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3 years ago

What are the criteria for distinguishing between a deductible expense and a capital expenditure?

1 answer:

6 0

The criteria for distinguishing between whether an expenditure is a capital item or a deductible expense is the useful life of the item.

If the purchase is going to be used and no longer have value at the end of the reporting period it is an expense for that period. If the item is a capital item it is going to have a longer useful life. In this case the item is depreciated over its useful life, assigning an expense amount to each accounting period that the item has value.

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During its first year of operations, the McCormick Company incurred the following manufacturing costs: Direct materials, $5 per

Arturiano [62]

Answer:

$150,000

Explanation:

The computation of value of ending inventory under absorption costing is shown below:-

Total Cost per unit = Direct Material per unit + Direct Labor per unit + Variable Overhead per unit + Fixed Overhead per unit

= $5 + $4 + $3 + ( $200,000 ÷ 25,000 units)

= $5 + $4 + $3 + $8

= $20

Ending Inventory in units = Units produced - Units sold

= 25,000 - 17,500

= 7,500

Cost of Ending Inventory = Total Cost per unit × Ending Inventory units

= $20 × 7,500

= $150,000

So, for computing the cost of ending inventory we simply multiply the total cost per unit with ending inventory units.

8 0

3 years ago

In the late 1930s management at Atalanta Industries agreed to hire only those workers who were already members of the Electrical

earnstyle [38]

Answer: closed shop

Explanation:

From the question, we are informed that in the late 1930s management at Atalanta Industries agreed to hire only those workers who were already members of the Electrical Union.

It should be noted that here, Atlanta agreed to a type of arrangement known as closed shop. This occurs when the workers have to belong to a particular union before they'll be employed. This was legal in 1930 but it was later declared illegal by Taft Hartley Act.

7 0

3 years ago

Employees and customers are treated like a family at State Street Coffee House. Jason and Jill, the owners, work to encourage un

quester [9]

Answer: <em>Clan Culture</em>

Explanation:

A clan culture is generally referred to or known as a tribe-like or family-like kind of organization environment that tend to emphasize on the consensus and also on the commonality of values and goals. Clan cultures are often viewed as a collaborative and also one of the least competitive corporate culture models which often exist in an organization.

7 0

3 years ago

You have been recently hired as an assistant controller for XYZ Industries, a large, publically held manufacturing company. Your

soldi70 [24.7K]

Answer:

XYZ

a. The Effect on Income Before Taxes of the Change of Ageing Analysis:

The Income before Taxes would be $45,000 ($180,000 - $20,000) - ($135,000 - 20,000) more than the income that should have been reported. Assuming the Income Taxes were to be based on the increased income figure, XYZ would have an increased tax liability by say $18,000 (45,000 x 40%). This reduces the Retained Earnings (or Stockholders Equity) by $18,000. The company would in actual fact, be reporting a net income of $27,000 more than it should have reported. This is very deceptive for all those who would be using the reported financial statement in making their decisions. Unfortunately, we would have showed the affected customer that we are dubious in our business practise, further jeopardizing the chance of full recovery of the debt. This is apart from taking into consideration the type of customer that would be ready to accept a revised invoice that was formerly past due.

b. The ethical dilemma is doing the right thing according to Rights Theory. We cannot say we have adhered to a set of rules (the U.S GAAP or the IFRS) when in fact we are violating an important rule of fair presentation of the elements of the financial statement.

I would try to convince the controller to rescind his suggestion and follow the rules. We understand that making allowance for uncollectibles is an estimate based on judgement. However, since we have established the basis and even stated it in the notes to the financial statements, I think that we should follow through.

Explanation:

The year's Uncollectible Expense should be $160,000 ($180,000 - $20,000). If the allowance for the year were to be adjusted from $180,000 to $135,000, it means that the Uncollectible Expense would then be $115,000 ($135,000 - $20,000). We will be under-reporting the Uncollectible Expense by a difference of $45,000 ($160,000 - $115,000), thereby boosting the net income before tax by $45,000.

4 0

3 years ago

Mighty Manny, Incorporated manufactures ice scrapers and distributes them across the midwestern United States. Mighty Manny is i

coldgirl [10]

Answer:

The answer is "Choice D".

Explanation:

FedEx Express has developed or continued being a pioneer in high level, providing quick, which remains the global leader offering quick, efficient, or timely delivery to even more than 220 countries that connect more than 99% of the world's largest gross national product with markets, that's why the Two customers are in Wisconsin for Mighty Manny. Mighty Manny accepts phone orders or ships products via FedEx to its customers.

4 0

3 years ago