Answer: Higgins should report this litigation as a contingent liability.
Explanation: A liability that is contingent upon an event, that is, dependent on a future event that may or may not happen is called contingent liability. Potential law suits, pending investigations are some of the examples of contingent liability.
A contingent liability will only be recorded if there is likely probability that the event on which such liability depends will occur and the amount of liability could be reasonably estimated.
Answer:
Explanation:
The correct amounts are shown below:
1. Assets = Asset balance - depreciation + service revenue
= $60,000 - $925 + $1,500
= $60,575
2. Liabilities = Liabilities balance + employees wages earned
= $20,000 + $410
= $20,410
3. Stockholders' Equity = Equity balance - depreciation + service revenue - employees wages earned
= $40,000 - $925 + $1,500 - $410
= $40,165
4. Net Income = Net income balance - depreciation + service revenue - employees wages
= $9,000 - $925 + $1,500 - $410
= $9,165
Answer:
2.83%
Explanation:
P0 = $6,700,000
Cost of equity Ke = 8%
So, value of this perpetuity 6 years form now is P6 = P0*(1+Ke)^6
= $6,700,000*(1.08)^6
= $6,700,000*1.58687432294
= $10632057.96
Free cash flow at year 7 (FCF7) = $550,000
So, using constant growth model, g = Ke - FCF7 / P6
g = 0.08 - 550000/10632057.96
g = 0.08 - 0.05173034
g = 0.02826966
g = 2.83%
Thus, the growth rate required for the continuation value (terminal value perpetuity) term is 2.83%.
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Answer:
Hend's ownership percentage after Fatima is admitted is 28%.
Explanation:
Since on Jan 1, Athari and Hend are partners with capital balances of 40,000 and 20,000 and they share profits and losses in the ratio of 3: 2 respectively, and on this date, Fatima invests 20,000 in cash for a 15 percent interest in the partnership, to determine Hend's ownership percentage after Fatima is admitted, the following calculation must be performed:
40,000 + 20,000 = 100%
100 - 15 = 85
60,000 = 85
20,000 = X
20,000 x 85 / 60,000 = X
28,333 = X
Therefore, Hend's ownership percentage after Fatima is admitted is 28%.
