Writing off an uncollectible account affects only balance sheet accounts under the allowance method.
Answer:
Economic profit= $25,000
Explanation:
Giving the following information:
Last year he earned $200,000 in total revenues and paid $125,000 to his employees and suppliers.
Job offer= $50,000 per year
The economic profit takes into account the opportunity cost of other options.
Economic profit= 200,000 - 125,000 - 50,000
Economic profit= $25,000
Solution :
We know that the exchange takes place when the FMV receive is equal to the FMV given up.
Where the FMV = fair market value
The commercial substance means the future cash flows exchange.
The non monetary exchange refers to the cash which is less than 25% of the fair value exchange.
The journal entries for the Santana Corp. when the exchange lack the commercial substance are reported as :
Transaction Debit ($) Credit ($)
Asset(new) 11,000
Accumulated depreciation(old) 9,000
Asset (old) 28,000
Cash 2000
The journal entries for Delaware Corp. when the exchange lacks the commercial substance.
Transaction Debit ($) Credit ($)
Asset(new) 16,000
Accumulated depreciation (old) 10,000
Loss 2500
Assets (old) 28,000
