Answer:
$11,200
Explanation:
As not mentioned in the account. It is Assumed that the Larry and Bird are related parties and Bird made a sale at a transfer price of $40,000 with $24,000 cost of inventory.
Bird can only recognize the equity up to the ratio of inventory used or sold by the related party.
As 30% was not consumed then consumption will be 70%, so 70% of the income is realized and it will be recorded.
Equity Income = $40,000 - $24,000 = $16,000
Realized Equity income = $16,000 x 70% = $11,200
* There is some ambiguity in the question given.
Answer:
B) a loss contingency of $5,400,000 and disclose an additional contingency of up to $3,600,000.
Explanation:
The company should make the loss occur at this accoutning cycle as the current information states it will be a reasonable amount.
It should however make an additional disclosure but not a journal entry for the difference which isn't posted as it may occur and people willing to invest or lend the firm should be aware of these potential loss figures.
Reducing interest rates means that interest is less, which in turn means more money for people to spend so yes I would say it increases the money supply.
