Answer:
a. $135,845.77
b. $79,154.23
Explanation:
The computation of the basis is shown below:
a. For Land
= Total value of the property × land appraised value ÷ Total appraisal value
= $215,000 × $158,750 ÷ $251,250
= $135,845.77
b. For warehouse
= Total value of the property × warehouse appraised value ÷ Total appraisal value
= $215,000 × $92,500 ÷ $251,250
= $79,154.23
The total appraisal value is
= $92,500 + $158,750
= $251,250
Answer:
Equal to
Explanation:
Financial theory assumes that financial markets are efficient and that there is no information failure in conducting financial transactions. However, this is an assumption and there could, in some instances, be asymmetric information in the form of adverse selection and moral hazards. For example, if managers of a corporation know how well or how poorly their business is doing than stockholders (as organizational performance determines the price of a security), then there would be an information failure or informational inefficency. Also, a potential investor who cannot distinguish between a firm whose security has a high potential for profit and low risks compared to that with a low potential for profit and high risk will be willing to pay a price that lies between the value of stock from bad firms and the value of stock from good firms. This will not augur well for good firms as their stock is underpriced and they will be reluctant to sell.
When the financial market is efficient, investors of stock would be able to earn supernormal returns on their investments. It is therefore neccessary that the price of a corporation's common stock should be equal to the present value estimate of the firm's expected cash flows discounted by it appropriate rate of return.
The liabilities will be understated.
<span>Alice had original amount = $12,450. She earned an interest of $622.50 on the original amount. To find the percent, say, $622.50 = x% of $12,450, we get x% = 0.05 or x = 5%. Thus, Alice earned approximately 5% of the interest.</span>
Answer:
Deferred income tax expense = $7,161
Explanation:
Given:
Bed debts increase = $6,800
Depericiation increase = $40,900
Tax-exempt life insurance = $3,450
Computation:
Assume tax rate = 21%
Taxable difference = 40,900 - 6,800
Taxable difference = 34,100
Deferred income tax expense = 34,100 × 21%
Deferred income tax expense = $7,161
