<u>Answer:</u> The amounts have to be determined using fair value for plant and equipment and for long term debt.
<u>Explanation:</u>
Fair value method is based on the market price of the asset. The historical value of the assets is not used to consider the sale price of the asset. Fair value is where Company J and Company K both the parties have to accept the price based on the known facts of the assets.
Company J and Company K should both accept the price out of free will and should not be out of compulsion. Company J can report based on the financial statement fair value of the assets and long term debt.
Answer:
$51,300
Explanation:
Given that,
Assets require = $380,000
Return on the invested capital, ROE = 13.5%
ROE = Net income ÷ Total Equity
0.135 = Net income ÷ $380,000
0.135 × $380,000 = Net income
$51,300 = Net income
Therefore, the net income must be expected to warrant starting the business is $51,300.
Note: Since, all of the total assets are financed by the common stock.
Answer:
D
Explanation:
Profit is Maximize when MR = MC
since MR=40 - 0.5Q
and MC= 4
Therefore:
40-0.5Q = 4
-0.5Q = 4 - 40
-0.5Q= -36
divide through by -0.5
Q = 72
since Q = 72
from Q = 160 - 4p
72 = 160 - 4P
-4p = 72 - 160
-4P = -88
divide through by -4
P = 22
