It is very important to pay attention to these notes because, it is the notes that will indicate when the use of the combination code is appropriate and it will also point out the codes that are combined into one combination code.
Answer:
A. In a situation where prices are declining, companies using LIFO will report the smallest cost of goods sold.
- This is because LIFO calculates goods sold as Last in, First Out. And since the cost is declining, the last in inventory will have the smallest cost of goods sold.
C. Weighted average cost of goods sold will be between FIFO and LIFO costs of goods sold.
- Whether the cost of goods are rising or falling, this will always be the case.
D. Companies using LIFO will pay higher taxes than companies using FIFO, assuming all else being equal.
- This is because when using LIFO in this scenario, higher profits would be recorded and the tax is paid on profit, thus higher taxes.
F. Companies using LIFO will report the highest ending inventory on their balance sheets (as compared to companies using FIFO or weighted average,)
- This is simply because in this scenario, the LIFO sold the cheaper goods first leaving an ending inventory of the relatively expensive goods unlike FIFO which would have sold the expensive first. Again, emphasis on this scenario of declining cost.
Answer:
c. 42.6%
Explanation:
Average total assets = $410,000+$257,000/2
Average total assets = $667,000
Average total assets = $333,500
Net income = $112,000
Interest expenses = $30,000
Return on total assets = Net income + Interest expenses / Average total assets
Return on total assets = $112,000 + $30,000 / $333,500
Return on total assets = 0.42388060
Return on total assets = 42.39%
Answer:
$77,600
Explanation:
Total value of compensation expenses:
= No. of options granted × Fair of value options
= 97,000 × $4
= $388,000
Compensation expenses should be recognized per year:
= Total value of compensation expenses ÷ Excercisable time
= $388,000 ÷ 3
= $129,333.33
Expenses recognized in year 1 = $129,333.33
Due to unexpected turnover 20% of the options are forfeited,
Annual compensation = $388,000 × 80%
= $310,400
Annual compensation in year 2:
= Accumulated compensation expenses in year 2 - Expenses recognized in year 1
= [$310,400 × (2/3)] - $129,333.33
= $206,933.33 - $129,333.33
= $77,600
