Total income can be calculated as contribution margin - fixed costs.
Budgeted income statement for Kenya Company, July-September (Kaizen budgeting):WORD COUNT 100Sales revenue (33,000 units, July) $7,731,000Sales revenue (36,300 units, August) $8,292,300Sales revenue (39,930 units, September) $8,915,770Variable costs (33,000 units, July) 4,783,400Variable costs (36,300 units, August) 5,128,806Variable costs (39,930 units, September) 5,486,869Contribution margin (33,000 units, July) $2,947,600Contribution margin (36,300 units, August) $3,163,494Contribution margin (39,930 units, September) $3,428,901Fixed costs 1,463,000 1,505,890 1,549,994Income $1,484,600 $1,657,604 $1,878,907Explanation:Calculation of sales revenue: July: The increase in sales revenue from June to July would be (1% of $7,029,000) $70,290. Thus, the sales revenue in July would be $7,029,000 + $70,290 = $7,799,290. As the sales volume is expected to increase by 10% in July, the number of units sold would be 33,000 * 1.1 = 36,300. Thus, the sales revenue per unit would be $7,799,290 / 36,300 = $214.5.August: The sales revenue in August would increase by 1% from July's sales revenue, which would be (1% of $7,799,290) $77,993. Thus, the sales revenue in August would be $7,799,290 + $77,993 = $8,292,283. As the sales volume is expected to increase by 10% in August, the number of units sold would be 36,300 * 1.1 = 39,930. Thus, the sales revenue per unit would be $8,292,283 / 39,930 = $207.50.September: The sales revenue in September would increase by 1% from August's sales revenue, which would be (1% of $8,292,283) $82,923. Thus, the sales revenue in September would be $8,292,283 + $82,923 = $8,915,206. As the sales volume is expected to increase by 10% in September, the number of units sold would be 39,930 * 1.1 = 43,923. Thus, the sales revenue per unit would be $8,915,206 / 43,923 = $203.Variable costs would increase by 2% per month and the increase in variable costs for each month can be calculated as follows: July: (2% of $4,983,000) $99,660. Thus, the variable costs in July would be $4,983,000 + $99,660 = $5,082,660.August: (2% of $5,082,660) $101,653.2. Thus, the variable costs in August would be $5,082,660 + $101,653.2 = $5,184,313.2.September: (2% of $5,184,313.2) $103,686.26. Thus, the variable costs in September would be $5,184,313.2 + $103,686.26 = $5,287,999.46.Contribution margin can be calculated as sales revenue - variable costs. Fixed costs remain unchanged at $1,463,000 for all three months. Total income can be calculated as contribution margin - fixed costs.
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Kaizen budgeting is a budgeting method that concentrates on the continuous improvement of existing systems and processes. The technique was initially created in Japan and was implemented by businesses to boost their competitiveness. Using the method, companies may build budgets that are both achievable and adaptable to shifting market conditions. It helps in creating a more accurate budget that can withstand market changes, making it possible to maintain long-term financial health. Using Kaizen Budgeting, the budgeted income statement for July through September of Kenya Company is as follows: July August September Sales revenue (for 36,630 units) $7,476,900 $8,004,093 $8,560,880Variable costs 4,785,660 4,887,373 4,991,119Contribution margin $2,691,240 $3,116,720 $3,569,761Fixed costs 1,508,890 1,551,256 1,594,256Income $1,182,350 $1,565,464 $1,975,505
From June's budgeted income statement, we can see that the sales revenue was $7,029,000, the variable costs were $4,983,000, and the contribution margin was $2,046,000. The fixed costs income was $1,463,000, resulting in $583,000 income. For the next three months, Kenya expects sales volume to rise by 10%. It hopes to boost its sales price by 1% per month, its variable costs by 2% per month, and its fixed costs by 3% per month. Using these assumptions, we may generate the income statement for the next three months using Kaizen Budgeting. As a result, the budgeted income statement for July, August, and September will be $1,182,350, $1,565,464, and $1,975,505, respectively. These figures will help the company in making decisions that will guarantee long-term financial health.
In conclusion, using Kaizen Budgeting, the budgeted income statement for July through September of Kenya Company is as follows: July's income is $1,182,350, August's income is $1,565,464, and September's income is $1,975,505.
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C. IOI's shares are currently selling at RM 8 and you knew that the price of an IOI's share is expected to fall to RM 6.50 in three day's time. As an opportunist, you want to take advantage of the fall in price by using 'short selling' method. If you borrow 5 lots of IOI'S share from the broker, show your net profit if your prediction is right. (4 marks) d. You would like to speculate on a rise in the price of a certain stock. The current stock price is RM40, and a three-month call option with a strike price of RM45 cost RM3. You have RM60,000 to invest. Identify two alternative strategies, one involving an investment in stock and the other involving in option. What are the potential gains and losses from each if: i) Price goes up to RM50. (4 marks) ii) Price goes down to RM 35. (4 marks) (Total: 25 marks) C. IOI's shares are currently selling at RM 8 and you knew that the price of an IOI's share is expected to fall to RM 6.50 in three day's time. As an opportunist, you want to take advantage of the fall in price by using 'short selling' method. If you borrow 5 lots of IOI'S share from the broker, show your net profit if your prediction is right. (4 marks) d. You would like to speculate on a rise in the price of a certain stock. The current stock price is RM40, and a three-month call option with a strike price of RM45 cost RM3. You have RM60,000 to invest. Identify two alternative strategies, one involving an investment in stock and the other involving in option. What are the potential gains and losses from each if: i) Price goes up to RM50. (4 marks) ii) Price goes down to RM 35. (4 marks) (Total: 25 marks) b. The mood on MariBank very bullish when they propose to acquire HengBank at RM 4.26 billion. The proposed acquisition will see MariBank emerge as the single largest shareholder in HengBank. Most analysts and stock broking firms believe that the stock price would continue to rise. To bet on this expectation, Rizal Hidayat buys 1500 units of MariBank September RM 8.00 call option for 50 sen. Currently the shares are traded at RM 9.50. Identify: Type of option. (1 mark) Underlying asset. (1 mark) Exercise price. (1 mark) IV. Calculate the profit if the holder expectation is accurate. (4 marks) IOI's shares are currently selling at RM 8 and you knew that the price of an IOI's share is expected to fall to RM 6.50 in three day's time. As an opportunist, you want to take advantage of the fall in price by using 'short selling method. If you ii.
Short selling is a trading technique used by speculators who believe that the price of a stock or security will decline in the future.
It entails selling borrowed securities and repurchasing them at a lower price, profiting from the price difference. A speculator who wants to profit from a short sale borrows stock from a broker and sells it on the market with the expectation that the price will decline before the stock must be returned to the broker. In this case, you want to take advantage of the fall in IOI's share price from RM 8 to RM 6.50 by short selling 5 lots of IOI'S share from the broker. Each lot consists of 100 shares. If the price of an IOI's share falls to RM 6.50, the profit would be as follows: Net Profit = [(Initial selling price - Final buying price) × Total number of shares sold] - Interest on borrowed shares. Initially, the total amount of shares borrowed will be 5 lots × 100 shares/lot = 500 shares. Initial Selling price of IOI's shares = RM 8Final Buying price of IOI's shares = RM 6.50Therefore, Net Profit = [(RM 8 - RM 6.50) × 500] - Interest on borrowed shares = RM 750
The net profit earned would be RM 750 if the price of IOI's share falls to RM 6.50 in three days time. This would be a profitable trade for the speculator.
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The following facts apply to a convertible bond making semiannual payments: Conversion price $53/share Coupon rate 6% Par value $1,000 Yield on nonconvertible debentures 8% of same quality Maturity 30 years $43 /share Market price of stock What is the minimum price at which the convertible should sell?
The minimum price at which the convertible bond should sell can be determined by comparing the value of the bond as a straight bond (nonconvertible debenture) and its conversion value.
The lower of these two values represents the minimum price at which the convertible should sell.
In this case, the bond has a conversion price of $53/share, a coupon rate of 6%, a par value of $1,000, and a maturity of 30 years. The yield on nonconvertible debentures of the same quality is 8%. The market price of the stock is $43/share.
To calculate the value of the bond as a straight bond, we can determine the present value of its future cash flows (coupon payments and principal repayment) using the yield on nonconvertible debentures. The value of the bond as a straight bond would be lower than its par value due to the higher yield.
The conversion value of the bond can be calculated by multiplying the market price of the stock by the conversion ratio (par value / conversion price). The conversion value represents the value the bondholder would receive if they chose to convert the bond into stock.
Comparing the straight bond value and the conversion value, the lower of the two will determine the minimum price at which the convertible bond should sell. If the conversion value is lower, the bondholder would be better off converting the bond into stock rather than selling it as a straight bond.
Without the specific values for the coupon payments and the conversion ratio, it is not possible to provide an exact minimum price at which the convertible bond should sell in this case.
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As
a real estate salesperson, selling a $3 million home, what will you
say in your sales presentation to influence your client. Name three
talking points
In the sales presentation for a $3 million home, I would discuss the neighborhood, amenities, and unique features of the home. I would emphasize the benefits of owning the property and highlight its potential future resale value.
As a real estate salesperson, selling a $3 million home, what you will say in your sales presentation to influence your client are:1. Discuss the neighborhood, amenities, and features of the homeOne talking point in your sales presentation to influence your client is to discuss the neighborhood, amenities, and features of the home. The neighborhood and the amenities it offers should be a focal point of your sales presentation. You should also describe in detail all of the features of the home that will set it apart from other homes that are on the market.2. Show them the benefits of owning the homeAnother talking point in your sales presentation to influence your client is to show them the benefits of owning the home. Owning a $3 million home will come with many perks, such as social status, great schools, access to high-end amenities, etc.3. Highlight the future resale value of the homeLastly, you should highlight the future resale value of the home. A property of this value is likely to appreciate, and this is an excellent selling point for your client. This is especially true if you are selling a home in an up-and-coming neighborhood where home values are expected to rise.
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Taylor Insurance Company invests $250,000 to acquire $250.000 face value, 4% five-year corporate bonds on December 31, 2024. The bonds pay interest semiannually on June 30 and December 31 every year until maturity. Assume Taylor Insurance Company uses a calendar year. Based on the information provided, which of the following is the journal entry for the transaction on December 31, 2025? A Adebit to interest Revenue for $5,000, and a credit to Cash for 55.000 B A debit to Cash for $5,000, and a credit to interest Revenue for $5,000 C. A debit to Cash for $10,000, and a credit to Interest Revenue for $10.000 D. A debit to Interest Revenue for $10,000, and a credit to Cash for $10,000
A. Debit to Interest Revenue for 5,000
B. Credit to Cash for 5,000
C. Debit to Cash for 10,000
D. Credit to Interest Revenue for $10,000
The transaction involves the acquisition of a bond by Taylor Insurance Company. The bond pays interest semiannually on June 30 and December 31 every year until maturity. Since the transaction occurred on December 31, 2025, the interest payment due on June 30, 2026, will be the first interest payment.
The journal entry for this transaction should recognize the interest expense for the period and the corresponding increase in the bonds payable account. The interest expense for the period would be calculated as follows:
Interest expense for the period = (Interest rate x Face value of bond) / 2
= (5% x 250,000) / 2
= 5,000
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Why
business consider redundancy?
1 Reason (Explain with examples)
Redundancy is the process where an employer discharges or reduces the jobs of one or more workers due to the reduction of production in the company, a change in the direction of the business, or a merger or acquisition.
Redundancy in the workplace is an option for businesses to cut back on staff in times of economic uncertainty and a decline in business activity. Here are some of the reasons why business considers redundancy: Redundancy can save the business money in the short term by reducing employee expenses such as salaries, pensions, and bonuses. Redundancy enables the business to stay operational in the long term by making tough choices to ensure that it can weather the economic storms that come along.
For example, companies in the retail sector like BHS and Toys R Us closed their doors and laid off thousands of workers because they were unable to keep up with online competitors. Redundancy provides companies with the opportunity to remove underperforming employees who may be holding the business back or to restructure the workforce in a way that aligns with the current objectives of the company, for example, by increasing the number of technical staff in the business.
In conclusion, redundancy is a tough decision that most companies must face at some point in their lifespan. Although it can be emotionally difficult for employees, it can be the best course of action for businesses to stay afloat.
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GIVE TWO Asian countries that have undergone drastic economic
change over the last decade and compare their differences in terms
of political, economic, social, and technological advancements
Two Asian countries that have undergone significant economic changes over the last decade are China and South Korea.
Here's a comparison of their differences in terms of political, economic, social, and technological advancements:
1. China: - Political: China has maintained a single-party communist system with a strong centralized government. The Chinese Communist Party (CCP) exercises control over major political decisions.
- Economic: China has experienced rapid economic growth and has become the world's second-largest economy . It has implemented market-oriented reforms while retaining state control over key sectors. It is known for its export-oriented manufacturing industries and infrastructure development. - Social: China has witnessed significant improvements in living standards, poverty reduction, and urbanization. However, it continues to face challenges related to income inequality, rural-urban disparities, and environmental degradation.
- Technological: China has made remarkable advancements in technology, particularly in areas like e-commerce, telecommunications, and artificial intelligence. It is a global leader in tech innovation and has a thriving digital economy.
2. South Korea: - Political: South Korea is a democratic republic with a multi-party system. It has a presidential system where the president serves as the head of state and government.
- Economic: South Korea has experienced steady economic growth and is recognized as one of the "Asian Tigers." It has a highly developed industrial sector, including electronics, automobiles, shipbuilding, and petrochemicals. It has also embraced globalization and actively participates in international trade. - Social: South Korea has made significant strides in education, healthcare, and overall quality of life. It has a strong emphasis on education and has achieved high literacy rates. It faces challenges related to an aging population and gender inequality.
While both countries have experienced economic transformations, there are differences in their political systems, economic models, social dynamics, and technological achievements. China has a more centrally controlled political system and a state-led economic model, while South Korea has a democratic political system and a market-oriented economy. Additionally, China's focus has been on rapid industrialization and becoming a global manufacturing hub, while South Korea has emphasized technology and innovation as key drivers of economic growth.
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Who is responsible of Employee Safety?
How can senior managers support Employee Safety
What are the three [3] steps in keeping emlpoyees safe?
How can a "Risk Assessment Matrix" help companies to allo
1. The responsibility of employee safety lies with both employers and employees.
2. Senior managers can support employee safety by setting a positive safety culture, providing resources and training, and actively participating in safety initiatives.
3. The three steps in keeping employees safe include identifying hazards, assessing risks, and implementing control measures.
4. A risk assessment matrix helps companies allocate resources and prioritize actions by evaluating the likelihood and severity of potential risks.
1. Responsibility for employee safety is shared between employers and employees. Employers have a legal and ethical obligation to provide a safe working environment, including proper training, equipment, and safety protocols. Employees, on the other hand, have a responsibility to follow safety guidelines, report hazards, and actively participate in safety programs.
2. Senior managers play a crucial role in supporting employee safety. They can demonstrate their commitment by establishing a positive safety culture, where safety is prioritized and rewarded. They can allocate resources for safety programs, provide adequate training, and ensure that employees have access to necessary safety equipment. Senior managers should also actively participate in safety initiatives, such as safety committees and inspections, and communicate the importance of safety throughout the organization.
3. The three steps in keeping employees safe are:
a) Identifying hazards: This involves recognizing potential sources of harm or danger in the workplace, such as unsafe machinery, hazardous substances, or ergonomic risks.
b) Assessing risks: Once hazards are identified, the next step is to evaluate the likelihood and potential severity of the risks associated with those hazards. This assessment helps prioritize actions and allocate resources effectively.
c) Implementing control measures: Based on the risk assessment, appropriate control measures are implemented to eliminate or reduce the risks. This may involve implementing engineering controls, providing personal protective equipment (PPE), or developing safety procedures.
4. A risk assessment matrix is a tool that helps companies assess and prioritize risks. It typically involves a matrix that combines the likelihood and severity of risks to determine their overall level of risk. This matrix helps companies allocate resources and prioritize actions by focusing on high-risk areas. By using a risk assessment matrix, companies can systematically identify and address potential hazards, develop risk mitigation strategies, and make informed decisions about resource allocation to enhance employee safety.
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Objectives of auditing. (Clear and
detailed objectives were given on auditing)
The objectives of auditing are to provide independent assurance on the reliability and accuracy of financial statements, to ensure compliance with laws and regulations, and to identify and assess risks within an organization's operations.
Auditing aims to enhance the credibility and transparency of financial information and contribute to the overall effectiveness and efficiency of business operations. The primary objective of auditing is to provide independent assurance to stakeholders that the financial statements of an organization present a true and fair view of its financial position and performance. Auditors examine the financial records, transactions, and internal controls of an entity to verify the accuracy and reliability of the information presented in the financial statements. This helps to instill confidence in investors, shareholders, creditors, and other stakeholders who rely on the financial statements for decision-making. Another objective of auditing is to ensure compliance with laws, regulations, and accounting standards. Auditors assess whether the organization has followed applicable laws and regulations, such as tax regulations and industry-specific regulations. They also review the organization's adherence to accounting principles and standards, such as the Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS). Additionally, auditing aims to identify and assess risks within an organization's operations. Auditors evaluate the internal control systems and risk management processes in place to mitigate potential risks and identify any weaknesses or vulnerabilities. This helps management and stakeholders to understand the level of risk exposure and make informed decisions to improve controls and mitigate risks effectively. Overall, the objectives of auditing go beyond simply verifying financial information. They encompass providing assurance, ensuring compliance, and contributing to risk management, thereby enhancing the credibility and transparency of an organization's financial reporting and operations.
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At January 1, 2021, Canaday Corporation had outstanding the following securities:
720 million common shares
20 million 8% cumulative preferred shares, $50 par
6.4% convertible bonds, $4,500 million face amount, convertible into 90 million common shares
The following additional information is available:
On September 1, 2021, Canaday sold 81 million additional shares of common stock.
Incentive stock options to purchase 40 million shares of common stock after July 1, 2020, at $14 per share, were outstanding at the beginning and end of 2021. The average market price of Canaday’s common stock was $20 per share during 2021.
Canaday's net income for the year ended December 31, 2021, was $2,378 million. The effective income tax rate was 25%.
Basic 2298 / 747 = 3.08
Diluted ? / ? = ?
The diluted earnings per share for Canaday Corporation cannot be determined without additional information.
Is the diluted earnings per share for Canaday Corporation determinable based on the provided information?No, the diluted earnings per share for Canaday Corporation cannot be determined solely based on the information provided.
To calculate diluted earnings per share (EPS), we need information on potentially dilutive securities, such as convertible bonds and stock options.
The conversion of these securities into common shares can increase the number of shares outstanding and impact the EPS calculation.
In the given scenario, we have the information about the outstanding securities, including convertible bonds and stock options.
However, we do not have the information on whether these securities were actually converted or exercised during the year.
Without knowing the number of additional shares that would be added to the denominator of the diluted EPS calculation, we cannot determine the diluted EPS figure.
To calculate diluted EPS, we would need to know the number of shares resulting from the conversion of the convertible bonds and the stock options exercised, as well as the potential impact on net income.
Only with this additional information can we accurately calculate the diluted EPS for Canaday Corporation.
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Renewable Energy - Job Creation • Renewable energy plays an increasingly important role for improving energy access. GOGLA and Vivid Economics (2018) estimated direct off-grid solar employment in parts of Sub-Saharan Africa and in South Asia at 372 ooo full-time equivalent jobs. 56% of these jobs are located in rural areas and 27% are filled by women. Thousandjob (met det me 1400 South Asia 1200 Central Africa 1,000 West Africa East Africa 1100 600 150 400 350 200 0 2018 2022 (pro) SL4 and 20 https://www.irena.org/benefits/Job-Creation Renewable Energy - Job Creation • Employment remains concentrated in a handful of countries, with China, Brazil, the United States, India and members of the European Union in the lead. Asian countries' share remained at 60% of the global total. China EU Jobs (housando United States of America 1235 (4 078 Germany 291 (855) India Brazil 719 Japan North 1125 00000 CO IRENA 11 milan jobs in 20 ded
Renewable energy has a significant impact on job creation, particularly in developing regions. The International Renewable Energy Agency (IRENA) reported that in 2018, the renewable energy sector provided approximately 11 million jobs globally.
These jobs are expected to increase to 42 million by 2050. GOGLA and Vivid Economics estimated that off-grid solar employment in parts of Sub-Saharan Africa and South Asia reached 372,000 full-time equivalent jobs, with 56% of these jobs located in rural areas and 27% filled by women. While employment remains concentrated in a few countries, including China, Brazil, the United States, India, and the European Union, Asian countries account for 60% of the global total. The renewable energy sector provides a great opportunity for job creation, particularly in regions that need it the most.
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a)What Financial Risks is NexTier Oilfield a leading oilfield
company in the USA is exposed to?
b_)Determine and elaborate on why NexTier Oilfield solutions a
leading oilfield company should hedge and
a) NexTier Oilfield Solutions, as a leading oilfield company in the USA, is exposed to various financial risks in its operations. Some of the key financial risks it may face include:
Commodity Price Risk: NexTier is exposed to fluctuations in oil and gas prices, which can significantly impact its revenue and profitability. Changes in market prices can affect the demand for drilling and oilfield services.
Foreign Exchange Risk: If NexTier operates internationally or deals with foreign customers, it may face foreign exchange risk due to currency fluctuations. Changes in exchange rates can affect the company's revenue, expenses, and overall financial performance.
Interest Rate Risk: NexTier may be exposed to interest rate risk if it carries debt or uses financial instruments with floating interest rates. Changes in interest rates can affect the company's borrowing costs and the value of its debt.
Credit Risk: NexTier may face credit risk when providing services to customers who may fail to pay or face financial difficulties. Non-payment or delayed payment can impact the company's cash flow and profitability.
b) NexTier Oilfield Solutions, as a leading oilfield company, should consider hedging to mitigate various risks it faces. Hedging involves using financial instruments or strategies to offset the potential negative impact of price fluctuations or other risks. Here are some reasons why NexTier should hedge:
Revenue Stability: Hedging can help NexTier stabilize its revenue by protecting against adverse movements in commodity prices. For example, the company can use futures contracts or options to lock in prices for future sales, reducing the impact of price volatility.
Cost Control: By hedging against foreign exchange risk, NexTier can better manage its costs when dealing with international transactions. Hedging can help reduce the impact of currency fluctuations on expenses and maintain more stable profit margins.
Debt Management: Hedging interest rate risk can help NexTier manage its borrowing costs and reduce uncertainty. By using interest rate swaps or other derivatives, the company can lock in favorable interest rates or manage its exposure to interest rate movements.
Cash Flow Protection: Hedging can provide NexTier with cash flow protection by mitigating the risk of non-payment or delayed payment from customers. For instance, the company can use credit derivatives or trade credit insurance to safeguard against potential defaults.
Overall, hedging allows NexTier Oilfield Solutions to proactively manage its financial risks, enhance stability, and protect its profitability in the face of uncertain market conditions.
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A model of wages and prices is presented Wt = αo + αlPt + α2Qt + μ2t Pt = βo + βlWt + β21Yt + μ2t Where W is the wage rate, P is the price indicator, product, Y the income -Establish what type of multiequational model it is -Indicate the endogenous and exogenous variables -Construct the synthetic version of the reduced form of the model. -Identify the system using the exclusion technique. Conclusion?
The identification of the given model can be done by eliminating one variable from each equation, and then, the remaining equation is estimated. Exclusion of W from the first equation gives Wt − λ1Yt − λ2Qt = λ0 + ν1t − μ1t/β2. Exclusion of P from the second equation gives Pt − γ1Yt − γ2Qt = γ0 + ν2t − μ2t/β1.
The given equation is a type of linear model of wage and price. Let's discuss the answers step by step:
Type of multi equational model. It is a type of two-equation linear model. Indicate the endogenous and exogenous variables
The endogenous variables are P and W. The exogenous variables are Y and Q.
Construct the synthetic version of the reduced form of the model.
The synthetic version of the reduced form of the model is given as follows:
[tex]Wt = λ0 + λ1Yt + λ2Qt + ν1tPt = γ0 + γ1Yt + γ2Qt + ν2t[/tex]
Where [tex]λ1 = -β1/β2γ1 = (β1β21- β2β11)/β1β22ν1t = (-β1μ2t + μ1t)/β2ν2t = (-β2μ1t + μ2t)/β1[/tex]
Identify the system using the exclusion technique.
The given model is identified by the exclusion technique. The identification of the given model can be done by eliminating one variable from each equation, and then, the remaining equation is estimated.
Exclusion of W from the first equation gives [tex]Wt − λ1Yt − λ2Qt = λ0 + ν1t − μ1t/β2[/tex]
Exclusion of P from the second equation gives
[tex]Pt − γ1Yt − γ2Qt = γ0 + ν2t − μ2t/β1[/tex]
Conclusion
From the above discussion, we can say that the given model is a type of two-equation linear model of wage and price. The endogenous variables of this model are P and W, and the exogenous variables are Y and Q. The synthetic version of the reduced form of the model is also constructed. The given system is identified by the exclusion technique.
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What is the Capital Market? Name three instruments 2 or 3 ta b. What is indirect finance? Name three instruments it is indire nce Name ti VITUD UeybowWOH C. What do we mean by adverse selection? What tools can solve the problem of adverse selection? d. Name 2 types of depository institutions. e. What is M1? Explain how its parts are money.
Capital Market refers to the market for securities that are long-term, i.e., with a maturity of more than one year. It allows the sale and purchase of securities such as bonds, equities, and other long-term securities.
Here are the answers to the questions: Three instruments of the capital market are:
Stocks - A stock is a share in the ownership of a company and represents a claim on part of the company’s assets and earnings.
Bonds - Bonds are debt securities that represent loans to the issuer from the investor. They have a predetermined repayment date and interest rate.
Debentures - Debentures are like bonds but they are not secured by collateral. Instead, debenture holders have a claim on the issuer's assets if the issuer fails to pay them. Indirect finance refers to the practice where funds are obtained from savers through financial intermediaries. The intermediaries then lend the funds to borrowers who need them.
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how can you provide a positive customer experience amazon answer
To provide a positive customer experience, Amazon focuses on prompt delivery, easy navigation, competitive pricing, reliable customer support, and personalized recommendations based on user preferences.
Customers are individuals or entities that purchase goods or services from businesses. They play a central role in the economy, driving demand and shaping market trends. Customer satisfaction is crucial for businesses to thrive and succeed. Understanding customer needs, preferences, and expectations is essential for delivering a positive customer experience. Businesses strive to attract and retain customers by offering high-quality products, personalized services, competitive pricing, convenience, and excellent customer support. Building strong relationships with customers through effective communication and addressing their concerns helps foster loyalty and repeat business. Customer feedback and reviews also provide valuable insights for businesses to improve their offerings and meet customer expectations.
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A chain of well-known Cafés in Sydney and Melbourne has decided to open a smaller version of their larger shops in Canberra. The name of the Café is Aroma. The café in Canberra will be based in Manuka. The Melbourne and Sydney Cafés have an attached-on site industrial bakery that produces all of their bread, pastries, pies and cakes on site. In Canberra the company's bakery is based in Fyshwick and does not have a café attached to it. The bakery in Fyshwick operates from 0200 (2am) through to 0900 (9am) daily-7 days a week The café in Manuka will operate from 0700 (7am)-1600 (4pm)-7 days a week. This version will NOT have the bakery on site; however, this café will be receiving all of their required bakery products from their own bakery based in Fyshwick (run by the same company-but at a different location). You have 3 staff members to assist you throughout the project. You are to allocate their roles and names in the assessment. ALLOCATED BUDGET TO COMPLETION AND HANDOVER: $75000.00 (AUD) Aroma Café Details:
By assigning specific roles to each staff member, the project will be more likely to be completed on time and within budget while still providing high-quality bakery products to the new Aroma Cafe in Manuka.
Aroma is a well-known chain of cafes in Sydney and Melbourne that has recently decided to open a smaller version of their larger shops in Canberra. The cafe in Canberra will be based in Manuka. The cafes in Melbourne and Sydney have an on-site industrial bakery that produces all of their bread, pastries, pies, and cakes on-site. In Canberra, the company's bakery is based in Fyshwick and does not have a cafe attached to it. The bakery in Fyshwick operates daily from 2 am to 9 am.
The cafe in Manuka will operate from 7 am to 4 pm daily, and it will not have the bakery on-site. However, this cafe will be receiving all of its required bakery products from its own bakery based in Fyshwick (run by the same company-but at a different location). In order to help manage this project, there are three staff members available to assist you.
These staff members are assigned to different roles that will help ensure the successful completion of this project. The allocated budget to completion and handover is $75000.00 (AUD). One of the staff members, named Amy, will be responsible for managing the cafe's daily operations, including ordering supplies and managing staff schedules. Another staff member, named Ben, will be responsible for overseeing the logistics of transporting bakery products from Fyshwick to Manuka.
Finally, the third staff member, named Chris, will be responsible for managing the project's finances, including keeping track of expenses and ensuring that the project remains within budget.
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cost accounting question 19
Shown below is the sales forecast for Kalin Inc. for the first four months of the coming year. Jan Feb Apr Cash sales Credit sales $ 23,000 $260,000 $ 32,000 $280,000 Mar $ 26,000 $250,000 $ 22,000 $2
The credit sales amount for April is not provided in the given information.
The sales forecast for Kalin Inc. for the first four months of the coming year is as follows: January:
- Cash sales: $23,000- Credit sales: $260,000 February:- Cash sales: $32,000- Credit sales: $280,000 March:- Cash sales: $26,000- Credit sales: $250,000 April:- Cash sales: $22,000- Credit sales: [Information missing] credit sales amount for April is not provided in the given information.
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the inventory decision model provides which type of information? multiple choice optimal total inventory optimal safety stock optimal order size optimal carrying cost per unit
The safety stock is an extra quantity of inventory that is maintained to protect against fluctuations in demand and supply.
The inventory decision model provides optimal safety stock type of information. Optimal safety stock is the level of inventory that provides the desired level of customer service while minimizing the total inventory holding cost. Hence, the main answer to the given question is "optimal safety stock". The inventory decision model is used to determine how much inventory to order and when to order it. It considers different factors such as the carrying cost of inventory, the ordering cost, the lead time, the demand rate, and the cost of stock outs. The inventory decision model is important for businesses because it helps them to balance the costs of holding too much inventory against the costs of running out of stock.
In conclusion, the inventory decision model provides information about optimal safety stock. To maintain the desired level of customer service, businesses use safety stock, which is the extra quantity of inventory kept to protect against fluctuations in demand and supply. The inventory decision model helps businesses determine the optimal level of safety stock and balance inventory holding costs against the costs of stock outs.
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Question 13 (2 points) Saved When an economy achieves both allocative and productive efficiency, it implies that there is: income equality. fixed technology. full production. G price stability. Page 13 of 50 Previous Page Next Page
The correct answer is full production.
When an economy achieves both allocative and productive efficiency, it implies that there is full production. Allocative efficiency means that resources are allocated in a way that maximizes society's welfare, while productive efficiency means that goods and services are produced at the lowest possible cost. When both efficiency conditions are met, the economy is operating at its maximum potential output, which is referred to as full production. Therefore, the correct answer is full production.
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TRUE/FALSE. Mood effects based on exercise tend to be optimal at a moderate intensity level.TRUE/FALSE. The most important component of Theories of reasoned action and planned behavior is that an individual's intentions form the best predictors of actual behavior. TRUE/FALSE. When their is no temptation to engage in the old behavior and 100 percent confidence about overcoming previous temptations not to exercise a person is believed to be in the maintenance stage of the Transtheoretical Model of Change.
Moderate-intensity exercise is associated with optimal mood effects, intentions are important predictors of behavior according to the Theories of Reasoned Action and Planned Behavior, and the maintenance stage of the Transtheoretical Model of Change is characterized by confidence in sustaining the new behavior without relapse.
True. Research suggests that moderate-intensity exercise has a positive impact on mood. It can improve overall well-being, reduce stress, and enhance mood states. Extreme exercise intensity may lead to increased fatigue or stress on the body, while low-intensity exercise may not provide sufficient physiological stimulation to induce mood benefits.
True. The Theories of Reasoned Action and Planned Behavior propose that an individual's intentions play a crucial role in predicting their behavior. These theories suggest that attitudes, subjective norms, and perceived behavioral control influence intentions, which, in turn, determine actual behavior. Intentions reflect a person's motivation and willingness to engage in a specific behavior.
True. The Transtheoretical Model of Change describes different stages individuals go through when adopting and maintaining behavior change. The maintenance stage is characterized by sustained behavior change without relapse. At this stage, individuals have overcome previous temptations and have high confidence in their ability to maintain the new behavior, such as regular exercise.
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Typically most health-care information systems can be classified as: o Closed systems Open systems Clinical system A temporary system
Typically most health-care information systems can be classified as open systems and closed systems. However, they can also be classified as clinical systems and temporary systems.
Health-care information systems are technological systems designed to process, store, and retrieve patient health-care data. These systems are used in the healthcare sector to manage and analyze patient health data.What are closed health-care information systems?Closed health-care information systems are non-networked information systems that store data locally. This means that data is not shared across multiple systems or networks. This system is designed to maintain data privacy and security, making it the ideal choice for storing sensitive patient data.
Open health-care information systems are networked systems that allow data to be shared across multiple platforms. This system is designed to facilitate data sharing among healthcare providers, insurance companies, and patients.
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MATCH
I. Managers and employees
II. Investment analysts and information intermediaries
III. Creditors and suppliers
IV. Stockholders and directors
V. Customers and strategic partners
VI. Regulators and tax agencies
___ a. Is company management demonstrating good stewardship of the resources that have been entrusted to it?
___ b. What product lines, geographic areas, or other segments have performed well compared with competitors?
___ c. What regulated price is appropriate given the company's financial condition?
___ d. Is the strategic partnership providing reasonable returns to both parties?
___ e. What expectations about the company's future profit and cash flow should we use as input into the pricing of its stock?
___ f. Is the company in compliance with the contractual terms of its existing loan covenants?
___ g. Have we reached the level of profitability necessary to pay bonuses or profit-sharing payments to employees?
___ h. Is the company financially solvent and able to meet its financial obligations?
___ i. How do our expectations about the economy, interest rates and the competitive environment affect the company?
___j. Should we extend credit to this company in the form of a loan or line of credit for inventory purchases?
___ k To properly analyze?
To properly analyze a company, it is crucial to consider the interests of various stakeholders and evaluate performance, compliance, financial solvency, and strategic partnerships.
a. Managers and employees: This question focuses on the company's management and their ability to responsibly handle the resources entrusted to them. It involves evaluating their decision-making, leadership, and overall stewardship of the company's assets.
b. Investment analysts and information intermediaries: This question relates to identifying product lines, geographic areas, or other segments that have outperformed competitors. It helps investment analysts assess the company's market position and potential for growth.
c. Creditors and suppliers: Determining the appropriate regulated price for a company involves considering its financial condition. Creditors and suppliers need to assess the company's ability to meet its financial obligations and determine a fair price for their products or services.
d. Stockholders and directors: This question pertains to the returns generated from a strategic partnership. Stockholders and directors need to assess whether the partnership is mutually beneficial and if it contributes to the company's overall profitability and value.
e. Customers and strategic partners: Expectations about a company's future profit and cash flow are essential for pricing its stock. Customers and strategic partners consider these expectations when evaluating the company's performance and potential.
f. Regulators and tax agencies: This question focuses on whether the company is complying with the contractual terms of its existing loan covenants. Regulators and tax agencies ensure that the company operates within legal and regulatory boundaries.
g. Employees: The level of profitability necessary to provide bonuses or profit-sharing payments to employees is assessed here. It indicates whether the company's financial performance is sufficient to reward its employees.
h. Creditors and suppliers: This question addresses the company's financial solvency and its ability to meet its financial obligations. Creditors and suppliers need to ensure that the company can fulfill its payment obligations.
i. Investment analysts and information intermediaries: Economic conditions, interest rates, and the competitive environment can significantly impact a company. Analysts and intermediaries consider these factors to assess the company's performance and potential risks.
j. Creditors: This question relates to whether it is suitable to extend credit to the company in the form of a loan or line of credit for inventory purchases. Creditors need to evaluate the company's creditworthiness and ability to repay the debt.
k. To properly analyze a company, it is essential to consider all the aforementioned stakeholders and their respective interests. By evaluating each aspect, a comprehensive understanding of the company's performance, financial condition, strategic partnerships, compliance, and market position can be gained. This holistic approach enables a more informed and accurate analysis of the company's prospects and risks.
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You will be assigned into your official groups. You will attempt to create a Balanced Scorecard for your chosen company. SEE the Balanced Scorecard shown in the class materials for today. Use that as a guide, but try to be creative! The next Strategic Plan Project has this as a requirement, so you can use this time to experiment and learn.( air canada)
A balanced scorecard is an important tool in strategic planning. It is used to measure and evaluate the performance of an organization. It is a comprehensive system that tracks financial and non-financial measures. The balanced scorecard consists of four perspectives: financial, customer, internal business process, and learning and growth.
Financial Perspective- The financial perspective focuses on the financial performance of the company. The metrics in this perspective include revenue, profit, return on investment, and cash flow. For Air Canada, the financial objectives would be to increase revenue and profits, reduce costs, and improve cash flow. The metrics that could be used to measure these objectives include revenue growth rate, profit margin, cost per seat, and cash flow from operations.
Customer Perspective- The customer perspective focuses on the customer experience. The metrics in this perspective include customer satisfaction, customer retention, and customer acquisition. For Air Canada, the customer objectives would be to improve the customer experience and increase customer loyalty. The metrics that could be used to measure these objectives include customer satisfaction rate, Net Promoter Score, and customer retention rate.
Internal Business Process Perspective- The internal business process perspective focuses on the efficiency and effectiveness of the company's internal processes. The metrics in this perspective include cycle time, quality, and cost. For Air Canada, the internal business process objectives would be to improve operational efficiency and reduce costs. The metrics that could be used to measure these objectives include on-time performance, aircraft utilization, and cost per available seat mile.
Learning and Growth Perspective- The learning and growth perspective focuses on the company's ability to innovate and improve. The metrics in this perspective include employee satisfaction, employee turnover, and employee training. For Air Canada, the learning and growth objectives would be to improve employee satisfaction and increase employee retention. The metrics that could be used to measure these objectives include employee engagement score, turnover rate, and training hours per employee.
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Long Term Assets (30 points) 1. Long-term assets are shown on the balance sheet at: a. Their current market value. b. The amount it will cost to replace them after they reach the end of their useful life. C. Their original cost minus accumulated depreciation. d. Their purchase price multiplied by an inflation adjustment factor.
Long-term assets are shown on the balance sheet at their historical cost, which is the amount of money paid to acquire the asset.
This value is then reduced by accumulated depreciation, which represents the amount of the asset's value that has been used up over time due to wear and tear, obsolescence, or other factors. The resulting figure represents the book value of the asset, which reflects its current worth if the company were to sell it at its current condition and state of usefulness.
It is important to note that long-term assets are not shown at their current market value or the amount it will cost to replace them after they reach the end of their useful life. Instead, the historical cost minus accumulated depreciation is used as it provides a more accurate representation of the asset's actual value to the company.
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Write a self-assessment on your communication strengths, weaknesses, and areas for growth. Formatting should be 11" or 12" font, single-spaced and approximately 500 – 1000 words. Separate your assignment into sections using headings. Include your first and last name, course (ENL1823) and section (1, 2, etc.) at the top of the first page or within a header. See Brightspace or "Assignment Expectations" announcement for section information; refer to the Additional Resources folder for an explanation and format sample.
After you’ve completed the online quiz, write down three careers that you think may be a good match for your communication skills and identify why they are a good match. Include these in your self-assessment.
Marking Criteria
In your self-assessment:
Describe your key strengths and weaknesses based on the quiz
Identify a minimum of two areas for growth that are related to your strengths/weaknesses
Create corresponding goals that are specific and measurable
List three careers with a brief description of how they fit with your communication skills
Review the rubric in Brightspace to ensure you have included all required elements
Correct grammar, punctuation and formatting are also required.
Format Tip: Separate each section with descriptive headings based on the rubric for readability and cohesiveness
Content Tip: Use the course lessons to help with how to write specific and measurable goals
To structure and approach your self-assessment on communication strengths, weaknesses, and areas for growth. Summarise your strengths, shortcomings, growth areas, and career matches. Communicate your dedication to studying and enhancing your communication abilities.
Introduce yourself, ENL1823, and your section. Discuss the importance of good communication in life and work. Communication Skills. Assess your communication strengths after taking the quiz. Discuss how these strengths have improved your relationships and accomplishments.
Communication Defects Review the quiz results and identify communication problems. Show how these deficiencies have hindered you. Accept criticism of your communication skills. Growth Zones
Choose two communication skills to improve based on your strengths and shortcomings. Explain how these areas affect your personal and professional growth. Discuss how these areas can help you overcome problems and improve communication.
4: Objectives
Set quantifiable targets for growth areas.
5: Career Matches
List three communication-related jobs.
Explain each career and how your communication abilities fit it.
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A bond with a par value of $1,000, a maturity of 14 years, and an annual interest or coupon rate of 9% sells in the market for $1,100. The market required return for a comparable bond at risk is 10%. Answer or calculate the following: I. Is the bond selling at par, at a premium, or at a discount? explain II. Is the bond being sold in the primary or secondary market? explain III. List two reasons why a company or government issues or sells bonds. a. b. IV. Calculate the bond's yield to maturity. a. YMT= V. Show procedure or what you did to get to that performance. VI. Determine the value of the bond or the price paid, given the required rate of return. a. Price = VII. Show procedure or what you did to determine the price. VIII. Would you buy the bond? explain
To analyze this situation, we need to determine whether the bond is selling at par, at a premium, or at a discount, identify whether it is being sold in the primary or secondary market, list reasons why companies or governments issue bonds, calculate the bond's yield to maturity, determine the bond's value given the required rate of return, and evaluate whether it would be a good investment.
I. To determine whether the bond is selling at par, at a premium, or at a discount, we compare the market price ($1,100) with the par value ($1,000). Since the market price is higher than the par value, the bond is selling at a premium.
II. The bond is being sold in the secondary market because it is already issued and is now being bought and sold among investors, rather than being sold directly by the issuer.
III. Two reasons why companies or governments issue or sell bonds are:
a. To raise capital for financing projects, expansion, or operations.
b. To take advantage of lower interest rates compared to other forms of financing, such as bank loans.
IV. To calculate the bond's yield to maturity (YTM), we need to use the present value formula and solve for the discount rate that makes the present value of the bond's cash flows equal to its market price. The formula is:
YTM = (Coupon Payment + ((Par Value - Market Price) / Number of Years)) / ((Par Value + Market Price) / 2)
V. By plugging in the values into the formula, we can calculate the bond's yield to maturity.
VI. To determine the value of the bond or the price paid, given the required rate of return, we use the present value formula. We discount the bond's cash flows (coupon payments and par value) at the required rate of return.
VII. By applying the present value formula to the bond's cash flows and the required rate of return, we can determine the price.
VIII. Whether to buy the bond or not depends on various factors such as the investor's risk tolerance, investment objectives, and other available investment options. A comprehensive evaluation considering these factors is necessary to make an informed decision.
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The credibility theory of the European monetary system actually implies the political cost of violating international exchange rate treaties
A. Unable to restrain the government from devaluing the currency
B. Can restrain the government from devaluing the commodity market
C Inability to restrain the government from devaluing the currency in the short term
D Inability to restrain the government from devaluing the currency in the long run
E None of the above is correct
The credibility theory of the European monetary system implies that it is unable to restrain the government from devaluing the currency (option A).
The credibility theory of the European monetary system refers to the belief that governments should adhere to international exchange rate treaties in order to maintain the credibility of their currency. The theory suggests that violating these treaties would result in a loss of confidence in the currency and increased uncertainty in the financial markets. In this context, the theory does not provide mechanisms or constraints to prevent governments from devaluing their currency.
Instead, it emphasizes the importance of maintaining credibility and the potential political costs associated with violating international exchange rate treaties. Therefore, the correct answer is option A, which states that the credibility theory is unable to restrain the government from devaluing the currency.
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A (MARKS: 25, 45 MINUTES) QUESTION 1 Beesting Boots (Pty) Ltd is a vehicle manufacturing company. Ben Bothma the owner of Beesting Boots inherited the business from his grandfather. Beesting Boots is
Beesting Boots (Pty) Ltd is a vehicle manufacturing company that was inherited by its current owner, Ben Bothma, from his grandfather. Beesting Boots (Pty) Ltd should continue to invest in modernizing its manufacturing processes and provide quality products to remain competitive in the market.
The company operates in the manufacturing sector. The manufacturing sector is a critical aspect of any country’s economic growth, as it provides job opportunities and stimulates the development of other industries. The Beesting Boots company is an excellent example of a manufacturing business that has been passed down from generation to generation.
As a manufacturing company, Beesting Boots must ensure that it produces high-quality vehicles at affordable prices to compete with other companies in the industry. It must also consider the needs of the customers and the market while ensuring it meets all the necessary safety standards. The company must also employ highly skilled employees to produce the best quality products.
It must also invest in research and development to stay up to date with the latest technologies and innovations. Overall, Beesting Boots (Pty) Ltd should continue to invest in modernizing its manufacturing processes and provide quality products to remain competitive in the market.
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Smeagol is the founder and sole shareholder of Precious Corporation. Precious owns and operates a jewelry shop that sells only simple gold rings. Smeagol routinely takes gold cleanser home to polish all the gold fixtures he has in his house, though Le never pays for it. He also takes rings from inventory and gives them to his friends on their birthdays. Again, he does not pay for the rings. And when Smeagol is short of cash, he takes money from the store cash register but never replenishes it One day a customer has an allergic reaction to the gold after putting on one of the rings. He sues Precious, and also asks the court to pierce the corporate veil and hold Smeagol personally liable. Will the court decide to pierce the corporate veil? Why or why not? No, because courts are highly reluctant to remove shareholder protections from liability Yes, because Smeagol was taking advantage of the corporate form for personal gain No, because the corporation was operated in accordance with state laws No, because if shareholders are found personally liable it will discourage corporate formation
Smeagol's personal liability will likely be pierced by the court, holding him personally liable for the customer's allergic reaction to the ring.
Will Smeagol be personally liable for the customer's allergic reaction?The court is likely to pierce the corporate veil and hold Smeagol personally liable for the customer's allergic reaction to the ring. Piercing the corporate veil is a legal doctrine that allows a court to disregard the separate legal entity of a corporation and hold its shareholders personally liable for the corporation's actions.
In this case, Smeagol's actions demonstrate a disregard for the legal separation between himself and the corporation. By taking gold cleanser and rings without paying for them, and using store funds for personal use without replenishing them, Smeagol is abusing the corporate form for personal gain. This behavior undermines the purpose of the corporate structure and may lead the court to hold him personally responsible.
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Lupin & Co. is the auditor for Diamond Berhad, a large interior design company. During the audit for the year ended 30 June 2021, the managing director informed auditor that the company has recently lost a major government contract and contracts from developer. Diamond’s current ratio has fallen from 1 to 0.40 for the first time due to this matter. Diamond has paid a number of its interior supplier later than usual and some of them have withdrawn credit terms. In addition, one of Diamond’s suppliers is threatening legal action to recover the sums owing. The Diamond’s projections include fifty percent cash inflows from this contract.The company has been experiencing some cash flow difficulties in previous and current year. Management has extended their bank credit facility to pay day-today expenses. Additionally, Diamond has a loan of RM5 million which is due for repayment in full by September 2021. The audit partner is concerned that the company may be facing going concern problem, but the managing director believes that the company intends to cut back future capital expenditure to alleviate the going concern issue.
a. Evaluate the indicators of going concern problems facing by Diamond Berhad and briefly explain the audit procedures that should be carried on by the auditor in assessing whether or not the entity’s is going concern.
Diamond Berhad is facing going concern problems indicated by loss of contracts, decreased current ratio, delayed payments, threatened legal action, cash flow difficulties, reliance on credit facility, and upcoming loan repayment, requiring auditor to assess ability to continue operating and impact on financial statements.
Identify the indicators?
Indicators of going concern problems facing Diamond Berhad:
1. Loss of major government contract and contracts from developers.
2. Decrease in current ratio from 1 to 0.40.
3. Delayed payments to interior suppliers and withdrawal of credit terms.
4. Legal action threatened by one of Diamond's suppliers.
5. Cash flow difficulties in previous and current years.
6. Dependence on bank credit facility for day-to-day expenses.
7. Loan of RM5 million due for repayment by September 2021.
Audit procedures to assess the going concern of Diamond Berhad:
1. Review management's cash flow projections and assess the accuracy and reliability of the projected cash inflows from the lost contracts.
2. Analyze the impact of the loss of contracts and delayed payments on the company's liquidity and ability to meet its obligations.
3. Evaluate the company's ability to repay the RM5 million loan by September 2021.
4. Assess the company's plans to cut back future capital expenditure and evaluate the impact of these measures on its financial stability.
5. Perform additional tests and analyses to assess the accuracy and reliability of the financial statements, including reviewing the collectability of receivables, analyzing the aging of payables, and assessing the adequacy of provisions and contingencies.
6. Consider the impact of the going concern issues on the valuation of assets, including potential impairment of assets and reassessment of asset values.
7. Evaluate the company's discussions and negotiations with suppliers and the potential outcome of the threatened legal action.
8. Consider any additional information or events subsequent to the balance sheet date that may impact the going concern assessment.
By conducting these audit procedures, the auditor can gather sufficient evidence to assess whether Diamond Berhad is facing significant going concern problems and determine the appropriateness of the going concern assumption in the financial statements.
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In January 2009, Rashed enterprises purchased equipment for 710,000 and was estimated to have a useful life of 14 years with a residual value of 10,000. At the end of 2019, it was determined that the equipment is of lower quality and there was a change of estimates accordingly. The useful life is now estimated to be 15 years with 10,000 residual value. (All figures are in AED) (5 Marks) Required: A. Compute the depreciation expenses for 2020 (1 mark) B. Show the journal record for 2020 (1 mark) C. Explain three factors involved in the depreciation process
A. Calculation of the depreciation expense for 2020: Using the straight-line method,
Depreciation expense = (Purchase cost - residual value) / useful life
Depreciation expense = (710,000 - 10,000) / 14= 50,000 per year
Change in the estimated useful life, on the other hand, causes a change in depreciation expense.
The new depreciation expense for the year 2020 will be:
New Depreciation expense = (Purchase cost - residual value) / useful life
New Depreciation expense = (710,000 - 10,000) / 15= 46,000 AED
B. Journal record for 2020 will be:
Depreciation expenses (Profit & Loss Account)46,000 AED
Equipment (Balance Sheet)46,000 AED
C. Three factors involved in the depreciation process are as follows:
Depreciable asset cost: This is the purchase cost of an asset that is depreciable. Cost reduction implies that the asset's depreciation expense will decrease while residual value increases.
Depreciable base: This refers to the amount of the asset's cost that can be used in the calculation of the asset's depreciation. When a residual value is present, it decreases the depreciable base.
Life of the asset: The amount of time that the asset is expected to be useful is referred to as its useful life. When the useful life of an asset is lengthened, it decreases the annual depreciation charge.
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