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djverab [1.8K]
3 years ago
5

Four years ago, on January 1, California Creamery bought a new delivery truck for $30,000. The company planned to use the truck

for 7 years, and then sell it for $2,000. The company used the truck for 4 years and properly recorded straight-line depreciation each year. At the beginning of the 5th year, a change in emissions standards made the truck illegal in California. The company expects to sell the truck outside of California later this year for $6.000. The company should record a journal entry that includes a(n) (Check all that apply) $8,000 debit to Depreciation Expense scetu 0 ipd $8,000 debit to Impairment Loss $22,000 debit to Impairment Loss $8.000 credit to Truck $22.000 credit to Truck
Business
1 answer:
Gekata [30.6K]3 years ago
5 0

Answer:

The company should record a journal entry that includes: Debit to Impairment Loss $8,000

Explanation:

The company uses straight-line depreciation, Depreciation Expense each year is calculated by following formula:  

Depreciation Expense = (Cost of delivery truck − Residual Value )/Useful Life  = ($30,000 - $2,000)/7 = $4,000

At the end of year 4, Accumulated depreciation = $4,000 x 4 = $16,000

At the end of year 4, Book value of the truck = $30,000 - $16,000 = $14,000

The company expects to sell the truck for $6,000 < Book value of the truck

California Creamery should record Impairment Loss for $14,000-$6,000=$8,000

The journal entry includes:

Debit to Impairment Loss $8,000

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3 years ago
The risk-free rate of return is 10.5%, the expected rate of return on the market portfolio is 17%, and the stock of Xyrong Corpo
nadezda [96]

Answer:

$88.24

Explanation:

The computation of the  intrinsic value of a share of Xyrong stock is shown below;

k = risk free rate of retunr+ beta[expected market rate of return - risk free rate of return]

= 10.5% + 1.5(17% - 10.5%)

= 20.25%  

Now

growth rate = b × ROE

= .5 × 24%

= 12%

Now the intrinsic value of the stock is

= (($13 × 50%)  × (1 + 0.12)) ÷ (0.2025 - 0.12)

= $88.24

5 0
3 years ago
Beau borrows $15,000 from credit center to buy a car. The lender assigns the right to receive the loan payments to debt collecti
alexandr1967 [171]

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5 0
1 year ago
Mikey initially invested $2,400 in a company and has held this investment for 3 years. He sold the investment after 3 years for
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Answer:

499.80

Explanation:

There is no 39.6% tax bracket, the highest marginal tax is 37%. But we can assume that Mikey had to pay 39.6% in taxes which means that he is in the seventh tax bracket (highest). Since he is classified under the highest tax bracket, he will also pay the highest capital gains rate which is 20%.

Mikey's long term capital gain = $4,950 - $2,400 = $2,550

if he paid regular income taxes = $2,550 x 39.6% = $1,009.80

since he pays capital gains taxes = $2,550 x 20% = $510

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3 0
3 years ago
Warr Company is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's pr
BartSMP [9]

Answer:

Option B, IRR is 14.42%

Explanation:

The IRR is the rate of return that equates the cost of the project to the present value of cash flows receivable from the project in future.

Using an excel approach, the formula formula IRR is given as:

=irr(values)

The values in this case are

-$1300 in  year 0

$450 in year 1

$450 in year two

$450 in year 3

$450 in year 4

The irr gives 14.42% as shown in the spreadsheet attached

The cost of the investment of the investment project of $1300 equals the present values of its cash flows at 14.42% rate of return

Download xlsx
4 0
3 years ago
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