What do Rational decision makers use to make economic decisions?

What is the primary difference between: (i) accounting for a business combination when the subsidiary is dissolved; and (ii) acc

dangina [55]

Answer:

It is not formally recorded in the accounting record of the parent company if the subsidiary retains its incorporation.

Explanation:

IFRS 3 explains business acquisition as the taking over the control of an existing business by another with the acquired assets measured at the fair value at the date of transaction.

The combining of interest method has ceased to be considered by GAAP since 2001.

That means a subsidiary has to lose its incorporation for full acquisition or rather treated as an investment by the acquiring company.

4 0

3 years ago

A firm that uses an international division structure sometimes experiences intra-organizational conflict because ________. Grupo

valkas [14]

Answer:

more resources and management attention tend to get channeled toward the international division than toward the domestic divisions

Explanation:

A firm that uses an international division structure sometimes experiences intra organizational conflict because MORE RESOURCES AND MANAGEMENT ATTENTION TEND TO GET CHANNELED TOWARD THE INTERNATIONAL DIVISION THAN TOWARD THE DOMESTIC DIVISIONS.

4 0

3 years ago

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A developer is proposing to build and operate an 8 store strip mall. Each unit would rent for $3,500 per month. It is expected t

lys-0071 [83]

Answer:

Requirement A: CAP Rate is 12.5%

Requirement B: Capitalized Value of the Property is $1,884,960

Requirement C: Loan Amount is $1,413,720

Requirement D: Debt Service Coverage Ratio is 1.85

Requirement E: Loan per unit is $176,715 Per Unit

Explanation:

Requirement A: Find the CAP Rate

The CAP Rate will be calculated using the following formula:

CAP Rate = Annual Net Operating Income (NOI) (Step1) / Property Capitalized Value (Step2)

Here

Operating Income is $235,620 (Step1)

Property Capitalized Value (Step2)

Now, by putting values we have:

CAP Rate = $235,620 / $1,884,960 = 12.5%

Step1: Find Annual Net Operating Income (NOI)

As we know that:

Operating Income = Expected Revenue - Operating Expense

Here

Expected Revenue from 8 Strip Malls = Rent / Month * 12 Months * (1 - Vacancy Ratio) * 8 Strips Malls

= $3,500 * 12 * (1 - 15%) * 8

= $285,600

Operating Expenses = Expected Revenue * 17.5%

= $285,600 * 17.5% = $49,980

Now by putting value in the above Operating Income equation, we have:

Annual Operating Income = $285,600 - $49,980 = $235,620

Step2: Find Property Capitalized Value (It is also Requirement B)

Property Capitalized Value = Annual Operating Income / Minimum Accepted Rate of Return (MARR)

Here

Annual Operating Income is $235,620 from Step1

MARR is 12.5%

By putting values, we have:

Capitalized Value of the Property = $235,620 / 12.5% = $1,884,960

Requirement C. Find Loan Amount

It is given in the question that the Loan Amount is 75% of Property Capitalized Cost. This implies:

Loan Amount = $1,884,960 * 75% = $1,413,720

Requirement D. Debt Service Coverage Ratio

Debt Service Coverage Ratio (DSCR) = Annual Net Operating Income / Total Debt Service for the Year

Here

Annual Net Operating Income is $235,620 from Step1

Total Debt Service for the Year $127,235 (See Step3 below)

By putting values, we have:

Debt Service Coverage Ratio = $235,620 / $127,235 = 1.85

Step3: Total Debt Service for the year

Total Debt Service for the year = Loan Amount * Debt Service Rate

Here

Loan Amount is $1,413,720

Debt Service Rate is 9%

By putting values, we have:

Total Debt Service for the year = $1,413,720 * 9% = $127,235

Requirement E. Find Loan Amount

We can find loan per unit by simply dividing the loan amount by number of strip mall. Here total number of strip mall are 8. This implies that:

Loan Per Unit = $1,413,720 / 8 Units = $176,715 Per Unit

3 0

3 years ago

A. Draw a production possibilities curve for a hypothetical economy producing capital and consumer goods.

solniwko [45]

Answer:

See the attached and the explanation below.

Explanation:

a. A production possibility curve (PPC) refers to a curve that displays different combinations of the maximum output of two goods that can be produced from a given or fixed amount of input and technology.

An example of PPC is figure (A) in the attached document.

b. When there is a major technical breakthrough in the capital goods industry and the new technology is widely adopted only in this industry, it will make the PPC to rotate outward at the capital good axis only, while consumer good axis will remain the same (see the curve and the arrow in Figure B in the attached). This implies that the break has enabled the economy to produce more of capital goods while consumer goods production level remains the same.

c. When there is a technological advance in consumer goods production, but not in capital goods production, it will make PPC to rotate outward at the consumer good axis only, while capital good axis will remain the same (see the curve and the arrow in Figure C in the attached). This implies that the break has enabled the economy to produce more of consumer good while capital good production level remains the same.

8 0

3 years ago

A 2-column table has 9 rows. The first column is labeled monthly expenses with entries rent, utilities phone internet, groceries

meriva

Explanation:

234.456.567.567.567.456.456.

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3 years ago

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