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AleksAgata [21]
3 years ago
12

Sox Corporation purchased a 30% interest in Hack Corporation for $ 1,725,000 on January 1, 2018. On November 1, 2018, Hack decla

red and paid $ 1.9 million in dividends. On December 31, Hack reported a net loss of $ 6.3 million for the year. What amount of loss should Sox report on its income statement for 2018 relative to its investment in Hack?
Business
1 answer:
kotegsom [21]3 years ago
3 0

Answer:

The answer is $1,155,000

Explanation:

Purchase price is $1,725,000

Dividends declared is $1,900,000

So Sox Corporation's share of the dividend is $570,000(30% of $1,900,000)

Carrying value before net loss is:

Purchase price - share of dividends

$1,725,000 - $570,000

=$1,155,000

Net loss for the year is $6,300,000

So Sox Corporation's share of the dividend is $1,890,000(30% of $6,300,000)

The net loss of $1,890,000 is greater than $1,155,000. The investment account cannot be negative ($1,155,000 - $1,890,000). Hence, carrying value of $1,155,000 will be recognized as the amount of loss Sox will report on his income statement for 2018

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A brewery produced regular beer and a low carb "light beer". Steady Customers of the brewery buy 10 units of regular beer and 15
Svet_ta [14]

Answer:

                                                Regular     Low Carb      Total

a) Units to be produced               20              22             42

(to minimize total production cost)

b) Total production costs    $704,000   $1,150,000   $1,854,000

Explanation:

a) Data and Calculations:

                                                Regular     Low Carb

Monthly customers demand         10              15

Ratio of customers demand        40%           60%

Cost per unit                           $32,000      $50,000

Revenue per unit                    120,000      300,000

Contribution per unit            $88,000    $250,000

Total required revenue = $9,000,000

With 20 additional units of beer, total units produced = 45 (25 + 20)

To minimize production costs and generate a total revenue of $9,000,000, more of the units that cost less should be produced.  Units should be produced according to the following ratio:

                                                   Regular       Low Carb       Total

New Production and Sales units  20                   22             42

                                         

Total production cost =       $640,000         $1,100,000         $1,740,000

                                       ($32,000 * 20)       ($50,000 * 22)

Total revenue =               $2,400,000        $6,600,000     $9,000,000

                                      ($120,000 * 20)      ($300,000 * 22)

To achieve a minimum revenue of $9,500,000,

New production units                  22                   23                  45

Total production cost =     $704,000         $1,150,000        $1,854,000

Total revenue =                2,640,000         6,900,000         9,540,000

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Which of the following is an example of a Specialty store? a. Big Lots c. Macy’s b. Wal-Mart d. PetSmart
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Answer:

<u>PetSmart</u> is an example of a speciality store.

Explanation:

It sells stuff only related to pets, unlike the other stores mentioned.

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Which of the following is not a correct statement about​ M2? A. M2 is a broader definition of money compared to M1 and currency.
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Answer:

1. Periodicity assumption.

2. Going concern assumption.

3. Historical cost principle.

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5. Full disclosure principle.

6. Monetary unit assumption.

Explanation:

1. <u><em>Periodicity assumption</em></u>: The economic life of a business can be divided into artificial time periods. It is also known as the Time period assumption.

2. <em><u>Going concern assumption</u></em>: The business will continue in operation long enough to carry out its existing objectives.

3. <em><u>Historical cost principle</u></em>: Assets should be recorded at their acquisition cost.

4. <em><u>Economic entity assumption</u></em>: Economic events can be identified with a particular unit of accountability.

5. <em><u>Full disclosure principle</u></em>: Circumstances and events that could make a difference to financial statement users should be disclosed.

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