Answer:
(a) $2.14 million; $3.45 million
(b) $1.3 million; $4.15 million
Explanation:
Given that,
(a) Book value of current assets = Net working capital + current liability
= $0.54 million + $1.6 million
= $2.14 million
Total book value of current and net fixed assets:
= Book value of current assets + Book value of net fixed assets
= $2.14 million + $3.45 million
= $5.59 million
(b) Market value of current assets:
= Cash value of all the current assets today
= $1.3 million
Market value of net fixed assets:
= Selling value of machinery today
= $4.15 million
Total market value:
= Market value of current assets + Market value of net fixed assets
= $1.3 million + $4.15 million
= $5.45 million
Answer:
Option A and B
Explanation:
The company desires to estimate the cost of the job so that it can minimize it by emphasizing control. This is one of the major reasons why the companies estimate cost of the job, product or service. So option A is correct.
Option B is also correct because the companies have to form contracts with its customers and for that reason predetermined overhead rates helps a lot estimating the price of the product which the company and customer can agree upon.
Option C is incorrect because predetermined costs are estimates and estimates are not always accurate.
Option D is false because daily recording of overheads requires predetermined overhead rates which is adjusted at the month end or quarter end or year end. So its not useless at all.
Answer:
Which party to the exchange must pay boot to make the exchange work?
- Rufus must pay boot since the FMV of its property is less than the FMV of Hardy's property.
How much boot must be paid?
- $90,000 - $77,500 = $12,500
Assuming the boot payment is made, how much gain or loss will Rufus realize and recognize on the exchange, and what tax basis will Rufus take in the property acquired?
- Rufus doesn't have any gain, and the tax basis for the new asset will be $50,000 + $12,500 = $62,500
Assuming the boot payment is made, how much gain or loss will Hardy realize and recognize on the exchange and what tax basis will Hardy take in the property acquired?
- Since Hardy's property basis is $60,000 and it would be receiving $50,000 (Rufus's property) + $12,500 = $62,500, then it must recognize a $2,500 gain. The basis of Hardy's new property will be $62,500.
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