Answer:
$12,000
Explanation:
The amount of intercompany profit should be eliminated on the consolidated statements workpaper is the written down value of the merchandise minus the cost of the remaining merchandise in S Company's inventory. This can be calculated as follows:
The written down value of the merchandise = $92,000
Cost of the remaining merchandise = $240,000 × (1 ÷ 3) = $80,000
Intercompany profit = $92,000 - $80,000 = $12,000
Therefore, the amount of intercompany profit should be eliminated on the consolidated statements workpaper is $12,000.
Answer:
The answer is LIFO
Explanation:
LIFO is Last in First out. It means the Inventory that was purchased last goes out first.
In periods LIFO, cost of sales reflects the cost of goods purchased recently and the ending Inventory reflects the older goods.
In periods of falling prices, the costs of ending inventory are high, cost of sales are low and the gross profit are high.
Answer is c. the beta of a portfolio of stocks is always smaller than the betas of any of the individual stocks.
Answer:
P0 = $14.4683 rounded off to $14.47
Explanation:
To calculate the market price of the stock today, we will use the constant growth model of DDM. The constant growth model calculates the values of the stock today based on the present value of the expected future dividends from the stock. The formula for price today under this model is,
P0 = D0 * (1+g) / (r - g)
Where,
- D0 is the dividend today
- g is the constant growth rate
- r is the required rate of return on the stock
We first need to calculate r using the CAPM equation. The equation is,
r = rRF + Beta * (rM - rRF)
Where,
- rRF is the risk free rate
- rM is the return on market
r = 0.06 + 1.6 * (0.147 - 0.06)
r = 0.1992 or 19.92%
Using the price formula for DDM above, we can calculate the price today to be,
P0 = 1.9 * (1+0.06) / (0.1992 - 0.06)
P0 = $14.4683 rounded off to $14.47
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