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ivolga24 [154]
3 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]3 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.

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Data concerning Pellegren Corporation's single product appear below: Fixed expenses are $531,000 per month. The company is curre
GrogVix [38]

Answer:

a. decrease of $18,000

Explanation:

The calculation of overall effect on the company's monthly net operating income is shown below:-

<u>Particulars          Current                  Proposed </u>

Sales               $800,000                 $837,000

                     ($200 × 4,000) (200 - 14) × (4,000 + 500)

Variable

expenses          $160,000               $180,000

                     (40 × 4,000)              (40 × (4,000 + 500))

Contribution

margin              $640,000                $657,000

Fixed

expenses           $531,000                 $566,000

                                               ($531,000 + 350,00)

Net operating

income                  $109,000              $91,000

Decrease in net operating income is

= $109,000 - $91000

= $18,000

6 0
3 years ago
You recently bought a used car and it breaks down. You take it to the repair shop, which will charge $400. You don’t have that m
notka56 [123]

Answer:

My Guest is P2P or Debit Card

Explanation:

3 0
2 years ago
Tyler Toys has beginning inventory for the year of $19,600. During the year, Tyler purchases inventory for $233,000 and has cost
Nimfa-mama [501]

Answer

The correct answer is:

$16,600

Explanation:

The ending inventory is the total value of the inventory at hand, that was not sold for the year. To calculate this, we will subtract the total cost of goods sold from the total purchase. This is shown below:

Beginning inventory =                     $   19,600

Purchased inventory =                     $ 233,000

Total inventory value in the year = $ 252,600

Cost of goods sold = $ 236,000

Therefore, Ending inventory = Total inventory value in the year - Cost of goods sold

= 252,600 - 236,000 = $16,600

8 0
3 years ago
At the end of the year, a company has a balance in Allowance for Uncollectible Accounts of $2,200 (credit) before any year-end a
Lapatulllka [165]

Answer: Debit Bad debt expense $7,300; Credit Allowance for doubtful accounts $7,300.

Explanation: 5% of accounts receivable of $190,000 is $9,500. Remember the credit balance in Allowance for uncollectible accounts is $2,200 prior to any adjustment and this reports to the balance sheet. To reinstate this account to the required provision for uncollectible amount of $9,500, we need to adjust for the difference (that is, $9,500 minus $2,200 existing balance), which is $7,300. <u>Then, the entries above would be recorded. </u>

<u />

3 0
3 years ago
In the short-run an increase in the costs of production makes a. output rise and prices fall. b. output and prices fall. c. outp
gtnhenbr [62]

Answer:

C) Output fall and prices rise

Explanation:

In an aggregate supply, aggregate demand model, price level is the Y axis, and output is the X axis. Supply is positively related with price: the higher the price, the more firms produce.

However, to produce someting, firms need to employ the factors of production: land, labor and capital. The wages firms pay to workers, and the rent firms pay for land and capital are the production costs. If these costs rise, then, the products will become more expensive.

This increase in price will be met with lower demand; less customers will be willing to purchase the product, and therefore, the firms will start producing less until reaching a new equilibrium.

7 0
3 years ago
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