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3 years ago

According to the Fair Value framework and to the lecture, what should companies try to do?

Business

1 answer:

Flauer [41]3 years ago

5 0

Answer:

c. Offer fair value on two bundles and offer better than fair value on the other bundle

Explanation:

According to the Fair Value framework companies should try to Offer fair value on two bundles and as well try to offer better than fair value on the other bundle which simply means that in a situation where their are two bundles companies should tend to offer fair value on them and they should as well offer something that is far better than fair value on other bundle.

Therefore Fair value can be seen as an estimated price in which either asset or liability can be sold out or settled to a third party under recent and current market conditions.

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George and Dan's political consulting firm is losing money, but it is more than covering its variable costs. What is the most ac

aniked [119]

Answer:

- It will go out of business in the long run.

Explanation:

If George and Dan's political consulting firm is losing money, but it is more than covering its variable costs, then the most accurate statement we can make about it is that: It will go out of business in the long run.

In the SHORT RUN, as long as the firm is covering variable costs, it means that the firm is able to generate normal profit or contribution that takes care of part or all of its fixed costs. It will stay in business

In the LONG RUN, the firm will only continue to operate if it can make normal profits

Normal profit occurs when the difference between a company's total revenue and combined explicit and implicit costs are equal to zero.

Since George and Dan's political consulting firm cannot cover fixed costs, it will go out business in the long run.

3 0

3 years ago

8. Chocolates bought at 5 for £6 are sold at 2 for £3, find:

s344n2d4d5 [400]

1. Divide price by quantity:

6/5 = 1.20 each

2. 3/2 = 1.50 each

3. profit/ loss = sold - purchased price

1.50 - 1.20 = 0.30 profit

4 0

2 years ago

A manager of a store that sells and installs spas wants to prepare a forecast for January, February, and March of next year. Her

Andreas93 [3]

Answer:

JANUARY = 218.28

FEBRUARY = 184.8

MARCH = 207.36

Explanation:

Trend component of demand equation :

Ft = 90 + 6t, where t = 0 in June of last year

Seasonal relatives are ;

1.07 for January

0.88 for February

0.96 for March

Forecast for January, February and March of next year:

JANUARY :

last year June, 't' = 0,

[last year - this year - next year]

Therefore January of next year, 't' = 19

Ft = 90 + 6(19) = 204

Forecast = Ft × seasonal relative

Forecast = 204 × 1.07 = 218.28

FEBRUARY :

Therefore January of next year, 't' = 20

Ft = 90 + 6(20) = 210

Forecast = Ft × seasonal relative

Forecast = 210 × 0.88 = 184.8

MARCH:

Therefore January of next year, 't' = 21

Ft = 90 + 6(21) = 216

Forecast = Ft × seasonal relative

Forecast = 216 × 0.96 = 207.36

3 0

3 years ago

A firm whose production process exhibits constant returns to scale would find that if it doubled all of its inputs, its output w

Tom [10]

If the returns are constant to scale, the output increases by the same as the increase in inputs, therefore, it would double.

7 0

3 years ago

The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2021. The compan

Digiron [165]

Answer and Explanation:

Journal entries

Mar.31

Dr Investment in Distribution Transformers shares $ 400,000.00

Cr Cash $ 400,000.00

Sept.1

Dr Investment in American Instruments bonds $900,000.00

Cr Cash $900,000.00

Sept.30

Dr Cash ($400,000 x 8%/2) $ 16,200.00

Cr Investment revenue $ 16, 000.00

Oct.2

Dr Cash $ 425,000.00

Cr Investment in Distribution Transformers $ 400,000.00

Cr Gain on sale of investments $ 25,000.00

Nov.1

Dr Investment in M&D Corporation shares $1,400,000.00

Cr Cash $1,400,000.00

Dec.31

Dr Investment revenue receivable $ 30,000.00

Cr Investment revenue ($900,000 x 10% x 4/12) $ 30,000.00

Dec.31

Dr Investment revenue receivable $ 14,000.00

Cr Investment revenue ($1,400,000x 6% x 2/12) $ 14,000.00

Dec.31

Dr Fair value adjustment (calculated below) $ 10,000.00

Cr Net unrealized holding gains and losses–OCI $ 10,000.00

Available for sale securities Cost Fair market Value Profit/Loss

M & D Corporation shares

$1,400,000.00 $ 1,460,000.00 $ 60,000.00

American Instruments bonds $900,000.00 $850,000.00 ($50,000.00)

Totals $2,300,000.00 $2,310,000.00 $ 10,000.00

Income Statement

Investment Revenue = $16,200 + $30,000 + 14,000 $ 60,200.00

Gain on sale of investments $ 25,000.00

Statement of comprehensive income

Net unrealized holding gains and losses on investments $ 10,000.00

Balance sheet:

Current Assets

Investment revenue receivable $ 30,000.00

Securities available-for-sale $2,300,000.00

Add: Fair value adjustment $ 10,000.00 $2,310,000.00

Shareholders’ Equity

Net unrealized holding gains and losses on investments $ 10,000.00

6 0

3 years ago