Answer:
Gadget will have higher earning.
Explanation:
Price Earning Ratio is the ratio of Market price to the earning per share. PE Ratio measure the effect of earning over the market price of the company.
Widget
Stock Price = $30
Earning per share = $2
PE ratio = $30 / $2 = 15 times
Gadget
Stock Price = $30
Earning per share = $2
PE ratio = $20 / $1 = 20 times
Gadget will have higher earning.
Answer: D. The investor has no tax liability on distributions received, and the investment company has no tax liability on retained income
Explanation:
Municipal Securities are exempt of Federal taxes and this is what makes them most attractive. An investor in a mutual fund which invests solely in municipal securities will therefore not have any tax liability because their returns would be based on securities that are federally tax exempt. The same goes for any income the Mutual fund intends to retain.
Answer: debit to Stock Investments for $55,080.
Explanation:
As this is an investment in another company, it will count as an asset which means that when it increases, the account will have to be debited. It will therefore be debited for $55,080 to show the investment.
Cash will decrease by the same amount which means that it will have to be credited because assets are credited when they decrease.
Dr Stock Investments $55,080
Cr Cash $55,080
Answer: they will report an interest expense of $150000 in December 2020
Explanation:
firstly we calculate how much interest will be accumulated for the whole year so we are given a $5 million Dollar purchase which is the amount that will accumulate interest over time, then we have been told the company ha issued a 1 year installment note therefore we have a time frame.
so now we will calculate the yearly interest of $5 million :
$5 000000x12% = $600000 so the company will accumulate this interest yearly then we divide this amount by 12 to get the monthly interest.
$600000/12 = $ 50000 per month interest thereafter we will multiply the monthly interest of $50000 by 3 months which is months from October to December.
therefore the interest expense to be reported on the December 2020 income statement is $50000 x 3= $150000
Answer:
The answer is D. Puffery.
Explanation: When an advertisement is being made, certain boastful and exaggerated claims can be made by a company about the superiority and uniqueness of their product.
This claim is termed as Puffery.
Puffery is defined as advertising or promotional content that makes exaggerated or boastful statements about a product or service that are based on opinion rather than something that can be measured.
Puffery in advertising is done based on the chance that no reasonable person would presume the exaggeration to be literally true.
This is what Esme Inc. has done by claiming that its mascara is the best in the world, and also gives ten times more volume to the eyelashes. This is an exaggerated claim.
