to broadest standard for holding accountants liable to third parties for negligence?
A.Section 552,
Ultramares,
foreseeability standard
B.
Ultramares,
foreseeability standard, Section 552
C.
foreseeability standard, Section 552, Ultramares
D.
Ultramares,
Section 552, foreseeability standard
E.
Section 552, foreseeability standard, Ultramares
The correct order from least broad to broadest standard for holding accountants liable to third parties for negligence is:
A. Section 552, Ultramares, foreseeability standard
Section 552 refers to the Restatement (Second) of Torts, which imposes liability on accountants who supply information to third parties for their use. Ultramares is a court case that established a more limited standard for holding accountants liable. The foreseeability standard is the broadest standard, indicating that accountants can be held liable if the harm caused to third parties was reasonably foreseeable.
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By saving and making investments you’ve been able to set aside
$450,000 in an annuity for retirement. If your account earns 3.25% interest,
compounded monthly, how much will you be able to withdraw each month if
you want to be able to make withdrawals for 25 years?
Therefore, the monthly withdrawals required for 25 years is $2,305.63.
Given details
Annuity for retirement = $450,000
Interest rate = 3.25%
Compounding frequency = Monthly Withdrawals required for 25 years
Formula used for calculations
Using the formula to find out the monthly withdrawals required for 25 years:
A = (P * r) / (1 - (1 + r)^-n)
Where, A = Monthly withdrawals required
P = Principal amount (annuity for retirement) = $450,000
r = Monthly interest rate = Annual interest rate / 12
r = 3.25% / 12
n = Total number of payments
n = 25 years * 12
n = 300
calculations
Substituting the values in the formula
A = (450000 * 0.00270833) / (1 - (1 + 0.00270833)^-300)
A = $2,305.63
Note: Monthly interest rate is obtained by dividing the annual interest rate by 12.
This is because the interest is compounded monthly.
Also, the number of payments is obtained by multiplying the number of years by 12 because there are 12 months in a year.
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What promotional trends do you see in response to the predominantly digital and increasingly fragmented marketing communications environment? For example, what new types of media are being used (e.g., Walmart advertising on TikTok)? What new types of noise are present that marketers did not need to contend with in the past?
Promotional trends in response to the digital and fragmented marketing environment include influencer marketing, advertising on emerging platforms, personalized experiences, and the challenge of breaking through ad clutter.
In response to the predominantly digital and increasingly fragmented marketing communications environment, several promotional trends have emerged. One prominent trend is the rise of influencer marketing, where brands collaborate with social media influencers to reach niche audiences. This allows for more targeted and authentic brand messaging.
Another trend is the utilization of new types of media platforms. Brands are exploring advertising opportunities on emerging platforms such as Twitch, where they can engage with younger and more diverse audiences. These platforms offer innovative ad formats and interactive features to capture user attention.
Additionally, marketers are adopting personalized and interactive experiences to cut through the noise and engage consumers. This includes techniques like gamification, augmented reality (AR), and virtual reality (VR), which create immersive brand experiences and enhance customer engagement.
However, with the increasing digital and fragmented landscape, marketers also face new types of noise. Competition for consumer attention is fierce, and consumers are bombarded with a constant stream of information and advertisements.
Marketers must now contend with ad blockers, ad fatigue, and the challenge of breaking through the clutter to grab attention and deliver compelling messages.
In summary, promotional trends in response to the digital and fragmented marketing communications environment include influencer marketing, advertising on new media platforms, personalized experiences, and interactive technologies. Marketers must navigate the noise and find innovative ways to capture consumer attention.
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If you were Engr. Cabillo how will you decide and what is your decision?
To guide you here are some steps to follow.
Identify the problem or opportunity
Analyze the internal and external environment.
Articulate the problem or opportunity
Develop viable alternatives
Evaluate the alternatives
Make a choice and explain reasons for the choice.
As Engr. Cabillo, I would follow the steps provided to make a decision:
Identify the problem or opportunity: The first step is to clearly identify the problem or opportunity at hand. This could involve assessing a specific engineering challenge, such as improving a manufacturing process or addressing a technical issue.
Analyze the internal and external environment: I would conduct a thorough analysis of the internal and external factors that may impact the decision. This includes assessing the resources available, the capabilities of the team, market trends, competition, and any regulatory or environmental considerations.
Articulate the problem or opportunity: Once the problem or opportunity is clearly understood, I would articulate it in a concise and specific manner. This step helps ensure a shared understanding among stakeholders and sets the stage for developing viable alternatives.
Develop viable alternatives: In this step, I would brainstorm and generate multiple alternative solutions or approaches to address the problem or opportunity. It is important to consider a range of options that are feasible, practical, and aligned with the organization's goals and values.
Evaluate the alternatives: Each alternative should be evaluated based on predetermined criteria, such as feasibility, cost-effectiveness, impact on stakeholders, sustainability, and alignment with long-term objectives. This analysis will help identify the strengths and weaknesses of each alternative.
Make a choice and explain reasons for the choice: After evaluating the alternatives, I would select the most suitable option based on the analysis conducted. The choice would be based on a careful consideration of the available information, weighing the potential benefits, risks, and trade-offs associated with each alternative. I would communicate the reasons behind the chosen alternative, providing a clear rationale supported by the analysis conducted.
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Parnell Company acquired construction equipment on January 1, 2020, at a cost of $70,100. The equipment was expected to have a useful life of six years and a residual value of $14,000 and is being depreciated on a straight-line basis. On January 1, 2021, the equipment was appraised and determined to have a fair value of $64,600, a salvage value of $14,000, and a remaining useful life of five years. In measuring property, plant, and equipment subsequent to acquisition under IFRS, Parnell would opt to use the revaluation model in IAS 16.
Assume that Parnell Company is a U.S.-based company that is issuing securities to foreign investors who require financial statements prepared in accordance with IFRS. Thus, adjustments to convert from U.S. GAAP to IFRS must be made. Ignore income taxes.
Required:
Prepare journal entries for this equipment for the years ending December 31, 2020, and December 31, 2021, under (1) U.S. GAAP and (2) IFRS.
Prepare the entry(ies) that Parnell would make on the December 31, 2021, conversion worksheet to convert U.S. GAAP balances to IFRS.
Journal entries for the equipment under U.S. GAAP and IFRS:
Under U.S. GAAP:
December 31, 2020:
Depreciation Expense 9,350
Accumulated Depreciation 9,350
December 31, 2021:
Depreciation Expense 9,350
Accumulated Depreciation 9,350
Under IFRS:
December 31, 2020:
Depreciation Expense 11,420
Revaluation Surplus 2,070
Accumulated Depreciation 9,350
December 31, 2021:
Depreciation Expense 11,420
Revaluation Surplus 2,070
Accumulated Depreciation 9,350
The journal entries reflect the depreciation expense for the equipment for the respective years under both U.S. GAAP and IFRS. Under U.S. GAAP, the equipment is depreciated on a straight-line basis using the original cost, useful life, and residual value. Therefore, the depreciation expense remains constant at $9,350 for both years.
Under IFRS, Parnell Company chooses to use the revaluation model in IAS 16 for subsequent measurement of property, plant, and equipment. This means that the equipment is revalued to its fair value at the end of each reporting period, and the depreciation expense is based on the adjusted carrying amount. In this case, the fair value of the equipment is $64,600, and the revaluation surplus is the difference between the fair value and the carrying amount. The depreciation expense under IFRS is higher at $11,420 for both years due to the increased carrying amount after revaluation.
Step 3: On the December 31, 2021, conversion worksheet to convert U.S. GAAP balances to IFRS, the following entry would be made:
Revaluation Surplus 2,070
Accumulated Depreciation 2,070
This entry recognizes the revaluation surplus resulting from the difference in carrying amount under U.S. GAAP and IFRS. The accumulated depreciation is adjusted accordingly to reflect the higher carrying amount after revaluation under IFRS.
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Newing plc (Newing) is a construction company constructing homes and apartments. In its financial statements for the fiscal year ended on 31 December 2021, Newing recognised revenue for the following construction contract: At the beginning of 2021, Newing entered into a contract with a local government authority. The contract specified that Newing would construct an apartment building for people with disabilities on land owned by the government authority. To accommodate the preferences of the government authority, Newing arranged several meetings before the contract was signed. At these meetings, the parties discussed, for example, size of the apartments and rooms, the possibility of creating communal areas and the installation of exclusively designed equipment that some of the future tenants require. The government authority agreed to a price of £1,850,000 and will pay the entire amount upon completion. At the end of 2021, Newing has incurred costs in relation to the contract of £978,000 of which £718,000 relate to work performed in fiscal year 2021. Newing expects total costs to amount to £1,350,000 and will complete the construction of the apartment building by the end of fiscal year 2022.
Newing wants to measure progress based on costs incurred for work performed to date. Identify and explain the methods to measure progress that are allowed under IFRS 15 and provide an example of each that applies to the above construction of the apartment building.
The two methods allowed under IFRS 15 to measure progress for the apartment building construction are the Percentage of Completion (POC) method and the Output method. POC measures progress based on costs incurred, while the Output method focuses on achieving specific milestones.
Under IFRS 15, the following methods can be used to measure progress for long-term construction contracts like the apartment building:
1. Percentage of Completion (POC) Method: This method measures progress based on the proportion of costs incurred for work performed to date relative to the total estimated costs. The POC is typically determined by comparing actual costs incurred with the total estimated costs. For example, if Newing has incurred £718,000 out of the total estimated costs of £1,350,000, the POC would be (718,000 / 1,350,000) * 100 = 53.19%.
2. Output Method: This method measures progress based on the achievement of specific outcomes or milestones. It focuses on the physical progress of the construction project rather than the costs incurred. For example, Newing could measure progress based on the completion of specific stages of the apartment building, such as the foundation, framing, or installation of equipment.
It's important to note that Newing's chosen method for measuring progress should be consistent with the pattern of transfer of control over the construction project to the customer. The method should reflect the actual progress towards completion and be reliable in representing the value of work performed at any given point in time.
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Operating cash flow is not the same as net income. Essential reason(s):
a Expenses are matched to revenue
b Revenue is booked at sale
c Capital expenditures don't count against profit
d All of the above
The essential reason(s) for this is that expenses are matched to revenue, revenue is booked at sale and capital expenditures don't count against profit. Therefore, the correct option is d, "All of the above".
What is the reason?The operating cash flow is the money generated from operations. It indicates how much cash is produced by the activities of the business.
Net income is a measure of the profit or loss of a company over a certain period of time. While net income is a crucial performance metric, it does not reflect the company's liquidity.In addition to its use in analyzing financial statements, operating cash flow is often used by business owners and investors to evaluate a company's cash-generating capacity and to decide whether to make an investment.The matching principle is a fundamental accounting concept that dictates that expenses are recorded in the same accounting period as the revenue they generate. For example, if a company sells a product in March but doesn't receive payment until April, it will record the sale in March and the payment in April. Revenue is therefore recognized only when the company provides goods or services to customers and the related earnings are probable and can be measured.Cash flow from operating activities is a useful measure for determining a company's overall financial health. It shows how much money the company produces from its core business activities, excluding financing and investing activities. Capital expenditures, on the other hand, are expenses incurred by a company to buy, improve, or maintain long-term assets such as equipment or property.These expenditures are not included in net income because they are not considered a cost of doing business.
Hence, option d. is correct.
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