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Elza [17]
4 years ago
8

Webster and Moore paid $148,000, in cash, for equipment three years ago. At the beginning of last year, the company spent $21,00

0 to update the equipment with the latest technology. The company no longer uses this equipment in its current operations and has received an offer of $96,000 from a firm that would like to purchase it. The firm is debating whether to sell the equipment or to expand its operations so that the equipment can be used. The equipment, including the updates, has a book value of $44,500. When evaluating the expansion option, what value, if any, should the firm assign to this equipment as an initial cost of the project?
Business
1 answer:
vovikov84 [41]4 years ago
4 0

Answer:

The detailed answer is given below;

Explanation:

The company has received an offer of $96,000 for equipment. It means that if the equipment is sold in market, it will fetch a revenue of $96,000.

Whereas the company is thinking for expansion option, in such case the cost of equipment for that project will $96,000 because as per definition of opportunity cost, this system if not used in expansion; can readily be sold out in market for $96,000.

Therefore the relevant cost for the project shall be $96,000 because this is the amount that Webster and Moore can loose if not sold in the market.

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$(4,000)

Explanation:

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8 0
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Below are the simplified current and projected financial statements for Decker Enterprises. All of Decker's assets are operating
Mkey [24]

Answer:

Decker Enterprises

Based on the projections, Decker will have:___________:

b.) a financing surplus of $36

Explanation:

a) Data and Calculations:

Income Statement            Current        Projected

Sales                                     na              1,500

Costs                                    na              1,050

Profit before tax                   na                450

Taxes                                    na                 135

Net income                           na                315

Dividends                              na                95

Balance sheets    Current  Projected                          Current   Projected

Current assets        100        115          Current liabilities 70          81

Net fixed assets   1,200    1,440          Long-term debt 300      360

                                                             Common stock 500      500

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Total                    1,300     1,555            Total              1,300     1,591

b) Financing surplus             36

c) Decker Enterprises does not need additional financing, but has excess financing because the Liabilities and Equity are greater than the assets.

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