Answer: The correct answer is B) He might have to purchase a less-expensive car.
Explanation:
Increasing interest rates make the process of borrowing money less desirable. Since people usually borrow money for major purchases, the correct answer would be that <em>Joe might have to purchase a less-expensive car.</em> People often use credit to buy a car, and since all of the other options involve much less-expensive situations, we can determine that this is the correct answer.
Answer:
$2,730,000
Explanation:
Operating activities: It includes those transactions which affect the working capital after net income. The increase in current assets and a decrease in current liabilities would be deducted whereas the decrease in current assets and an increase in current liabilities would be added.
These changes in working capital would be adjusted. Moreover, the depreciation expense is added to the net income
The preparation of the Cash Flows from Operating Activities—Indirect Method is shown below:
Cash flow from Operating activities - Indirect method
Net income $2,500,000
Adjustment made:
Add : Depreciation expense $160,000
Add: Decrease in accounts receivable $350,000
Less: Decrease in accounts payable -$280,000
Total of Adjustments $230,000
Net Cash flow from Operating activities $2,730,000
Answer:
Investment on Gold Company 305,565
Goodwill 20,360
Carrying value 325,925
Explanation:
<em>Because our current control, we have to use the equity valuation</em>
<em>the net income increased our investment and the cash dividends decreased.</em>
beginning book value 275,400
+ 30% net income
30% of 125,600 = 37,680
-30% cash dividends
30% of 25,050 = (7,515)
ending I<u>nvestment on Gold Company 305,565</u>
<u />
<em>The goodwill will be amortized over 5 years using straight-line method</em>
<u>Goodwill</u>
300,850 - 275,400 = 25,450
life 5 years
25,450/5 = 5,090
amortization (5,090)
<u>Total 20,360</u>
Answer:
option (A) $11,000
Explanation:
Given;
Miles drove in first year = 15,000
Miles drove in second year = 22,000
Cost of the truck = $175,000
Residual value = $25,000
Estimated life = 10 years or 300,000 miles
Now,
using the activity based method
Rate of depreciation per mile driven = 
or
Rate of depreciation per mile driven = 
or
= $0.5 per mile
also,
Number of miles driven in second year = 22,000 miles
Hence,
Depreciation for the second year
= Depreciation rate × Number of miles driven in second year
= 0.5 × 22,000
= $11,000
Hence,
The correct answer is option (A) $11,000
