Answers
Answer:
12.8%
Explanation:
Data provided in the question:
Debt = 60% = 0.60
Equity = 40% = 0.40
Cost of debt, kd = 10% = 0.10
cost of equity, ke = 17% = 0.17
Now,
firm weight average cost of capital
= ( ke × weight of equity ) + ( kd × weight of debt )
on substituting the respective values, we get
= ( 0.17 × 0.40 ) + ( 0.10 × 0.60 )
= 0.068 + 0.06
= 0.128
or
= 0.128 × 100%
= 12.8%
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Required:
Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) units-of-output method, and (c) the double-declining-balance method.
Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar.
Answers
Answer:
a. Straight-line method.
Year Depreciation expense ($)
1 10,530
2 14,040
3 14,040
4 3,510
b. Units-of-production method.
Year Depreciation expense ($)
1 7,800
2 14,950
3 12,350
4 7,020
c. Double-declining balance method
Year Depreciation expense ($)
1 21,735
2 14,490
3 4,830
4 1,065
Explanation:
(a) the straight-line method
Note: See part a of the attached excel file for the depreciation schedule for Straight-line method.
In the attached excel file, the depreciation rate used for the Straight-line method is calculated as follows:
Straight line depreciation rate = 1 / Estimated useful life = 1 / 3 = 0.3333, or 33.33%
(b) units-of-output method
Note: See part b of the attached excel file for the depreciation schedule for units-of-production method.
(c) the double-declining-balance method.
Note: See part c of the attached excel file for the depreciation schedule for double-declining-balance method.
In the attached excel file, the depreciation rate used for the Double- declining-balance method is calculated as follows:
Double-declining depreciation rate = Straight line depreciation rate * 2 = (1/3) * 2 = 0.666667, or 66.6667%
Note:
Under this double-declining-balance method, the depreciation expenses for Year 4 is calculated by deducting the residual value of $1,350 from the Year 4 Beginning depreciable amount (i.e. $2,415 - $1,350 = $1,065). The residual value of $1,350 therefore represents the book value at the end of Year 4.
Production overhead $150,000
Office expense 100,000
Total $250,000
Distribution of resource consumption:
Activity Cost Pools
Making Awnings Job Support Other Total
Production overhead 45% 40% 15% 100%
Office expenses 8% 65% 27% 100%
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. The amount of activity for the year is as follows:
Activity Cost Pool Annual Activity
Making awnings 5,000 metres
Job support 200 jobs
Other Not applicable
Prepare the first-stage allocation of overhead costs to the activity cost pools
Answers
Answer and Explanation:
The preparation of the First stage allocation of overhead costs to the activity cost pools is presented below
Particulars Making awnings Job Support Other Total
Production Overhead $67,500 $60,000 $22,500 $150,000
Office Expenses $8,000 $65,000 $27,000 $100,000
The production overhead is allocated in 45% 40%, 15% and 100%
And,
The office expenses is allocated in 8%, 65%, 27% and 100%
The same is shown above
Check all that apply.
An asset account increases. An asset account decreases.
A liability account increases. A liability account decreases.
Capital Stock increases. Capital Stock decreases.
Retained Earnings increase. Retained Earnings decrease.
Answers
Answer:
Asset Account is decreased.
Liability Account is also decreased.
No effects on Capital Stock.
No effects on Retained Earnings.
Explanation:
Asset Account is decreased by $5000 because Cash is paid for the purchases made on account last month.
Liability Account is decreased by $5000 because accounts payable for the purchases made In the last month is now paid.
This transaction will have no effects on Capital Stock Account and Retained Earnings Account.
Answers
Answer:
The cost of land to be reported is $174,750
Explanation:
The cost of land reported in the Balance sheet does not only include the price paid to acquire the Land but also include any costs/revenue received in the processes, activities needed to bring the land to the stage in which it may be ready for usage.
Thus, besides the price paid which is $140,000 ( $90,000 cash and $50,000 short-term note), we have to add-up all the relevant costs including Legal fees, delinquent taxes, Removal of old building expenses and deduct the material salvaged gain from demolition of old building. The construction cost of new warehouse is irrelevant here as without this cost, the Land is already in a ready-to-use stage ( i.e: for building new property in the Land)
So, the amount of Cost of Land to be reported is : 140K + 1,75K + 25K + 9K - 1K = $174,750
Final answer:
The cost of the land to be reported on the balance sheet is $174,750.
Explanation:
To determine the cost of the land to be reported on the balance sheet, we need to add up all the costs associated with acquiring and preparing the land. In this case, the costs include the cash payment of $90,000, the short-term note of $50,000, legal fees of $1,750, delinquent taxes of $25,000, and fees paid to remove the old building of $9,000. We then subtract the salvage value of the materials sold, which is $1,000. So the total cost of the land is:
Total cost of land = Cash payment + Short-term note + Legal fees + Delinquent taxes + Fees to remove old building - Salvage value of materials
= $90,000 + $50,000 + $1,750 + $25,000 + $9,000 - $1,000 = $174,750
Therefore, the cost of the land to be reported on the balance sheet is $174,750.
Learn more about the cost of land here:
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Answers
Answer:
6.5017%
Explanation:
Given that,
Total cost of a college education when your child enters college in 16 years, Future value = $200,000
Amount today to invest, present value = $73,000
Time period = 16 years
Therefore,
Annual rate of interest:
r = 6.5017%
Therefore, the annual rate of interest you must earn on your investment to cover the cost of your child’s college education is 6.5017%.
b. $35.00
c. $37.50
d. $37.60
Answers
Answer: $49.05
Explanation:
The call was purchased at $3.05 and the strike price at expiration is $46. The total expenses at expiration is:
= 46 + 3.05
= $49.05
To make a profit, the stock price will have to be above $49.05 which makes it the breakeven point.
Option not included.