If the “asset” price is $3.50 and the “strike” price is $3.75, how much of the premium cost is its “intrinsic” value?

Brief Exercise 233 Kinney Company purchased a truck for $66,000. The company expected the truck to last four years or 100,000 mi

babunello [35]

Answer:

$15,660

$16,500

Explanation:

Depreciation expense using the double declining method = Depreciation factor x cost of the asset

Depreciation factor = 2 x (1 / useful life)

2 x (1 / 4 ) = 0.5

The depreciation expense in the first year = 0.5 x $66,000 = $33,000

Book value = $66,000 - $33,000 = $33,000

The depreciation expense in the second year = 0.5 x $33,000 = $16,500

The Units of production method = (miles driven in the second year / estimated total miles that can be driven) x (Cost of asset - Salvage value)

(27,000 / 100,000) × ($66,000 - $8,000)

= 0.27 x $58,000 = $15,660

I hope my answer helps you

4 0

3 years ago

. In a sole proprietorship, the owner a. has full liability for all business debts and obligations. b. has limited liability, on

bazaltina [42]

Answer:

A

Explanation:

A sole proprietorship is a type of business that is owned by one person

Characteristics

1. it is owned by one person

2. the business has unlimited liability

3. the business has limited access to capital

4. the business usually lacks continuity. this type of business usually ceases to exist when the owner dies

5. the business is usually not separated from the owner

Advantages of sole proprietorship 

They are easy to establish
The owner has complete control over ownership

Disadvantages of sole proprietorship

It has a limited life span. The business usually ends when the owner dies
the owner has an unlimited liability

3 0

3 years ago

Consider the market for pens. suppose that increased medical concerns over lead pencils have led schools to steer away from penc

Len [333]

Answer: Rise in price of pens. Change in quantity unambiguous

Explanation: When schools steer away from pencils in favor of pens, the demand for pens will increase in the market. This will lead to a rightward shift in the demand curve for pens.

While, a rise in price of ink an input in pen production will increase the cost of pen production. This will lead to fall in the supply of pens, shifting the supply curve upward to the left.

The net effect of this change is a rise in the price of pens. However, the change in quantity cannot be determined.

When shift is demand is greater than shift in supply curve, quantity will rise.

When shift is demand is less than shift in supply curve, quantity will fall.

7 0

4 years ago

Mistine is a direct selling cosmetics firm based in Thailand. Originally, it made a name for itself selling an affordable produc

spayn [35]

I’m fighting this out for you

5 0

3 years ago

Carrying Amount $120,000 Selling Price $80,000 Costs of Disposal $5,000 Expected Future Cash Flows $90,000 Present Value of expe

frez [133]

Answer:

$35,000

Explanation:

Under IAS 36, an asset is said to be impaired where the carrying amount is more than the recoverable amount.

The recoverable amount is the higher of the fair value less cost to sell or the value in use which is the present value of the expected future cashflow.

Given that;

Carrying Amount = $120,000

Selling Price = $80,000

Costs of Disposal = $5,000

Hence fair value less cost to sell = $80,000 - $5,000 = $75,000

Expected Future Cash Flows = $90,000

Present Value of expected future cash flows = $85,000 ( this is the value in use)

Recoverable amount = $85,000 (since the value in use is higher that the fair value less cost to sell)

This is lower than the carrying amount hence the asset is impaired.

Impairment = $120,000 - $85,000

= $35,000

8 0

3 years ago