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Finger [1]
3 years ago
5

Ryan exchanged a car that he used in his business for the past 3 years for a new truck with a FMV of $25,000. This transaction t

ook place at the end of the year. The adjusted basis of the car was $8,000 at the beginning of the year of disposition. Ryan paid $4,000 cash and assumed a note payable of $10,000 to be paid in $2,000 increments over the next 5 years. Ryan’s depreciation on the car for the year of disposition was $2,500. What is the gain (loss) recognized on the transaction?
Business
1 answer:
alexandr1967 [171]3 years ago
3 0

Answer:

The gain on the transaction is $5,500

Explanation:

Gain on Transaction = Fair Value of Truck - Cash Paid - Note Payable - carrying value of car exchanged

= $25,000 - $4,000 - $10,000 - ( $8,000 - $2,500)  

= $25,000 - $4,000 - $10,000 - $5,500

= $5,500 Gain

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How do marginal costs<br> and benefits relate to trade-offs?
Lisa [10]

Answer:

A trade-off is the actual alternative option that is given up, while the value of this alternative option is the opportunity cost. ... Marginal cost is the cost of using one more unit of a good or service, and marginal benefit is the benefit or satisfaction received from using one more unit of a good or service.

Explanation:

6 0
3 years ago
Simon Software Co. is trying to estimate its optimal capital structure. Right now, Simon has a capital structure that consists o
lidiya [134]

Answer:

14.35%

Explanation:

Simon Software Co

rs= 12%

D/E = 0.25

rRF= 6%

RPM= 5%

Tax rate = 40%.

We are going to find the firm’s current levered beta by using the CAPM formula which is :

rs = rRF+ RPM

12%= 6% + 5%

= 1.2

We are going to find the firm’s unlevered beta by using the Hamada equation:

=bU[1 + (1 −T)(D/E)]

Let plug in the formula

1.2= bU[1 + (0.6)(0.25)]

1.2=(1+0.15)

1.2= 1.15bU

1.2÷1.15

1.0435= bU

We are going to find the new levered beta not the new capital structure using the Hamada equation:

b= bU[1 + (1 −T)(D/E)]

Let plug in the formula

= 1.0435[1 + (0.6)(1)]

=1.0435(1+0.6)

=1.0435(1.6)

= 1.6696

Lastly we are going to find the firm’s new cost of equity given its new beta and the CAPM:

rs= rRF+ RPM(b)

Let plug in the formula

= 6% + 5%(1.6696)

= 14.35%

3 0
3 years ago
Jason jones has been asked to assemble an eight-member self-managed work team of experienced employees to work on a project that
Jlenok [28]

Answer:

Explanation:

Align and Track Organizational, Team, and Individual Goals with Frequent Check-Ins. Provide Managers The Tools To Give Feedback While Creating A Culture Of Happier Employees. Real-Time Coaching. Recognition & Rewards. Pulse Suveys. Features: Check-Ins, Sync-Ups.

6 0
3 years ago
2. Let’s work out a simple example where a person smooths her consumption over time. Gwen is a real estate agent, and she knows
Pepsi [2]

Answer:

A) How much should Gwen consume in the average year?

Gwen should consume the average money she earns taking into account the good and bad years.

In the good years, she is earning $90,000, and in the bad years she is earning $20,000. We simply obtain the average:

$90,000 + $20,000 = $110,000/2 = $55,000

B) How many dollars will she save during the good years?

Personal saving equals disposable income minus consumption. As stated above, during the good years she will consume $55,000, while having a disposable income of $90,000. Her personal saving will then be:

$90,000 - $55,000 = $35,000

C) How many dollars will she borrow during the bad years?

During the bad years, Gwen is making $20,000, while consuming an average of $55,000 per year. Therefore, her total borrowing during the bad yeras is:

$55,000 - $20,000 = $35,000

In other words, for every bad year, she will exhaust a total good year's savings.

8 0
3 years ago
On January 1, 2021, Pence Airlines issued $400,000 of its 20-year, 8% bonds. The bonds were priced to yield 10%. Interest is pay
finlep [7]

Answer:

1) the price of the bonds can be determined by calculating the PV of the face value and coupon payments:

PV of face value = $1,000 / 1.05⁴⁰ = $142.05

PV of coupon payments = $40 x 17.159 (PV annuity factor, 5%, 40 periods) = $689.36

PV of each bond = $831.41 x 400 = $332,564

January 1, 2021, bonds issued at a discount

Dr Cash 332,564

Dr Discount on bonds payable 67,436

    Cr Bonds payable 400,000

2) amortization of bond discount = (332,564 x 5%) - 16,000 = $628.20 ≈ $628

June 30, 2021, first coupon payment

Dr Interest expense 16,628

    Cr Cash 16,000

    Cr Discount on bonds payable 628

3) amortization of bond discount = (333,192 x 5%) - 16,000 = $659.60 ≈ $660

December 31, 2021, first coupon payment

Dr Interest expense 16,660

    Cr Cash 16,000

    Cr Discount on bonds payable 660

4) bonds carrying value on December 31, 2021 = $333,852 - $335,000 = $1,148

December 31, 2021, adjusting entry for bonds' fair market value

Dr Unrealized loss on bonds' fair value 1,148

    Cr Fair value adjustment 1,148

4 0
3 years ago
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