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Brut [27]
3 years ago
14

Jamison Enterprises acquired a franchise to operate a Good Burger Joint in January, 2013. The cost of the franchise was $360,000

and was estimated to have a limited life of 30 years. Early in the year 2018, the franchise was forced out of business due to lawsuits. Jamison should record which of the following series of expenses to their income statement for the years noted
A) 12,000,
B) 12,000
C) 300,000 from 2013
D) 2014 and 2018 respectively
Business
2 answers:
Nitella [24]3 years ago
8 0

Answer: A. $12000

Explanation:

Jamison Enterprises acquired a Franchise, The Franchise license is an Asset to Jamison Enterprises because they expect an inflow economic benefits in the form of Revenue from the use of this Franchise license. The Franchise License has a Useful Life of 30 years

The Franchise License would be amortized over a period of 30 year. Intangible assets like franchise License are amortized over their useful life. The same way we depreciate assets like vehicles over their useful life, Think of amortization as The Depreciation for intangible asset.

Amortization expense incurred each year will be calculated by taking Cost of Franchise License and divide it by 30 which is the useful life of the Franchise license. The amortazation expense incurred each year would be 360 000/30 = $12000

An Expense of $12000 will be will be reported on the Income statement each year from 2013 until 2017, amortization expense for 2018 will be adjusted for the number of months the business operated before closing down.

The series of expense that should be recorded in the income statement each year is $12000

goldenfox [79]3 years ago
7 0

Answer:

$12,000 for 2013 and $300,000 for 2018

Explanation:

Jamison Enterprises acquired a franchise to operate a Good Burger Joint in January, 2013. The cost of the franchise was $360,000 and was estimated to have a limited life of 30 years.

Hence the yearly franchise cost at this point is 360,00 / 30 years = $12,000

Early in the year 2018, the franchise was forced out of business due to lawsuits.

At this point the company had only operated for 5 years and have incurred franchise cost to date of 5 years x $12,000 = $60,000

Jamison should record $300,000 ($360,000 - $60,000 to date) balance of the franchise cost in its expenses to their income statement for the years 2018

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It will take 8.04 years for the initial investment of $15000 to become $30,000

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The future value of $15,000 invested now earning a rate of return of 9% per year is $30,000, it the future equivalent of an amount invested now when the invested amount has earned interest over a specific period of time.

The below future value formula of single cash flow can be used to determine the number of years it takes for the initial investment to double.

FV=PV*(1+r)^N

FV=future value=$30,000

PV=initial investment=$15,000

r=rate of return=9%

N=number of years it takes for the initial investment to double=unknown(assume it is X)

$30,000=$15000*(1+9%)^N

$30000/$15000=(1+9%)^N

2=1.09^N

take log  of both sides

ln(2)=N*ln(1.09)

N=ln(2)/ln(1.09)

N=8.04 years

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2 years ago
Levelor Company's flexible budget shows $10,750 of overhead at 75% of capacity, which was the operating level achieved during Ma
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Answer:

The controllable variance for the month was $1,709 unfavorable

Explanation:

Controllable variance: The controllable variance show a difference between actual overhead expenses incurred and budgeting operating level based on direct labor hour.

In mathematically,

Controllable variance = Actual overhead expenses - budgeting operating level based on direct labor hour

where,

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= budgeted operating level  × direct labor per hour

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Now, put these values on the above formula:

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Controllable variance = $11,227 - $12,936 = $1,709 unfavorable

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3 years ago
Assume that the yen/dollar exchange rate quoted in London at 3:00 p.m. is ×120 = $1, and the New York yen/dollar exchange rate a
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A. currency swap.

B. arbitrage.

C. backwardation.

D. straddle.

<u>The answer is </u><u>b.</u>

Explanation:

Arbitrage is a common practice used to gain profits from inefficient markets. Since most financial markets are inefficient by nature, dealers and similar business entities that have an interest in this kind of business practice.

The profit in arbitrage is based on the <u>imbalance in the two prices</u> on each market respectively. The term is mainly used for financial markets and various financial instruments (securities, bonds, currencies).

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The amount that they have not earned but have received would therefore be;

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= $220,000

<em>This amount will be recorded after they finish deliveries of magazines in next year May. </em>

7 0
3 years ago
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