Answer:
The correct option is (b)
Explanation:
According to the scenario, the foreign currency that original sold at the market is shown below:
= (Forward rate to Jan 15 - Spot rate) × paymen made
= ($0.00089 - $0.00082 ) × 20 million
= $0.00007 × 20,000,000
= $1,400 premium
hence, the foreign currency that originally sold at the market is $1,400 premium
Therefore the correct option is (b)
Answer:
S/N ACCOUNT DEBIT CREDIT
1 Equipment $22,000
Cash $22,000
Being payment for new component expected to increase the
equipment’s productivity by 10% a year
2. Equipment Repairs expenses $6,250
Cash $6,250
Being payment for equipment repair
3. Equipment $14,870
Cash $14,870
Being payment for equipment repair to prolong the useful life
the asset
Explanation:
The initial cost incurred in acquiring an asset is debited to asset account, subsequently every other cost spent on the assets are either expenses against the earning of that period or expensed over many years over the useful life of the asset.
Capitalization is the recognition of an expense as an asset in the balance sheet rather than expenses in the income statement.
The payment of $22,000 paid for the equipment productivity must be capitalized, that is added to the cost of the asset because it is a cost that is expected to increase the equipment’s productivity by 10% a year.
The $6,250 paid for normal repair is a revenue items which is to be expensed against the earning of that period.
The $14,870 paid for repairs which will increase the useful life of the equipment from four to five years is a capital expenditure which should capitalized, that is added to the cost of the asset.
Answer:
$9,600
Explanation:
Calculation for Bumble Bee's pretax accounting income
Using this formula
Pretax accounting income=Taxable income-Accrued warranty expense+(Tax depreciation-Book depreciation)
Let plug in the formula
Pretax accounting income=$7,000-$400+($5,000-$2,000)
Pretax accounting income=$7,000-$400+$3,000
Pretax accounting income=$9,600
Therefore Bumble Bee's pretax accounting income will be $9,600
