Earnings management is the process of utilizing accounting techniques to improve a company's financial statements by manipulating earnings.
Earnings management might entail tweaking revenue figures, reducing expenses, or both. By doing so, a firm can make its financial performance appear better or worse than it truly is, either to satisfy internal stakeholders (such as company executives) or to impress external stakeholders (such as investors or analysts).
Below are two examples of earnings management:1. Manipulation of Accruals:Accrual accounting is a technique used to record revenue and expenses as they happen, rather than when cash changes hands. Companies that use accrual accounting must use estimates and assumptions to record some transactions that have not yet been completed.
Earnings management can occur if a business intentionally manipulates its accruals by overestimating future revenues or underestimating future costs to improve current earnings.
2. Timing of Expenses:Companies might also use timing tactics to improve their financial statements. One example is to put off spending until the next accounting period, or to shift certain expenditures to different accounts to make them appear less significant.Earnings management may not always be bad.
There are circumstances where it is acceptable. It may be a result of errors in estimates that the company believes will be corrected in the future, or it may be a result of necessary actions taken by the company to restore its profitability. In certain instances, earnings management may also be legal and ethical, and it is frequently used to ensure that the firm complies with regulatory requirements and laws. Earnings management becomes illegal when it involves fraudulent accounting methods, such as recording non-existent transactions or concealing debt or expenses, in order to misrepresent the financial position of the business.
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Quantitative benefits of a project are the intangible benefits of completing a project such as employee morale. True False
The statement "Quantitative benefits of a project are the intangible benefits of completing a project such as employee morale" is FALSE.
Quantitative benefits of a project are not intangible. These benefits are measurable, and they relate to the numerical aspect of a project. Quantitative benefits can include cost savings, revenue increases, and reduced project durations, while intangible benefits cannot be measured and valued monetarily.Intangible benefits of completing a project are qualitative, and they cannot be measured or quantified. These benefits may include customer satisfaction, employee satisfaction, and enhanced company reputation. Employee morale is considered an intangible benefit because it is not easily measurable but is a significant factor in the success of a project. Therefore, it is not correct to state that "Quantitative benefits of a project are the intangible benefits of completing a project such as employee morale." Hence, the statement is False.
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Uncertain Future Cash Flows Lukow Products is investigating the purchase of a piece of automated equipment that will save $400,000 each year in direct labor and inventory carrying costs. This equipment costs $2,500,000 and is expected to have a 15-year useful life with no salvage value. The company’s required rate of return is 20% on all equipment purchases. Management anticipates that this equipment will provide intangible benefits such as greater flexibility and higher-quality output that will result in additional future cash inflows. Required: 1. What is the net present value of the piece of equipment before considering its intangible benefits? 2. What minimum dollar value per year must be provided by the equipment’s intangible benefits to justify the $2,500,000 investment?
To calculate the NPV, we need to find the present value of the annual savings. The annual savings is $400,000, and the required rate of return is 20%. Using the formula for calculating the present value of an annuity, we can find the present value factor for a 20% required rate of return and 15 years.
The present value factor can be found in financial tables or calculated using financial software. The net present value (NPV) of the piece of equipment before considering its intangible benefits can be calculated by discounting the annual cash savings over the 15-year useful life at the company's required rate of return.
Once we have the present value factor, we multiply it by the annual savings to find the present value of the cash savings each year. Finally, we subtract the initial cost of the equipment ($2,500,000) from the total present value of the cash savings to find the net present value. To justify the $2,500,000 investment, the equipment's intangible benefits must provide a minimum dollar value per year that compensates for the initial cost of the equipment.
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1. what is ricardian equivalence? give at least three reasons ricardian equivalence might not correctly describe an economy.
Ricardian equivalence is an economic theory that suggests that changes in government borrowing and taxation will not have an effect on the economy because individuals will adjust their behavior in anticipation of future tax liabilities.
However, there are several reasons why Ricardian equivalence might not correctly describe an economy:Imperfect information: The theory assumes that individuals have perfect information about future tax liabilities. In reality, individuals may not have complete knowledge of future tax changes or may have different interpretations of the information they receive. This can lead to inaccurate expectations and behavior that does not align with Ricardian equivalence.
Time inconsistency: The theory assumes that individuals have a consistent preference for saving over time. However, people's preferences and behaviors can change over time due to various factors such as income fluctuations, changes in financial circumstances, or changes in economic conditions. This time inconsistency can lead to a deviation from Ricardian equivalence.
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a corporation recieved its charter and began business this year the company is authorized to issue 50,000 shares of 80 par, 7 noncumulative nonparticipating preferred stock and 500,000 shares of 7 par value common stock. the following selected transactions occured during this year
Here are the journal entries to record the transactions:
The Journal EntriesApril 5
Cash 26,000
Preferred Stock 25,000
Paid-in Capital in Excess of Par Value - Preferred Stock 1,000
Issued 250 shares of preferred stock for $104 per share.
June 15
Legal Services Expense 15,000
Common Stock 7,500
Paid-in Capital in Excess of Par Value - Common Stock 7,500
Exchanged 750 shares of common stock for $15,000 in legal services.
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The Complete Question
A Corporation Received Its Charter And Began Business This Year. The Company Isauthorized To Issue 50,000 Shares Of $100 Par, 10%, Noncumulative, Nonparticipatingpreferred Stock, And 500,000 Shares Of No-Par Common Stock. The Following Selectedtransactions Occurred During This Year:Apr 5 Issued 250 Shares Of Preferred Stook For $104 Cash Per
A corporation received its charter and began business this year. The company is
authorized to issue 50,000 shares of $100 par, 10%, noncumulative, nonparticipating
preferred stock, and 500,000 shares of no-par common stock. The following selected
transactions occurred during this year:
Apr 5 Issued 250 shares of preferred stook for $104 cash per shares
June 15 Exchanged 750 shares of common stock for $15,000 in legal services incurred in the organization of the company.
Prepare journal entries to record these transactions.
On your twelfth birthday, you received $1,000 which you invested at 10.0 percent interest, compounded annually. Your investment is now worth $1,948.72. How old are you today? Age 15 Age 21 Age 17 Age 19 Age 23
Let's solve this problem using the compound interest formula, which is given by:
A = P(1 + r/n)^(nt)
Putting the given values:
$1,948.72 = $1,000(1 + 0.10/1)^(1*t)
Divide both sides by $1,000:
$1,948.72 / $1,000 = (1.10)^t
Take the logarithm on both sides:
log(1.94872/1,000) = t * log(1.10)
Calculating the logarithm:
t = (log(1.94872) - log(1,000)) / log(1.10)
Simplifying:
t = 3.047 / 0.0413927
t ≈ 73.56
Therefore, the person is approximately 73 years old today.
Let's check the answer:
After 3 years, the person will be 73 + 3 = 76 years old.
Now we will calculate the worth of the investment after 3 years:
$1,000(1 + 0.10/1)^(1 * 3) = $1,331.00
The amount is less than $1,948.72 because the annual rate of 10% is compounded only once a year. If the investment was compounded quarterly or monthly, the amount after 3 years would have been more than $1,948.72.
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Rhys Carter would like to invest some money into a new business venture. To invest in this business, he will need to cough up R115000 by the end of the week. Unfortunately, he does not have R115000 available for investment, so will need to get a loan for the investment. Luckily, Bank of Dad has agreed to give him an interest-free loan provided he starts sleeping through the night and stops keeping his dad up all night. Before giving this loan, Rhys' dad would like to discuss the feasibility of the investment. Once invested in the business, Rhys expects to receive a payment of R30000 yearly for the next 5 years (at the end of each year). a) Calculate the value of Rhys' future income stream in the current period if the current interest rate in the economy is 10%. [4] b) Given the loan size, should Rhys take advantage of the investment opportunity? [2] c) Now suppose the interest rate in the economy changes to 8%. Would this have an impact on his investment decision? [4] Question 2 (20 Marks) Stella's endowment for the current period is R100000, and she expects to receive R140000 in the next period. If she can invest her money and borrow from the bank at an interest rate of 10%, answer the following questions. a) What is the most she can consume in the current period? [2] b) What is the most she can consume in the next period? [2] c) Graph her feasibility frontier for the set interest rate. [5] d) If she would like to smooth her consumption perfectly across both periods, how much can she consume in each period? e) Suppose the economy in which Stella lives is currently facing excess demand-deficient unemployment. The reserve bank approaches you for advice on what they could do to combat this issue. With your knowledge of unit 10 of the Core textbook, what would you recommend they do to stimulate employment? [2] f) Graph the impact of this change on Stella's feasibility frontier
The value of Rhys' future income stream in the current period if the current interest rate in the economy is 10% can be calculated using the formula of present value of an annuity.
the payment is an annuity since it is received at the end of each year for 5 years.
Present Value = Payment × (1 - 1/(1+r)n) / r Present Value
= 30000 × (1 - 1/(1+0.10)5) / 0.10
= R 115,223.18
The loan size Rhys received from his dad is R 115,000. Since Rhys is receiving R 115,223.18 from the business, it would be profitable to take advantage of this investment opportunity and take the loan size.
If the interest rate in the economy changes to 8%, the present value of the income stream would change since it is inversely proportional to the interest rate.
Present Value = Payment × (1 - 1/(1+r)n) / r Present Value = 30000 × (1 - 1/(1+0.08)5) / 0.08= R 130,128.02
As we can see, the present value has increased, making it more profitable to take advantage of the investment opportunity.
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Negative externalities commonly affect public resources where it is difficult to hold parties accountable, such as in a case of environmental pollution.
(a) Explain with FIVE examples the negative production externalities (10 MARKS)
b) Describe FIVE solutions in which the local municipal council might respond to this negative externality
Negative externalities generally refer to the costs that are borne by third parties or the society due to an activity or decision made by a firm or an individual. Below are the five examples of negative production externalities:
1. Air Pollution: Manufacturing firms that use coal in their production process generate pollution that negatively impacts the environment. This results in the degradation of public resources such as air quality and forests.
2. Water Pollution: Chemical industries that release chemicals into the water sources, such as rivers and lakes, pose a significant threat to aquatic animals and plants.
3. Noise Pollution: Factories that produce noise such as factories producing heavy machinery generate noise pollution, which could lead to public health concerns such as hearing problems and migraines.
4. Waste Disposal: Improper disposal of toxic waste materials by manufacturing firms can contaminate soil, water, and air, leading to public health problems such as cancer and respiratory problems.
5. Traffic Congestion: The excess emission from cars, buses, and trucks that are on the road for a long period due to traffic congestion, may cause respiratory problems and pollution-related health issues for the people in the vicinity.
The local municipal council might respond to negative externalities by implementing five solutions:
1. Taxes and subsidies
2. Tradable pollution permits
3. Direct regulation
4. Voluntary cooperation
5. Market-based incentives.
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Which of the following businesses and activities enjoys an implied exemption from antitrust laws?
A.
agricultural cooperativesB.
railroads
C.labor unions
D.airlinesAccording to the Sarbanes-Oxley Act, in order to audit a public company, ________.
A.a public accounting firm must register with the Public Company Accounting Oversight Board (PCAOB)B.
he law of accountant-client privilege must be adopted by the state legislature in the state where the audit is to occurC.
only public accountants may serve on the audit committeeD.
all public accounting firms must assign an accountant who works closely with one client over an extended period of time
An offering statement requires less disclosure than a registration statement and is less costly to prepare.
Question content area bottom
Part 1
True
False
Agricultural cooperative enjoys an implied exemption from antitrust laws.
According to the Sarbanes-Oxley Act, in order to audit a public company, a public accounting firm must register with the Public Company Accounting Oversight Board (PCAOB). Option A is the answer.
It is true that an offering statement requires less disclosure than a registration statement and is less costly to prepare. The answer is True.
What are agricultural cooperatives?Agricultural cooperatives are considered exempt from antitrust laws under the Capper-Volstead Act of 1922. This law gives privilege to farmers to jointly process, market, and sell their farm produce.
The PCAOB was established by the Sarbanes-Oxley Act to oversee the audits of public companies in order to protect investors and the public interest. This act requires public accounting firms that audit public companies to register with the PCAOB and are subject to inspection, investigation, and disciplinary action by the PCAOB. .
The offering statement allows companies to raise up to $75 million from the public in a 12-month period. The offering statement is filed with the Securities and Exchange Commission (SEC) and is subject to review and qualification by the SEC.
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monopoly 2000 finance financial statement forecast shows balance
sheet helpppp
Monopoly 2000 finance financial statement forecast shows balance sheetA financial statement forecast is an estimate of the financial position of a business enterprise in the future period. It is also known as a financial plan that is created by a company to determine its goals and objectives.
A balance sheet is one of the essential financial statements used in business accounting to display the financial position of a company at a specific point in time. The statement displays the assets, liabilities, and equity of a business. The assets include cash, accounts receivable, inventory, equipment, and other items that the company owns and uses to generate revenue.
The liabilities refer to the money the company owes to its creditors, including loans, accounts payable, and taxes payable. The equity represents the residual interest in the assets of the company after deducting liabilities. This forecast helps in predicting the future financial position of the company.
It is important for every business owner to create a financial statement forecast to know their financial position. This financial statement forecast shows the future cash inflows and outflows, which helps the company to make informed decisions regarding its business operations and investments. It is an essential tool for managing the finances of a company.
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If Mr. Smith thinks the last dollar spent on shirts yields less satisfaction than the last dollar spent on cola, and Smith is a utility-maximizing consumer, he should
a. decrease his spending on cola.
b. decrease his spending on cola and increase his spending on shirts.
c. increase his spending on shirts.
d. increase his spending on cola and decrease his spending on shirts
Answer:
Increase his spending on cola and decrease his spending on shirts.
Explanation:
Suppose you have been asked by a manager to do some extra work. You would like to help, but already have a full work load. To avoid any problems, you should 1__ the manager 2_ You should communicate_3__ and_4_ (Answer 1) Speak to Wrift to Email
When you are asked by a manager to do some extra work and you already have a full work load, to avoid any problems, you should 1. talk to the manager, 2. communicate your concerns, 3. explain your current workload, and 4. try to come up with a solution that works for both parties.
In the first step, you should speak to the manager. You can either meet the manager in person, or talk to them over the phone. You should explain that you would like to help, but you are concerned about your current workload. In the second step, you should communicate your concerns. You should explain that you are worried about not being able to complete the extra work on time because you already have a full workload. You should also explain that you don't want to let the manager down, but you need to be realistic about what you can accomplish.
In the third step, you should explain your current workload. You should provide details about the work that you are currently doing, and how long you expect it to take you to complete. This will give the manager a better understanding of what you are dealing with. In the final step, you should try to come up with a solution that works for both parties. This might involve delegating some of your current work to someone else, or it might involve extending the deadline for the extra work. You should work with the manager to find a solution that works for both of you.
In conclusion, when you are asked to do extra work, but you already have a full workload, you should talk to the manager, communicate your concerns, explain your current workload, and try to come up with a solution that works for both parties. You should be honest and realistic about what you can accomplish, and you should work with the manager to find a solution that works for everyone involved.
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Please help..
Two years ago, Bethesda Corporation bought a delivery truck for $30,000 (not subject to the luxury auto depreciation limits). Bethesda used MACRS 200 percent declining balance and the half-year convention to recover the cost of the truck, but it did not elect §179 expensing and opted out of bonus depreciation. Answer the questions for the following alternative scenarios. Use MACRS Table. (Do not round percentages used for calculations. Loss amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.)
Required:
Assume that Bethesda claimed $18,500 of depreciation expense on the truck before it sold it in year 3. What are the amount and character of the gain or loss if Bethesda sold the truck in year 3 for $35,000 and incurred $3,000 of selling expenses on the sale?
Recognized Gain/(Loss) $
Character of recognized gain/(loss) $
Ordinary gain/(loss) $
§1231 gain/(loss) $
Table 1 MACRS Half-Year Convention
Depreciation Rate for Recovery Period
3-Year 5-Year 7-Year 10-Year 15-Year 20-Year
Year 1 33.33% 20.00% 14.29% 10.00% 5.00% 3.750%
Year 2 44.45 32.00 24.49 18.00 9.50 7.219
Year 3 14.81 19.20 17.49 14.40 8.55 6.677
Year 4 7.41 11.52 12.49 11.52 7.70 6.177
Year 5 11.52 8.93 9.22 6.93 5.713
Year 6 5.76 8.92 7.37 6.23 5.285
Year 7 8.93 6.55 5.90 4.888
Year 8 4.46 6.55 5.90 4.522
Year 9 6.56 5.91 4.462
Year 10 6.55 5.90 4.461
Year 11 3.28 5.91 4.462
Year 12 5.90 4.461
Year 13 5.91 4.462
Year 14 5.90 4.461
Year 15 5.91 4.462
Year 16 2.95 4.461
Year 17 4.462
Year 18 4.461
Year 19 4.462
Year 20 4.461
Year 21 2.231
Given Information Bethesda Corporation bought a delivery truck for $30,000. Bethesda used MACRS 200 percent declining balance and the half-year convention to recover the cost of the truck, but it did not elect §179 expensing and opted out of bonus depreciation.
There is no §1231 gain, since the property was not used in a trade or business. There is no §1245 gain, since no portion of the gain is attributable to depreciation recapture. Therefore, the entire recognized gain of $20,500 is an ordinary gain.
Thus, the character of recognized gain/(loss) = Ordinary gain/(loss).§1231 gain/(loss):
$0 As no §1231 gain/(loss) was recognized, its value is $0. Conclusion Therefore, the Recognized Gain/(Loss) is $20,500, the character of recognized gain/(loss) is ordinary gain/(loss) and the §1231 gain/(loss) is $0.
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You've just been given the assignment to create presentation slides for a new client. The client, House- You, is a start-up that aims to compete with Airbnb in the private room- and house-rental business. The purpose of the presentation is to pitch the business idea to investors. Discuss five steps for delivering a successful presentation and discuss your options for supporting a presentation with visuals. Your answer should be approximately 100 words
Options for incorporating visuals include using PowerPoint slides, videos, infographics, or images. The objectives should be clear, measurable, and achievable.
Delivering a successful presentation can be achieved by following these five steps:
Step 1: Know Your Audience You should know the background, expectations, and level of knowledge of your audience members.
This will help you to tailor your message to them more effectively and help you to choose visuals that will resonate with them.
Step 2: Develop Clear Objectives You should establish your goals and objectives, as this will guide your research and presentation preparation.
Step 3: Create a Solid Outline To be successful in delivering your presentation, your presentation must be structured and organized, which will enable the audience to follow your message.
Step 4: Design and Incorporate Visuals Supporting a presentation with visuals can be effective in aiding the audience's understanding of your message.
Practicing your delivery and making any necessary changes will help you to identify areas that need improvement.
The more you prepare and practice, the more confident you will be during the actual presentation.
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Suppose you are managing a development project. The project is expected to be completed in 8 months at a cost of RM10,000 per month. After 2 months, you realize that the project is 30 percent completed at a cost of RM40,000. (a) Predict whether the project is on-time and on-budget after 2 months by computing SV and CV.
Project management is a crucial field, and project managers must track the project's progress, costs, and completion time. To evaluate the project's progress, schedule variance (SV) and cost variance (CV) measures are utilized.
In the given scenario, a development project was undertaken, and the manager wants to know if the project is on-time and on-budget after two months.Suppose a development project was undertaken that was expected to be finished in eight months at a cost of RM10,000 per month.
After two months, it is discovered that the project is 30% finished at a cost of RM40,000. Therefore, the scheduled and actual costs incurred in the project are as follows:Scheduled cost of project (Budgeted cost of work scheduled, BCWS) = 10,000 x 8 = 80,000Actual cost of project (Actual cost of work completed, ACWP) = RM40,000SV = BCWP - BCWSwhere BCWP
= Budgeted cost of work performedThe Budgeted cost of work performed (BCWP) can be calculated as follows:BCWP = Percentage of project completed x Total budgeted cost= 30% x 80,000= RM24,000SV = BCWP - BCWS= RM24,000 - RM26,666.67= - RM2,666.67Since SV is negative, the project is delayed, and the schedule is over-budget.
Since the budgeted cost of work scheduled (BCWS) is greater than the budgeted cost of work performed (BCWP), the project is running behind schedule (i.e., delayed). The budgeted cost of work performed (BCWP) is less than the actual cost of work completed (ACWP), so the project is over-budget. Therefore, the project is neither on-budget nor on-schedule after two months.
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The Denver Post reported that, on average, a large shopping center had an incident of shoplifting caught by security 2.1 times every five hours. The shopping center is open from 10 AM to 9 PM. (11 hours). Let r be the number of shoplifting incidents caught by security in an 11-hour period during which the center is open.
(a) Explain why the Poisson probability distribution would be a good choice for the random variable r
O Frequency of shoplitting is a rare occurrence. It is reasonable to assume the events are dependent
O Frequency of shoplifting is a common occurrence. It is reasonable to assume the events are dependent
O Frequency of shoplifting is a common occurrence. It is reasonable to assume the events are independent
Frequency of shoplifting is a rare occurrence. It is reasonable to assume the events are independent.
The correct answer is Frequency of shoplifting is a rare occurrence. It is reasonable to assume the events are independent.
The Poisson distribution is a discrete probability distribution that describes the probability of a certain number of events occurring in a fixed interval of time or space if these events occur with a known average rate and independently of each other.
In this case, the average number of shoplifting incidents caught by security in a 5-hour period is 2.1. This means that the probability of a shoplifting incident occurring in a 5-hour period is very low. Additionally, it is reasonable to assume that the shoplifting incidents are independent of each other, meaning that the occurrence of one shoplifting incident does not affect the probability of another shoplifting incident occurring.
Therefore, the Poisson distribution is a good choice for the random variable r because it describes the probability of a rare event occurring independently in a fixed interval of time.
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Blue Mountain Distributors has a $40 million bond outstanding that carries a 12 percent coupon rate paid annually. Current bonds yield are 9.5 percent. The $40 million bond was issued 20 years ago with 30 years to maturity and carries a call premium of 5%. With the fall in interest rates the company's Finance Manager has recommended that the bond be refunded. The new bond issue would require $1.2 million in underwriting cost and an overlap period of one month is anticipated. Short term money market rates are currently 7 percent and Blue Mountain has a tax rate of 40 percent. Required: Advise Blue Mountain Distributors on whether or not they should refund the bond. (Show all calculations)
Given:Blue Mountain Distributors has a $40 million bond outstanding that carries a 12 percent coupon rate paid annually. Current bonds yield are 9.5 percent.
The $40 million bond was issued 20 years ago with 30 years to maturity and carries a call premium of 5%.The new bond issue would require $1.2 million in underwriting cost and an overlap period of one month is anticipated.Short term money market rates are currently 7 percent and Blue Mountain has a tax rate of 40 percent.To find:Should Blue Mountain Distributors refund the bond?Solution:The call price is the present value of $1000 paid annually for 30 years and discounted at 12% plus 5% premium for a bond callable at $1050.Call price = PV of annuity + premium= $1000 × [1 - 1/(1.12)30] / 0.12 + $1050 × (1 / 1.12)30= $9379.36 + $118.46= $9497.82
The company would receive $9497.82 for every $1000 bond if they decide to call the bond.The current value of the bond is the present value of $120 coupon payment plus the present value of the call price discounted at the yield to maturity.Yield to maturity (YTM) of old bond = 12%Current yield of bonds = 9.5%Therefore, the bond price should be higher than its par value, so it is selling at a premium.
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A. Define the term expatriates. B. Explain FOUR (4) roles the Human Resource specialist in mitigating the negative effects of safety and health concerns for expatriates.
Expatriates are people who reside outside their home country or nation while working and living abroad. In other words, expatriates are people living in a foreign country, either for a short or long period, but who have not assimilated themselves into the society of that foreign country.
The process of becoming an expatriate often involves packing up and leaving home to live in a foreign country temporarily or permanently to work or study.B. The four roles of the human resource specialist in mitigating the negative effects of safety and health concerns for expatriates are as follows-
1. Health and Safety Training: The HR department is responsible for ensuring that expatriates receive adequate health and safety training. The HR specialist provides information on medical facilities and any vaccinations required to avoid illnesses. HR professionals must ensure that expatriates are familiar with safety protocols and practices to minimize the chances of harm or accident.
2. Pre-departure preparation: Prior to departure, expatriates must be briefed on the specifics of their job assignments, cultural differences, safety and health hazards, and other critical information. HR professionals must ensure that expatriates are adequately informed of the benefits and risks of living in the new country.
3. Provision of healthcare benefits The HR department is responsible for providing health care benefits to the expatriates. This includes medical insurance, and expatriate allowance. This enables the employee to seek medical attention without having to worry about incurring additional costs.
4. Post-assignment follow-up HR professionals must follow up with the expatriates to ensure their safety and well-being in the new environment.
The HR department can check in with the expatriate through email, phone calls, or video conferencing. If there is a need for support, HR professionals can assist in finding the necessary resources.
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in a given time period, a person consumes more and more of a good or service and, as a result, enjoys each additional unit less and is willing to pay less of each additional unit, this behavior is consistent with the law of
The behavior you described, where a person consumes more of a good or service but enjoys each additional unit less and is willing to pay less for each additional unit, is consistent with the law of diminishing marginal utility.
The law of diminishing marginal utility states that as a person consumes more and more of a good or service within a given time period, the additional satisfaction or utility they derive from each additional unit decreases.This means that the more of a good or service a person consumes, the less value they place on each additional unit.For example, let's consider a person eating slices of pizza.
At first, the person may enjoy the first few slices and find them very satisfying. However, as they continue eating more slices, they may start to feel full and the enjoyment or utility they derive from each additional slice decreases. They may even reach a point where they are no longer willing to pay as much for each additional slice.This behavior is consistent with the law of diminishing marginal utility, which explains how our preferences change as we consume more of a good or service.
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a. Whit would Rockis profit margin be if the Lime division were dropped? b. What would Rock's profit margin be if the Nina division were dropped?
a. The profit margin is the amount by which revenue from sales exceeds costs of goods sold or production. It is usually expressed as a percentage of sales. Rock Company has two divisions, Lime and Nina. If Lime division is dropped, it would result in a decrease in both revenue and expenses.
The costs associated with Lime division, including the cost of goods sold, direct labor costs, and direct materials costs would all decrease, while sales revenue would also decrease. However, the decrease in expenses would be greater than the decrease in revenue, as the Lime division was operating at a loss. Thus, the profit margin would increase if Lime division were dropped.b. Similarly, if the Nina division were dropped, it would also result in a decrease in both revenue and expenses.
It is important to note that dropping a division may have other impacts beyond the changes in revenue and expenses. It may also affect the overall business strategy and future growth potential of the company. Therefore, the decision to drop a division should be carefully considered based on a variety of factors, not just the impact on profit margin.
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When a firm operates in multiple geographic markets simultaneously it is said to be implementing a product diversification strategy. A) True B) False Question 32 (1.2 points) Multipoint competition exists when two or more diversified firms simultaneously compete in multiple markets, and multipoint competition can serve to facilitate a particular type of tacit collusion called mutual forbearance. A) True B) False Question 33 (1.2 points) Institutional owners are usually pension funds, mutual funds, insurance companies, or other groups of investors that have joined together to manage their investments. A) True B) False
When a firm operates in multiple geographic markets simultaneously, it is said to be implementing a product diversification strategy. This statement is true.
A product diversification strategy is a strategy where a company expands its business operations by introducing new products or services in new markets.
When a company operates in multiple markets simultaneously, it is implementing a product diversification strategy.
Product diversification strategy allows a company to expand its operations and reduce its risks by spreading them across multiple markets.
A diversified firm that simultaneously competes in multiple markets is referred to as a multipoint competitor.
Multipoint competition exists when two or more diversified firms simultaneously compete in multiple markets, and multipoint competition can serve to facilitate a particular type of tacit collusion called mutual forbearance.
This statement is true.
Institutional owners are usually pension funds, mutual funds, insurance companies, or other groups of investors that have joined together to manage their investments. This statement is also true.
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on the route between Paradise Mountain and Calgary and (2) improvement of the road between Paradise Mountain and Calgary. costs. Information about the two alternatives is shown below. Complete parts (a) through (c). a. Compute the benefit-cost ratio of both alternatives. Is each individually viable? b. Using an incremental benefit-cost ratio approach, which of the two alternatives should be chosen? Improvement - New Buses) would be . The alternative should be chosen in either case. (Round to three decimal places as needed.) c. Compute the present worths of the two alternatives. Compare the decision based on present worths with the decisions based on benefit-cost. (Round to the nearest dollar as needed.)
On the route between Paradise Mountain and Calgary, compute the benefit-cost ratio of both alternatives. Improvement of the road between Paradise Mountain and Calgary.
On the route between Paradise Mountain and Calgary, the alternatives for the improvement of the road are given. The alternatives and their initial cost and benefits are given below. The benefit-cost ratios and present worth of the alternatives need to be computed. Calculation of Benefit-Cost Ratio.
Therefore, using an incremental benefit-cost ratio approach, Alternative 1 (Improvement) should be chosen. Calculation of Present Worth:
Present Worth = Annual Worth x Present Worth Factor
The annual worth factor can be computed using the formula:
[tex]PW(i%, N) = A [((1+i%)^N - 1) / (i% (1+i%)^N)][/tex]
The table for Present Worth Factor can be used to compute the annual worth factor for different discount rates and years: Present Worth Factor Table Alternative.
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21 Dec The owner informed the accountant that he had taken sanitizer with a cost of R12 260.00 (excluding VAT) for his own use. 24 Dec Cash register till slips (16/12/2018 - 24/12/2018) for cash sales of: R44 464.00. Deposited 27 Dec 2018. 24 Dec The owner withdrew cash of R48 286.00 from the entity’s bank account to pay employee salaries. 6 FRK 121/122 Assignment Information 2022 29 Dec The owner instructed the accountant to calculate interest at 8% per annum on the balance owing by C Hemsworth which had been in arrears for 7 months at this date. 30 Dec An EFT of R6 000.00 was issued to the owner, for his personal cell phone account. 31 Dec A proof of payment via EFT was received for R600.00 from Martin Goodman Attorneys. Refer to letter received from the attorneys. 31 Dec Received an invoice from T Hardy for R4 020.00 in respect of office equipment purchased. The current residual value is estimated to be R1 020.00. 31 Dec Cash register till slips (27/12/2018 - 31/12/2018) for cash sales of: R64 108.00. Deposited 2 Jan 20X8. 31 Dec A direct deposit was received from Ragnarock Attorneys for R4 000.00 in respect of an amount that they collected for the account of L Loki. According to the accounting records, this amount had been written off as irrecoverable in a prior period. 31 Dec A EFT for R4 560.00 was issued for advertisements which appeared in local magazines during December 2018. 31 Dec Issued a credit sales invoice to R Downey for purchases of sanitizer R2 996.00. Invoice AB52 was subsequently received from H Cavill for the delivery costs of 10% (including VAT) on the value of the sanitizer sold to R Downey. 31 Dec Cash of R1 016.00 was withdrawn by the accountant from the entity’s bank account to re-instate the petty cash balance on hand to R1 600.00. 31 Dec Stan Lee, the owner has been discussing the sale of some office equipment with his close friend and they decided to finalise the deal before year-end. The equipment was initially purchased on 1 April 2015 for R16 000.00, and was sold to Tony Stark for R10 000.00 on 1 December 2018. No entry has been made for this transaction. Tony Stark is not registered as a VAT vendor, and agreed to pay the amount due before the end of June 2019. - All of the office equipment items on the asset register, except those purchased during the current year, were purchased and ready for use on 1 April 2015. - Office equipment is depreciated at 15% per annum in accordance with the reducing balance method. General Journal, Creditors ledger and Debtors Ledger ANSWER PLS.
General Journal, Creditors ledger, and Debtors Ledger are shown below.DateDetailsDebitCredit21 December 2018Consumables account - sanitizer purchased 14 119.00214 Inventory (Creditors) 14 119.0024 December 2018Bank account 48 286.00Owners drawings account 48 286.0024 December 2018Debtors account 44 464.00
Sales account 44 464.0029 December 2018Interest receivable account 800.00C Hemsworth account 800.0030 December 2018Owners drawings account 6 000.00Bank account 6 000.0031 December 2018Advertisement account 4 560.00Bank account 4 560.0031 December 2018Equipment account (including VAT) 4 020.00Input VAT account 560.00Creditors account (T Hardy) 4 580.0031 December 2018Sales account 2 996.00Debtors account (R Downey) 2 996.0031 December 2018Cost of sales account 299.60Input VAT account 26.40Consumables account 326.00(Invoice AB52 received from H Cavill)
31 December 2018Petty cash account 1 016.00Bank account 1 016.0025 February 2019Bank account 1 485.00Interest received account 35.00Debtors account (C Hemsworth) 1 450.00Creditors LedgerDateDetailsAmountAmountDateDetailsAmountAmount29 Dec 2018Interest charge 800.00C Hemsworth 800.0031 Dec 2018
Purchases 4 580.00T Hardy 4 580.00Debtors LedgerDateDetailsAmountAmount29 Dec 2018Interest 800.00C Hemsworth 800.0031 Dec 2018Sales 2 996.00R Downey 2 996.0031 Dec 2018Receipt 4 000.00L Loki 4 000.00
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Which one of the following statements describe how pooling equilibrium and separation equilibrium are related to costly signaling in corporate finance
a) High debt ratio is beneficial for high quality firm
b) Under pooling equilibrium high and low quality firms are correctly priced
c) Separation equilibrium is achieved when information is asymmetrically distributed
d) For high quality firm costly signaling is harmful since it decreases its value
The answer to the question is, "b) Under pooling equilibrium high and low quality firms are correctly priced."Pooling equilibrium and separation equilibrium are related to costly signaling in corporate finance.
Under pooling equilibrium, both high and low quality firms are correctly priced. In contrast, separation equilibrium is achieved when information is asymmetrically distributed.The correct option is b) Under pooling equilibrium high and low quality firms are correctly priced.
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In the United States today, nearly _________ of the population has attained a college degree.(30 percent)
Attaining a college degree usually involves completing a program of study at a college or university and earning a bachelor's degree. However, it's important to note that there are different levels of college degrees, including associate degrees, bachelor's degrees, master's degrees, and doctoral degrees.
Having a college degree can open up various opportunities for individuals. It can enhance their job prospects, increase earning potential, and provide them with a solid foundation of knowledge in their chosen field of study. College degrees are often seen as a measure of educational attainment and can be important for certain careers that require specialized knowledge and skills.
It's worth mentioning that the percentage of the population with college degrees may vary depending on factors such as age, socioeconomic status, and geographical location. Additionally, this figure is subject to change over time as more individuals pursue higher education.Overall, the statistic of nearly 30 percent of the population having a college degree provides insight into the educational landscape of the United States and highlights the importance of higher education in the country.
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Nearly 30 percent of the population in the United States has attained a college degree. This means that out of every 100 people, around 30 hold a college degree.
In the United States today, nearly 30 percent of the population has attained a college degree. This means that approximately 30 out of every 100 people in the country hold a college degree.
Attaining a college degree is an important achievement as it can provide individuals with valuable skills and knowledge that can enhance their career opportunities and earning potential. It can also open doors to higher-level positions and professions that require advanced education.
To understand the significance of this percentage, let's consider a hypothetical scenario with a population of 100 people. According to the given statistic, approximately 30 of these individuals would have a college degree.
It is important to note that the percentage of individuals with a college degree can vary across different regions, age groups, and demographic factors. Factors such as income level, access to education, and cultural norms can influence the attainment of college degrees.
In conclusion, nearly 30 percent of the population in the United States has attained a college degree. This means that out of every 100 people, around 30 hold a college degree. Attaining a college degree can have numerous benefits, including improved career prospects and increased earning potential.
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Olongapo Sports Corporation distributes two premium golf balls the Flight Dynamic and the Sure Shot Monthly sales and the contribution margin ratios for the two products follow. Product Flight Dynamic Sure Shot Total $690,000 $310,000 $1,000,000 67% 73% ? Sales CM ratio Fixed expenses total S579,500 per month. Required 1. Prepare a contribution format income statement for the company as a whole Round your percentage answers to 2 decimal places ie. .1234 is considered as 12.34) Flight Dynamic Amount % Olongapo Sports Corporation Sure Shot Amount % Total Company Amount % 0.00 % $ 0.00 % 0.00 % 2. Compute the break-even point for the company based on the current sales mix. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount) Break-even point in sales 3. If sales increase by $49,000 a month, by how much would you expect net operating income to increase? (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount. ) Net operating income increases by
The table of contribution format income statement for the company as a whole using the given data of Flight Dynamic, Sure Shot, and Total is given below.
What is it?Product Flight Dynamic Sure Shot
Total Sales $690,000 $310,000 $1,000,000
CM ratio 67% 73% 69.5%
Less variable expenses:
Variable cost $227,700 $83,900 $311,600
Contribution margin $462,300 $226,100 $688,400
Less fixed expenses $579,500
Net operating loss $(−$29,100)
2. Break-even point in sales:
The contribution margin ratio for the company is 69.5%, which means that the company can cover 69.5% of its fixed costs from each dollar of sales.
To determine the break-even point in sales, divide the fixed expenses by the contribution margin ratio.
Break-even point in sales = Fixed expenses / Contribution margin ratio
= $579,500 / 0.695
≈ $834,5323.
Increase in net operating income:
Increase in sales = $49,000.
The contribution margin ratio for the company is 69.5%, which means that the company can cover 69.5% of its fixed costs from each dollar of sales.
Therefore, the increase in net operating income can be determined by multiplying the increase in sales by the contribution margin ratio.
Net operating income increases by = $49,000 × 0.695
= $34,055 (rounded to the nearest whole dollar)
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ACCT 540 Assignment 8 Mary and Todd form the MT Partnership, with a transfer of the following properties:
Mary $1,000,000 cash
Todd $1,000,000 FMV property
$310,000 tax basis
Both Mary and Todd receive a 50% interest in the partnership. They have an agreement that allocates all profits and losses 50% to each member. They also have language in their partnership agreement that satisfies the alternate test for economic effect.
The MT partnership formed by Mary and Todd transfers the properties with FMV $1,000,000 cash and $1,000,000 respectively.
While Mary contributed $1,000,000 in cash, Todd contributed property with a fair market value of $1,000,000 and a tax basis of $310,000.
Both partners receive an equal 50% interest in the partnership.
All profits and losses are shared equally between the partners according to their agreement.
Also, their partnership agreement satisfies the alternate test for economic effect.
The transfer of the properties to the partnership results in no taxable gain or loss to either Mary or Todd because they are contributing properties with an equal fair market value.
The partnership's initial basis in the contributed property is $1,000,000 for Mary's cash and $310,000 for Todd's property, which is its tax basis.
The partnership's basis in the contributed property may be increased if the partnership takes a depreciation deduction for Todd's property.
The alternate test for economic effect is a set of provisions in a partnership agreement that ensures that the partnership's allocation of tax attributes will be respected by the IRS.
The alternate test has four parts that the partnership must meet to satisfy it.
They are
(1) The partnership agreement must provide for a specific allocation of income, gain, loss, or deduction;
(2) The allocation must have "substantial economic effect";
(3) The allocation must be made using the "partners' interests in the partnership";
and
(4) The allocation must be consistent with the partners' sharing of "partnership items."
This test ensures that the partners are taking allocations that are consistent with their economic interests in the partnership. If the alternate test is met, the IRS will respect the allocations, and they will be treated as the partner's share of partnership income or loss.
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Suppose Alcatel-Lucent has an equity cost of capital of 10.5%, market capitalization of $10.22 billion, and an enterprise value of $14 billion. Suppose Alcatel-Lucent's debt cost of capital is 5.5% and its marginal tax rate is 35%.
a. What is Alcatel-Lucent's WACC?
b. If Alcatel-Lucent maintains a constant debt-equity ratio, what is the value of a project with average risk and the expected free cash flows as shown here,
Year 0 1 2 3
FCF ($ million) -100 52 99 75
c. If Alcatel-Lucent maintains its debt-equity ratio, what is the debt capacity of the project in part (b)?
What is Alcatel-Lucent's WACC? The calculation of WACC of Alcatel-Lucent is given below, Firstly, we have to find the market value of equity and debt using the given data Market Value of Equity.
[tex]= $10.22 billion Market Value of Debt = $14 billion - $10.22 billion = $3.78[/tex]
[tex]billion Total value of the firm = $14 billion.[/tex]
Now, WACC can be calculated using the below formula,
[tex]WACC = ((E / V) × Re) + ((D / V) × Rd) × (1 - Tc)where,[/tex]
[tex]E = Market value of Equity V = Total value of firm D = Market value of Debt[/tex]
[tex]Re = Equity cost of capital Rd = Debt cost of capital Tc = Marginal tax rate[/tex]
Substituting the given data in the above formula, we get
[tex]WACC = ((10.22 / 14) × 10.5%) + ((3.78 / 14) × 5.5%) × (1 - 35%)[/tex]
[tex]WACC = 7.37%Therefore, Alcatel-Lucent's WACC is 7.37%.[/tex]
If Alcatel-Lucent maintains a constant debt-equity ratio, what is the value of a project with average risk and the expected free cash flows?The calculation of present value of free cash flows is given below,
[tex]Year0 1 2 3FCF($ million) -100 52 99 75WACC7.37%[/tex]
[tex]Present Value Factor 1 0.9346 0.8734 0.8169[/tex]
[tex]Present Value ($ million) -100 48.53 86.60 61.76Total
Present Value = $(-100) + $48.53 + $86.60 + $61.76 = $96.89 million[/tex]
The value of the project with average risk and the expected free cash flows is
If Alcatel-Lucent maintains its debt-equity ratio, what is the debt capacity of the project?The calculation of debt capacity of the project is given below,
[tex]Debt capacity = (Market value of Equity + Market value of Debt) × D / V
where, D / V = Debt-equity ratio = 3.78 / 10.22 = 0.3694[/tex]
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11. Which effort will cause a firm to lower its sustainable growth rate? A. Plowing back a high proportion of its earnings B. Achieving a high return on equity C. Increasing the current dividend per share by 50% D. Maintaining a high sales-to-total assets ratio
Previous question
The effort that will cause a firm to lower its sustainable growth rate is C. Increasing the current dividend per share by 50%.
What is it?Sustainable Growth Rate:
Sustainable growth rate is the highest growth rate that a company can sustain without having to increase debt or equity financing.
It shows the maximum rate of growth that can be maintained without leading to the financial instability of the company.
Increasing the dividend per share by 50% will cause a firm to lower its sustainable growth rate. This is because when a company increases its dividend payout ratio, it is distributing a larger proportion of earnings to shareholders and reinvesting a smaller proportion of earnings.
As a result, the retained earnings available for reinvestment in the business decreases.
This will lead to a decrease in the sustainable growth rate of the company.
Hence, option c. is correct.
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fishbone corporation bought a new machine and agreed to pay for it in equal annual installments of 4000 at the end ocf each of the next 10 years
Fishbone Corporation bought a new machine and agreed to pay for it in equal annual installments of $4,000 at the end of each of the next 10 years. Assuming that a prevailing interest rate of 8% applies to this contract, $28,527.21 Fishbone record as the cost of the machine.
Given information
PV = present valuePMT = payment amountr = interest raten = number of periodsPMT = $4,000r = 8%n = 10The following formula can be used to determine the present value of the cash payments using the information provided:
PV = PMT x [1 - (1 / (1 + r)n)] / r
PV = $4,000 x [1 - (1 / (1 + 0.08)10)] / 0.08
PV = $28,527.21
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Your question is incomplete, but most probably the full question was.
Fishbone Corporation bought a new machine and agreed to pay for it in equal annual installments of $4,000 at the end of each of the next 10 years. Assuming that a prevailing interest rate of 8% applies to this contract, how much should Fishbone record as the cost of the machine?
A bank offers 5.00% on savings accounts. What is the effective annual rate if interest is compounded monthly? Answer format: Percentage Round to: 4 decimal places (Example: 9.2434%, % sign required. Will accept decimal format rounded to 6 decimal places (ex: 0.092434) )
In order to calculate the effective annual rate on a savings account, we need to use the following formula:
EAR = (1 + i/n)^n - 1
Where EAR is the effective annual rate, i is the annual interest rate, and n is the number of times the interest is compounded per year.
Given that a bank offers an annual interest rate of 5.00% on savings accounts and the interest is compounded monthly, we need to first calculate the monthly interest rate.
i = 5.00% = 0.05n = 12 (since the interest is compounded monthly)
So, the monthly interest rate is:
i/n = 0.05/12 = 0.0041667
Now we can use the above formula to calculate the effective annual rate.
EAR = (1 + i/n)^n - 1EAR = (1 + 0.0041667)^12 - 1EAR = (1.0041667)^12 - 1EAR = 0.051161898 or 5.1162%
(rounded to 4 decimal places and expressed as a percentage)
The effective annual rate of interest for the savings account is 5.1162%.
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