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Volgvan
3 years ago
7

Murphy & Johnson is a privately owned manufacturer of small motors for lawnmowers, tractors, and snowmobiles. The components

of its financial statements are (1) income before taxes = $21 million, (2) total assets = $550 million, and (3) total revenues = $775 million.
a) Determine overall materiality and determine tolerable misstatement. Justify your decisions.
Business
1 answer:
Gennadij [26K]3 years ago
6 0

Answer:

Auditing:it enables business managers,consultants,investors,regulatory agencies and creditors to take right decision on financial aspects of the entity,auditing also ensures that the financial information pertaining to he entity is reliable,credible,relevant and time bound.

Explanation:

Murphy & Johnson is a privately-owned company, we should use 5% of net income before taxes. => Planning Materiality = $21 million × 5% = $1.05 million. The planning materiality is not an extremely high number, so we will use 50% to help determine tolerable  misstatement,  as   it   is   a  safer  value   to  use  when  calculating   tolerable  misstatements because it has a lower risk. => Tolerable Misstatement = $1.05 million × 0.50 = $525,000.

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Raby, Inc. acquires all of the outstanding stock of Fletcher Corporation on January 1, 2017. At that date, Fletcher owns only th
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Answer:

D. $285,000

Explanation:

When a company is acquired by another company, the parent company (the new owner) must report the assets at fair market value - amortization.

FV = $300,000

amortizable value = $100,000

depreciation for 3 years (2017, 2018 and 2019) = ($100,000 / 20) x 3 = 415,000

reported value = $300,000 - $15,000 = $285,000

6 0
2 years ago
When making competitive priority decisions the firm: must ensure the pwp is correctly established must select the correct supply
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When making competitive priority decisions the firm <u>"must make trade-off decisions".</u>


Making decisions requires exchanging off one thing against another.  

In economics, the term trade-off is regularly communicated as an opportunity cost, which is the most favored conceivable option. A trade-off includes a forfeit that must be made to get a specific item or experience. A man surrenders the chance to purchase 'great B,' since they need to purchase 'great A. For a man setting off to a ball game, their financial trade-off is the cash and time spent at the ballpark, when contrasted with the option of watching the diversion at home and sparing their cash, in addition to the time spent heading to the ball game.

5 0
3 years ago
On January 1, 2016, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc. for $784,000 cash. At Janua
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Answer:

a) Consolidated net income for Phoenix and Sedona for 2018

Phoenix revenues                      $648,000

-Phoenix expenses                    ($412,000)

Phoenix Net Income                  $236,000

2018 Income from Sedona        <u>$54,075</u>

Consolidated net income for   $290,075

Phoenix and Sedona for 2018  

b) Phoenix’s consolidated retained earnings balance at December 31, 2018

Phoenix’s consolidated retained earnings balance at December 31, 2018  = $347,075.00  (same as Phoenix because of equity method use)  

c) What amount should Phoenix report for Sedona’s customer list?

Consideration transferred at fair value      $784,000

Book value acquired                                   <u>($548,800)</u>

Excess fair over book value                        $235,200

To Equipment                                               <u>$95,000   </u>

To customer list (4 year life)                        <u> $140,200 </u>

Three years since acquisition of customer list = $140,200/4 years = $35,050. Hence, Phoenix report $35,050 as Sedona’s customer list.

4 0
2 years ago
Cameron has a cup of coffee every morning, smokes about 10 cigarettes a day, and has a beer with his dinner every night. this is
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This is an example of substance use
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Answer: the correct answer is $169,000

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