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slava [35]
3 years ago
7

Sheridan Company received $135000 in cash and a used computer with a fair value of $318000 from Carla Vista Co. for Sheridan Com

pany's existing computer having a fair value of $453000 and an undepreciated cost of $420300 recorded on its books. The transaction has no commercial substance. How much gain should Sheridan recognize on this exchange, and at what amount should the acquired computer be recorded, respectively
Business
1 answer:
sammy [17]3 years ago
6 0

Answer:

The gain that  Sheridan should recognize on this exchange is $135000

Explanation:

Where Exchange Transaction lacks commercial substance, the asset that is acquired is measured at the <em>Carrying Amount or Undepreciated Cost </em> of the asset given up.

The gain will then include an <em>further consideration acquired</em> on the exchange of an asset.

<u>Entries to record the exchange are as follows :</u>

Cash $135000 (debit)

New Asset at undepreciated cost $420300 (debit)

Cost of Old asset given up $420300 (credit)

Gain on exchange $135000 (credit)

Conclusion :

The gain that  Sheridan should recognize on this exchange is $135000

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viva [34]

Answer:

Explanation:

The time (T) = 6 months = 6/12 years  = 0.5 years

Interest rate (r) = 6% = 0.06

The stock is priced [S(0)] = $36.50

The price the stock sells at 6 months (V_c) = $3.20

European call (K) = $35

The price (P) is given by:

P=V_c+K.e^{-rT}-S(0)+Dividends\\But, Dividends = 0.5*e^{-0.25*0.06}+ 0.5*e^{-0.5*0.06}\\Therefore, P=V_c+K.e^{-rT}-S(0)+0.5*e^{-0.25*0.06}+ 0.5*e^{-0.5*0.06}\\Substituting:\\P=3.2+35*e^{-0.06*0.5}-36.5+0.5*e^{-0.25*0.06}+ 0.5*e^{-0.5*0.06}\\P=3.2+33.9656-36.5+0.4926+0.4852\\P=1.64

The price of a 6-month, $35.00 strike put option is $1.65

5 0
3 years ago
The strategy of setting a single price for two or more units is known as
jekas [21]
Is known as multiple- unit pricing.
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Lana71 [14]

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6 0
2 years ago
You have accepted a job as the president and CEO of a large transportation conglomerate. Over the years, the conglomerate has ac
rjkz [21]

Answer: a. Railroad loading

Explanation:

This question relates to the BCG matrix which allows a company with multiple divisions to know how to deal with its various divisions based on their growth rate and market share.

The question specifically relates to a matrix called "Cash cows". Cash cows are divisions that have a significant market share but a low growth rate. These divisions are stable and bring more money into the company than they cost to run.

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