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Ronch [10]
2 years ago
5

1. A parent company acquires all of a subsidiary's voting stock at the beginning of 2018. At the date of acquisition, the subsid

iary's equipment had a book value of $40 million and a fair value of $15 million. The equipment had a 10-year remaining life, straight-line. Consolidation eliminating entry (O), on the consolidation working paper for 2021, has what effect on consolidated depreciation expense? A. Credit for $10 million B. Debit for $2.5 million C. Debit for $10 million D. Credit for $2.5 million
Business
2 answers:
kkurt [141]2 years ago
4 0

Answer:

B Debit for $2.5 million

Explanation:

Taking the book value and subtracting the fair value we get $25 mil

$40 MIL -$15 MIL=$25 MIL

So the depreciation expense over the ten years is

$25 mil/10 years= $2.5 mil

mafiozo [28]2 years ago
3 0

Answer:

D. Credit for $2.5 million

Explanation:

The depreciation expense to be recorded in the subsidiary individual accounts in respect of equipment is given below:

Depreciation expense to recorded in subsidiary accounts=$40 million/10

                                                                                                 =$4 million

Since for the consolidated accounts we consider the fair value of the assets of the subsidiary and not the book values of assets, so for the purpose of consolidation, the depreciation expense of the equipment shall be recorded based on its fair value and not its book value in the following manner:

Depreciation expense to recorded in consolidated accounts=$15 million/10

                                                                                                 =$1.5 million

Effect on consolidated depreciation expense= depreciation expense recorded in subsidiary accounts-depreciation expense recorded in consolidated accounts

Effect on consolidated depreciation expense=$4 million-$1.5 million

                                                                            =$2.5 million

So based on the above calculation, the answer is D. Credit for $2.5 million

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How do debt and self financing affect the financial statement
zalisa [80]
Debt in any form worsens the financial position of the company as it is money that the company does not really have and will eventually have to be repaid. if self financing is the same as introducing capital then this would improve the financial standing of the company as this money does not have to be repaid but is the company's to use
6 0
3 years ago
List three professionals other than lawyers that can handle some legal matters for you.
frosja888 [35]

Answer:

this is the answer

Explanation:

  1. legal recruiter
  2. court messenger
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7 0
2 years ago
Yields on short-term bonds tend to be more volatile than yields on long-term bonds. Suppose that you have estimated that the yie
Alika [10]

Answer:

70.1754386

Explanation:

The calculation of the number of the futures contract to sell as follows:

Portfolio value $1,000,000

Face value $100

Units. $10,000

Maturity portfolio. 5

Modified duration. 4

Modified duration of T bonds 9

Yield on portfolio. 0.000015

Yield on T bonds. 0.00001

Future price of the bonds $95

Loss of portfolio. $60

Decline in fut T bond price $.0086

Per value contract. $86

Number of future contract to sold 70.1754386

7 0
3 years ago
For the Dividend Growth Model, the equation can be written as follows: P0 = =D1/(RE – g). How can this equation be rearranged?
zmey [24]

Answer:

C) RE = D1/P0 + g

Explanation:

The formula above is the cost of retained earnings or the cost of equity.

The first portion of the formula (D1/P0) is known as dividend yield which is simply dividend divided by price.

The second part(g) is known as the growth rate of dividends.

The initial formula is rearranged thus:

P0=D1/(RE – g)

P0*(RE – g)=D1

RE – g=D1/P0

RE=D1/P0+g

4 0
3 years ago
Incremental costs - Initial and terminal cash flow
Black_prince [1.1K]

Answer:

c. $504,000

Explanation:

Total cost of new equipment = Price of equipment + Shipping & Installation costs = $3,200,000 + $160,000 = $3,360,000

Increase in working capital = Increase in inventories & account receivables - Increase in accounts payable = $640,000 - $256,000 = $384,000

Total Initial net investment outlay = $3,744,000 ($3,360,000+$384,000)

Project terminal cash-flow = Sale value of equipment (after tax) + Recovery of working capital = $200,000*(1-0.40) + $384,000 = $120,000 + $384,000  = $504,000

5 0
2 years ago
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