All categories

3 years ago

Product warranties are an expense of the period in which the product is sold

Business

1 answer:

Lelechka [254]3 years ago

4 0

Answer:

The statement is false. The correct option is B.

Explanation:

The statement is false because the product warranties are those warranties which are provided at the time of sale of the product but they are not expensed in the account in the period when the product is sold as these warranties are claimed by the customer when they face any defect in the product so it is uncertain in which year this will happen. So, they will be expensed when the customer will claim the product warranty.

Therefore, the correct option is B.

You might be interested in

Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at

Alja [10]

Answer:

1st Plan Earning per Share $ 1.80

2nd Plan Earning per Share $ 2.30

The Second Plan provides better earnings per share.

Explanation:

1st Plan:

Income before Interest and taxes 1,008,000

Bonds Payable Interest: (144,000)

Income before taxes 864,000

Income tax expense (345,600)

Net Income 518,400

Quantity of Common Stock:

$ 1,440,000 / $5 = 288,000

Earing per share:

518,400 / 288,000 = $1.80

2nd Plan:

Income before Interest and taxes 1,008,000

Bonds Payable Interest: (72,000)

Income before taxes 936,000

Income tax expense (374,400)

Net Income 561,600

Preferred Shares Dividends (120,000)

Available for common stock 441,600

Quantity of preferred Stock:

$1,200,000 / $10 =120,000 shares

Dividends on Preferred Shares:

120,000 x $1 = 120,000

Quantity of Common Stock:

$ 960,000 / $5 = 192,000

Earing per share:

441,600 / 192,000 = $2.30

3 0

3 years ago

Crane Company purchased equipment on January 1 at a list price of $120000, with credit terms 4/10, n/30. Payment was made within

Brrunno [24]

Answer:

The cost of equipment = $127,650

Explanation:

According to International Accounting Standards (IAS) 16, property plants and equipment, the cost of land includes all of the cost necessary to bring and make it ready for the intended use.

These costs include purchase cost, fees and commission associated with the purchase transaction.

Here in this question the installation charges, sales taxes and the cost of concrete slab all fall within the definition of IAS 16

The quotation 4/10, n/30 implies that if payment is made within =10 days, Crane would get 4% off the initial purchase price.

Since the payment was made within the discounted period, the net purchase price would be

Purchase price = 120,000 - (4%× 120,000)= 115,200

The cost of equipment = 115,200 +4,750 + 2,100 + 5600= 127650

The cost of equipment = $127,650

4 0

3 years ago

Under a divorce decree executed in 2019, Duron is required pay $800 of alimony and $400 of child support each month for the next

pashok25 [27]

Answer:

The total monthly payments that are deductible by Duron are:

$1,200 each month for the next 10 years.

Explanation:

According to the IRS rules, if Duron pays his ex partner payments each month which are not documented by the court, the money is not tax deductible. Therefore, it is beneficial for Duron to receive a court order to pay the additional alimony if Duron plans on enjoying a tax deduction for the additional spousal support of $200.

4 0

3 years ago

Clemens Inc. is considering a $100 million investment in a new line of soft drinks. However, $100 million is a huge investment f

BARSIC [14]

Answer:

Expand

Explanation:

Since future market demand is not ceratin so company use to invest portion of fund to determine demand of product and opportunity in market. if they find that there is demand and opportunity in market then they invest large amount.

This process is called real option to Expand the business.

Hence, option (expand) is correct answer.

6 0

3 years ago

On January 1, year 1, Dave received 1,000 shares of restricted stock from his employer, RRK Corporation. On that date, the stock

butalik [34]

Answer:

Taxes on January 1, year 1= $1400

Taxes on Dec 31, year 4=$3300

Explanation:

The question relates to 'EQUITY GRANT', which is some sort of compensation given to somebody, especially/specifically to employees of an entity provided that certain conditions/vesting requirements are satisfied by the employee.

Now on January 1, year 1 Dave has received 1000 shares, for him the shares received is treated is income for Dave, as the shares are being offered against certain services rendered by Dave to RRK corporation. So on January 1 Dave would record income and pay income tax as follows:

Value of shares on Jan 1/ income= 1000×$7

Value of shares on Jan 1/ income= $7000

Lets assume income tax is 20% and marginal tax rate is 10%, the tax consequences would be as follows:

TAXES = $7000×20%

TAXES = $1400

There will be no tax consequences at the vesting date and at the end of year 4 (the date when he sells them) there will be tax consequences of $4000.

At year 4 = 1000×$40

Amount realized= $40000 -$7000

Taxes at marginal rate= $33000×10%

Taxes at marginal rate= $3300

(Note: $7000 is subtracted because it's already present in $40000).

8 0

3 years ago