Answer:
Their relative fair values
Explanation:
The relative fair value method is mainly used in the determination of straight debt that is similar, warrantee, or tradable options. When different assets have been purchased, it is common for their purchase prices not to separate individually out the total cash that would be paid for these assets. But these assets will be most likely to be depreciated at rates that are not similar. Therefore, the relative fair value method will be the best and most effective technique that would be used in the allocation of total purchase costs for each of the available assets. This technique will depend mainly on the appraised fair market value for the assets being considers. The goal, in this case, is to allocate the total cost of purchasing through the use of relatively reasonable value methods as the main formula.
Asset allocation = (Purchase Cost) * (Asset FMV/Total FMV)
Where FMV is the Fair Market Value
Usually, a lump-sum purchase will occur where different assets have been acquired mainly from a similar price. Therefore, each of these assets will have to be recorded differently (fixed assets), specifically in an accounting record. To this, the purchase price will be allocated among the available assets acquired based mainly on the fair market values. Relative fair market value can be considered as a method of valuations in consideration of the assets of an acquired –business. In this case, a basket purchase price (lump sum) will be allocated to these assets. All the assets will be treated as a group. As a result, the relative fair value can help investors, particularly when it comes to choosing among different investments, particularly those that are available at any given time. The method will look mainly at relevant management, economic data, and footnotes, which are essential in the assessment of value relative of any given stock to its peer.
Answer: The correct answer is "B, C, and D".
Explanation: All of these are corrects statements regarding the direct write-off method for calculating bad debt expense.
- This method is generally not consistent with GAAP and accrual accounting.
- Using this method generally causes an over estimate of accounts receivable in the company's balance sheet.
- One of the peculiarities of this method is that it only recognizes the expense for bad debts when a specific account is determined uncollectible.
Answer:
Free cash flow to the firm = $326,000
Explanation:
The free cash flow to the firm can be computed using the following formula:
Free cash flow to the firm = Cash flow from operating activities + (Interest paid * (100% - Tax rate)) - Net capital expenditures ............... (1)
Where:
Cash flow from operating activities = $600,000
Interest paid = $40,000
Tax rate = 35%
Net capital expenditures = $300,000
Substituting the values into equation (1), we have:
Free cash flow to the firm = $600,000 + ($40,000 * (100% - 35%)) - $300,000 = $326,000
Answer:
$812.49
Explanation:
Given that
Sale value of ordinary annuity = $4,947.11
Time period = 8 years
Interest rate = 6.50%
So by considering the above information, the annual annuity payment is
$4,947.11 = Annual annuity payment × Present value annuity factor at 6.5% for 8 years
$4,947.11 = Annual annuity payment × 6.0888
So, the annual annuity payment is $812.49
Answer:
Missing word <em>"Indicate the effect each transaction has on the accounting equation, (Assets = Liabilities + Stockholders' Equity), using plus and minus signs."</em>
Assets = Liabilities + Stockholders' Equity
1. Increase(+) No Effect Increase(+)
2. Decrease(-) No Effect Decrease(+)
3. Increase(+) No Effect Increase(+)
4. Decrease(-) No Effect Decrease(+)
