Answer: During the year after the acquisition, the undervalued equipment will exceed Abbott's investment revenue by $1,200.
Explanation:
Multiply the amount exceeded of its carrying value by the % shares owned by Abbott.
Then divide the result by the useful life value of Barta's equipments
= (20,000 x 30%) / 5
= $1,200
Rule I is correct.
<u>Explanation:</u>
Year Cash flow Pv at 8% Discounted cash flow
0 100000 1 100000
1 26000 0.9259 24074.074
2 26000 0.8573 22290.809
3 26000 0.7938 20639.638
4 26000 0.7350 19110.776
5 26000 0.6806 17695.163
From the above calculation, the net present value is $203810.46
Option 1 Option 2
NPV 203810.5 200000
Payback 5 years 0 years
IRR No IRR No IRR
NPV (Net present value) option say that former would be selected
So, answer is Rule I only.
Answer:
He should reorder when he is left with 200 hammers.
Explanation:
Reorder point is the trigger which informs the businessmen to order the inventory when the stock is used.
Reorder point = Safety Stock + (Average daily usage of units * Average lead time in days )
Reorder Point = 0 + (100 hammers * 2 days)
Reorder Point = 200
Answer:
b. $26,740
Explanation:
The computation of the total amount of overhead allocated is shown below:
overhead allocated is
= (actual direct labor hour × overhead rate per direct labor hour) + (Actual machine hour × overhead rate per machine hour)
= (550 × 28) + (270 × 42]
= $15,400 + $11,340
= $26,740
hence, the total amount of overhead allocated is $26,740
Answer:
Explanation: Dr Cr
1)
Allowance for doubtful account
3%*3610000 108300
Bad debt expense 108300
2)Allowance for doubtful account
2%*(1285070+3610000) 146,852.10
Bad debt expense 146,852.10
3)Allowance for doubtful account
1093830*6% 65,629.80
Bad debt expense 65,629.80
