Answer:
$400,000
Explanation:
Since at December 31, Year 5, Tedd's tax advisor believed that an unfavorable outcome was <u>probable</u>. And a <u>reasonable estimate </u>of additional taxes was $400,000 but could be as much as $600,000.
Although after the Year 5 financial statements were issued, Tedd received and accepted an IRS settlement offer of $450,000.
Tedd should have included an amount of $400,000 as accrued liability in its December 31, Year 5 balance sheet
The reason is that according to the International Financial Reporting Standards, a PROVISION must be made as long as the conditions below were obtainable at year end.
- Existing Condition (which in this case is the tax dispute with the IRS)
- Probable Cash Outflow (which Tedd's Tax adviser confirmed)
- Reliable Estimate of Outflow ( which the scenario stated ''A reasonable estimate of additional taxes was $400,000'')
Hence, such 'reasonable estimate is the appropriate amount for inclusion in the financial statements.
Answer:
Bad debts expenses Debit $ 11,750
Allowance for uncollectible receivables Credit $ 11,750
Explanation:
The allowance for uncollectible accounts receivables balances are calculated as a percentage of the receivable balance.
The receivable balances as at December 31, 2018 is
Services provided on account $ 154,000
Cash collections received <u>$ 107,000</u>
Receivables from services uncollected <u>$ 47,000</u>
Estimated percentage considered uncollectible 25 %
Allowance for uncollectible accounts $ 47,000 * 25 % = $ 11,750
Answer:
aggregate demand curve; right
Explanation:
Inflation can be regarded as
when the level of price of goods/service increases for consumer to buy, it can be measured as a result of change in price. There are four types of level of inflation which are creeping, walking as well as galloping, and hyperinflation, which are measured base on speed. It should be noted that For a given level of inflation, if a rise in the stock market makes consumers more willing to spend (the wealth effect), then the aggregate demand curve shift right
Answer:
Contingencies are potential liabilities that might result because of a past event
Explanation:
Reasonably possible losses are only described in the notes and remote contingencies can be omitted entirely from financial statements.
The correct answer is false.
It is false that the slope of the investment demand function indicates how sensitive investment is to changes in real interest rates. The 'steeper' the investment demand function, the less sensitive investment is to changes in the real rate of interest, all else constant.
We can say that the downward slope is the consequence of several reasons. For instance, the concept that money, its nominal value, is fixed. However, the real value of money depends on the level of prices. So the demand for money is related to the demand for it. The interest rate falls when the price level falls.
