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kobusy [5.1K]
3 years ago
5

Cleaverland purchased 100% of Omaha on January 1, 2019 for $650,000. On that date, Omaha's stockholders' equity was $650,000, an

d the recognized book values of Ottowa’s individual net assets approximated their fair values. Omaha had net incomes of $150,000 and $190,000 for 2019 and 2020, respectively. The subsidiary paid dividends amounting to $30,000 in both years. Cleaverland uses the equity method to account for its pre-consolidation investment in Omaha. What was the balance in Equity Investment at December 31, 2020?
Business
1 answer:
zzz [600]3 years ago
5 0

Answer:

$960,000

Explanation:

The balance in equity investment made by Cleaverland in Omaha as at December 31, 2020 shall be determined using the following method:

Purchased price of Cleaverland as at January 1, 2019    $650,000

Net income for the year 2019                                            $150,000

Net income for the year 2020                                           $190,000

Less: Dividend paid by Omaha to Cleaverland                ($30,000)

Balance as at December 31, 2020                                   $960,000

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Which of the following is an example of the law of diminishing marginal​ returns? A. Holding capital​ constant, when the amount
Irina-Kira [14]

Answer:

The correct answer is option A.

Explanation:

The law of diminishing returns states that as we go on employing more and more unit of input while keeping other inputs constant, the return from each additional unit of input will go on declining.  

This means that the output produced from each additional unit of input will go on declining.

Here, as capital is kept constant and labor is increased by a unit, the output at first increases by 5 units from 20 to 25. But later when input is again increased by a unit, the output increase by only 3 units from 25 to 28.

This shows the law of diminishing marginal returns where the marginal returns from a unit of labor is declining.

3 0
3 years ago
The definition of internal control developed by the Committee of Sponsoring Organizations (COSO) includes controls related to th
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Answer:

A. Compliance with applicable laws and regulations.

Explanation:

The definition of internal control developed by the Committee of Sponsoring Organizations (COSO) includes controls related to the reliability of internal and external reporting, the effectiveness and efficiency of operations, and Compliance with applicable laws and regulations.

7 0
3 years ago
At the end of the year, a company reports a balance in its Allowance for Uncollectible Accounts of $1,700 (debit) before any yea
iren2701 [21]

Answer:

Bad debt expense $11,320   ($283,000 × 4%)

      To Allowance for doubtful debts $11,320

(being the bad debt expense is recorded)

Explanation:

The journal entry is shown below:

Bad debt expense $11,320   ($283,000 × 4%)

      To Allowance for doubtful debts $11,320

(being the bad debt expense is recorded)

For recording this given transaction, we debited the bad debt expense as it increases the expenses account and at the same time it decreases the account receivable so the allowance would be credited so that the proper posting could be done

7 0
3 years ago
Fortune Enterprises is an all-equity firm that is considering issuing $13.5 million of perpetual debt. The interest rate is 10%.
Nuetrik [128]

Answer:

d. Debt holders get $0 mil. under the unlevered plan vs. 0.6075 mil. under the levered plan

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interests paid to debt holders = $13,500,000 x 10% = $1,350,000

generally, interest revenue is taxed as ordinary revenue = corporate income tax rate (if debt holder is a business) or personal income tax (if debt holder is an individual).

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under the second plan, if the personal tax rate on interest income is 55%, which is really high, the debt holders will earn $1,350,000 x (1 - 55%) = $607,500

8 0
3 years ago
An accountant increases the price he charges for his services by 2 percent. In​ response, the demand for his services decreases
Rashid [163]

Answer:

Decrease

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4 0
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