Explanation:
To calculate the required discount factor to sustain cooperation, we need to analyze the expected discounted profit for both firms under different demand scenarios.
Let's denote the profit of firm A as π_A and the profit of firm B as π_B.
Under demand scenario A, the profit functions for both firms are:
π_A = (P(Q_A) - MC_A) * Q_A = (24 - Q_A - MC_A) * Q_A
π_B = (P(Q_B) - MC_B) * Q_B = (24 - 2Q_B - MC_B) * Q_B
Under demand scenario B, the profit functions for both firms are:
π_A = (P(Q_B) - MC_A) * Q_A = (24 - 2Q_B - MC_A) * Q_A
π_B = (P(Q_B) - MC_B) * Q_B = (24 - 2Q_B - MC_B) * Q_B
To analyze the expected discounted profit, we need to consider the probabilities of each demand scenario occurring. Given that the demand remains at A with a probability of 1/2 and reverts to B with a complementary probability of 1/2, we can calculate the expected discounted profit for each firm.
The expected discounted profit for firm A can be calculated as:
EDP_A = (1/2) * π_A + (1/2) * π_A
Similarly, the expected discounted profit for firm B can be calculated as:
EDP_B = (1/2) * π_B + (1/2) * π_B
To sustain cooperation, both firms need to have equal expected discounted profits. This implies that EDP_A = EDP_B.
By setting EDP_A equal to EDP_B and solving for the discount factor, we can find the required discount factor to sustain cooperation.
Based on the provided information and profit functions, the required discount factor to sustain cooperation is approximately 0.750.
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Problem 1 (Specific Factors Model). Canada and U.S. trade two products with each other - Cars (C) and Textile (7). Denote all US variables with *. Each product is produced using labour only but there are two types of workers in each industry: low- skilled workers (L) and high-skilled ones (H). Low-skilled workers can easily change occupation and move from one industry to another if they can earn more there. Skilled workers, however, cannot change occupation because their skills are specific to the industry in which they work. Denote with L low-skilled labor, so that Lc and LT are employment of low-skilled workers in auto and textile industries and Lc+LT = L is the full employment condition for unskilled labor, with Ī being the total number of unskilled workers. For skilled labor, employment levels are given exogenosuly by Hc and HT. Production technologies in the two industries are the same in both coun- tries and are given by the following production functions: Yc LOHC YT = LT + HT Consumers in both countries have the where Yo and Yr are output levels. same preferences given by utility function U = CECT where Ce and CT are consumption levels of the two goods. Also suppose that Canada has more skilled workers in auto industry but less in textiles than US: Hc> Hc; HT
Based on the information provided, Canada has more skilled workers in the auto industry compared to the US, but fewer skilled workers in the textile industry.
In the specific factors model, the employment levels of low-skilled workers in the auto and textile industries are denoted by Lc and LT, respectively, while the employment levels of skilled workers are given exogenously by Hc and HT.
The production technologies in both countries are the same, with the output of cars denoted as Yc and the output of textiles denoted as YT. The production functions for both industries are Yc = LOHc and YT = LT + HT.
Consumers in both countries have the same utility function, U = [tex]U = C^{e} \cdot T^{CT}[/tex], where Ce and CT represent the consumption levels of cars and textiles, respectively.
Based on the information given, Canada has a higher number of skilled workers in the auto industry compared to the US (Hc > Hc), indicating a comparative advantage for Canada in the production of cars. On the other hand, Canada has fewer skilled workers in the textile industry compared to the US (HT < HT), suggesting a comparative disadvantage for Canada in the production of textiles.
These differences in skilled labor distribution between the two countries can have implications for trade patterns and specialization. Canada is likely to export cars to the US and import textiles from the US, reflecting its comparative advantage in the auto industry and comparative disadvantage in the textile industry.
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Steel Co.'s cash balance according to the general ledger was $13,260 on February 28th, 2021. According to the bank staten Time left 1:22:04 the balance in Steel Co.'s bank account on February 28th was $13,310. The following cash related transaction for the month ended February 28, 2021 occurred: 1. The last deposit of the month, for $1,000, was made as a night deposit on February 28th by the company's owner for the services he rendered during the month of February. 2. One of Steel Co.'s customers paid its account by making an $600 EFT. 3. The bank subtracted a service charge of $40 from the company's bank account for February. Outstanding cheques totaled $1,200 at the end of February. 4. 5. The bank deducted $650 from Steel Co.'s account for payment of loan principal 6. The bank returned a $150 cheque marked NSF that a customer used to pay off their account 7. The bank statement showed that cheque number 004 (which Steel Co, had issued to pay for utilities expense) was recorded by the bank as $785, which is the correct amount for the invoice, while the company incorrectly recorded this cheque as $875. Required: Prepare the bank reconciliation for February 28, 2021. (8 marks) 2 What is the amount which Steel Co. should report on its statement of financial position on February 28th, 20217 (1 mark) 1 A BIG PART 1) BANK RECONCILIATION Bank Reconciliation
Bank reconciliation is the process of comparing the balance in a company's cash account with the balance on the bank statement. The amount which Steel Co. should report on its statement of financial position on February 28th, 2021 is $13,260
The purpose of bank reconciliation is to identify and reconcile any differences between the two balances. In this case, the bank reconciliation for February 28, 2021 is as follows:Bank Reconciliation for Steel Co. as of February 28, 2021Balance per bank statement: $13,310Add:EFT from customer: $600Last deposit made on February 28th: $1,000Total: $14,910Deduct:Service charge: $40NSF cheque: $150Cheque #004 - utilities: $90 (the difference between the amount on the bank statement and the amount recorded by the company)Loan principal: $650Total: $930Adjusted balance: $13,980Balance per general ledger: $13,260Add: Deposit in transit: $1,000Less: Outstanding cheques: $1,200Adjusted balance: $13,060The adjusted balance per bank statement and adjusted balance per general ledger do not match. The difference is $920 ($13,980 - $13,060). This difference is due to the bank service charge, NSF cheque, and the difference in the recording of cheque #004.2. The amount which Steel Co. should report on its statement of financial position on February 28th, 2021 is $13,260, which is the balance per general ledger.
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The Machine Shop is a retailer of tools for carpenters. Their top selling product is a revolutionary saw, which sells for €999. However, they are short on cash and try to hold the storage as short as possible. A customer interested in the saw buys with a probability of 0.8 if the saw is in the shop. If he has to wait for a day, he will buy and come back with a probability of 0.6. If the customer has to wait for two days, he will buy with a probability of 0.6, and if he has to wait for more than that, the customer will choose another saw. The owner thinks about offering discounts to customers willing to wait: 5% for one day waiting, 10% for two days waiting, and 15% for more than two days of waiting. Then he believes that the probability of a customer buying will go up to 0.8 for one day waiting, 0.6 for two days waiting, and 0.4 for more than two days of waiting. The owner can buy the saw for €450 and choose express freight (€80 for one day delivery), ordinary delivery (€40 for two days delivery), and snail delivery (free of charge, the tool will come when it comes). What decisions should be made? TY show and game "Who Wants to be a ings for each ques-
Machine Shop is a retailer of tools for carpenters. Their top selling product is a revolutionary saw, which sells for €999. However, they are short on cash and try to hold the storage as short as possible. A customer interested in the saw buys with a probability of 0.8 if the saw is in the shop. If he has to wait for a day, he will buy and come back with a probability of 0.6. If the customer has to wait for two days, he will buy with a probability of 0.6, and if he has to wait for more than that, the customer will choose another saw. The owner can buy the saw for €450 and choose express freight (€80 for one day delivery), ordinary delivery (€40 for two days delivery), and snail delivery (free of charge, the tool will come when it comes).
The owner thinks about offering discounts to customers willing to wait: 5% for one day waiting, 10% for two days waiting, and 15% for more than two days of waiting. Then he believes that the probability of a customer buying will go up to 0.8 for one day waiting, 0.6 for two days waiting, and 0.4 for more than two days of waiting.The owner can buy the saw for €450 and choose express freight (€80 for one day delivery), ordinary delivery (€40 for two days delivery), and snail delivery (free of charge, the tool will come when it comes).Let us consider the expected net profit for the Machine Shop in each of the following cases:
Case 1: The saw is available in the shop Expected demand if the saw is available is 0.8. Expected net profit = Expected revenue - Expected cost Expected revenue = Selling price = €999 Expected cost = Purchase price + Delivery cost = €450 + €0 (Snail delivery) = €450 Expected net profit = €999 - €450 = €549
Case 2: The saw is not available in the shop, but it will arrive in one day The probability that a customer will wait for a day is 1 - 0.8 = 0.2 Expected demand if the saw will arrive in one day is 0.6Expected net profit = Expected revenue - Expected cost Expected revenue = Selling price - 5% = €999 - (5/100) × €999 = €949.05Expected cost = Purchase price + Delivery cost = €450 + €80 (Express freight) = €530 Expected net profit = €949.05 - €530 = €419.05
Case 3: The saw is not available in the shop, but it will arrive in two days The probability that a customer will wait for two days is 1 - 0.8 - 0.2 = 0 Expected demand if the saw will arrive in two days is 0.6Expected net profit = Expected revenue - Expected cost Expected revenue = Selling price - 10% = €999 - (10/100) × €999 = €899.1Expected cost = Purchase price + Delivery cost = €450 + €40 (Ordinary delivery) = €490 Expected net profit = €899.1 - €490 = €409.1
Case 4: The saw is not available in the shop, and it will take more than two days to arrive The probability that a customer will wait for more than two days is 1 - 0.8 - 0.2 - 0 = 0 Expected demand if the saw will arrive in more than two days is 0.4Expected net profit = Expected revenue - Expected cost Expected revenue = Selling price - 15% = €999 - (15/100) × €999 = €849.15Expected cost = Purchase price + Delivery cost = €450 + €0 (Snail delivery) = €450 Expected net profit = €849.15 - €450 = €399.15The best decision for the Machine Shop is to stock the saw in the shop as the expected net profit (€549) is higher than the expected net profit for other cases.
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8. Efficiency and Equity Do "liberals" care more about fairness than "conservatives"?
Liberals and conservatives may prioritize fairness and equity differently, but it is important to recognize that both ideologies value these principles.
Liberals often advocate for policies aimed at reducing economic inequality, promoting social justice, and ensuring equal opportunities for all individuals. They emphasize the need for government intervention to address systemic injustices and create a more equitable society. Conservatives, on the other hand, generally emphasize individual liberty, personal responsibility, and limited government intervention. They believe that a free market system, with minimal government interference, can promote fairness by allowing individuals to keep the rewards of their own efforts and decisions. It is inaccurate to make broad generalizations about which group cares more about fairness. Both liberals and conservatives have concerns about equity, but they may have different perspectives on the most effective ways to achieve it. It is important to consider the diversity of opinions within these ideologies and engage in respectful dialogue to understand and appreciate the various perspectives on fairness and equity.
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True or False? Why?
A policy for decreasing the deficit would probably include
cutting consumption and government spending
True, a policy for decreasing the deficit would probably include cutting consumption and government spending.
The difference between government spending and revenue over a given time period is known as the deficit. Policymakers frequently put policies into place that are intended to decrease spending and increase revenue in order to reduce the deficit. A common approach to deal with deficits is to reduce consumption because it can help limit government spending. Additionally, cutting back on government spending can aid in reducing the deficit since less money is leaving the government's coffers. A comprehensive deficit reduction plan may also include additional measures like raising taxes or promoting economic growth.
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True. Cutting consumption and government spending would undoubtedly be part of a strategy to reduce the deficit.
Consumption reduction suggests that people and households would spend less money on goods and services, which can assist lower the overall demand for products and services in the economy. By reducing its expenditure on various programmes and services, the government can minimise its budget deficit by reducing its spending overall.
These policies seek to lower total economic spending, which can help close the deficit by either raising taxes or cutting spending on the part of the government. It is important to keep in mind that exact policy measures can differ according on the nation, the economy, and the aims of the policy.
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accounts receivable period is the time that elapses between the and the A. purchase of inventory; collection of the receivable OB. sale of inventory: payment to supplier OC. sale of inventory, collect
The correct statement is: C. sale of inventory; collection of the receivable.
The accounts receivable period refers to the time it takes for a company to collect payment from its customers after the sale of inventory. It represents the average number of days it takes for the company to convert its accounts receivable (outstanding invoices) into cash.
During this period, the company has already made the sale of its inventory to customers, and it is waiting to receive payment from them. Once the payment is received, the accounts receivable is collected, and the transaction is complete.
It's important for companies to manage their accounts receivable period effectively as it affects their cash flow and liquidity. By reducing the accounts receivable period, a company can accelerate the cash inflow and improve its working capital position.
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as a global company, electra bikes sells its products to other countries. this process is referred to as
As a global company, Electra Bikes sells its products to other countries. This process is referred to as Exporting.
Exporting refers to the sale of goods and services produced in one country to customers in another country. It is one of the easiest and most effective ways for companies to expand globally because it allows them to start small and slowly build a business relationship with foreign customers. In addition, exporting enables companies to reduce their reliance on a single market and expand their customer base, which can help mitigate the risks associated with doing business domestically. In this case, Electra Bikes sells its products to other countries, which is a form of exporting. This implies that the business is looking to expand globally by identifying other potential markets where they can sell their bikes.
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Short Continuous Assessment. 1: Define global leadership and identify any four great global leaders you know 2: Enumerate the opportunities and challenges of global leaders. 3: As a global leader, identify and develop your own global talent pool. Lecture Day 3 Class exercise & discussion
Global leadership refers to the ability to lead and inspire individuals, teams, and organizations to achieve goals on a global scale. It requires a combination of interpersonal skills, strategic thinking, cultural awareness, and adaptability to navigate complex and diverse environments.
Global leaders face both opportunities and challenges in their roles. Some opportunities include access to a wider talent pool, diverse perspectives and ideas, and the potential for greater innovation and growth. However, they also face challenges such as cultural differences, language barriers, and varying political and economic environments.
To identify and develop their own global talent pool, global leaders need to focus on attracting and retaining top talent from different parts of the world, building strong relationships with local stakeholders, and creating a culture of collaboration and innovation.
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The concept of public opinion played a central role in
the work this thinker (Hegel). Write a paragraph on the concept of
public opinion as developed by any Hegel
As developed by Hegel, the public opinion is a key aspect of the modern state. Public opinion serves as a vital link between the state and the people.
According to Hegel, public opinion represents the collective views, beliefs, and values of a society. It is shaped by the various social, cultural, and political forces that operate within a given society. Hegel believed that public opinion was a crucial factor in shaping the direction and trajectory of the state.
He argued that public opinion could influence the policies and decisions of the state by exerting pressure on the ruling elites. Hegel believed that public opinion was a key factor in the process of social and political change. He argued that the state had to take into account the views and opinions of the people if it wanted to maintain its legitimacy and authority.
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Question 3
A. Describe THREE (3) ways in which a project may be closed or terminated. (9 marks) Outline THREE (3) positive and TWO (2) negative impacts closure of a project has on (5 marks)
B. team members.
C. Submit TWO (2) reasons that a project's final report should be permanently retained by a firm. (6 marks)
A. Projects can be closed or terminated in various ways, such as completion and handover, cancellation, or suspension.
B. A project's final report should be permanently retained by a firm for two main reasons: knowledge preservation and future reference.
A. There are several ways in which a project can be closed or terminated. Firstly, completion and handover occur when the project objectives have been achieved, and the deliverables have been successfully transferred to the stakeholders. Secondly, cancellation happens when a project is stopped before completion due to various reasons, such as changes in business priorities or budget constraints. Lastly, suspension occurs when a project is temporarily put on hold, usually due to external factors like legal issues or market conditions. The closure of a project can have positive impacts on team members, such as celebrating achievements, learning from experiences, and transitioning to new opportunities, but it may also have negative impacts like job uncertainty and the loss of a sense of purpose.
B. The closure of a project can have positive impacts on team members. Firstly, it provides an opportunity to celebrate the achievements and recognize the efforts of the team. This can boost morale and motivation. Secondly, the closure phase allows for reflection and learning from the project experiences, identifying best practices and lessons learned for future projects. Lastly, project closure can also lead to new opportunities for team members, such as transitioning to other projects or roles within the organization. The report serves as a valuable source of information and insights for future projects and can contribute to continuous improvement and informed decision-making within the organization.
However, project closure may also have negative impacts on team members. For example, there may be job uncertainty if there are no immediate projects for the team to move on to. The sense of purpose and camaraderie that developed during the project may also be lost, leading to a period of adjustment and potential feelings of disconnection.
C. The final report of a project should be permanently retained by a firm for two key reasons. Firstly, knowledge preservation is essential for organizational learning and knowledge management. The final report contains valuable information about the project's objectives, methodologies, challenges faced, and lessons learned. By retaining the report, the organization can access this knowledge in the future, enabling continuous improvement and avoiding the repetition of past mistakes.
Secondly, the final report serves as a point of reference for future projects. It provides insights into the project's outcomes, success factors, and areas that require improvement. This information can be utilized to inform decision-making, establish benchmarks, and set realistic expectations for similar projects in the future. The final report acts as a valuable resource for project managers, stakeholders, and teams involved in subsequent projects, promoting efficiency and effectiveness in project execution.
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The company depreciates motor vehicles on a straight-line basis.
Their expected useful life is six years.Each motor vehicle has a residual value of $5000.
For tax purposes, the motor vehicles depreciate at 20% per annum on a straight-line basis.
Accounting profit before tax (PBT) for the years 2015 to 2020 is $60000 per annum.
The tax rate is 12.5%.
Required
a. Calculations of current and deferred tax (5 marks)
b. Related figures to be included in the financial statements for the years 2015 to 2020 (5 marks)
a) Deferred tax liability = (Tax depreciation charge - Annual depreciation charge) x Tax rate = ($6,000 - $4,166.67) x 12.5% = $229.17
b) Balance sheet:
Deferred tax liability = $229.17 (to be carried forward from the previous year)
a. Calculation of current and deferred tax:
Year 2015:
Depreciation calculation:
Cost of motor vehicle = $30,000
Residual value = $5,000
Depreciable amount = Cost - Residual Value = $25,000
Annual depreciation charge = Depreciable amount / Useful life = $4,166.67
Tax depreciation rate = 20%
Tax depreciation charge = Cost x Tax depreciation rate = $30,000 x 20% = $6,000
Accounting profit before tax = $60,000
Taxable profit = Accounting profit before tax - Tax depreciation charge = $60,000 - $6,000 = $54,000
Current tax liability = Taxable profit x Tax rate = $54,000 x 12.5% = $6,750
Deferred tax liability = (Tax depreciation charge - Annual depreciation charge) x Tax rate = ($6,000 - $4,166.67) x 12.5% = $229.17
Year 2016 to 2020:
The same calculations can be applied to each year as follows:
Accounting profit before tax = $60,000
Taxable profit = Accounting profit before tax - Tax depreciation charge = $60,000 - $6,000 = $54,000
Current tax liability = Taxable profit x Tax rate = $54,000 x 12.5% = $6,750
Deferred tax liability = (Tax depreciation charge - Annual depreciation charge) x Tax rate = ($6,000 - $4,166.67) x 12.5% = $229.17
b. Related figures to be included in the financial statements for the years 2015 to 2020:
Year 2015:
Income statement:
Profit before tax = $60,000
Tax expense:
Current tax = $6,750
Deferred tax = $229.17 Net profit after tax = $52,020.83
Balance sheet:
Deferred tax liability = $229.17
Year 2016 to 2020:
Income statement:
Profit before tax = $60,000
Tax expense:
Current tax = $6,750
Deferred tax = $229.17 Net profit after tax = $52,020.83
Balance sheet:
Deferred tax liability = $229.17 (to be carried forward from the previous year)
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In economics, as a result of scarcity: Consumers face tradeoffs regarding what they want to purchase and consume. Producers face tradeoffs regarding what they are able to supply. It may not be possible to fulfill all possible wants and needs among all individuals in the economy. All of the above.
The correct answer is "All of the above." Scarcity, which refers to the limited availability of resources in relation to unlimited wants and needs, impacts both consumers and producers in the economy.
Consumers face tradeoffs because they have limited income and resources to allocate towards different goods and services. They must make choices about what they want to purchase and consume, weighing the benefits and costs of different options. For example, a consumer may have to choose between buying a new car or going on a vacation due to limited financial resources.
Producers also face tradeoffs as they have limited resources and production capabilities. They must decide what goods and services to produce given these constraints. Allocating resources towards producing one good means sacrificing the production of another. For instance, a company may need to choose between producing more of one product or investing in research and development for future innovations.
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Case Study
The Malaysian economy is in equilibrium. Changes began to happen
in the economy. Explain using the IS and LM curve what are the
changes in the economy with BOP curve is facing a deficit.
2.
When the Malaysian economy experiences changes, particularly a deficit in the balance of payments (BOP), it can be analyzed using the IS-LM framework to understand the impact on the economy.
The IS curve represents the equilibrium in the goods market, showing the relationship between output (Y) and the interest rate (r). A BOP deficit implies that the country is importing more than it is exporting, resulting in a leakage from the domestic economy. This leads to a decrease in output and a leftward shift of the IS curve. As a result, the equilibrium level of output decreases, leading to a contraction in the economy.
The LM curve represents the equilibrium in the money market, showing the relationship between the interest rate and the level of income (Y). With a BOP deficit, the outflow of funds increases, leading to a decrease in the money supply. Consequently, the LM curve shifts upward, indicating a higher interest rate is required to achieve equilibrium in the money market.
Combining the IS and LM curves, the new equilibrium point is determined where the two curves intersect. This point represents the lower output level and higher interest rate resulting from the BOP deficit. The decrease in output and the higher interest rate negatively impact investment and consumption, leading to a slowdown in economic activity.
To address the BOP deficit and stimulate the economy, policymakers may implement measures such as fiscal policies (e.g., reducing government spending or increasing exports) and monetary policies (e.g., lowering interest rates or implementing exchange rate adjustments) to restore equilibrium in the goods and money markets.
Overall, a BOP deficit in the Malaysian economy would lead to a contraction in output and an increase in the interest rate, as depicted by the shifts in the IS and LM curves. Policymakers would need to undertake appropriate measures to restore equilibrium and foster economic growth.
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A. Accounting standards are prepared by regulators in order to assist both preparers and users of financial statements. Explain the advantages and disadvantages of compulsory accounting standards. (5 Marks) B. Calando plc operates a perpetual inventory system. The following transactions relate to one line of goods for resale during the period from 1st January to 31st March 20X0. Units Price per unit 5.00 1,000 Opening stock 1" January Purchases 10 January 25 January 15th March Sales 5th February 31" March 3,750 2,500 1,500 6.30 6.50 13.00 4,500 2,600 20.00 21.00 REQUIRED: 1. Calculate the gross profit for the three months to 31st March 2010 using the first-in, first-out (FIFO) method. (7 Marks) 2. Calculate the gross profit for the three months to 31st March 2010 using the last-in, first out (LIFO) method. (7 Marks) 3. Show how your answer to i would differ if 50% of the goods purchased on 15th March were damaged and had a net realizable value of £7.00 per unit.
Accounting standards are guidelines that are used in accounting practices for keeping financial records.
The accounting standards are prepared by regulatory bodies such as the International Accounting Standards Board and Financial Accounting Standards Board, and the Securities and Exchange Commission to assist both preparers and users of financial statements. The following are the advantages and disadvantages of compulsory accounting standards:Advantages1. Comparability: When companies use the same accounting standards, it makes it easy to compare their financial statements.
This enables investors and other stakeholders to make informed decisions.2. Accuracy: The use of accounting standards ensures that companies report their financial statements accurately, which promotes transparency and ensures that financial statements are free from errors and misstatements. 3. Consistency: Accounting standards promote consistency in accounting practices. This makes it easier for companies to track their financial performance and make strategic decisions.Disadvantages1. Cost: Compliance with accounting standards can be expensive, especially for small businesses. Companies need to hire skilled accountants to prepare their financial statements, which can be costly.2. Complexity: Accounting standards can be complex and difficult to understand. This can make it difficult for companies to comply with them.3. Rigidity: Accounting standards can be rigid and may not take into account the unique circumstances of each company.
This can make it difficult for companies to comply with them. B. Calculation of Gross Profit using FIFO and LIFO methods. Gross profit is the difference between the cost of goods sold and the revenue generated from the sale of those goods. In order to calculate the gross profit for the three months to 31st March 2010, we will use the first-in, first-out (FIFO) method and the last-in, first-out (LIFO) method. First-in, First-out (FIFO) method: Units Price per unit. Total cost Opening stock5.001,0005,000Purchases10 January2,5006.302,50025 January2,6006.5021,65015 March1,50013.0021,000Total cost48,650Sales5th February3,7506.304,687.5031st March4,50021.0052,500Total sales57,187.50Cost of goods sold48,650Gross profit8,537.50Last-in, First-out (LIFO) method: Units Price per unit Total cost Opening stock5.001,0005,000Purchases10 January2,5006.5021,25025 January2,6006.3036,36015 March1,50013.0021,000Total cost83,610 Sales 5th February3,7506.304,687.5031st March4,50020.0036,000Total sales40,687.50Cost of goods sold83,610Gross profit(42,922.50)
From the above calculations, it is clear that the gross profit is £8,537.50 when we use the FIFO method, and the gross profit is negative £42,922.50 when we use the LIFO method. This is because the prices of the goods sold increased during the period, and using the LIFO method assumes that the latest purchases are the ones sold first. If 50% of the goods purchased on 15th March were damaged and had a net realizable value of £7.00 per unit, then the cost of goods sold would be adjusted downwards, leading to a decrease in gross profit.
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Consider a project with a life of 8 years with the following information: initial fixed asset investment = $490,000; straight-line depreciation to zero over the 8-year life; zero salvage value; price = $31; variable costs = $16; fixed costs = $181,300; quantity sold = 96,089 units; tax rate = 22 percent. How sensitive is OCF to changes in quantity sold?
a) $8.31
b) 15.09
c) 11.70
d) 0.09
The answer is (b) 15.09.
The sensitivity of OCF to changes in quantity sold is calculated as follows:
Sensitivity = (P - VC) x (1 - Tax Rate) / Quantity Sold
In this case, the sensitivity is:
Sensitivity = ($31 - $16) x (1 - 0.22) / 96,089 units
= $15.09
This means that a 1 unit change in quantity sold results in a $15.09 change in OCF.
The sensitivity of OCF to changes in quantity sold is important because it can help us to understand how much risk is associated with the project. A high sensitivity indicates that the project is more sensitive to changes in quantity sold, and therefore more risky.
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There is a continuum of consumers distributed uniformly with density 1 over the interval [0, 1]. There are three stores: store A is located at 0, store B is located at 0.6, and store C is located at 1. There are three profit-maximising firms i = 1, 2, 3 that produce a homogeneous product at no cost. The timing of the game is as follows: • Firm 1 chooses its store among A, B, and C (i.e., it chooses among locations 0, 0.6, and 1). • Firm 2 chooses its store among the two that firm 1 did not pick. • Firm 3 gets the last available store. • All three firms simultaneously choose their price. • Each consumer x = [0, 1] purchases one unit of the product from whichever store minimises the sum of the price and the travel distance. (For consumer x, that sum is PA + if (s) he goes to store A, PB + x -0.6| if she goes to store B, and pc +1-z if she goes to store C.) Find where each firm locates itself and what price it sets in equilibrium.
In equilibrium, Firm 1 will choose to locate at store B (0.6), Firm 2 will locate at store A (0), and Firm 3 will locate at store C (1). The prices set by the firms will be as follows: Firm 1 will set a price of P1 = 0, Firm 2 will set a price of P2 = 0.6, and Firm 3 will set a price of P3 = 1.
In this game, the firms aim to maximize their profits by strategically choosing their store location and price. Firm 1, being the first mover, selects the store that will yield the highest profit. It is in Firm 1's best interest to locate at store B (0.6) since it is closer to the majority of consumers (60% of the consumers are located between 0 and 0.6). Firm 2 then chooses the remaining store that will generate the highest profit, which in this case is store A (0). Finally, Firm 3 is left with store C (1) as its only option.
To determine the prices in equilibrium, each firm considers the consumers' travel distances and the prices set by their competitors. Since Firm 1 is located at store B (0.6), it has a cost advantage over the other firms for consumers located between 0 and 0.6. Hence, Firm 1 can set a price of 0, attracting all the consumers in that range. Firm 2, located at store A (0), recognizes that it can only attract consumers located between 0 and 0.6. To incentivize these consumers to travel the extra distance to store A, Firm 2 sets a price of 0.6, effectively equalizing the total cost for consumers choosing between stores A and B. Lastly, Firm 3, located at store C (1), sets a price of 1 to account for the consumers who are located between 0.6 and 1 and have no other store option available to them.
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Bess company shows the following unit costs for its product
Direct materials $70
Direct labour 50
Variable overhead 5
Fixed overhead 8
What is the unit product cost using variable costing?
A.None of the given answers
B.$120
C.$125
D.$133
The unit product cost using variable costing for Bess Company's product is (C) $125.In the given scenario, Bess Company has provided the unit costs for its product.
Variable costing excludes fixed manufacturing overhead costs because these costs are not directly tied to the production volume or the number of units produced. Fixed overhead costs remain constant regardless of the level of production or sales.
Given the following unit costs:
Direct materials: $70
Direct labor: $50
Variable overhead: $5
To calculate the unit product cost using variable costing, we add the variable costs together:
$70 (direct materials) + $50 (direct labor) + $5 (variable overhead) = $125
Therefore, the unit product cost using variable costing for Bess Company's product is $125.This cost represents the direct costs directly associated with producing each unit of the product, while excluding the fixed overhead costs. Therefore, option C, which states that the unit product cost is $125, is the correct answer.
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Question 3[5 marks]: Consider the given slicing structure matrix: 0 1 10 0 0 0 0 1 3 0 1 0 1 0 1 2 574 1 1 1 1 1 6 8 0 1 1 a) [2 points) Draw the slicing structure tree diagram for the given slicing structure matrix. b) [2 points] Draw the layout for the given slicing structure matrix. c) [1 point] Construct an alternative slicing structure matrix. (neighborhood)
a) Slicing Structure Tree Diagram:
The slicing structure tree diagram represents the hierarchy of the slicing structure matrix. Each row in the matrix represents a level in the hierarchy, and the numbers in each row indicate the connections between the slices.
Here is the slicing structure tree diagram based on the given matrix:
Level 1 Level 2 Level 3 Level 4
0 1 10
| |
0 1
|
1
|
0
|
0
|
0
|
1
|
3
|
0
|
1
|
2
|
574
|
1 1 1 1 1
\ | | | | /
6 8 0 1 1
|
0
|
1
b) Layout:
The layout represents the physical arrangement of slices based on the slicing structure matrix. Each number in the matrix represents a separate slice, and the connections between the slices determine their arrangement.
Here is the layout based on the given slicing structure matrix:
Slice 1 Slice 2 Slice 3
+-----+ +-----+ +-----+
| | | | | |
| 10 | | 1 | | 1 |
| | | | | |
+-----+ +-----+ +-----+
| |
+-----+ +-----+
| | | |
| 1 | | 3 |
| | | |
+-----+ +-----+
|
+-----+
| |
| 2 |
| |
+-----+
|
+-----+
| |
| 574 |
| |
+-----+
|
+-----+-----+-----+-----+-----+
| | | | | |
| 1 | 1 | 1 | 1 | 1 |
| | | | | |
+-----+-----+-----+-----+-----+
| | | |
6 8 0 1
|
1
|
0
|
1
c) Alternative Slicing Structure Matrix (Neighborhood):
Constructing an alternative slicing structure matrix (neighborhood) requires specific guidelines or criteria to determine the connections between slices. Without additional information or guidelines, it is not possible to construct a specific alternative slicing structure matrix based on the given matrix.
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Human Resources Experts- (Only answer if familiar with the Northrop Grumman Case Study)-NGC has moved to the use of a "virtual data room," which means that MA (Mergers and Acquisitions) members no longer have to meet physically. Explain the pros and cons of this innovation. Should NGC continue in this vein? Please answer TYPED in your own words, 250 words or more, please.
Northrop Grumman Case Study Northrop Grumman Corporation (NGC) is an American global aerospace and defense technology firm, which is based in Falls Church, Virginia, US. The organization was established in 1939 and has since expanded its presence to the United States, Europe, and Asia.
NGC is known for delivering some of the most cutting-edge technological advancements in the industry and has managed to maintain a strong market position in the face of increasing competition. One of the most significant aspects of the firm’s operations is its human resources (HR) department, which has been lauded for its approach to employee retention and recruitment. The following is an analysis of the benefits and drawbacks of the virtual data room innovation, which has been implemented in NGC’s mergers and acquisitions (MA) department.ProsVirtual data rooms are online repositories that enable the secure exchange of sensitive information and documents related to mergers and acquisitions. The benefits of the virtual data room innovation are that it provides greater flexibility for members of the MA team.
This feature is particularly useful for teams working in different geographical locations and time zones. Moreover, it reduces the need for travel and office space, which can significantly reduce costs. The virtual data room innovation also allows for better document management, making it easier to locate, store, and archive documents. Cons The primary drawback of the virtual data room innovation is the potential for increased cybersecurity risks. When documents and information are shared online, there is a higher risk of unauthorized access, theft, or loss. Therefore, it is essential to implement robust security measures, such as encryption and authentication protocols. Additionally, there may be concerns about data privacy and confidentiality.
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Tesla's manager is not satisfied with the RO that the division achieved this year. What can he do to improve the return on investment? Multiple Choice Increase investment in assets and keep net income
To improve ROI for Tesla's division, the manager should focus on enhancing operational efficiency, increasing sales and revenue, controlling costs, optimizing pricing, investing in R&D, maximizing asset utilization, seeking strategic partnerships, and fostering employee development and engagement.
To improve the return on investment (ROI) for Tesla's division, the manager can implement various strategies that focus on maximizing profitability and optimizing the utilization of assets. While increasing investment in assets and keeping net income are potential options, there are other key considerations that can be explored to enhance ROI.
Enhancing Operational Efficiency: The manager can focus on improving operational efficiency by streamlining processes, reducing waste, and optimizing resource allocation. This can be achieved through lean management practices, automation, and continuous improvement initiatives. By maximizing productivity and minimizing costs, the division can generate higher returns on the invested capital.
Increasing Sales and Revenue: To improve ROI, the manager can focus on expanding market share and increasing sales revenue. This can be achieved through effective marketing strategies, product innovation, and expanding distribution channels. By capturing a larger market share and increasing sales volume, the division can generate higher returns on the invested capital.
Cost Control and Expense Management: The manager should closely monitor and control costs to improve profitability. This includes managing variable and fixed costs, negotiating favorable terms with suppliers, and implementing cost-saving measures. By controlling expenses, the division can increase net income and ultimately improve ROI.
Pricing Optimization: The manager can assess pricing strategies to ensure they align with market demand and maximize profitability. By analyzing customer behavior, competitor pricing, and cost structures, the manager can determine optimal price points that maximize revenue and profitability. Effective pricing strategies can positively impact ROI by increasing margins.
R&D and Innovation: Investing in research and development (R&D) can lead to product innovation and differentiation, allowing the division to gain a competitive advantage. By introducing new and improved products, Tesla can attract more customers and potentially command higher prices, resulting in increased sales revenue and improved ROI.
Asset Utilization: The manager should evaluate the division's asset utilization and identify opportunities to optimize their use. This includes assessing production capacity, inventory management, and asset turnover ratios. By maximizing the efficient use of assets, such as manufacturing facilities and equipment, the division can increase productivity and generate higher returns on the invested capital.
Strategic Partnerships and Collaborations: The manager can explore strategic partnerships and collaborations with other companies in the industry. This can provide access to new markets, technologies, or distribution networks, which can lead to increased sales and improved ROI.
Employee Development and Engagement: Investing in employee development and fostering a positive work culture can improve productivity and efficiency. Engaged and motivated employees are more likely to contribute innovative ideas, drive performance, and improve overall divisional ROI.
In conclusion, to improve ROI for Tesla's division, the manager should focus on enhancing operational efficiency, increasing sales and revenue, controlling costs, optimizing pricing, investing in R&D, maximizing asset utilization, seeking strategic partnerships, and fostering employee development and engagement. By implementing these strategies, the division can achieve higher profitability and ultimately improve its return on investment.
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A researcher is testing the hypothesis that the average monthly income in the population is 20,000 AD. Using the formula for testing a hypothesis about the mean,
the researcher calculates the Z value to be 2.06. If the researcher is using 9596 confidence level, what should the researcher do next?
Based on the calculated z-value and the 95% confidence level, the researcher should reject the null hypothesis that the average monthly Income in the population is 20,000 ad.
To determine the next step, we need to refer to the critical value table for the standard normal distribution. since the researcher is using a 95% confidence level, we need to find the critical value corresponding to an alpha level of 0.05 (1 - 0.95).
the critical value for a two-tailed test at a 95% confidence level is approximately 1.96. since the researcher's calculated z-value of 2.06 is greater than the critical value of 1.96, it falls in the rejection region. the evidence suggests that the average monthly income is significantly different from 20,000 ad.
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A cleaning company uses $20 of chemicals, $40 of labour, and $5 of misc. expenses for each house it cleans. After some quality complaints, the company has decided to increase its use of chemicals by 50%. By what % has multifactor productivity fallen?
To calculate the multifactor productivity, we need to divide the output by the sum of inputs. In this case, the output is the number of houses cleaned, and the inputs are the cost of chemicals, labour, and misc. expenses. Let's assume that the company charges $100 per house.
Before the increase in chemical use, the total cost per house was $20+$40+$5=$65. Therefore, the productivity was 100/65=1.54 houses per dollar of input. After the increase in chemical use, the cost per house is $30+$40+$5=$75. The productivity is now 100/75=1.33 houses per dollar of input.
The percentage change in productivity is (1.33-1.54)/1.54= -0.136 = -13.6%. Therefore, multifactor productivity has fallen by 13.6%.
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If price breaks out from support, it is likely that it will
continue to go lower and a short position makes sense as long
as:
a.Both A and B
b.Both A and C
c.B. There is an increasing volume on the co
The correct answer is "c. B. There is an increasing volume on the continuation of the move."
A short position makes sense when the price breaks out from support and there is an increasing volume on the continuation of the move.
When the price breaks out from a support level, it indicates a potential downward movement in the price. This suggests that selling pressure may outweigh buying pressure, leading to a decline in price. However, to confirm the likelihood of further downward movement and validate a short position, it is important to consider the volume of trading activity.
If there is an increasing volume accompanying the continuation of the downward move, it signifies that more market participants are actively selling the asset, supporting the bearish sentiment. Higher volume suggests stronger conviction and participation in the downward move, making a short position more reasonable. Therefore, both the breakout from support and increasing volume act as confirming factors for considering a short position.
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After watching the Belgian / French film "Fear and Trembling," respond to the following prompt . Please clearly address each prompt (1-4) and each of the components within each prompt.
Prompt 1: Imagine that you took over Amelie’s position in that company after she left and that she had explained in detail what had occurred there. What did you learn about Anglo-European and Japanese cultural differences from this information (in the film) that would help you succeed better than she did? Would it have made any difference if she were a man?
Taking over Amelie's position in the company, learning from the cultural differences portrayed in the film "Fear and Trembling" can help succeed. Gender may or may not have made a difference.
In the film "Fear and Trembling," the protagonist, Amelie, experiences challenges working in a Japanese company due to cultural differences. Learning from her experiences, one can glean valuable insights into Anglo-European and Japanese cultural differences to succeed in a similar position. The film highlights several cultural aspects, such as hierarchy, respect for authority, strict adherence to rules, and group harmony, prevalent in Japanese workplaces.
Understanding these differences can help navigate interpersonal dynamics and expectations in the workplace. By demonstrating respect for hierarchy, following protocols, and embracing teamwork, one can foster better relationships and integrate effectively into the Japanese work environment.
Regarding gender, the film does not explicitly explore the impact of being a man or a woman in Amelie's position. However, it is worth considering that cultural norms and gender roles may influence workplace dynamics in both Anglo-European and Japanese contexts. Factors such as communication styles, leadership expectations, and societal perceptions of gender roles could potentially affect how one is perceived and interacts in the workplace. Thus, being aware of these dynamics can contribute to better understanding and adapting to cultural differences, regardless of one's gender.
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American Eagle Distributing Co. (AEDC) is a regional distributor of Budweiser beer. Ross Hopkins, 41, who works for the company, ordered a Budweiser beer from a local bar after his shift on a Saturday evening. By the way, he drank Coors beer because he wanted to drink it quickly, because a competitor's beer, Coors, came to him by mistake by the clerk. The bar that was finished at that time was attended by the son-in-law of the AEDC major shareholder.
The following Monday, Hopkins was fired. The reason was that he failed to meet his obligations of conflicts of interest. Accordingly, Hopkins filed a lawsuit invalidating the dismissal, arguing that the company had no authority to order what beer to drink outside of working hours.
Reference:
Joseph DesJardins, J. (2020), An Introduction to Business Ethics (6th Ed.) McGraw-Hill
Filed an invalidation lawsuit against a man fired for drinking beer from a competitor (Herald, 2005. 5. 18) Question
1. Is it morally wrong for a company to fire someone for behavior outside of Hopkins working hours (drinking a competitor's beer)? isn't there? (Think in terms of what you have learned, such as the duty of good faith, trust and loyalty, and conflicts of interest among members of the organization.)
2. If you are a manager, how would you respond to organizational members who use a competitor's products/services? Why?
a. No, it is not morally wrong for a company to fire someone for behavior outside of working hours if that behavior creates a conflict of interest or violates the duty of good faith, trust, and loyalty towards the organization.
In this case, Ross Hopkins, an employee of American Eagle Distributing Co., ordered and consumed a competitor's beer while representing the company. This behavior raises concerns about conflicts of interest and loyalty, as well as the potential impact on the company's reputation. Organizations have a legitimate interest in ensuring that their employees maintain a level of integrity and avoid actions that could undermine the company's interests.
b. As a manager, it is important to address situations where organizational members use a competitor's products/services. First, I would establish clear policies and guidelines regarding conflicts of interest and loyalty. This would include educating employees about the potential consequences of actions that could create conflicts or harm the organization's reputation. Open communication channels would be encouraged, allowing employees to raise concerns or seek guidance. In cases where conflicts of interest arise, it may be necessary to evaluate the nature and severity of the conflict on a case-by-case basis. Transparency and fairness are key in handling such situations, ensuring that decisions are made in the best interest of the organization while also respecting the rights and well-being of employees. By promoting a culture of ethical behavior and addressing conflicts of interest proactively, the organization can maintain trust, integrity, and a focus on its mission and goals.
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Which of the following is true about defined contribution plans?
They are preferred more in smaller companies than larger ones.
They shift the investment risk to the employer.
They promise a specific benefit level for employees upon retirement.
They present greater administrative challenges to employers.
They have become less
C). Defined contribution plans are retirement plans that specify the amount of money that an employer will contribute to an employee's account during their working years. The employee then chooses how to invest those funds, and the account balance grows over time. Upon retirement, the employee receives the accumulated balance, which depends on investment performance.
Out of the given options, the statement that is true about defined contribution plans is that they present greater administrative challenges to employers. This is because employers are responsible for choosing and managing the investment options available to employees, as well as ensuring that the plan meets legal requirements.
Defined contribution plans are not preferred more in smaller companies than larger ones, as they can be implemented by companies of any size. They do not promise a specific benefit level for employees upon retirement, as the final amount depends on investment performance. Additionally, they do not shift investment risk to the employer, as this risk is borne by the employee.
Overall, defined contribution plans have become more popular in recent years, as they provide more flexibility for employees and employers alike. However, they do require careful management to ensure that they provide adequate retirement benefits while remaining financially sustainable.
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Which of the following is true of a current account surplus?
A country that is running a current account surplus will have negative net exports.
A current account surplus means that a country is also running a net surplus in its financial account.
A country can have a current account surplus only if it exports more services as compared to goods.
A country that is running a current account surplus buys more bonds from the rest of the world as compared to what it sells.
Option (b), A current account surplus means that a country is also running a net surplus in its financial account. This statement is true of a current account surplus.
A country that is running a current account surplus buys fewer goods and services from the rest of the world than it sells. The current account surplus reflects the difference between a country's savings and its investment, as well as its net trade balance.
A current account surplus means that a country is also running a net surplus in its financial account. A country running a current account surplus means that it has a positive net export value. This occurs when exports are greater than imports.
When a country runs a current account surplus, it means that it has a positive net export value. This occurs when exports are greater than imports. It reflects a country's savings and investment difference as well as its net trade balance. The balance of trade between a country and its trading partners is shown in the current account, which includes imports and exports of goods, services, and investment income. If a country sells more goods and services than it purchases, it has a trade surplus.
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Shown below is information relating to the stockholders' equity of Grant Corporation at December 31, Year 1:
5.5% cumulative preferred stock, $100 par value;
authorized, 38,000 shares; issued and outstanding, 19,000 shares $1.900.000
Common stock, $5 par value; authorized, 540,000 shares; issued and outstanding, 324,000 shares : $ 1,620,000
Additional paid-in capital: preferred stock $ 190,000
Additional paid-in capital: common stock $ 2,500,000
Retained earnings $ 1,020,000
Dividends have been declared and paid for Year 1.
The average issue price per share of Grant's preferred stock was:
A) $105.50. B) $55.00 C) $100.00. D) $110.00.
The average issue price per share of Grant Corporation's preferred stock is (C) $100.00.
To calculate the average issue price per share of Grant Corporation's preferred stock, we divide the total amount of preferred stock issued by the number of shares issued. The information provided states that the preferred stock has a par value of $100, and 19,000 shares were issued and outstanding. The par value represents the initial value assigned to each share of preferred stock.
To calculate the total amount of preferred stock issued, we multiply the par value by the number of shares issued:
$100 (par value) * 19,000 (shares issued) = $1,900,000. Since the total amount of preferred stock issued is $1,900,000 and the number of shares issued is 19,000, the average issue price per share of the preferred stock is:
$1,900,000 (total amount issued) / 19,000 (shares issued) = $100.00
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Identify the statements as True / False
1- Sending a covering letter with a job application ensures that the candidate will get the job.
2- Paragraph 1 of the covering letter markets your skills and targets them to the position.
3- It is good idea to avoid using soft skills unless you provide specific examples.
4- In a traditional interview the applicant is asked a variety of typical questions.
Of the given statements, 2 and 4 are true while 1 and 3 are false.
1- False: Sending a covering letter with a job application does not ensure that the candidate will get the job. The decision to hire a candidate is based on various factors, including their qualifications, experience, and performance in the interview process.
2- True: Paragraph 1 of the covering letter is typically used to market the candidate's skills and align them with the requirements of the position. It is an opportunity to make a strong first impression and grab the attention of the employer.
3- False: It is not a good idea to avoid using soft skills in a covering letter. Soft skills are important in the workplace and can demonstrate qualities such as communication, teamwork, and problem-solving. However, it is recommended to provide specific examples or evidence of how these soft skills have been applied in previous experiences.
4- True: In a traditional interview, the applicant is commonly asked a variety of typical questions to assess their suitability for the role. These questions may cover areas such as their background, experience, skills, and ability to handle specific situations.
In conclusion, while sending a covering letter is important, it does not guarantee a job offer. Paragraph 1 of the covering letter should market the candidate's skills. Soft skills can be included in the covering letter, preferably with specific examples. In a traditional interview, typical questions are asked to evaluate the candidate.
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On July 1, 2021, the CFAS Corporation was registered with the SEC. its authorized share capital consists of 100.000 ordinary shares with par value P20.00 per share On July 15, 2021, it issued 10,000 shares at P25 per share On October 15, 2021 the CFAS Corp paid to the majority shareholder the sum of P80.000 for a certain parcel of land, and issued 5,000 ordinary shares for the building on the land. The land was appraised at P130,000. The building has a cost of P150,000 and its depreciated value is P90,000 It was appraised at P120.000
On April 15, 2022, the corporation purchased 5.000 of its own ordinary shares for 100,000. On June 15.2022 2,000 of the breasury shares were sold at 934 per Share
How much is the total share premium of CFAS Corp on June 30, 2020?
The total share premium of CFAS Corp on June 30, 2022 is 938,000.
The total share premium of CFAS Corp on June 30, 2022 is 250,000. Share premium is the amount of cash that a company receives for its shares above their stated par value. In this case, the authorized share capital consists of 100.000 ordinary shares with a par value of P20.00 per share.
Therefore, the authorized share capital of the corporation is
P2,000,000 (100,000 shares × P20 par value).
Share premium is calculated as the difference between the proceeds from the sale of shares and the par value of the shares issued.
Hence, the share premium from the sale of 10,000 shares at P25 per share is
P50,000 ((10,000 shares × P25) - (10,000 shares × P20 par value)).
From the information given, the shares that were issued in exchange for the land and building had no stated par value. Therefore, the total consideration is P230,000 (P80,000 cash payment plus the P150,000 cost of the building). The appraised value of the land and building is P250,000 (P130,000 appraised value of the land plus the P120,000 appraised value of the building). However, the shares were issued at a total value of P230,000, which means that the share premium for the land and building is P20,000 (P250,000 appraised value - P230,000 total consideration).
Finally, on April 15, 2022, the corporation purchased 5,000 of its own ordinary shares for 100,000. This means that the corporation bought back its shares at their par value.
Therefore, there is no share premium on the purchase of these shares. However, the corporation sold 2,000 of the treasury shares at 934 per share on June 15, 2022. This generated a total amount of P1,868,000 (2,000 shares × P934 per share). Therefore, the share premium from the sale of the treasury shares is P868,000 (P1,868,000 proceeds - P1,000,000 par value).
Total share premium = P50,000 + P20,000 + P868,000 = P938,000
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