Solution:
The reporting unit's book value of $250 million meets the market value of $220 million.
Requirement 1:
Determination of implied fair value of goodwill:
Fair value of Center point, Inc. $220 million
Fair value of Center point’s net assets (excluding goodwill) 200 million
Implied fair value of goodwill $ 20 million
Measurement of impairment loss:
Book value of goodwill $62 million
Implied fair value of goodwill 20 million
Impairment loss $42 million
Requirement 2: If the operating unit's market valuation of 270 million dollars surpasses 250 million dollars, there is no depreciation risk.
Answer:
a. Overstates Year 1 cost of goods sold.
b. Understates Year 1 net income
c. Understates Year 2 cost of goods sold
Explanation:
a. The formula for Calculating the Cost of Goods sold is;
<em>Cost of Goods Sold = Opening inventory + Purchases - Closing inventory.</em>
If the closing inventory is understated, it will reduced the amount being subtracted from Purchases and Opening inventory which would means that Cost of Goods sold will be overstated.
b. The Cost of goods sold is deducted from sales to give Gross profit. If Cost of goods is overstated, it will reduce Gross Profit higher than it should. A lower Gross Profit equates to a lower Net Income.
c. Going by the formula in <em>a;</em>
<em>Cost of Goods Sold = Opening inventory + Purchases - Closing inventory.</em>
In Year 2, the understated Year 1 closing stock will become the understated Year 2 Opening stock. With the opening stock understated, the Cost of goods will be understated as well because Opening stock is meant to increase Cost of goods sold as the formula shows. If it is understated, the amount that it will add will be understated as well.
The answer to this question is a problem.
Problem is a situation that everybody encounters that is needed for a solution or a specific result. Problems cannot be ignored or avoided, a person should should know how to solve it and deal with the problem once it hits you. In order to deal with problems, a person should always focus on the outcome and the possible solution to it.
Answer:
$9,800,000
Explanation:
Statement of Cash Flows (Indirect Method)
Particulars Amount
Net income $8,400,000
Add: Adjustment for operating activities -<u>$1,300,000</u>
Net cash flow from Operating Activities (I) $7,100,000
Add: Net Cash Flow from Investing Activities (II) -$1,300,000
Add: Net Cash Flow from Financing Activities (III) <u>$4,000,000</u>
Net Cash Flow (I+II+III) <u>$9,800,000</u>
Answer: When employees are provided with a conducive environment they perform better than normal and with good products and services customers are satisfied hence more profit. The CEO should ensure all department work with same goal for the benefit of the organization
Explanation:
Companies tend to focus on the non-economic goals such as providing a good place for employees to work, good product and services to the customers and acts as a good citizen in the society. Achieving these goals are costly and doing so might interfere with profit maximization but in long term achieving them is beneficial to the company. When employees are provided with a conducive environment they perform better than normal and with good products and services customers are satisfied hence more profit. The CEO should ensure all department work with same goal for the benefit of the organization
