A tax advantage of business combination can occur when the existing owner of a company sells out and receives: a. cash to defer the taxable gain as a “tax-free reorganization” b. stock to defer the taxable gain as a “tax-free reorganization” c. cash to create a taxable gain d. stock to create a taxable gain 2. Publics Company acquired the net assets of Citizen Company during 20X9. The purchase price was $800,000. On the date of the transaction, Citizen had no long-term investments in marketable equity securities and $400,000 in liabilities. The fair value of Citizen assets on the acquisition date was as follows: |Current assets |$ 800,000 | |Noncurrent assets | 600,000 | | |$1,400,000 | How should Publics account for the $200,000 difference between the fair value of the net assets acquired, $1,000,000, and the cost, $800,000?
(Points : 5) is increased with a debit is decreased with a credit is not an expense account All of the above 3. (TCOs A, B) Cerner Company showed the following balances at the end of its first year: Cash $5,000 Prepaid insurance 500 Accounts receivable 2,500 Accounts payable 2,000 Notes payable 3,000 Common stock 1,000 Dividends 500 Revenues 15,000 Expenses 12,500 What did Cerner Company show as total credits on its trial balance? (Points : 5) $21,500 $21,000 $20,500 $22,000 4. (TCOs B, E) Using accrual accounting, expenses are recorded and reported only _____. (Points : 5) when they are incurred, whether or not cash is paid when they are incurred and paid at the same time if they are paid before they are incurred if they are paid after they are
• $4,072. • $6,100. • $4,100. Multiple Choice Question 198 Given the following account balances at year end, compute the total intangible assets on the balance sheet of Janssen Enterprises. Cash $1,500,000 Accounts Receivable 4,000,000 Trademarks 1,000,000 Goodwill 2,500,000 Research & Development Costs 2,000,000 • $7,500,000.
Compute the payback period for a project with the following cash flows, if the company's discount rate is 12%. Initial outlay = $450 Cash flows: Year 1 = $325 Year 2 = $65 Year 3 = $100 • 3.17 years • 2.6 years • 2.88 years • 3.43 years Want help? Click to download FIN 370 7. Which of the following best describes why cash flows are utilized rather than accounting profits when evaluating capital projects? • Cash flows have a greater present value than accounting profits.
Cash-based income: Revenues Received $6,000 Less expenses paid $5,000 = Income $1,000 3. Question 3: Please refer to Q2. What was Brady Brothers accrual basis income? Accrual-based income: Revenues Earned $12,000 Less expenses incurred $8,000 =Income $4,000 4. Question 4: Anderson Company’s balance sheet at the end of the year revealed the following information: Clients owe Anderson Company $35,300 for completed projects.
B. adjustment of an unearned revenue MM-DD-YY | Cash | | | $ 1,500 | | | Unearned Revenue | | $ 1,500 | | Advance collection from client | | | 12-31-YY | Unearned Revenue | | $ 750 | | | Revenue | | | $ 750 | | Adjusting entry for earned portion of prepayment | b. c. Increase total revenue by $750 2) Sally Corporation provided $1,500 of services to Artech Corporation; no billing had been made by December 31. a. D. adjustment to record an accrued revenue 12-31-YY | Accounts Receivable | | $ 1,500 | | | Revenue | | | $ 1,500 | | Adjusting entry to reflect services provided | | b. C. Increase total revenue by $1,500 3) Salaries owed to employees at year-end amounted to $1,000. a. C. adjustment to record an accrued expense 12-31-YY | Salaries Expense | | $ 1,000 | | | Salaries Payable | | | $ 1,000 | | Accrued salaries at end of period | | b. c. Increase total expense by $1,000 4) The Supplies account revealed a balance of $8,800, yet only $3,300 of supplies were actually on hand at the end of the period. a. A. adjustment of a
Financing Strategy Problem Week 5 Firm A has $10,000 in assets entirely financed with equity. Firm B also has $10,000 in assets, but these assets are financed by $5,000 in debt (with a 10 percent rate of interest) and $5,000 in equity. Both firms sell 10,000 units of output at $2.50 per unit. The variable costs of production are $1, and fixed production costs are $12,000. (To ease the calculation, assume no income tax.)
27 Sold 1,200 shares of Black and Decker at $49.25 less a $735 commission. June 2 Purchased 2,500 shares of Merck stock at $72.50 per share plus a $3,890 brokerage fee. 14 Purchased 900 shares of Wal-Mart at $50.25 per share plus a $1,082 commission. 2004 Transactions in Trading Securities Jan. 28 Purchased 2,500 shares of Dell Co. stock at $39.50 per share plus a $2,356 commission. 31 Sold 2,500 shares of Merck at $71.25 per share less a brokerage commission of $2,356.
2 - M&M II Assume perfect capital markets and no taxes or costs of financial distress. Consider a firm, XYZ Inc. that has assets that pay total (liquidating) cash flows of either £200 million or £50 million in one year from now (after which the company shuts down), each with probability 50%. XYZ has debt with face value of £30 million outstanding at the end of the year. It also has 100 million shares outstanding. Assume that the discount rate for all cash-flows is zero (for simplicity).
Flood damage losses to property where flooding is rare (not restructuring charges, losses from inventory obsolesce or impairment losses on intangible assets). - The gain or loss from disposal of a component of a business is shown as a (an): part of discontinued operations. - Clair, Inc. reports net income of $700,000. It declares and pays total dividends of $100,000 for the year, one-half of which relate to the preferred shares. The weighted-average number of common shares outstanding during the year is 200,000 shares, and the weighted-average number of preferred shares outstanding during the year is 10,000 shares.