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lilavasa [31]
3 years ago
8

A purchaser of the assets of a business must allocate the purchase price to the individual assets in accordance with the written

agreement between the purchaser and the seller. Which of the following assets would be least preferred for purposes of allocating value from the purchaser point of view?
Business
1 answer:
Irina18 [472]3 years ago
4 0

Answer:

The "Goodwill Asset" will be least preferred

Explanation:This is because

All the other assets i.e buildings, equipments, inventory are tangible in nature and can be easily valued in the market and fair value of these assets can be identified in the market.

These assets can be measured on the basis of their physical presence, location of building, present condition of equipment, or per demand of the inventory or obsoleteness etc.

Whereas "Goodwill" is intangible in nature, it is many times "Self generated". Assets by an entity are based on the relationship with the suppliers, creditors, debtors or with their clients or on any other basis. Therefore the valuation of goodwill why the purchaser cannot be done easily and the valuation can prove to be incorrect.

Hence, the purchaser preffers Goodwill the least for the purpose of valuation of assets and it is considered "balancing figure" during this transaction between purchaser and seller.

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A company pays $35,000 per period to rent a small building that has 12,000 square feet of space. This cost is allocated to the c
Alexus [3.1K]

Answer: $7,000

Explanation:

As the question says, a total of $35,000 is paid for 12,000 square feet of space and that the rent is apportioned on the basis of space.

Department One occupies 2,400 square feet of that space.

Calculating the proportion it occupies is,

= 2,400/12,000

= 20%

Since it occupied 20% of the total space then it should be charged 20% of the rent bill.

= 20% * 35,000

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Department One should be charged rent expense for the period of $7,000.

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Gideon Company uses the direct write-off method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off
zloy xaker [14]

Answer and Explanation:

The Journal entry is shown below:-

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When the demand curve for a good is unit elastic, raising the price of the good by 25 percent will change the revenue of the fir
san4es73 [151]

Answer: 0%

Explanation:

Elasticity measures the change in demand resulting from a change in price. The law of demand holds that when prices increase, quantity demand would decrease and elasticity is meant to show the magnitude of this change.

A unit elastic good means that prices and quantity demanded change by the same amount. This means that for a unit elastic good, if the price change is a 5% increase, the quantity demanded will decrease by 5%.

In terms of revenue, if the price increases by the same amount that quantity demanded decreases, the effects will cancel out so there will be no revenue effect.

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