Answer:
Takeover Co.
a) Goodwill = $146,000
b) Target's ROI = 36.42%
c) Takeover's ROI = 21.07%
d) False
Explanation:
a) Data and Calculations:
Target Co's net assets fair value = $162,000
Payment by Takeover Co = $308,000
Goodwill = $146,000 ($308,000 - $162,000)
b) Target's ROI:
Operating income = $59,000
Net assets = $162,000
ROI = ($59,000/$162,000) * 100
= 36.42%
c) Takeover Co's ROI:
Operating income = $64,900
Net assets = $308,000
ROI = $64,900/$308,000 * 100
= 21.07%
d) Takeover Co:
Goodwill = $93,000
Purchase price of Target = $255,000 ($93,000 + $162,000)
Answer:
Letter of Credit (LC)
a) Mbo Limited's bank can issue a letter of credit to Tiffany Anderson Group Ltd.'s bank a credit guarantee by which Mbo's bank guarantees that Mbo Limited will settle Tiffany Anderson Group Ltd in full for the amount involved in their trade relationship. It is usually used by importers and exporters to settle trade credit. It is the most acceptable means of settling debts across national boundaries.
b) A diagram is attached. The procedures are detailed below:
A. A Sales Contract is established between the seller (exporter) and the buyer(importer).
B. The importer makes a request to its bank for issuance of letter of credit.
C. The importer’s bank issues a letter of credit to the exporter’s bank.
D. The exporter’s bank advises on the letter of credit to the exporter.
E. The exporter presents export documents (bill of lading and invoice) to its bank.
F. The exporter’s bank delivers the documents to the importer’s bank.
G. The importer’s bank debits the account of the importer for the stated amount after confirming that the documents are in order.
H. The importer’s bank pays the purchase price to the exporter’s bank.
I. The exporter’s bank credits the exporter’s bank to show payment. This ends the transaction.
c. The letter of credit guarantees both the Mbo Limited and Tiffany Anderson Group Ltd. It guarantees and ensures that payment for goods are not paid to Tiffany Anderson Group Ltd until there is evidence that the correct goods and quantity have been shipped by Tiffany Anderson Group Ltd (through the bill of lading). It also assures Tiffany Anderson Group Ltd of payment for shipped goods since the documents cannot be released to Mbo Limited unless Mbo Limited's account had been debited and the money transmitted to Tiffany Anderson Group Ltd through its bank.
Explanation:
As above.
Declining-balance depreciation method does not use an asset's residual value to calculate depreciation expense.
<h3>What is depreciation?</h3>
- In accountancy, depreciation refers to two aspects of the same concept: first, the actual decrease of fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wear, and second, the allocation in accounting statements of the original cost of the assets to periods in which the assets are used.
- Depreciation is thus the decrease in the value of assets and the method used to reallocate, or "write down" the cost of a tangible asset (such as equipment) over its useful life span.
<h3>What does accounting depreciation mean?</h3>
- During the asset's anticipated useful life, depreciation is allocated in order to charge a fair percentage of the depreciable amount in each accounting period.
- Amortization of assets with predetermined useful lives is included in depreciation.
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The process of a business or organization attempting to acquire goods or services to accomplish the goals of its enterprise is called purchasing
What is the purchasing means?
Purchasing is the organized acquisition of goods and services on behalf of the buying entity. Purchasing activities are needed to ensure that needed items are obtained in a timely manner and at a reasonable cost.
What are the 3 types of purchasing?
There are three main types of procurement activities: direct procurement, indirect procurement, and services procurement
Why is purchasing important?
Purchasing is generally responsible for spending more than 50 percent of all the revenues the firm receives as income from sales. More money is often spent for purchases of materials and services than for any other expense, and the spend in services is rapidly increasing.
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