1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
ivolga24 [154]
2 years ago
15

Club Co. appropriately uses the equity method to account for its investment in ChipCorp. As of the end of 2013, Chip's common st

ock had suffered a significant declinein fair value, which is expected to be recovered over the next several months. How should Club account for the decline in value? A. Club should switch to the fair-value method.B.No accounting because the decline in fair value is temporary.C. Club should decrease the balance in the investment account to the current value and recognize a loss on the income statement.D. Club should not record its share of Chip's 2013 earnings until the decline in the fair value of the stock has been recovered.E. Club should decrease the balance in the investment account to the current value and recognize an unrealized loss on the balance sheet.
Business
1 answer:
sweet-ann [11.9K]2 years ago
3 0

Answer:

C. Club should decrease the balance in the investment account to the current value and recognize a loss on the income statement.

Explanation:

Club SHOULD account for the decline in value by decreasing the balance in the investment account because it is stated in IAS 28 that when the 'carrying amount' which is the book value of an investment in an another company's shares <u>exceeds</u> the amount at which that investment can be disposed which is its 'recoverable amount', an impairment loss is recognized. The loss should be posted directly to the investment account.

Hence the investment account will be credited and the corresponding debit will go to the income statement.

You might be interested in
Is the U.S. airline industry attractive? Describe Southwest Airlines’ strategy. What are the most important strategic choices? W
MA_775_DIABLO [31]

Answer:

Yes, the US airline Industry is attractive. Southwest Airline's has a unique business model with an efficient operational strategy.

Explanation:

The most important strategic choices for Southwest Airline is a low-cost operational structure that achieves high returns on capital due to a unique

The unique thing about southwest strategy is, the company has good credit rating which has positioned them strategically compared to its competitors.

The components of Southwest's strategy that are VRIO is as follows

!. The management keeps the balance sheet strong by being financially conservative.

2. Investors concentrates on earnings volatility and short term stock prizes

3. They are specific about their staff specifications

4. They are deliberate in their branding and public image.

No, it would not be easy to imitate the strategy like the one they employed to mitigate the tragic incident that occurred seven months ago that had one person killed.

Yes, their strategy is sustainable because it is both cost effective, efficient and produces result.

The threats they are likely to face include

1. Unfavorable Legislation: Regulatory changes in commercial aviation that directly influences their current business model will directly affect their impeccable record.

2. They will be at a disadvantage position if pitted against larger airline companies.

3. Their pilot population is limited.

4. Volatility of fuel prices can upset their lean budget.

From the foregoing, it is evident that southwest has a sustainable business model that should make them become an international airline

7 0
3 years ago
You are ready to buy a house, and you have $20,000 for a down payment and closing costs. Closing costs are estimated to be 4% of
Bess [88]

Answer:

So we can offer for the house $180119.95

Explanation:

Monthly income =$4000

Monthly mortgage payment allowed (P)= 25% of 4000= $1000

Interest rate per month (i)= 0.5%

Number of months in total (n)= 30*12= 360

Maximum loan affordable = P*(1-(1/(1+i)^n))/i

=1000*(1-(1/(1+0.5%)^360))/0.5%

=$166791.61

Closing cost is 4% of loan value = 166791.61*4% =$6671.66

Balance Amount left for down payment = 20000-6671.66

=$13328.34

It means we can pay $6671.66 for closing cost of Loan and $13328.34 for down payment.

Cost of house paid maximum = Down payment + Affordable loan

=13328.34+166791.61

=$180119.95

So we can offer for the house $180119.95

7 0
3 years ago
Barnes Company reports the following operating results for the month of August: sales $305,000 (units 5,000); variable costs $21
Ostrovityanka [42]

Answer:

1. $30,500;

2. $30,000;

3. $22,000;

=> Option 1 produce the highest net income.

Explanation:

We have sell price per unit = 305K /5K = $61

1.  Increase selling price by 10% with no change in total variable costs or sales volume:

Sell price = 61 x 1.1 = $67.1

Sales revenue = 67.1 x 5,000 = $335,500

Increase in sales revenue = 335.5K - 305K = $30,500

As costs remains the same, Net income will increase as much as the increase as sales revenue which is $30,500.

2.  Reduce variable costs to 60% of sales:

New variable cost = $305,000 x 60% = $183,000

Saving in variable cost = 213K - 183K = $30,000

As fixed cost and sales revenue remain the same, net income will increase as much as the saving in variable cost which is $30,000

3. Reduce fixed costs by $22,000:

As variable cost and sales revenue remain the same, net income will increase as much as the saving in fixed cost which is $22,000

6 0
2 years ago
Assume that the friend in the previous question notified the owner of the office building of the assignment. When the work was c
Cerrena [4.2K]

Answer:

Stop assuming then....hehe haha don't know ur previous ques and too lazy to open it and even too lazy to read it full sorry

8 0
2 years ago
Due to scarce resources, every individual, whether rich or poor, faces a(n)cost when choosing to produce or consume more of one
prisoha [69]

Due to scarce resources, every individual, whether rich or poor, faces an opportunity cost when choosing to produce or consume more of one good over another.

<h3>What is the problem with scarce resources?</h3>

The gap between scarce resources and hypothetically unbounded needs is referred to as scarcity and is a fundamental economic issue. In order to meet both basic necessities and as many additional wants as feasible, people must decide how to spend resources effectively.

The value of the best option foregone is the opportunity cost of a decision. The state of not being able to obtain all the commodities and services one desires is known as scarcity. It exists because there are more commodities and services that people demand than can be produced with all of the available resources.

Learn more about Opportunity costs here:

brainly.com/question/13036997

#SPJ4

7 0
1 year ago
Other questions:
  • A consumer is making purchases of products Alpha and Beta such that the marginal utility of product Alpha is 30 and the marginal
    7·1 answer
  • Lisa is a manager at a thriving marketing company. Her boss recently gave her authorization to increase her department’s yearly
    14·1 answer
  • Karen pays a trainer to enforce her fitness plan, despite the fact that she is capable of doing the routine on her own and could
    10·1 answer
  • When might be the best time to start saving for retirement?
    12·2 answers
  • One of the results of the increase in the older population of the United States is
    6·2 answers
  • The owner of a luxury motor yacht that sails among the 4000 Greek islands charges $450 per person per day if exactly 20 people s
    6·1 answer
  • Economic agents who borrow funds are known as debtors ​, the funds that they borrow are referred to as credit ​, and this activi
    7·1 answer
  • Problem found with in the agriculture sectors and the solution
    9·1 answer
  • The zero coupon bonds of Mark Enterprises have a market price of $394.47, a face value of $1,000, and a yield to maturity of 6.8
    11·1 answer
  • Consumer surplus is the difference between the ___ price a consumer is willing to pay for a product and the price paid.
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!