To calculate the output of each firm, market output, and price in a duopoly with a market demand of p=150−Q, Firm 1 having a constant marginal cost of MC1 =$20 and Firm 2 having a constant marginal cost of MC2 =$40, we can analyze both the collusive and Cournot equilibrium.
(a) Collusive equilibrium:
In a collusive equilibrium, firms coordinate their production decisions to maximize joint profits. In this case, q1 and q2 will be equal.
To find the collusive equilibrium output and price, we can start by finding the market output.
Given the market demand equation p=150−Q, we can substitute q1 + q2 for Q:
150 - (q1 + q2) = p
Since q1 = q2 in the collusive equilibrium, we can rewrite the equation as:
150 - 2q = p
Next, we need to determine the individual quantities produced by each firm. Since both firms have the same marginal cost of MC1 =$20 and MC2 =$40, their marginal costs are equal.
To find the output of each firm, we equate the marginal cost to the market price:
MC1 = p
MC1 = 150 - 2q1
20 = 150 - 2q1
2q1 = 130
q1 = 65
Similarly, for Firm 2:
MC2 = p
MC2 = 150 - 2q2
40 = 150 - 2q2
2q2 = 110
q2 = 55
The collusive equilibrium occurs where q1 equals 65 and q2 equals 55.
To find the market output, we sum the individual quantities produced:
Market output = q1 + q2 = 65 + 55 = 120
The collusive equilibrium price can be found by substituting the market output into the demand equation:
p = 150 - Q
p = 150 - 120
p = 30
Therefore, in the collusive equilibrium, the output of each firm is 65 and 55 respectively, the market output is 120, and the collusive equilibrium price is $30.
(b) Cournot-Nash equilibrium:
In a Cournot-Nash equilibrium, firms compete by simultaneously choosing their quantities. Each firm assumes that its rival's output will remain constant.
To find the Cournot equilibrium output and price, we can follow a similar process as before.
First, we determine the individual quantities produced by each firm. Each firm chooses its quantity to maximize its profits, given the quantity chosen by the other firm.
For Firm 1, we find the quantity that maximizes its profit:
MC1 = p
MC1 = 150 - 2q1
20 = 150 - 2q1
2q1 = 130
q1 = 65
For Firm 2, we find the quantity that maximizes its profit, assuming q1 remains constant:
MC2 = p
MC2 = 150 - 2q2
40 = 150 - 2q2
2q2 = 110
q2 = 55
The Cournot-Nash equilibrium occurs where q1 equals 65 and q2 equals 55.
To find the market output, we sum the individual quantities produced:
Market output = q1 + q2 = 65 + 55 = 120
To find the Cournot equilibrium price, we substitute the market output into the demand equation:
p = 150 - Q
p = 150 - 120
p = 30
Therefore, in the Cournot-Nash equilibrium, the output of each firm is 65 and 55 respectively, the market output is 120, and the Cournot equilibrium price is $30.
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The America Dog and Cat Hotel is a pet hotel located in Las Vegas. Assume that in March, when dog-days (occupancy) were at an annual low of 500, the average cost per dog-day was $14. In July, when dog-days were at a capacity level of 4,000, the average cost per dog-day was $7.
(a) Develop an equation for monthly operating costs. (Let X = dog-days per month)
Total cost =Answer
+ Answer
* X
(b) Determine the average cost per dog-day at an annual volume of 24,000 dog-days.
a) Monthly operating costs for the America Dog and Cat Hotel is given below:
Total cost = Fixed Cost + Variable Cost * X
Given:
When dog-days occupancy were at an annual low of 500, the average cost per dog-day was $14.
Then, the total cost for that month can be given as, 500 * $14 = $7,000
When dog-days occupancy were at a capacity level of 4,000, the average cost per dog-day was $7.Then, the total cost for that month can be given as, 4,000 * $7 = $28,000
Now, we can use the above two values to find out the fixed and variable costs.
Monthly Fixed Cost = Total Cost - (X * Variable Cost)When X = 500, Total Cost = $7,000, Variable Cost = $14
Fixed Cost = $7,000 - (500 * $14) = $-1,000
When X = 4000, Total Cost = $28,000, Variable Cost = $7Fixed Cost = $28,000 - (4,000 * $7) = $0
Now, we can put the above values in the formula of Monthly operating costs.
Total cost = Fixed Cost + Variable Cost * XTotal cost = $0 + $7 * X
Total cost = $7XMonthly operating costs equation is:
Total cost = $7X. (Ans: $7X) b)
We are given that at an annual volume of 24,000 dog-days,
we have to find the average cost per dog-day.
Annual volume = 24,000 dog-days
Monthly volume = 24,000/12 = 2,000 dog-days
Using the formula of monthly operating costs, we can find the average cost per dog-day.
Total cost = $7X, X = 2,000 dog-daysTotal cost = $7 * 2,000 = $14,000
======================
Average cost per dog-day = Total cost/Number of dog-days
Average cost per dog-day = $14,000/24,000
Average cost per dog-day = $0.58333
The average cost per dog-day at an annual volume of 24,000 dog-days is $0.58333. (Ans: $0.58333)
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The following table lists the components needed to assemble an end item, lead times, and quantities on hand. Click bere for the Excel Data Fille a. If 21 units of the end item are to be assembled, how many additional units of E are needed? (Hint You don't need to develop an MRP plan to determine this. Answer is complete and correct. a. If 21 units of the end item are to be assembled, how many additional units of E are needed? (Hint You don't need to develop an MRP plan to determine this.) b. An order for the end item is scheduled to be shipped at the start of week 13. What is the latest week that the order can be started and still be ready to ship on time? (Hint: You don't need to develop an MRP plan for this part either) Answer is complete but not entirely correct.
a. If 21 units of the end item are to be assembled, additional units of E are required.
The above table contains all the information required to determine the number of additional units of component E required to assemble 21 units of the end item. According to the table, for one end item, 2 units of component E are required. The total quantity of component E available is 70.
As a result, 2 x 21 = 42 units of component E are needed to produce 21 end items. As a result, an additional 42 - 70 = 28 units of component E are required to produce 21 end items. Therefore, if 21 units of the end item are to be assembled, 28 additional units of E are required.
b. The start of the week 10 is the latest time the order can be started in order to ship it at the start of the week 13.
According to the table, the lead time for end item is 3 weeks. As a result, to get the end item ready to ship at the beginning of week 13, the manufacturing order for end items should start in week 10. If the manufacturing order begins in week 11, there is no guarantee that the end items will be completed in time for shipment on time.
If the order starts in week 12, the end items will be completed in week 15, which is past week 13, the due date, and hence, can't be considered for on-time delivery. Therefore, week 10 is the last week in which the manufacturing order for end items should be started in order to ship the order on time, which is the beginning of week 13.
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Compare and contrast the logistics strategies of China and the European Union. Basically, compare "Belt and Road" with the EU Transport WhitePaper
China's Belt and Road Initiative aims to enhance connectivity and trade across continents through infrastructure development, while the EU Transport White Paper focuses on improving sustainability and efficiency in transportation within the European Union.
The Belt and Road Initiative is a comprehensive infrastructure project initiated by China that seeks to create a network of transportation and trade routes. It includes the construction of roads, railways, ports, and other infrastructure projects to connect China with various countries and regions. The aim is to facilitate trade, enhance economic cooperation, and boost development along the routes.
In contrast, the EU Transport White Paper is a policy framework proposed by the European Union to address the challenges and opportunities in the transportation sector within its member countries. The white paper focuses on sustainable transport systems, promoting greener modes of transport, reducing greenhouse gas emissions, and improving the efficiency and safety of transportation networks.
While the EU Transport White Paper concentrates on the transportation needs and challenges within the European Union. Both strategies reflect the respective priorities and goals of China and the European Union in their approach to logistics and transportation.
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Figure 1 contains the long-run average cost curve facing a firm.
Figure 1
Table 2a contains last year’s production and marketing costs for two products when two firms produce each product separately.
Table 2a
Product
Output
Manufacturing
Marketing
A
100
$5,000
$250
B
200
$16,000
$800
Table 2b contains the production and marketing costs for the two products for the upcoming year when one firm produces them.
Table 2b
Product
Output
Manufacturing
Marketing
A
150
$6,000
$300
B
200
$16,000
$640
1) Using the following figure to answer below
When output is between 20 and 40, the firm is experiencing
a. diseconomies of scale.
b. economies of scale.
c. constant returns to scale.
2) The firm experience economies of scale when output is
a. Between 10 and 20
b. Between 40 and 50
c. between 10 and 50
d. Between 20 and 40
When output is between 20 and 40, the firm is experiencing economies of scale. A firm is experiencing economies of scale when its long-run average cost (LAC) declines as output (production) expands. When production costs per unit of output decrease as the firm expands its scale of operations, economies of scale arise.
1. This results in an increase in profits for the firm as the firm lowers the costs of production for each unit. The firm's ability to increase its scale of operations is demonstrated by a downward sloping LAC curve that hits the minimum efficiency scale (MES) at Q1 (Figure 1). The MES is the production level at which LAC is at its minimum point.
2. The firm experiences economies of scale when output is between 20 and 40. When the long-run average cost (LAC) curve is declining as the output is increasing, a company is experiencing economies of scale. The most cost-effective output level occurs when the LAC curve intersects the minimum efficient scale (MES) of output.
Here, the MES for product B is around 20 units, and the MES for product A is around 30 units. As a result, the firm experiences economies of scale when output is between 20 and 40. Economies of scale are a concept that refers to the reduction of production costs and the development of improved efficiency as the scale of production increases.
The six-month and one-year zero rates are both 10% per annum. For a bond that has a life of 18 months and pays a coupon of 8% per annum (with semiannual payments and one having just been made), the yield is 10.4% per annum. What is the bond’s price? What is the 18-month zero rate? All rates are quoted with semiannual compounding.
The bond's price is $2,004.38, and the 18-month zero rate is approximately 11.6% per annum.
To calculate the bond's price, we need to determine the present value of its cash flows. The bond pays a coupon of 8% per annum, with semiannual payments. Since the coupon has already been paid, there are three remaining coupon payments of $20 each ($1,000 * 8% * 0.5). We discount these cash flows using the semiannual zero rates.
The present value of the three coupon payments can be calculated as follows:
PV = (20 / (1 + (0.1 / 2))) + (20 / (1 + (0.1 / 2))^2) + (20 + 1,020 / (1 + (0.1 / 2))^3)
≈ 18.18 + 16.53 + 1,026.98
≈ $1,061.69
Next, we need to calculate the present value of the bond's face value. The face value of the bond is $1,000, and it will be received in 18 months. We discount the face value using the 18-month zero rate.
The present value of the face value can be calculated as follows:
PV = 1,000 / (1 + (r / 2))^3
= 1,000 / (1 + (0.104 / 2))^3
≈ 1,000 / 1.06169
≈ $942.69
Finally, we sum the present values of the cash flows to find the bond's price:
Bond Price = PV of coupons + PV of face value
= $1,061.69 + $942.69
= $2,004.38
To calculate the 18-month zero rate, we use the bond's price formula with the known values and solve for the rate:
2,004.38 = 1,000 / (1 + (r / 2))^3
(1 + (r / 2))^3 ≈ 1.00038
(1 + (r / 2)) ≈ 1.00038^(1/3)
r / 2 ≈ (1.00038^(1/3) - 1)
r ≈ 2 * ((1.00038^(1/3) - 1))
r ≈ 0.116
Therefore, the 18-month zero rate is approximately 11.6% per annum.
The bond's price is $2,004.38, and the 18-month zero rate is approximately 11.6% per annum. This means that an investor would be willing to pay $2,004.38 to purchase the bond, considering the future cash flows and the prevailing interest rates.
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Lxpenditure Please Draw the full expenditure model bellow filling in all the amounts Expenditure
Unfortunately, your question seems to be incomplete. It is not clear what type of expenditure model you are referring to, or what specific amounts need to be filled in.
Please provide more information or context so that I can assist you better. Additionally.
if you have a specific question related to an expenditure model, feel free to ask it and I will do my best to provide a helpful response.
Remember to include all necessary information in your question to ensure that I can provide a complete and accurate answer.
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QUESTION 2 (20 Marks) Below are the title and abstract of an
article which was published in January 2020 in the Business
Strategy and the Environment Journal, Vol. 29, Issue 1, page 1 –
16. Critical
The relationship between Corporate Environmental Performance (CEP) and Financial Performance (FP) has been a subject of debate in the literature for many years. While some researchers argue that environmental performance is positively related to financial performance, others disagree.
The paper reviews 92 studies that have investigated the relationship between CEP and FP and identifies the main findings of these studies. The paper also discusses the methodological issues that arise in this area of research and suggests ways to address these issues.
the article provides a comprehensive review of the relationship between CEP and FP and suggests future research directions. The review suggests that the relationship is complex and depends on various factors, and that future research should adopt a more sophisticated research design.
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A production process consists of a three-step operation. The scrap rate is 19 percent for the first step and 10 percent for the other two steps. a. If the desired daily output is 486 units, how many units must be started to allow for loss due to scrap? (Do not round intermediate calculations. Round up your final answer to the next whole number.) Answer is complete and correct. b. If the scrap rate for each step could be cut in half at every operation, how many units would this save in terms of the scrap allowance? (Do not round intermediate calculations. Round up your final answer to the next whole number) Answer is complete but not entirely correct.
The total units saved in terms of the scrap allowance is approximately 32 + 34 + 37 = 103 units.
a. To determine the number of units that must be started to allow for loss due to scrap, we need to account for the scrap rate at each step of the three-step operation.
Step 1 scrap rate: 19%
Step 2 and 3 scrap rate: 10%
Desired daily output: 486 units
To calculate the total units that must be started, we divide the desired daily output by the complement of the scrap rate at each step. The complement of the scrap rate represents the proportion of units that are not lost due to scrap.
Step 1 units: 486 / (1 - 0.19) = 486 / 0.81 ≈ 600
Step 2 units: 600 / (1 - 0.10) = 600 / 0.9 ≈ 667
Step 3 units: 667 / (1 - 0.10) = 667 / 0.9 ≈ 741
Therefore, approximately 741 units must be started to allow for loss due to scrap.
b. If the scrap rate for each step is cut in half at every operation, we need to recalculate the number of units saved in terms of the scrap allowance.
New scrap rates:
Step 1 scrap rate: 19% / 2 = 9.5%
Step 2 and 3 scrap rate: 10% / 2 = 5%
Using the same calculation method as in part a, we can determine the new number of units saved.
Step 1 units saved: 600 - (600 / (1 - 0.095)) ≈ 32
Step 2 units saved: 667 - (667 / (1 - 0.05)) ≈ 34
Step 3 units saved: 741 - (741 / (1 - 0.05)) ≈ 37
The total units saved in terms of the scrap allowance is approximately 32 + 34 + 37 = 103 units.
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2. Sophia is single and has reached full retirement age. She is working part time and earning $35,000 per year. Are her social security benefits taxable, and if so, what percent of her benefits are taxable?
A. No, her social security benefits are not taxable
B. Yes, up to 85% of her social security benefits are taxable.
C. Yes, up to 50% of her social security benefits are taxable.
D. Yes, all her social security benefits are taxable.
The correct answer is option B. Yes, up to 85% of her social security benefits are taxable.
When it comes to determining the taxability of Social Security benefits, several factors need to be considered, including the individual's income level and filing status. In Sophia's case, as a single individual who has reached full retirement age, her Social Security benefits can indeed be subject to taxation.
The exact percentage of Social Security benefits that is taxable depends on her combined income, which is calculated by adding her adjusted gross income (AGI), any tax-exempt interest income, and half of her Social Security benefits. If the combined income exceeds certain thresholds, a portion of the benefits becomes taxable.
In Sophia's situation, her part-time earnings of $35,000 per year will be included in her AGI. Based on this income, it is likely that a portion of her Social Security benefits will be subject to taxation. The specific percentage of taxable benefits is determined using a formula, where up to 85% of the benefits can be taxable.
Therefore, option B, which states that up to 85% of Sophia's Social Security benefits are taxable, is the correct answer. It's important for individuals in similar situations to consult with a tax professional or refer to the IRS guidelines to accurately determine the taxability of their Social Security benefits based on their specific circumstances.
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On January 1,2019 Terry's Towing Service owned 10 tow trucks valued at $600,000. During 2019, Terry's bought 8 new trucks for a total of $640,000. At the end of 2019 , the market value of all the firm's trucks was $1,180,000. What was Terry's gross investment? Calculate Terry's depreciation and net investment. Terry's gross investment during 2019 was $ The Bureau of Economic Analysis reported that the U.S. capital stock was $49.6 trillion at the end of 2012 , $51.2 trillion at the end of 2013 , and $53.6 trillion at the end 2014 . Depreciation in 2013 was $1.6 trillion, and gross investment during 2014 was $2.4 trillion. Calculate U.S. net investment and gross investment during 2013. ≫ Answer to 1 decimal place. U.S. net investment during 2013 was \$ trillion. Depreciation in 2013 was $1.6 trillion, and gross investment during 2014 was $2.4 trillion. Calculate U.S. net investment and depreciation during 2014. ≫ Answer to 1 decimal place. U.S. net investment during 2014 was $ trillion. Frank takes a summer job painting houses. During the summer, he earns an after-tax income of $4,000 and he spends $2,000 on goods and services. What was Frank's saving during the summer and the change, if any, in his wealth? ≫ If your answer is negative, include a minus sign. If your answer is positive, do not include a plus sign. Frank's saving during the summer is dollars.
Frank's savings during the summer is $2,000.
1. Gross investment for Terry's Towing Service in 2019:
Gross investment is the total amount of money spent by a company on purchasing new assets during the year.
It is calculated by adding the value of new assets bought to the value of old assets owned by the company.
Gross investment = Old assets + New assets = $600,000 + $640,000 = $<<600000+640000=1240000>>1,240,0002. Depreciation and net investment for Terry's Towing Service in 2019:
Depreciation is the reduction in the value of an asset due to wear and tear over time.
Net investment is the gross investment minus the amount of depreciation.
Terry's Towing Service's depreciation = $1,240,000 - $1,180,000 = $<<1240000-1180000=60000>>60,000
Net investment = Gross investment - Depreciation = $1,240,000 - $60,000 = $<<1180000=1180000>>1,180,0003.
Gross investment and net investment for the U.S. in 2013:
Gross investment is the total amount of money spent by the U.S. on purchasing new assets during the year. Depreciation is the reduction in the value of assets due to wear and tear over time. Net investment is the gross investment minus the amount of depreciation.
Gross investment in 2014 = $2.4 trillion
Depreciation in 2013 = $1.6 trillion
Gross investment in 2013 = Gross investment in 2014 - (Gross investment in 2014 - Gross investment in 2013)Gross investment in 2013 = $2.4 trillion - ($53.6 trillion - $51.2 trillion)
= $2.0 trillion
Net investment in 2013 = Gross investment in 2013 - Depreciation in 2013 = $2.0 trillion - $1.6 trillion = $0.4 trillion
4. Frank's savings during the summer and the change in his wealth:
Frank's savings during the summer = After-tax income - Spending
= $4,000 - $2,000
= $<<4000-2000=2000>>2,000Change in wealth
= Saving
= $2,000
Therefore, there was an increase of $2,000 in Frank's wealth.
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Problem #3: A French software genius had been offered ∈15,000 per year for the next four years and then €25,000 per year for the following 15 years for the rights to his new smart phone app. At 5% interest, how much is this offer worth today? Problem # 4: A new wave-soldering machine is expected to save Brisbane Circuit Boards $15,000 per year through reduced labour costs and increased quality. The device will have a life of eight (8) years, and have a salvage value of $20,000. at the end of the 8 th year (salvage value means the used machine can be sold in the open market). If the company can generally expect to get 12% return on its capital, how much could it afford to pay for the wave-soldering machine?
The offer is worth €179,105.76 today at a 5% interest rate.
To find out the value of the offer today at a 5% interest rate, we need to use present value calculation.
The formula for calculating present value of an annuity is as follows:PV = (PMT / r) x [1 - (1 / (1 + r)^(n))], where PV is the present value, PMT is the payment, r is the interest rate, and n is the number of payments.
Using the above formula, we can find out the present value of the offer today as follows:
PV = [(15,000 / 1.05) x (1 - 1 / (1 + 0.05)^4)] + [(25,000 / 1.05^5) x (1 - 1 / (1 + 0.05)^15)]
PV = [12,828.13 + 166,277.63]PV = 179,105.76
Therefore,
To calculate how much the company could afford to pay for the wave-soldering machine, we need to use net present value calculation. The formula for calculating net present value is as follows
:NPV = (PV of cash inflows) - (PV of cash outflows)where PV is the present value.
Using the above formula, we can find out the maximum amount the company can afford to pay as follows:
PV of cash inflows = (annual savings x annuity factor) + salvage valuePV of cash inflows = (15,000 x 5.206) + 20,000
PV of cash inflows = 108,090.24PV of cash outflows = cost of the machine
PV of cash outflows = cost of the machineNPV = PV of cash inflows - PV of cash outflowsNPV = 108,090.24 - cost of the machine
At 12% return on capital, the company can afford to pay an amount that gives an NPV of zero.
Therefore,108,090.24 - cost of the machine = 0cost of the machine = 108,090.24
Therefore, the company can afford to pay $108,090.24 for the wave-soldering machine.
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Nick and Nate are founders of Smart Retail, a company operating in the e-Commerce space. The company runs its own online platform. The platform uses a proprietary algorithm, which was developed by Nick and Nate, and matches retail company products (such as products from Guess, GAP, Banana Republic) with retail customers. Nick and Nate invested their savings of $1 million in the company in 2021.
The company generates revenue only when there is an actual transaction on its platform. About 70% of retailers pay immediately, whereas the rest have credit arrangements with Smart Retail enabling them to pay 3 months after the online transactions take place. During the first half of 2021, the company recorded revenue of $2 million.
The company’s success depends on the ability of the algorithm to correctly match retailer products with customers. There has been heavy investment in Research and Development (R&D) towards improving this underlying technology. Smart Retail invested $3 million in R&D during the first half of 2021.
Nick and Nate realized that the company needed additional capital to expand. They secured a credit line from the bank, and took out a 5-year initial loan of $5 million at the beginning of July 2021. The interest rate for the loan was set at an annual rate of 8%.
The company immediately used half of the proceeds from the loan to buy servers to support operations due to anticipated increase in demand for the service. The new servers were expected to be used for 3 years before a replacement was required. The company also spent an additional $300,000 to equip the office space with new furniture. The estimated lifespan of the furniture was 3 years. Moreover, Nick and Nate decided to insure the office space and received a great quote from Prepaid Insurance company offering comprehensive insurance for one year at the amount of $50,000.
The company took off during the second half of the year. Compared to the first half of 2021, sales doubled.
The company calculated $500,000 of administrative costs and $600,000 of marketing costs for the year.
The tax rate was 25%.
Record the transactions for Smart Retail Company.
Prepare a properly formatted Balance Sheet, an Income Statement, and a Statement of Cash Flows for 2021.
1. Initial investment: Debit Cash - $1,000,000, Credit Common Stock - $1,000,000.
2. Revenue recorded: Debit Accounts Receivable - $2,000,000, Credit Revenue - $2,000,000.
To properly record the transactions for Smart Retail Company, we need to break them down into different categories. Here's a step-by-step breakdown of the transactions and how they should be recorded:
1. Initial investment by Nick and Nate:
Debit: Cash (Asset) - $1,000,000
Credit: Common Stock (Equity) - $1,000,000
2. Revenue recorded for the first half of 2021:
Debit: Accounts Receivable (Asset) - $2,000,000
Credit: Revenue (Income) - $2,000,000
3. R&D investment:
Debit: R&D Expense (Expense) - $3,000,000
Credit: Cash (Asset) - $3,000,000
4. Loan obtained from the bank:
Debit: Cash (Asset) - $5,000,000
Credit: Notes Payable (Liability) - $5,000,000
5. Purchase of servers:
Debit: Equipment (Asset) - $2,500,000 (half of the loan amount)
Credit: Cash (Asset) - $2,500,000
6. Purchase of office furniture:
Debit: Furniture (Asset) - $300,000
Credit: Cash (Asset) - $300,000
7. Prepaid insurance for office space:
Debit: Prepaid Insurance (Asset) - $50,000
Credit: Cash (Asset) - $50,000
(Note: We assume that all transactions are cash-based, meaning they are paid immediately unless specified otherwise.)
Now, let's prepare the financial statements for Smart Retail Company for the year 2021.
Balance Sheet as of December 31, 2021:
Assets:
Cash: $
Accounts Receivable: $
Equipment: $
Furniture: $
Prepaid Insurance: $
Total Assets: $
Liabilities:
Notes Payable: $
Total Liabilities: $
Equity:
Common Stock: $
Retained Earnings: $
Total Equity: $
Total Liabilities and Equity: $
Income Statement for the year 2021:
Revenue: $
Administrative Costs: $
Marketing Costs: $
R&D Expense: $
Net Income: $
Statement of Cash Flows for the year 2021:
Operating Activities:
Net Income: $
Adjustments for non-cash expenses:
Changes in working capital:
Net Cash Provided by Operating Activities: $
Investing Activities:
Purchase of Equipment: $
Purchase of Furniture: $
Net Cash Used in Investing Activities: $
Financing Activities:
Proceeds from Notes Payable: $
Net Cash Provided by Financing Activities: $
Net Increase in Cash: $
Cash at Beginning of Year: $
Cash at End of Year: $
Please note that the actual amounts need to be filled in based on the information provided in the question.
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Read Case Study Strava's the New Social Network, page 144. Answer the following Case Study Questions. 1.Discuss why the
Strava is a popular app that is mainly used by runners and cyclists. This app allows users to keep track of their progress and share their accomplishments with friends and followers. The social media component of the app has made it very popular among fitness enthusiasts.
One of the significant benefits of Strava is the data it collects. It gives users a clear view of their progress and helps them identify areas where they can improve. The data also allows users to see how they stack up against other users, which is a source of motivation for many.
Strava is a popular app that provides a supportive community for fitness enthusiasts. Its social media component has made it very successful, and users enjoy the competition and the ability to track their progress. The data collected by the app is a significant benefit for users as it allows them to see their progress and identify areas for improvement. Overall, Strava has become a popular app because of its unique features and the supportive community it provides.
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Should companies always have a strategy OR Should they just adapt as needed to a rapidly changing business environment. Agree or Disagree?
In today's fast-paced business world, organizations must have an effective and flexible strategy to respond to rapidly changing market situations.
Companies must have a strategy because it helps them to define goals, increase efficiency, and improve decision-making. Agreeing with the given statement, companies should always have a strategy to avoid pitfalls, unnecessary expenditures and to maximize profits. Without a strategy, organizations would not be able to allocate resources efficiently, which would lead to wasted resources.
If companies do not have a flexible strategy, they risk falling behind their competitors, as their products and services may become outdated. However, they must also be flexible and adaptable to changing market conditions to stay competitive in today's rapidly changing business environment.
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Id-6c An aggregate plan provides justification for:
Select one:
a.
the budget amount requested
b.
demand for individual products
c.
demand for product families
d.
the demand for the parts of each product
e.
number of customers
An aggregate plan provides justification for the (c) demand for product families. An aggregate plan is a tool used by companies to establish a general level of output in the future, inventory levels, and resource allocation while taking into account forecasts and possible changes in demand, capacity, and other variable costs.
Aggregate planning is the process of creating a production schedule that takes into account available resources while balancing demand and supply in order to achieve the most optimal outcome.
The main goal of aggregate planning is to provide a plan that balances capacity and demand in order to achieve the company's strategic goals while also improving efficiency and profitability. A demand forecast is used in aggregate planning to anticipate the company's future production needs.
Since it's not feasible to forecast demand for each individual item, forecasts are created for product families or categories instead of individual items, as these will provide a more accurate demand estimate. In summary, an aggregate plan provides justification for the demand for product families. C) is correct
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On April 1, Larkspur, Inc, began operations. The following transactions were completed during the month. 1. Stockholders invested $18,200 in the business in exchange for common stock. 2. Obtained a bank loan for $5,300 by issuing a note payable. 3. Paid $8,400 cash to buy equipment. 4. Paid $900 cash for April office rent. 5. Paid $1,100 for supplies. 6. Purchased $460 of advertising in the Daily Herold, on account. 7. Performed services for $13.700 : cash of $1,520 was received from customers, and the balance of $12,180 was billed to customers on account. 8. Paid $300 cash dividend to stockholders. 9. Pald the utiity bill for the month, $1,520. 10. Paid Doify Herald the amount due in transaction (6). 11. Paid $30 of interest on the bank loan obtained in transaction (2) 12. Pald employees salaries and wages, \$4,860. 13. Recelved $9,120 cashifrom customers billed in transaction (7). Mn 7. 8. 9. 10. 11. 12.
In April, Larkspur, Inc., received stockholder investments and a bank loan, purchased equipment, paid expenses, provided services, received cash from customers, and paid dividends.
In April, Larkspur, Inc., engaged in several significant transactions that impacted its financial activities. The company raised capital by receiving $18,200 in cash from stockholders who purchased common stock. To support its operations, Larkspur also obtained a bank loan of $5,300 by issuing a note payable.
The company invested in equipment by paying $8,400 in cash. Various expenses were incurred during the month, including $900 for office rent, $1,100 for supplies, $460 for advertising (purchased on account from the Daily Herald), $1,520 for utilities, and $4,860 for employee salaries and wages.
Larkspur generated revenue by providing services amounting to $13,700. Out of this, $1,520 was received in cash from customers, and the remaining $12,180 was billed to customers on account. The company also received $9,120 in cash from customers who had been previously billed.
The company paid $300 in cash dividends to its stockholders, fulfilling its distribution commitment. Additionally, Larkspur settled its obligations by paying the remaining balance due to the Daily Herald ($460) and $30 in interest on the bank loan.
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A nominal annual interest rate is 8.50%, compounded monthly. What are equivalent effective monthly and annual interest rates? 2. If the effective monthly interest rate is 1.50% per month, what is the effective quarterly rate? 3. If the nominal annual interest rate, r, is 9.00% per year, compounded semi-annually, what is the effective annual interest rate, i? 4. If the effective annual interest rate is 9.0% per year, what is the effective quarterly interest rate?
The equivalent effective monthly and annual interest rates are 0.69% and 9.14%, respectively. A nominal annual interest rate is 8.50%, compounded monthly.
What are equivalent effective monthly and annual interest rates?Nominal annual interest rate (r) = 8.50%
Effective monthly interest rate (i) = (1 + r / m)^(m / 12) - 1
where,
m is the number of compounding periods per year= 12 (compounded monthly)
i = (1 + r / m)^(m / 12) - 1
= (1 + 8.5%/12)^(12/12) - 1
= 0.69%.
Effective annual interest rate (I) = (1 + i)^12 - 1
= (1 + 0.69%)^12 - 1
= 9.14%.
Therefore, the equivalent effective monthly and annual interest rates are 0.69% and 9.14%, respectively.
2. What is the effective quarterly rate?Effective quarterly rate (i) = (1 + r)^3 - 1
Where r is the effective monthly rate= 1.50%
i = (1 + r)^3 - 1
= (1 + 1.50%)^3 - 1
= 4.57%.
Therefore, the effective quarterly interest rate is 4.57%.
3. Nominal annual interest rate (r) = 9.00%
Compounding frequency (m) = 2
Effective annual interest rate (i) = (1 + r / m)^m - 1
= (1 + 9.00% / 2)^2 - 1
= 9.20%.
Therefore, the effective annual interest rate is 9.20%.
4. If the effective annual interest rate is 9.0% per year, what is the effective quarterly interest rate?
Effective quarterly rate (i) = (1 + r)^1/4 - 1
where r is the effective annual interest rate= 9.00%
i = (1 + r)^1/4 - 1
= (1 + 9.00%)^1/4 - 1
= 2.16%.
Therefore, the effective quarterly interest rate is 2.16%.
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Jully Ltd. is building a new bridge that takes 18 months to complete. On 1st January 2020, it got a bank loan of $5,000,000 for 5 years at an interest rate of 8%/year for financing the construction. On 1st February 2020, it began to pay construction costs. Due to the actual conditions at the construction site, the bridge was flooded in the period from July to September. Thus, the construction cannot be carried out during this period (the Company has anticipated this).The total cost of building the bridge to completion is $5,000,000. Since construction costs are gradually eliminated according to the construction progress, there is a temporary income from the above loan of $100,000 during the construction period.
Required:
1. Determine when to start capitalization, stop capitalization and the time period when borrowing costs are capitalized into the cost of the bridge?
2. Determine the original cost of the bridge and annual depreciation charges
3. Make necessary accounting entries
1. Capitalize borrowing costs during construction from February 2020 to June 2020 and from October 2020 until completion.
2. The original cost of the bridge is $5,000,000, with annual depreciation charges of $250,000 over a 20-year useful life.
1. Determining when to start capitalization, stop capitalization, and the time period when borrowing costs are capitalized into the cost of the bridge:
According to the given information, the construction of the bridge takes 18 months to complete. The borrowing costs should be capitalized when the following conditions are met:
a) Expenditures on the asset have been made.
b) Borrowing costs are being incurred.
c) Activities that are necessary to prepare the asset for its intended use or sale are in progress.
Since construction costs begin on 1st February 2020, this is when the capitalization of borrowing costs should start.
The borrowing costs should be capitalized until the construction is interrupted due to flooding from July to September. During this period, no construction activities are taking place, so borrowing costs should be expensed rather than capitalized.
Once the construction activities resume in October, the capitalization of borrowing costs should also resume until the construction is completed.
2. Determining the original cost of the bridge and annual depreciation charges:
The original cost of the bridge is the total cost of building the bridge, which is $5,000,000.
To calculate the annual depreciation charges, we need to determine the useful life of the bridge. Let's assume the useful life of the bridge is 20 years.
The annual depreciation charges can be calculated using the straight-line depreciation method, which evenly distributes the cost over the useful life.
Annual Depreciation = Original Cost / Useful Life
Annual Depreciation = $5,000,000 / 20 = $250,000
Therefore, the annual depreciation charges for the bridge are $250,000.
3. Making necessary accounting entries:
a) Start of Capitalization (1st February 2020):
Debit: Construction in Progress (asset account) - $5,000,000
Credit: Bank Loan (liability account) - $5,000,000
b) Stop of Capitalization (1st July 2020):
Debit: Construction Expense (expense account) - $100,000
Credit: Accrued Borrowing Costs (liability account) - $100,000
c) Resumption of Capitalization (1st October 2020):
Debit: Construction in Progress (asset account) - $100,000
Credit: Accrued Borrowing Costs (liability account) - $100,000
d) Completion of Construction (date of completion):
Debit: Construction in Progress (asset account) - Remaining balance
Credit: Bank Loan (liability account) - Remaining balance
e) Annual Depreciation (each year):
Debit: Depreciation Expense (expense account) - $250,000
Credit: Accumulated Depreciation (contra-asset account) - $250,000
Note: The specific dates and accounts used in the accounting entries may vary based on the company's accounting policies and practices. It's recommended to consult with an accountant or financial professional for accurate and tailored advice for your specific situation.
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To add Line sparklines in the range F5:F10 based on the data in the range B5:E10, please follow these steps:
1. Select the range F5:F10.
2. Go to the "Insert" tab in the Excel ribbon
To add line sparklines in the range F5:F10 based on the data in the range B5:E10, follow these steps: Select the range F5:F10., Go to the "Insert" tab in the Excel ribbon.
Open the Excel spreadsheet and navigate to the worksheet containing the data.
Click and drag to select the range F5:F10 where you want to insert the line sparklines.
Switch to the "Insert" tab in the Excel ribbon at the top of the window.
Look for the "Sparklines" group within the "Insert" tab.
Click on the "Line" sparkline option to insert line sparklines.
A dialog box will appear where you need to specify the data range. In this case, the data range is B5:E10.
Select the data range B5:E10 by clicking and dragging over the cells containing the data.
Click "OK" to confirm and insert the line sparklines into the selected range F5:F10.
Now you should see line sparklines representing the data in the range B5:E10 within the range F5:F10.
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Financial Ratios help to provide
better
A. research
B. information and research
C. information
Answer: C. information
Explanation: The correct answer is C. Financial ratios help to provide information about a company's financial performance and position.
Scanning your-memory for previous experiences with products or brands occurs during which stage of the consumer purchase decision process? Q. information search purchase decision alternative evaluation postpurchase behavior problem recognition QUESTION 7 The personal, social, and economic significance of the purchase to the consumer, which is known as the level of may cause him or her to skip or minimize one ormore stages in the purchase decision process. aspiration cognitive dissonance motivation situational influences involvement QUESTION 8 A reference group that a person wishes to be a member of or wishes to be identified with is referred to as a(n) preference associative aspiration integrated QUESTION 9 Consumer behavior refers to the aspects of a consumer's decision-making processes that cannot be measured. the actions a person takes in purchasing and using products and services, including the mental and social processes before and after them. the five stages a buyer passes through in making choices about which product and service to investigate, purchase, and consume. the mental and social processes related to purchasing that are innate in a person from birth those purchasing behaviors that result from repeated experience and reasoning QUESTION 10 Situational influences refer to the temporary impediments to a consumer's purchase decision psychological concepts that are useful for irterpreting buying processes and directing marketing efforts the feelings of postpurchase anviety that can arise from a namber of different factors induding social surroundings, physical surroundings. psychological effects, and precedent states. both the objective and subjective attributes a consumer uses to campare different products and brands Chick Save and Subimit to save and nubmit. Cick Shere All Annurrs to save all annuer:.
Scanning a consumer's memory for previous experiences with products or brands occurs during the information search stage of the consumer purchase decision process.
The consumer purchase decision process consists of several stages, and information search is one of them. During this stage, consumers gather information about different products or brands to make an informed decision. Scanning their memory for previous experiences with products or brands is part of this information search process. By recalling past experiences, consumers can evaluate the performance, quality, and satisfaction they obtained from certain products or brands. This information helps them make comparisons and judgments, ultimately influencing their purchasing decision. By utilizing their memory, consumers can draw upon their past experiences to guide their current decision-making process.
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Ahmed Solomon has run his printing business since 2009 in Somolu. He started with a second hand Gestetner machine but about seven years ago had acquired a complete suite of equipment and was doing very well. In order to position himself to handle much bigger jobs he decided to incorporate his business. He has three sons and a daughter. He registered Solomonic Printers as a limited liability company with a share capital of N500,000.00. He held N200,000.00 shares directly and took out a debenture of N250,000.00. He gave his wife shares of N20,000.00 and registered N10,000.00 in the names of his sons.
Jensen Jibiti was one of his regular customers and often gave him printing jobs running into several millions of naira. Some seven months ago Jibiti introduced a business of printing fake dollars to Ahmed’s son who was running the business as the managing director. Lured on by Jibiti that son began to divert much of the company’s business to this business as an advance against payments by Jibiti. The company became insolvent in July 2021 and had to be wound up. The liquidator wants to know whether he should pay Ahmed first or the other creditors who had given advances on printing jobs. If he paid Ahmed there would not be enough to satisfy the other creditors. He wishes to take various steps against the managing director, as well. Advise him
In this scenario, the company has become insolvent due to the actions of Ahmed Solomon's son, who, in collusion with Jensen Jibiti, diverted much of the company's business to print fake dollars as an advance against payments by Jibiti.
Now, the liquidator wants to know whether he should pay Ahmed first or the other creditors who had given advances on printing jobs. Advise him.The liquidator should prioritize the payment of creditors who had given advances on printing jobs over Ahmed Solomon as per the principles of priority in liquidation. In a winding-up, the liquidator must follow certain rules when distributing the assets of the insolvent company.
According to the rules of priority, certain claims have priority over others. Section 530(1) of the Companies and Allied Matters Act (CAMA) provides a list of preferred creditors whose claims are given priority over others. The priority order of distribution is as follows:
Costs and expenses of winding-up ;
Outstanding salaries, wages, and other benefits to employees;
Local government tax and dues;
Payments due to the Federal Inland Revenue Service (FIRS);
Payments due to any other creditor with a valid fixed charge;
Payments due to other creditors who have no valid fixed charge;
Payments due to shareholders for the return of capital (paid in cash);
Payments due to shareholders as dividends;
In this case, since Ahmed Solomon is a shareholder and has a debenture, he falls under the seventh category of preferred creditors, and his claim must be paid after the first five categories have been settled, but before other unsecured creditors such as those who gave advances on printing jobs.
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Using examples, explain what ‘organisational culture’ refers to and critically discuss the extent to which culture can be used to organise and manage individuals in the contemporary workplace.
Organizational culture refers to the shared values, beliefs, attitudes, and practices that characterise an organisation and guide its conduct. Organizational culture is a term used to describe the values, beliefs, and norms that influence the behaviour of an organization's members.
It's a mix of the organization's history, values, behaviour, and beliefs that influence the way people interact and work together. The values and beliefs of an organisation determine how employees interact with each other, as well as with external stakeholders, and how decisions are made.
For example, an organization may have a culture of innovation, which encourages creativity and risk-taking to achieve results. It may also have a culture of quality, which emphasises excellence and attention to detail. Additionally, there can be a culture of hierarchy, which values chain of command and formal authority to maintain stability.
Management and organisational culture- The extent to which culture can be used to organise and manage individuals in the contemporary workplace is subject to debate. Organizational culture plays an essential role in management and performance, but it's critical to remember that culture should serve the needs of the organization and its members.
Culture can be an essential tool for organizing and managing individuals in the workplace. A culture that encourages teamwork, for example, fosters collaboration and the sharing of information. Managers may use organisational culture to motivate employees, create a sense of belonging, and enhance productivity.
Culture can also be used to influence employee behaviour. For example, an organisation that values customer service is likely to have employees who prioritise providing excellent customer service. However, culture should not be used to control individuals. Employees should be free to express themselves, and their work should be evaluated based on its merits.
In conclusion, organisational culture is a crucial aspect of management and performance. It plays a crucial role in shaping employee behaviour, decision making, and productivity. A healthy organisational culture fosters teamwork, innovation, and commitment to shared goals. However, it is critical to remember that culture should serve the needs of the organisation and its members and should not be used to control individuals. Culture should be used as a tool to organise and manage individuals in the workplace, but not as a way to dictate their actions.
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businessaccountingaccounting questions and answersat practical capacity, golding uses 22,000 check processing hours. required: 1. calculate the copacity cost rate for the checking account process. round your answer to the nearest cent. x perhourif the total number of statemenits issued was 30,000 , calcuiate the cost of the issuing statements activity. 2. assuming there are 2,000 interest-bearing checking
Question: At Practical Capacity, Golding Uses 22,000 Check Processing Hours. Required: 1. Calculate The Copacity Cost Rate For The Checking Account Process. Round Your Answer To The Nearest Cent. X PerhourIf The Total Number Of Statemenits Issued Was 30,000 , Calcuiate The Cost Of The Issuing Statements Activity. 2. Assuming There Are 2,000 Interest-Bearing Checking
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At practical capacity, Golding uses 22,000 check processing hours. Required: 1. Calculate the copacity cost rate for the checking account process. Round your answer to the nearest cent. X perhour If the total number of statemenits issued was 30,000 , calcuiate the cost of the issuing statements activity. 2. Assuming there are 2,000 interest-bearing checking accounts, calculate the cost per account using the activity rates from Requilement 1. Round your answers to the nearest cent. Unit cost 1 3. A time equation is used to assign resource costs to checking accounts. Select a time equation for the interest-bearing checking account product. Again, assuming that there are 2,600 interest bearing sccountr, show that the resource cost per account is the same as calculated in Requirement 2 . Round your answers to the nearest cent. s 4. What if process improvements decreased the number of customer inquiries, leading to a 10 percent reduction in check processing hours and a $12,320 reduction in total resource costs? Calculate the capacity cost rate for the checking account process, Round your answers to the nearest cent. X perbour Update all the activity rates for these changes in eperating conditions.
The capacity cost rate for the checking account process is calculated by dividing the total resources by the number of check processing hours. To calculate the cost of issuing statements, multiply the number of statements issued by the capacity cost rate.
The capacity cost rate for the checking account process, we divide the total resources by the number of check processing hours. Since the practical capacity is given as 22,000 check processing hours, we need to know the total resources available. Unfortunately, the information about total resources is missing in the provided question. Without that information, we cannot calculate the capacity cost rate accurately.
For calculating the cost of issuing statements, we can multiply the number of statements issued (given as 30,000) by the capacity cost rate. However, since the capacity cost rate is not provided, we cannot determine the exact cost of the issuing statements activity.
Therefore, it is important to have additional information about the total resources available in order to calculate the capacity cost rate and accurately determine the cost of issuing statements.
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Frannie is a farmer who raises corn as his main cash crop. Recently, domestic corn sales in the United States have hit an all-time low, and Frannie’s business is really struggling. Most corn is being imported from Mexico, and local farmers like Frannie cannot compete with the low prices. Frannie and other farmers ask for governmental help with this problem. One way that the government can address the problem and help American farmers is to:
prohibit all trade with Mexico.
nothing; the government cannot interfere with free trade.
impose a tariff on the sale of corn from Mexico.
prohibit all corn sales from Mexico.
Imposing a tariff on the sale of corn from Mexico would be one way that the government can address the problem and help American farmers in this scenario.
Prohibiting all trade with Mexico or prohibiting all corn sales from Mexico would not be the most effective or feasible solutions. Prohibiting all trade with Mexico would have broader economic implications and could negatively impact other industries and trade relationships. Prohibiting all corn sales from Mexico would likely face challenges in terms of international trade agreements and regulations.
Imposing a tariff on the sale of corn from Mexico can provide some protection for domestic farmers by making imported corn less competitive in terms of price. The tariff would increase the cost of Mexican corn, making it more comparable to the prices of domestically produced corn. This measure can help level the playing field and provide some relief to struggling American farmers.
It is important to note that trade policies and measures like tariffs can have broader consequences and should be implemented carefully, taking into account the potential impact on both domestic and international markets. The best approach would be to assess the specific circumstances and consult with experts to determine the most appropriate and effective solution to support American farmers while considering the overall economic implications.
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Sometimes called known unknowns and are included in the project cost baseline: Emergency Reserves Management Reserves Just in time Reserves Contingency Reserves
The contingency reserve is sometimes called known unknowns and is included in the project cost baseline.A project manager uses reserves to mitigate risk.
The term reserve is used to refer to funds put aside for use in unforeseeable circumstances. Different kinds of reserves are used to protect the project against various types of risks. In project management, there are four types of reserves, namely contingency reserves, management reserves, just-in-time reserves, and emergency reserves. Let's discuss them one by one.Contingency reserves are sometimes referred to as known unknowns and are included in the project cost baseline.They are set aside for use in unforeseeable circumstances. The main goal of contingency reserves is to compensate for risks that have been identified. Contingency reserves are set up based on the amount of risk involved in the project. They are used to handle risks that have been recognized but not quantified.
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If you selected American Airlines Group (AAL), look at 10-K (annual reports) and 10-Q (quarterly reports) and open the April 22,2021 – 10Q:Quarterly report for quarter ending March 31,2021 and in that file look for the Condensed Consolidated Balance Sheet at March 31, 2020 Inline XBRL Viewer (sec.gov). Find a proposed standard from the current or prior year that is related to this course (asset-type transactions only) in the FASB Codification system. Prepare a 2-3 page summary of the FASB proposal highlighting what changed, why, and the potential impact on the financial statements and disclosures of the company you have selected.
In the FASB Codification system, there are various proposed standards related to asset-type transactions. One such proposed standard from the prior year is the Accounting Standards Update (ASU) 2020-01, which is related to Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.
The FASB issued ASU 2020-01 to provide clarifications on the accounting for equity securities, convertible debt, and contracts in an entity’s own equity. The main change brought about by ASU 2020-01 is the introduction of more guidance on how entities should classify and measure financial instruments. The standard requires that entities classify equity securities as either “held-to-collect,” “held-to-sell,” or “held-to-respond to changes in fair value.” This new guidance can affect an entity’s financial statements and disclosures.
The adoption of ASU 2020-01 can have an impact on American Airlines Group (AAL) as it holds various financial instruments like equity securities and convertible debt. AAL will need to assess how the standard affects the classification and measurement of these financial instruments. The company may also need to update its financial statements and disclosures to ensure compliance with the new guidance. In conclusion, the ASU 2020-01, issued by FASB, clarifies the interactions between Topic 321, Topic 323, and Topic 815. American Airlines Group (AAL) needs to assess how the standard affects its financial instruments and ensure compliance with the new guidance.
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An activity with a learning rate of 0.8 takes 30 hours for the
first six units. How long will it take to complete this task for
the 12th time?
a.
2.985 hours
b.
3.055 hours
c.
3.135 hours
d.
3.325 hou
The learning rate of 0.8 indicates that the performance of the learner is 80% efficient. This means the time taken to complete each task will reduce by 20% with each unit completed.
To determine the time taken to complete the 12th unit, we need to use the formula;Tn = T1( n)^rWhere Tn = time taken to complete the nth unitT1 = time taken to complete the first unitn = unit of interestr = learning rate = 0.8We can find the value of T1 by using the data given. We know that the first six units take 30 hours to complete.
;T1 = 30/6 = 5 hoursUsing this value of T1, we can find the time taken to complete the 12th unit;
T12 = 5(12)^0.8T12 = 5(4.8)T12 = 24 hours
the time taken to complete the 12th unit is 24 hours.
Answer: d. 3.325 hours
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Suppose a domestically produced motor bicycle sells at a world price of $10,000 under unrestricted trade. The domestic producer uses $6000 worth of imported inputs. The $4,000 difference between the world price of the final motor bicycle and the cost of the imported components represents domestic value added (VA). Suppose a 10 percent ad valorem (on the value) tariff is imposed on the imported motor bicycle.
What is the domestic price of the imported motor bicycle?
What is the possible price of the domestically produced motor bicycle?
What is the domestic value-added of the imported motor bicycle (VA)?
What is the effective rate of protection (ERP)?
What does the effective rate of protection depend on? Can it be bigger than the nomina; tariff rate? Explain
The domestic price of the imported motor bicycle, after the imposition of a 10% ad valorem tariff, is $6,600. The possible price of the domestically produced motor bicycle remains $10,000. The domestic value-added (VA) of the imported motor bicycle is $4,000. The effective rate of protection (ERP) is 66.67%.
The effective rate of protection depends on the domestic value-added and the domestic price of the imported and domestically produced goods. It can be higher than the nominal tariff rate due to the difference in prices and value-added between the imported and domestically produced goods.
To calculate the domestic price of the imported motor bicycle after the tariff, we add the tariff amount to the cost of imported inputs. The tariff rate is 10% of the imported inputs, which is $600 ($6,000 * 0.1). Therefore, the domestic price of the imported motor bicycle is $6,600 ($6,000 + $600).
The possible price of the domestically produced motor bicycle remains the same as the world price of $10,000 since there is no tariff on the domestically produced goods.
The domestic value-added (VA) of the imported motor bicycle is the difference between the world price of the final motor bicycle and the cost of imported components, which is $4,000 ($10,000 - $6,000).
The effective rate of protection (ERP) is the ratio of the domestic value-added to the domestic price of the imported motor bicycle, multiplied by 100%. In this case, it is (4,000 / 6,600) * 100% = 66.67%.
The effective rate of protection depends on the domestic value-added and the domestic price of the imported and domestically produced goods. It considers the value-added domestically and the relative prices to measure the level of protection provided by the tariff. Therefore, it can be higher or lower than the nominal tariff rate.
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Suppose you want to have $0.5 million saved by the time you reach age 30 and suppose that you are 20 years old today. If you can earn 10% on your funds, how much would you have to invest today to reach your goal?
You would have to invest approximately $67,185.50 today to reach your goal of $0.5 million by the time you reach age 30. This calculation demonstrates the importance of considering the time value of money and the impact of compounding returns when setting savings goals and making investment decisions.
To calculate the amount you need to invest today to reach your savings goal, we can use the present value formula, as you are looking to determine the present value of a future amount.
Given:
Desired savings goal: $0.5 million
Interest rate: 10%
Time horizon: 10 years (from age 20 to age 30)
Using the formula for present value (PV):
PV = FV / (1 + r)^n
Where:
PV = Present value
FV = Future value
r = Interest rate
n = Number of periods
Substituting the values into the formula:
PV = $0.5 million / (1 + 0.10)^10
Simplifying the calculation:
PV = $0.5 million / 2.5937
PV ≈ $193,050.28
Therefore, you would need to invest approximately $193,050.28 today to reach your savings goal of $0.5 million by the time you reach age 30.
In conclusion, to have $0.5 million saved by the time you reach age 30, you would need to invest approximately $193,050.28 today, assuming an interest rate of 10% and a time horizon of 10 years. This calculation demonstrates the importance of considering the time value of money and the impact of compounding returns when setting savings goals and making investment decisions.
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