The net income of edwards corporation amounted to $74,000 for this year. the beginning balance ofâ stockholders' equity was $31,
1 answer:
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Answer:
d. A larger fixed assets turnover ratio and a larger gain on asset disposal
Explanation:
Accelerated depreciation is a method of depreciation whereby the book value of an asset is rapidly depreciated or reduced i.e at an accelerated rate.
This method usually minimizes taxable income in the initial years as a higher amount of depreciation is claimed.
Fixed assets turnover ratio refers to what percentage of net sales is attributable to an entity's fixed assets. It is expressed as:
Gain on sale of asset disposal = Sale value - Book Value
Book Value = Cost less accumulated depreciation till date
As can be seen, Average fixed assets balance would reduce thereby increasing fixed assets turnover ratio.
Similarly, due to higher depreciation charged, Book Value would be comparatively less, which would lead to larger gain on assets disposal in the initial years.
Answer:
6.78%
Explanation:
Data provided in the question:
Total return i.e nominal rate = 15% = 0.15
Real return = 7.7% = 0.077
Now,
Inflation rate = - 1
on substituting the respective values, we get
Inflation rate = - 1
or
Inflation rate = [ 1.15 ÷ 1.077 ] - 1
or
Inflation rate = 0.0678
or
Inflation rate = 0.0678 × 100% = 6.78%