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2 years ago

The journal entry for recording payment for the short-term lease of a fixed asset would?

1 answer:

3 0

The finance lease is the journal entry can be created by debiting the lease asset account and crediting the lease liability account. The amount of lease asset or lease liability recorded in this journal entry is the fair value of total lease payments.

Because short-term leases are not capitalized, no depreciation expense on the right of use asset or finance cost on the lease liability is recognized. Payments on short-term leases are expensed by the less on a straight-line or other systematic basis.

Debit the appropriate fixed asset account and credit the capital lease liability and account with the amount.

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The management of McCord Corp. makes an announcement that the top three employees of the firm will be rewarded with expensive gi

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Answer: Expectancy Theory

Explanation: Expectancy theory formulates that a person will conduct oneself in a specific manner as he or she is motivated to choose a particular behavior over others because of what they regard the outcome of the behavior that is selected as likely to be.

Here, the management of McCloud Corp utilizes the expectancy theory to make the workers develop the quality of their work and put in extra effort to the work . However, this theory is aimed at giving rewards to workers who earned them and also chose to get rewarded as they are chosen by their performance. The inspiration for the behavior preference is deduced by how appealing the result is.

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4 years ago

In a market system, the allocation of scarce goods involves the consideration of multiple choice 1 what must be sacrificed in us

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Answer:

what must be sacrificed in using a resource for its next-best use

Explanation:

The market cost would be managed by the clients also it would remember the advantage that is best Also it is remembered in order to support the satisfaction to their own decisions.

So in the case of the market system, the allocation of the scarcity goods would be based on the opportunity cost i.e. to be sacrificed for the next best usage

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3 years ago

Assume that your roommate, Linda, is very messy. Suppose she gets a $100 benefit from being messy but imposes a $200 cost on you

Readme [11.4K]

Answer:

B) to pay your roommate at least $100 but no more than $200 to clean up after herself

Explanation:

According to the Coase theorem, you should work a solution that benefits both Linda and yourself. Since Linda's benefits for being messy = $100, and your costs for her being messy = $200, then you should offer Linda an amount of money that is between $100-$200 so that she cleans her mess.

The Coase theorem states that disputing parties should negotiate an economically optimal solution, regardless of what originated the problem or who had the property rights at the beginning.

In this case Linda is responsible for all the mess but it will not help you to just complain about it, instead you should find an economical solution to the problem.

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4 years ago

D. L. Tuckers has $48,000 of debt outstanding that is selling at par and has a coupon rate of 6.75 percent. The tax rate is 35 p

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Answer:

$16,800 ($1,134 tax shield discounted at 6.75% to infinity)

Explanation:

Since debt interest payment is tax deductible, D.L. Tuckers, will enjoy an annual tax shield from the interest payment. This is computed as follows.

Debt Outstanding: $48,000

Interest payment: 6.75% * $48,000 = $3,240

Let's assume the in a given year, the profit of the Company was $x.

The tax payable on the profit (without the shield from debt interest) would be

= $x * 35% = 0.35x

However, due to the tax shield, the taxable profit of the Company will be reduced by the interest payment.

Taxable Profit = $x - $3,240

Tax payable = 35% * (x - 3,240) = 0.35x - 1,134

Thus, as a result of the tax shield from interest payment, the tax payable by the company is reduced by $1,134. This will recur annually since the company intends to keep this level of debt financing for the foreseeable future.

The effective interest payable (after tax) can also be computed using the formula below.

Effective after tax interest = $Debt Interest * (1-Tax Rate)$

= $3,240 * (1 - 35%)

= $3,240 * 65% = $2,106.

With an effective after tax interest of $2,106, the tax shield is the difference between the actual interest and the effective after tax interest

Tax shield = $3,240 - $2,106 = $1,134

Therefore, the present value of the tax shield is derived by discounting the tax shield with the appropriate discount rate, assumed to be the coupon rate in this case.

PV of Tax shield = $\frac{Tax Shield}{Coupon Rate}$

= $\frac{1,134}{0.0675}$

PV of Tax Shield = $16,800.

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4 years ago

2.3 The Ledger and Posting

blsea [12.9K]

The net change in the Cash account balance from these three transactions is $30,000

What is the company's net change in cash account balance?

The net change in company's cash balance is the excess of its cash inflows from sources minus its cash outflows from all sources, in other words, the net change in cash balance from the three transactions is the funds raised long-term debt issuance and the amounts paid for equipment and raw materials

net change in cash balance=$200,000-$150,000-$20,000

net change in cash balance=$30,000

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2 years ago