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3 years ago

EA4.

Business

1 answer:

Anton [14]3 years ago

5 0

Answer:

Please see Explanation

Explanation:

Management

Managers are not included in this list of users by the IASB Framework, because management should have access to all the financial information they need, and in much more detail than financial statements provide. However, management is responsible for producing the financial statements and might be interested in the information they contain.

Employees

Employees need information about the financial stability and profitability of their employer. An assessment of profitability can help employees to reach a view on the ability of the employer to pay higher wages, or provide more job opportunities in the future.

Investors

Investors in a business entity are the providers of risk capital. Unless they are managers as well as owners, they invest in order to obtain a financial return on their investment. They need information that will help them to make investment decisions.

Creditors

Financial information about an entity is also useful for suppliers who provide goods on credit to a business entity, and ‘other trade creditors’ who are owed money by the entity as a result of debts incurred in its business operations (such as money owned for rent or electricity or telephone charges). They can use the financial statements to assess how much credit they might safely allow to the entity.

Customers

Customers might be interested in the financial strength of an entity, especially if they rely on that entity for the long-term supply of key goods or services.

Tax authorities

The tax authorities use the information in the financial statement for the purpose of business regulation or deciding taxation policies.

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Marcus is on a team to plan volunteer opportunities for employees in the company. His role is to handle public communications ab

arsen [322]

Answer:

Marcus should control his emotions

Explanation:

It is natural for Marcus to become angry because of Amy's action. Nonetheless, as team member, he will need to control himself, to be effective as such. Lest such furiosity turn out to become a chaos in a work environment and hinder efficiency, consequently frustrating the aim of the team.

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4 years ago

if a recession caused millions of people to lose their jobs and millions more to fear unemployment, which of the following will

Shtirlitz [24]

Recession make goods more expensive and the increased prices would cause demand for all consumer goods to decrease

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4 years ago

Jules & Associates had the following information available related to revenues and expenses for the current period: Services

LiRa [457]

Answer:

Net income in cash = -$17,000

Net income of accounting= $ 198,000

Explanation:

$123,000 service provided for cash

-$140,000 Expenses paid in Cash

= -$17,000 Net income in cash

$240,000 Services provided on account

-$42,000 Expenses on account

=$198.000 Net Income of accounting

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3 years ago

The following estimates have been prepared for a project:Fixed costs: $27,000Depreciation: $18,000Sales price per unit: $4Accoun

Blababa [14]

Answer: $3.10

Explanation:

Accounting breakeven = Fixed costs / Contribution margin

Fixed costs = Fixed costs + Depreciation = 27,000 + 18,000 = $45,000

50,000 units = 45,000 / Contribution margin

Contribution * 50,000 = 45,000

Contribution = 45,000 / 50,000

Contribution margin = 0.9

Contribution margin = Sales - Variable cost

0.9 = 4 - Variable cost

Variable cost = 4 - 0.9

= $3.10

4 0

3 years ago

Nicole’s Getaway Spa (NGS) purchased a hydrotherapy tub system to add to the wellness programs at NGS. The machine was purchased

vfiekz [6]

Answer:

The question has asked to first create the income statement with the gain/loss on sale of asset and then find for depreciation. However, in order to create the income statement, we require the gain/loss on sale of asset and to do this, we require the depreciation. Hence, the order has been slightly changed but titled easily for your convenience (1. Depreciation 2. Sale of Asset 3. Income statement. Please refer explanation.

Explanation:

1. DEPRECIATION

1.A. Straight-line depreciation:

It is the simplest method of calculating depreciation and believes that the asset's value depreciates equally every year.

Depreciation per year = (Cost of asset - salvage value) / number of useful life years.

Depreciation for Year 1 : (7000 - 500) / 5 = $1300

Depreciation for Year 2: (7000 - 500) / 5 = $1300

Depreciation for Year 3 : (7000 - 500) / 5 = $1300

1. B. Units of Production/ Activity based depreciation:

Activity based depreciation is whereby an asset is depreciated based on the asset’s activity such as the number of hours worked or the number of units produced, during a particular period of time. Activity based depreciation per year is calculated as:

[(Cost - Salvage value) x activity performed during the period] / Total estimated life activity of the asset

Year 1 Depreciation : (7000-500) x (3100 / 13000) = $1550

Year 2 Depreciation : (7000-500) x (2500 / 13000) = $1250

Year 3 Depreciation : (7000-500) x (3400 / 13000) = $1700

1.C. Double-declining balance Method:

This is where the asset's value is depreciated at twice the rate than the straight line method. The depreciation amounts would be higher in the early years of the asset's life and gradually reduce towards the end. Hence, it does not mean that the depreciation amount would be higher than the straight line basis.

Straight Line depreciation per year = 1/5* x 100 = 20%

*as it is useful for five years

Hence double-depreciation value = 20% x 2 = 40%

It is calculated as depreciation rate x book value of asset at the beginning of the period

OR (Cost of Asset - Accumulation Depreciation) x Depreciation rate

Depreciation for Year 1 : 7000 x 40% = $2800

Accumulated Depreciation : $2800

Depreciation for Year 2 : (7000 - 2800) x 40% = $1680

Accumulated Depreciation: $2800 + $1680 = $4480

Depreciation for Year 3 : (7000 - $4480) x 40% = $1008

2. GAIN OR LOSS ON SALE OF ASSET

2.A. Straight-line depreciation :

Accumulated Depreciation at the end of Year 3 : $1300 x 3 = $3900

Cost of asset at the end of Year : $7000 - $3900 = $3100

Asset was sold for $2100 while its net book value was $3100. This means that the asset was sold for LESS than what it was worth and hence is a LOSS on sale of asset.

Gain/Loss on sale of asset : Sale Price - Net book value

Loss on sale : $2100 - $3100= ($1000)

2.B. Units of Production method :

Accumulated depreciation at the end of the Year 3 : $1550 + $1250 + $1700 = $4100

Cost of asset at the end of Year 3 : $7000 - $4500 = $2500

Asset was sold for $2100 while its net book value was $2500. This means that the asset was sold for LESS than what it was worth and hence is a LOSS on sale of asset.

Gain/Loss on sale of asset : Sale Price - Net book value

Loss on sale : $2100 - $2500= ($400)

2.C. Reducing balance method :

Accumulated depreciation at the end of Year 3 : $2800 + $1680 + $1008 = $5488

Cost of asset at the end of Year 3 : $7000 - $5488 = $1512

Asset was sold for $2100 while its net book value was $1512. This means that the asset was sold for MORE than what it was worth and hence is a GAIN/PROFIT on sale of asset.

Gain/Loss on sale of asset : Sale Price - Net book value

Gain on sale : $2100 - $1512= $588

3. INCOME STATEMENT

Income statement with gain/loss on sale of asset using straight line depreciation, units of production method and reducing balance method has been provided in attached tables 1, 2 and 3 respectively.

6 0

3 years ago