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prohojiy [21]
3 years ago
13

Which of the following accounting strategies (for financial reporting purposes) is the least likely for a firm that is currently

only marginally fulfilling the quantitative measures (all involving earnings) of its debt covenants?
Changing to the successful efforts method of accounting for natural resource exploration costs.
Business
1 answer:
jeyben [28]3 years ago
4 0

Using straight-line depreciation.

Changing to FIFO

Using the weighted average method for capitalizing interest during times of reduced interest rates, rather than the specific method.

Changing to the successful efforts method of accounting for natural resource exploration costs.

Changing to the successful efforts method of accounting for natural resource exploration costs.

<u>Explanation:</u>

The particular technique initially underwrites the enthusiasm on explicit obligation. With financing costs on the decay, enthusiasm on lower rate obligation is promoted and more is expensed, comparative with the weighted normal technique, which underwrites at the normal rate over all obligation.

The weighted normal strategy would underwrite more enthusiasm on more established (higher loan cost) obligation, in this way diminishing the present measure of premium cost and expanding income. Expanding profit lessens the danger of rebelliousness for this firm.

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Dee Trader opens a brokerage account and purchases 300 shares of Internet Dreams at $40 per share. She borrows$4,000from her bro
levacccp [35]

Answer:

A. The stock is purchased for $40 x 300 shares = $12,000.

Given that the amount borrowed from the broker is $4,000, Dee's margin is the initial purchase price net borrowing: $12,000 - $4,000 = $8,000.

B. If the share price falls to $30, then the value of the stock falls to $9,000. By the end of the year, the amount of the loan owed to the broker grows to:

Principal x (1 + Interest rate) = $4,000 x (1 + 0.08) = $4,320.

The value of the stock falls to: $30 x 300 shares = $9,000.

The remaining margin in the investor's account is:

Margin on long position = "Equity in account " /"Value of stock"

= "$9,000 - $4,320" /"$9,000" = 0.52 = 52%

Therefore, the investor will not receive a margin call.

C. Rate of return = "Ending equity in account - Initial equity in account" /"Initial equity in account"

= "$4,680 - $8,000" /"$8,000" = - 0.4150 = - 41.50%

7 0
3 years ago
For many years you have been using your local, small-town bank. One day you hear that the bank is about to be purchased by Bank
kari74 [83]

Answer:

If I was banking with my local town bank and it happens that Bank of Africa purchases it, there are cost and benefits associated with the merge. First, Bank of America is global, meaning that I will be able to access the Services such as ATM services at different points. Second, due to its area of coverage, the services are cheaper compared to the ones I got when it was in my local town. However, due to the monopoly of the bank, they might increase the charges making them more expensive than when the services in the local village. Additionally, it will be a challenge for average customers, such as farmers, to access big banks unless faithful people accompany them.

Explanation:

7 0
3 years ago
Own price increases are associated with decreases in quantity demanded, ceteris paribus. These decreases in quantity demanded ar
andrew11 [14]

Answer:

Income effect

Explanation:

Own price increases are associated with decreases in quantity demanded, ceteris paribus. These decreases in quantity demanded are composed of two effects, the substitution effect and the<u> Income effect.</u>

We know as per the law of demand, price increases lead to decrease in the quantity demanded if factor remain constant.

Quantity demanded has effect of two other major factors:

  • Subtitution effect.
  • Income effect.

Subtitution effect: It is the price of subtitution goods & services also lead to increase and decrease of demand for any particular goods.

Example: Price of tea and coffee.

Income effect: It is the income of consumer that effect the demand of any goods & sevices, as with the increase in income of consumer, their demand for inferior goods decreases and demand for branded goods increases.

Example: Non branded clothes and branded clothes.

3 0
3 years ago
A zero coupon bond: is sold at a large premium. can only be issued by the U.S. Treasury. has a market price that is computed usi
kupik [55]

Answer:

A zero coupon bond:

A. is sold at a large premium.

B. has a price equal to the future value of the face amount given a positive rate of return.

C. can only be issued by the U.S. Treasury.

D. has less interest rate risk than a comparable coupon bond.

E. has a market price that is computed using semiannual compounding of interest.

Answer is : B

Explanation:

In classification of bonds we have a unique type of bond known as Zero-coupon bonds also know as Pure discount bonds, unlike traditional bonds they don’t pay coupon instead they are sold on discount basis and on maturity the bondholder receive a par value, for this reason the price will be at a discount on sale and on maturity be redeemed at par price showing a positive rate of return.

5 0
3 years ago
What are resources needed to build a house
anastassius [24]
You could Google this.
4 0
3 years ago
Read 2 more answers
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