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Andre45 [30]
3 years ago
6

On September 30, 2018, Corso Steel acquired a patent from Thermo Steel. The agreement specified that Corso will pay Thermo $1,00

0,000 immediately and then another $1,000,000 on September 30, 2020. An interest rate of 8% reflects the time value of money for this type of loan agreement. (PV of $1, PVA of $1) (Use appropriate factor(s) from the tables provided.) What amount of interest expense, if any, would Corso record on December 31, 2018, the company’s fiscal year end?
Business
1 answer:
Delicious77 [7]3 years ago
5 0

Answer:

$17,146

Explanation:

Given:

Acquisition cost of patent = $2,000,000. $1,000,000 is paid immediately. Remaining $1,000,000 is paid after 2 years on September 30, 2020.

We have to calculate present value of $1,000,000 @8%, 2 years. Present value factor is 0.8573.

Present value of $1,000,000 = 1,000,000×0.8573 = $857,300.

Calculation of interest expense:

Principal amount = $857,300

Rate = 0.08

Time period = \frac{3}{12}= \frac{1}{4}\

Interest expense = 857,300\times 0.08\times \frac{1}{4}

                             = $17,146

Therefore, interest expense to be recorded as on December 31, 2018 is $17,146

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"In 2020, a customer buys a 3 3/4% U.S. Government bond maturing in 2029 at 104-16. The customer elects to amortize the bond pre
Lana71 [14]

Answer:

carrying value after 2 years = $967.64

Explanation:

the journal entry to record the purchase of  the bond:

Dr Investment in bonds 1,000

Dr Premium on investment in bonds 41.60

    Cr Cash 1,041.60

Assuming a straight line amortization, the yearly amortization = $41.60 / 9 years = $4.62 per year

carrying value at moment of purchase = $958.40

carrying value after 1 year = $963.02

carrying value after 2 years = $967.64

8 0
3 years ago
On January 1, JC Co. accepted a 60-day, 6%, note in the amount of $10,000 from a customer. On March 2, the due date of the note,
sammy [17]

Answer:

Cash account in the amount of $10,100

Explanation:

The journal entry to be recorded for the receipt of payment is as:

Cash A/c.............................................Dr $10,100

        Note receivable A/c...................Cr  $10,000

        Interest Revenue A/c..................Cr  $100

Being recoded the receipt of payment

As payment is received so asset is increasing and any increase in asset is debited. Therefore, cash account is debited. And the note receivable got decrease will be credited and the interest revenue is also credited.

Computation of interest revenue is as:

Interest revenue = Amount × % of note × Days / Number of days in a year

= $10,000 × 6% × 60 / 360

= $100

Note: Assume 360 days in a year

3 0
3 years ago
If the sales volume decreases by 25%, the variable cost per unit increases by 15%, and all other factors remain the same, net op
9966 [12]

Answer: decrease by $31,875

Explanation:

Net Operating income;

= Sales - variable cost - fixed cost

= (70 * 3,000) - ( 50 * 3,000) - 25,000

= $35,000

Sales volume decreases by 25%;

= 3,000 * ( 1 - 25%)

= 2,250 units

Variable cost per unit increases by 15%;

= 50 * ( 1 + 15%)

= $57.50

New Net Operating income;

= (70 * 2,250) - (57.50 * 2,250) - 25,000

= $3,125

Net Operating income change;

=  3,125 - 35,000

= -$31,875

Decrease by $31,875

6 0
3 years ago
Why might an older person invest in conservative investment portfolio? a.Because an older person has less time to make up for ba
Musya8 [376]
The correct answer is <span>a.Because an older person has less time to make up for bad investments

Young people have their entire life to fix their bad investments and can invest into new things that are up and coming and developing. Older people don't have time for that and have to approach investments differently.</span>
4 0
3 years ago
Ron just started working for a car wash company two weeks ago. Ron's team members come back from breaks late, and do not worry t
s344n2d4d5 [400]

Answer:

I would say B would be the best answer.

Explanation:

You shouldn't try to push it onto yourself to fix, the owner/manager to fix the problem!

3 0
3 years ago
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