Answer:
(A) $425,000
(B) $24,350
Explanation:
(a) Average Operating Assets:
= (Beginning Operating Assets + Ending Operating Assets) ÷ 2
= ($390,000 + $460,000) ÷ 2
= $425,000
Therefore, the average operating assets is $425,000.
(b) Residual Income:
= Operating Income - (Minimum Rate of Return × Average Operating Assets)
= $66,850 - (10% × $425,000)
= $66,850 - $42,500
= $24,350
Answer:
The correct answer is the option B: False.
Explanation:
To begin with, if Phoebe would have openness to experience she would have known that all those characteristics that she does not possess in her personality are essential and quite critical to have in order to be a good manager of an organization and also in order to have openness to experience due to the fact that only the experience will tell that without all those a manager will eventually fail with no doubt. Therefore that she does not possess openness to experience because of the fact that she is conventional and resistant to change.
The computation is shown below:
The amount which is to be recovered is equal to the purchase amount i.e $650,000
The present value of bargain purchase option is
= $150,000 × Present value factor at 6% for 6th period
= $150,000 × 0.704961
= $105,744
The amount to be recovers through periodic lease payment is
= $650,000 - $105,744
= $544,256
And, the annual lease payment is
= Recovered amount through periodic lease payment ÷ Cumulative Present value factor for annuity due at 6% for 6 periods
= $544,256 ÷ 5.212364
= $104,416