Answer:
$54,000
Explanation:
Eliza's share of net income = $40,000 ÷ 2
= $20,000
Eliza made withdrawals = $21,000
Eliza capital = $55,000
Eliza’s capital account balance at the end of the year:
= Eliza capital - Eliza withdrawals + Net income share of Eliza
= $55,000 - $21,000 + $20,000
= $54,000
Therefore, the Eliza’s capital account balance at the end of the year is $54,000.
Answer:
$5,896,778
Explanation:
The computation of the increase value in the liabilities section is shown below:
= Present value of the first liability due in one year + Present value of the second liability due in three years
= $1,388,889 + $4,507,889
= $5,896,778
For computing the increase value in the liabilities we simply added the present value of two liabilities given in the question
Answer:
The term used to describe the reduction of the balance owed on a loan with each payment made over a period of time is:
d. amortization.
Explanation:
Amortization of a loan is the gradual reduction of the balance owed on a loan because payments are being made over a period of time. Each payment is, therefore, a reduction of the borrowed fund. This gradual reduction through periodic payments is called amortization of the borrowed fund. Loan amortization, therefore, implies the spreading out of the loan payments over time. It is not the same as asset amortization, which is a kind of depreciation.
Answer:
Explanation:
Under GAAP, every cost incurred should be classified into either period cost or product cost, where:
Product Cost:
The cost business has incurred right now, but will benefit from it in future for e.g. raw materials used to manufacture something which will be sold in next period (by the way period means the time span for which business is reporting its performance like year or quarter). these generally include direct labor, materials and manufacturing over heads
these costs should be capitalized and expensed out in future as the inventory is used.
Period Cost:
all other costs from which business has benefited completely in current period, including admin sales and distribution related costs
these should be expensed out in current period.
for warehousing costs, if they pertain to raw materials and semi finished goods they will be capitalized but if they pertains to finished goods they will be expensed out (as there is no benefit expected from them in future now)
for research and development, every research cost should be expensed out for e.g. feasibility studies under GAAP, but if product found to be commercially viable then the development costs can be capitalized as intangible asset(with the same logic as these will be exactly like manufacturing costs for tangible products).
