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Mamont248 [21]
3 years ago
14

Horton Stores exchanged land and cash of $5,300 for similar land. The book value and the fair value of the land were $88,400 and

$100,800, respectively. Assuming that the exchange lacks commercial substance, Horton would record land-new and a gain/(loss) of: Land Gain/(loss) a. $ 106,100 $ 0 b. $ 106,100 $ 12,400 c. 93700 $ 0 d. $ 93,700 $ 12,400
Business
1 answer:
solmaris [256]3 years ago
6 0

Answer:

c.- 93,700  // 0

Explanation:

As it lacks commercial substance neither Horton nor the other parti will recognize gain/loss on the trade.

Horton will recognize the new land for the value traded without a gain/loss entry:

Land  93,700 (88,400 + 5,300 cash)  debit

   Cash              5,300 credit

   Land            88,400 credit

--to record trade of land without commercial subtance--

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3 years ago
Buchholz Corporation follows a moderate current asset investment policy, but it is now considering a change, perhaps to a restri
omeli [17]

Answer:

6.56%

Explanation:

1. Restricted policy where current assets are 15% of sales.

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Current assets = 0.15 * 400000 = $60,000

Total assets = Fix assets + Current assets = 100,000 + 60,000 = $160,000

Debt accounts for 50% of capital structure. Therefore 50% assets will be financed through debt.

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Equity = Assets - Debt =$80,000

Interest on Debt = 10% * $80,000 = $8,000

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PAT = $27,000-$6,750

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ROE = 20,250/ 80000 = 25.31%

2. Calculations for relaxed policy where current assets are 25% of sales.

Sales = $400,000

Current assets = 0.25 * 400000 = $100,000

Total assets = Fix assets + Current assets = 100,000 + 100,000 = $200,000

Debt accounts for 50% of capital structure. Therefore 50% assets will be financed through debt.

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Equity = Assets - Debt =$100,000

Interest on Debt = 10% * $100,000 = $10,000

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Tax = 25% of 25,000 = $6,250

PAT = 25000 - 6,250 = $18,750

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3 years ago
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Answer:

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6 0
3 years ago
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which of the following is a document whereby a bank promises to pay a payee a certain amount of money at a future time?
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A certificate of Deposit is a document whereby a bank promises to pay a payee a certain amount of money at a future time.

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The purpose of a document is to facilitate the switch of records from its author to its readers. it is the author's activity to design the report so that the facts it contains can be interpreted accurately and effectively. To do that, the writer can employ a fixed of stylistic tools.

process documentation is the act of capturing or documenting all of the steps in a particular assignment. preferably, it has to happen in real-time. As employees carry out an assignment, they record every step they take.

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4 0
1 year ago
The company has provided the following estimated costs: Advertising expense $ 800 Direct labor 3,000 Direct materials 1,500 Indi
natita [175]

Answer:

$3,400

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Therefore, Estimated manufacturing overhead ;

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6 0
3 years ago
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