Answer: b. neither the earnings nor the dividends of the investee.
Explanation:
When the cost method is used to account for a stock investment, it means that in the books, the stock is to be recorded at the price it was purchased for.
This means that even if earnings and dividends accrue on the stock, it is not to change in value but should stay being recorded at the price it cost to acquire.
Answer:
$8,767.50
Explanation:
Calculation for what Legion should report as bond interest expense for the six months ended
Using this formula
Bond interest expense= Carrying Value of Bond x Effective interest rate
Let plug in the formula
Bond interest expense=$146,125 x 12% yield interest x 6 months/12 months
Bond interest expense=$8,767.50
Therefore what Legion should report as bond interest expense for the six months ended is $8,767.50
Answer:
b. $5m
Explanation:
If we purchase another company for $50m and the company you purchase has assets with a fair value of $75m and liabilities with a fair value of $30m. The amount of goodwill we should record in this transaction is: $5m
Goodwill upon acquisition of companies is derived by subtracting the fair value of NET ASSETS from the TOTAL CONSIDERATION (i.e the price paid to acquire the company)
In the scenario, the value of Net Assets is the value of the fairvalue of the assets less the fair value of the liabilities which is $75 - $30 = $45
While the Total Consideration = $50
Therefore Goodwill = $50m - $45m = $5m
The similarity of negative growth rate and zero growth rate is that there is no growth towards a positive output. For example, if the business is currently in either state, it is not earning. It may be very stagnant (for zero growth rate) or losing (for negative growth rate). Which either the case may be, it is not beneficial to the business owner.
Answer:
The answer is C.
Explanation:
Reducing tax rate according to supply - side policy creates demand pull inflation.
Demand pull inflation is a situation whereby people have more buying power due to the availability of cash thereby leading to high demand and consequentially leading to an increase in the price of goods and services by suppliers.
That is the process where demand outplays supply due to the high purchasing power thereby causing price to increase which is the demand pull inflation effect.
