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Ksivusya [100]
3 years ago
7

Link Co. purchased machinery that cost $3,000,000 on January 4, 2019. The entire cost was recorded as an expense. The machinery

has a nine-year life and a $200,000 residual value. The error was discovered on December 20, 2021. Before the correction was made, and before the books were closed on December 31, 2018, retained earnings was understated by:__________
a. $3,000,000.
b. $2,066,667.
c. $2,377,778
d. $2,333,333.
Business
1 answer:
Natali5045456 [20]3 years ago
7 0

Answer:

See below

Explanation:

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On November 30, Parlor, Inc. purchased for cash at $15 per share all 250,000 shares of the outstanding common stock of Shaw Co.
scoray [572]

Answer:

Value of goodwill = $350,000

Explanation:

In case where is investment in 100% shares of a company then that may give rise to goodwill or rise to capital reserve.

Any amount paid to acquire that interest in company more than the value of such company is recorded as goodwill.

Here, cost of acquisition = $15 \times 250,000 =  $3,750,000

Carrying value of net assets of the company = $3,000,000

Increase in value due to fair value = $400,000

Value of goodwill = Purchase price - Fair Value of net assets

Therefore, value of goodwill = $3,750,000 - ($3,000,000 + $400,000) = $350,000

7 0
3 years ago
Brief Exercise 4-5 Morgana Company identifies three activities in its manufacturing process: machine setups, machining, and insp
Anni [7]

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

The company identifies three activities in its manufacturing process: machine setups, machining, and inspections.

Machine setups:

Estimated annual overhead= $140,000

Cost driver= machine setups

Activity= 2,000 machine setups

Machining:

Estimated annual overhead= $240,000

Cost driver= machine hours

Activity= 24,000 machine hours

Insections:

Estimated annual overhead= $54,000

Cost driver= number of inspections

Activity= 1,200 inspections

To calculate the estimated manufacturing overhead rate we need to use the following formula:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Machine setup:

Estimated manufacturing overhead rate= 140,000/2,000= $70 per machine setup

Machining:

Estimated manufacturing overhead rate= 240,000/24,000= $10 per machine hour

Inspection:

Estimated manufacturing overhead rate= 54,000/1,200= $45 per inspection

3 0
3 years ago
Ruth runs a bread store. Her store's supply is highly elastic. What will Ruth do when the price of bread falls?
I am Lyosha [343]

Answer:

D

Explanation:

If there is more bread for a low price more people will come.

I did this before.

P.S.S Please press the crown if you will.

5 0
2 years ago
Prices for many goods are higher in the city of Shenzhen on the mainland of China than in the city of Hong Kong. An article in t
Marysya12 [62]

Answer:

A) buy the product in Hong Kong and sell it in Shenzhen so eventually the price in Shenzhen will decrease and the price in Hong Kong will increase

Explanation: when the price of the product in Shenzhen reduces due to the low priced product being sold in same place the high priced is sold, this would even out the demands and the price of that in Shenzhen would be dragged down to be able to compete with that of the low priced.

5 0
2 years ago
Santa Fe purchased the rights to extract turquoise on a tract of land over a five-year period. Santa Fe paid $429,000 for extrac
givi [52]

Answer:

cost depletion expense =  $128700

so correct option is B. $128,700

Explanation:

given data

paid = $429,000

recover = 6,500 pounds

extracted = 1,950 pounds

sold = $277,000

to find out

cost depletion expense

solution

we get here cost depletion expense that is express as

cost depletion expense = \frac{paid}{recover} × extracted   ...........1

put here value we get

cost depletion expense = \frac{429000}{6500} × 1950

cost depletion expense =  $66 × 1950

cost depletion expense =  $128700

so correct option is B. $128,700

5 0
3 years ago
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