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kompoz [17]
3 years ago
13

Scenario 3: Assume that Jacob had not yet sold the office furniture division by the end of 2016. Further, assume that the fair v

alue less costs to sell of the division's assets at December 31, 2016, was $11.60 million and was expected to remain the same when the assets are sold in 2017. The book value of the division's assets was $18.64 million at the end of the year. Required: Under these assumptions, what would Jacob report in its 2016 income statement regarding the office equipment division? (Enter your answer in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50).)
Business
1 answer:
vladimir2022 [97]3 years ago
8 0

Answer:

According to IAS 36 Impairment of Assets says that impairment must be launched when it is clear that the carrying value of the asset is higher than  fair value less cost to sell or value in use.

In this question, we can see that the carrying value which is $18.64m is higher than $11.6m by $7.04m (18.64-11.6).

Dr. Impairment Loss   $7.04m

CR. Accumulated Impairment Loss   $7.04

The (Dr.) impairment Loss Should be Reported in the statement of comprehensive income as an Expense and (CR.) Accumulated Impairment Loss would reduce the Carrying Amount of the Respective Asset in the balance sheet.

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mel-nik [20]

Answer:

1000000= 50000 (1+ \frac{i}{1})^{1*50}

20 = (1+i)^{50}

20^{1/50} = 1+i

i = 20^{1/50} -1 = 0.0617

And if we convert this into % we got i = APR = 6.17 \%

See explanation below.

Explanation:

We assume that we have compounding interest.

For this case we can use the future value formula given by:

FV= PV (1+\frac{i}{n})^{nt}

Where:

FV represent the future value desired = 1000000

PV= represent the present value = 50000

i = the interest rate that we desire to find in fraction

n = number of times that the interest rate is compounding in 1 year, since the rate is annual then n=1

t = represent the number of years= 50 years

So then we have everything in order to replace and we got:

1000000= 50000 (1+ \frac{i}{1})^{1*50}

Now we can solve for the interest rate i like this:

20 = (1+i)^{50}

20^{1/50} = 1+i

i = 20^{1/50} -1 = 0.0617

And if we convert this into % we got i = APR = 6.17 \%

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Answer:

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2 years ago
JTM Ltd incurs costs of $16 per unit ($12 variable, $4 fixed) for a widget it sells for $22. JTM has received two special offers
Mademuasel [1]

Answer:

We must analyze the potential benefits of choosing one order or the other one:

Current JTM costs:

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  • $4 fixed per unit

If JTM accepts Firm A's order its fixed costs will not vary and it will be able to increase its profits by: ($17 - $12) x 10,000 = $50,000

Since JTM doesn't have the capacity to fulfill Firm B's order with their current cost structure, if it decides to take it, its variable or fixed costs (we don't know which) will probably increase, so its contribution margin will no longer be $5, as with Firm A's order, but will probably be lower. We are not told by how much the costs would increase.

The third alternative is to accept Firm B's offer and not sell 2,000 units through its normal distribution channels, but that would result in an increase in profits but also loss of normal profits:

($5 x 14,000 units) - ($6 x 2,000 units for the lost normal profits) = $70,000 -  $12,000 = $58,000. If JTM is able to cancel the sale of 2,000 units, then Firm B's offer would increase its profits by $58,000, $8,000 more than Firm A's order, but it depends on its ability to cancel or not the normal sales.

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