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Kitty [74]
3 years ago
7

Lardo Inc. plans to build a new manufacturing plant in either Country X or Country Y. It projects gross revenue in either locati

on of $4 million per year. Operating expenses would be $1.5 million in Country X and $1.8 million in Country Y. Country X levies income tax at a rate of 20 percent on net business income. Country Y does not have an income tax, but assesses a 10 percent tax on gross revenue, without allowance for any deductions. a. Calculate the after-tax profit for each country. b. In which country should Lardo build its new plant?
Business
1 answer:
Tom [10]3 years ago
3 0

Answer:

Following are the solution to the given points:

Explanation:

For point a:

After-tax profit for each country.

For Country X:

Particulars \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ Amount(\$)\\\\Gross \ \ Revenue\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 4,000,000\\\\ Operating\ \ Expenses \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  \ \ \ \ \ \ \ \ \ \ \ \ \ \  1,500,000\\\\ Pre-tax \ \ Profit \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 2,500,000 \\\\  

Tax \ [ 2,500,000 \times 20\% \ ] \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  \ \ \ \ \ \ \ \ \ \ \ \ \ \ 500,000\\\\ After-tax\ \ profit\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 2,000,000

For Country Y:

Particulars \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ Amount(\$)\\\\Gross \ \ Revenue\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 4,000,000 \\\\Operating\ \ Expenses \ \ \ \ \ \ \ \ \ \ \ \ \ \  \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  1,800,000\\\\

Pre-tax\ \ Profit \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  2,200,000\\\\Tax\  [40,00,000 \times 10\%] \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  400,000 \\\\After-tax\ \ profit \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  1,800,000

For point b:

For Country X:

Lardo is expected to establish its new plant in Country X, because Country X's after tax income is higher than Country y's after-tax income [$1,800,000].

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comparability of data

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Comparability of information is one attribute used only to characterize the consistency of descriptive statistics. For two factors the principle of comparability of data is especially critical to a Triad.

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A firm creates value by?
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Answer:

Paying more cash to its creditors and stockholders than the amount it received from them (1)

Explanation:

Stockholders are the primary owners of the company who have invested their money in the company's shares i.e equity holders and expect a reasonable returns higher than their investment.

Creditors are money lenders like banks i.e debt holders who have given loan or bank overdraft to the company and expecting the company to pay back at an agreed date with interest.

A firm creates value by being able to invest money sourced from various investors into a viable project that guaranteed greater returns than the weighted average cost of capital.

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3 years ago
PB9-2 Recording and Interpreting the Disposal of Long-Lived Assets [LO 9-5] During the current year, Rayon Corporation disposed
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Answer:

Machine A entries

Debit Other income/disposal account (p/l)  $60,000

Credit Asset account $60,000

Being entries to derecognize the cost of the Machine A

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Credit Other income/disposal account (p/l)  $28,000

Being entries to derecognize the accumulated depreciation on Machine A

Debit Cash account  $33,500

Credit Other income/disposal account (p/l)  $33,500

Being entries to record the amount received from the disposal of machine A

<u>Machine B entries</u>

Debit Other income/disposal account (p/l)  $14,200

Credit Asset account $14,200

Being entries to derecognize the cost of the Machine B

Debit Accumulated depreciation account  $7,365

Credit Other income/disposal account (p/l)  $7,365

Being entries to derecognize the accumulated depreciation on Machine B

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When the amount received from the disposal of an asset is higher than the carrying value of the asset, the company makes a gain on disposal. The proceed from the disposal of an asset may be recorded in the disposal or other income account.

On disposal, the carrying amount of the asset is derecognized by  

Debit Other income/disposal account (p/l)

Credit Asset account

with the cost of the asset, then,

Debit Accumulated depreciation account

Credit Other income/disposal account (p/l)

With the accumulated depreciation of the asset at the date of disposal,

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Answer:

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Answer:

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