In a traditional economy option C
A banker's acceptance is the payment guaranteed by a bank for a time draft that is payable to a seller of the goods.
A banker's acceptance is a short-term investment plan that is created by a company or firm with a guarantee from a bank. It is important that the company or firm is a non-financial firm. It is a guarantee that the bank gives that a buyer will pay the seller the amount at a future date. A good rating is a prerequisite for obtaining the banker's acceptance.
This is very useful, especially during foreign trade. During foreign trade, the creditworthiness of the importer is not known. The period of the banker's acceptance is usually lesser than 180 days. These acceptances are traded at discounts from the face value in the secondary markets. So, the banker's acceptance acts as a negotiable time draft.
This guarantee from the bank is a written promise by the bank to the seller to pay the sum specified if the buyer is not able to do so. This promise is backed by the bank so the seller feels confident in exporting his goods. As it is safe and liquid, the return on the banker's acceptance is low.
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Explanation:
The journal entry to record the estimated uncollectible accounts is shown below:
Bad debt expense Dr $7,500
To Allowance for uncollectible accounts $7,500
(Being the bad debt expense is recorded)
The computation is shown below:
= Estimated amount for uncollectible accounts - credit balance in allowance for uncollectible accounts
= $12,000 - $4,500
= $7,500
Answer:
Cost recovery deductions do not have relationship to any decline in value of the property to which the deduction relates.
Explanation:
Capitalised costs are the cost that is incurred when building and financing a fixed asset. For example labour cost in building and financing an asset.
These expenses are added to the cost of the asset (capitalised) and taken gradually over time through depreciation, depletion, and amortization. They are not taken out of revenue in the period when they were incurred.
So cost deductions through capitalised cost is not related to the value of the asset but is an expense that is incurred in relation to the asset, and it's payment is spread out over time.
For example if $1,200 is incurred on construction of an asset worth $500,000. If $1,200 is capitalised over 12 months $100 will be deducted each month from expense. This does not affect the value of the asset ($500,000).
