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LekaFEV [45]
3 years ago
9

Costs of Acquiring Fixed Assets

Business
2 answers:
Zepler [3.9K]3 years ago
8 0

Answer:

The answer is given below:

Explanation:

a.

1.Yes

2.Yes

3.Yes

4.Yes

5.Yes

6. Yes

b.

7.No

8.Yes

9.Yes

10.No

11.No

12.No

As a rule of thumb,those costs which increase the value or useful life of asset should be capitalized where as those costs that are incurred to maintain the usage of asset are revenue expenditure and should be charged to income statement not the asset.

Olegator [25]3 years ago
7 0

Answer:

Yes

Yes

Yes

No

Yes

Yes

Yes

Yes

Yes

No

Yes

No

Explanation:

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In one state, a mortgagee holds legal title to real property offered as collateral for a loan, and the mortgagor retains the rig
True [87]

Answer:

Lein Theory.

Explanation:

Lien theory refers to the theory in which the buyer stops the property deed at the time of the mortgage. Also the buyer promised to pay all the payments so that the mortgage could become a lien on a property but at the same time the  title would remain with the buyer but if all the payments are paid so the lien could be removed

Therefore in the given situation, it represents the lien theory

7 0
3 years ago
Can you think of some other capital budgeting situations in which negative cash flows during or at the end of the project's life
guapka [62]

Answer:

Multiple IRRs:

Said another way, Multiple IRRs occur when a project has more than one <em>internal rate of return.</em> The problem arises where a project has non-normal cash flow (non-conventional cash flow pattern).

Internal rate of return (IRR) is one of the most commonly used capital budgeting tools. Investors make decisions by comparing the IRR of the project under consideration with the <em>hurdle rate</em>. If the IRR is greater than the hurdle rate, the project is accepted, otherwise it is rejected. When there are more than two IRRs, it is not exactly clear which IRR to compare with the hurdle rate.

Hurdle rate is the minimum required rate of return which businesses use as a benchmark to decide whether to invest in a project or not.

<em>So a typical situation which can generate negative cashflows which can in turn lead to multiple IRRs towards the end of the project is where the conditions of investment become adverse towards the end of the project.</em>

Imagine that toward the end of the lifecycle of a project, a forecasted increase external costs such as Interest Rate, influenced by government policies translates to an erosion of the bottom line generated by the business in that year.

Period                                             0          1       3  3 4 5

Unconventional cash flows ($)-19,000 16,000 16,000 6,000 6,000 -52,000

The series is non-conventional cash-flow pattern, which has two sign changes. This is the range in which the net present value of the non-conventional cash flow series is positive. The multiple IRR problem poses a series problem to analysts because the decision is not obvious.  

Cheers!

5 0
3 years ago
_______ property is an ownership fence, which applies to resources like land that more than one individual owns jointly.
OverLord2011 [107]

Answer:

Common

Explanation:

6 0
2 years ago
Greenwell Farm Equipment sells a tractor to Farmer for $130,000 on January​ 1, 2019. The tractor is delivered that day. Greenwel
agasfer [191]

Answer:

Present value of interest is $5,062 and future value is $5,796        

Explanation:

The formula for finding the Present value of the interest reported as revenue is calculated as under:

Present Value of $40,000 receivable in 2 years = $40,000 / (1+7%)^2

Present Value of $40,000 receivable in 2 years = $34,938

The difference of the future value receivable and present value of the future amount receivable is the interest's present value which is given as under:

Interest Present value = $40,000 - $34,938 = $5,062

Using the compounding formula, the future value of the interest that will be recorded in the financial statement will be = $5,062 * (1 + 7%)^2 years

Future value of interest = $5796

7 0
2 years ago
Diminishing returns are a reason that fixed costs remain constant. the marginal cost curve is upward sloping. the average fixed
Molodets [167]

Answer:

the marginal cost curve is upward sloping.

Explanation:

Utility can be defined as any satisfaction or benefits a customer derives from the use of a product or service.

This ultimately implies that, any satisfaction or benefits a customer derives from the use of a product or service is generally referred to as a utility.

Basically, the marginal utility of goods and services is the additional satisfaction that a consumer derives from consuming or buying an additional unit of a good or service.

For example, buying a candy stick and eating it may satisfy your cravings but eating another one (an additional or extra unit) wouldn't give you as much satisfaction as the first due to diminishing marginal utility.

In Economics, the law of diminishing marginal utility states that as the unit of a good or service consumed by an individual increases, the additional satisfaction he or she derives from consuming additional units would start decreasing or diminishing as the units of good or service consumed increases.

Marginal cost can be defined as the additional or extra cost that is being incurred by a company as a result of the production of an additional unit of a product or service.

Generally, marginal cost can be calculated by dividing the change in production costs by the change in level of output or quantity. A marginal cost curve is upward sloping because of the law of diminishing returns.

4 0
3 years ago
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