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A financial analyst discovers that Stark Industries has been inappropriately capitalising R&D costs in each year and amortiz

Anvisha [2.4K]

Answer:

Stark Industries

a. Amount of total asset overstatement and expense understatement:

Total Asset and Expense Misstatements:

Assets Expenses

Overstatement Understatement

2017 $24m ($24m -$0) $24m

2018 $46m (24 -8 + 30)m $22m ($30m- $8m)

2019 $64m (46 -18 + 36)m $18m ($36m - $18m)

b. The Retained Earnings account will be misstated as a result of the above accounting treatment at the end of fiscal 2019.

c. Journal Entries:

June 30, 2019:

Debit R&D expense $82m

Credit Total assets $64m

Credit Amortization Expense $18m

To correct the R&D amortization and inappropriate capitalization.

Explanation:

a) Data and Calculations:

30 June 2019:

Total assets = $280m

Net income = $20m

Amortization R&D Amount

Expense Costs Capitalized

2017 $0 $24m $24m ($24m - $0)

2018 $8m $30m $46m ($24m - $8m + $30m)

2019 $18m $36m $64m ($46m - $18m + $36m)

Calculation of amortization expenses:

2017 R&D costs = $24m/3 = $8m

2018 R&D costs = $30m/3 = $10m

2019 R&D costs = $36m/3 =$12m

8 0

3 years ago

Landen's salary is $58,000 a year, and he contributes $4000 annually to his 401(k), while his employer matches 60%. What is his

LUCKY_DIMON [66]

Answer:

401k+4058.6

Explanation:

8 0

3 years ago

Chang industries has bonds outstanding with a par value of $200,000 and a carrying value of $203,000. If the company calls these

Fynjy0 [20]

If the company calls these bonds at a price of $201,000, the gain or loss on the retirement would be $2,000.

Here, $203,000 is the net carrying value of the liability - $201,000 is the price the bonds were called at and the price that Chang industries paid to retire the bonds and the associated liability.

Therefore, $203,000 - $201,000 = $2,000

The gain or loss on the retirement would be $2,000.

A bond retirement occurs when an organization repurchases bonds that it had previously issued to investors. Thus, the issuer retires the bonds at the scheduled maturity date of the instruments.

Hence, bond retirement involves the cashing out of a bond that has been invested in.

To learn more about bond retirement here:

brainly.com/question/13960495

#SPJ4

4 0

2 years ago

We have acquired new furniture for the office. The invoice for $6,000 offers two ways to pay: we can pay the entire amount by Se

Drupady [299]

Answer:

6.12%

Explanation:

Calculation for How does our decision depend on the interest rate at which we can invest our funds

Present value = 6000-3060

Present value = 2940

Future value = Present value+Present Value*Numver of month* Rate of interest/ 100

3000 = 2940+2940*4/12*R/100

60 = 2940*4/12*R/100

60*12/4 = 2940*R/100

180 = 2940*R/100

180/2940 = R/100

0.061224 = R/100

Rate = 6.1224

Therefore How does our decision depend on the interest rate at which we can invest our funds is 6.1224

5 0

3 years ago

Xenox Company had net credit sales during the year of $1300000 and cost of goods sold of $800000. The balance in accounts receiv

Lunna [17]

Answer:

8 times

Explanation:

Financial Statements depicts the financial position of a firm at a particular point of time or specified date. The users of financial statements use various types of analysis to understand or compare the current financial statements of the company to prior years or with those of the competitors.

‘Ratio Analysis’ is used to analyze the performance of a company. It is used to analyze the liquidity, profitability, solvency and operational efficiency of the company.

Given:

Net credit sales = $1,300,000

Beginning accounts receivable = $185,000

Ending accounts receivable = $140,000

Accounts receivable turnover is the ratio of net credit sales to average accounts receivable.

It can be calculated as:

Average accounts receivable = $\frac{Beginning accounts receivable + Ending accounts receivable}{2}$