When a negative net present value is obtained, it is a sure indicator that the firm should not continue to invest in a project. NPV (0.34 -$2,000,000.00 -$900,000.00 -$1,200,000.00+$2,100,000.00+$2,100,000.00) -100,000.00 = $23,285,773.76 6. What is its internal rate of return? The internal rate of return is a form of a discount rate. The IRR allows the current value of all the cash flows to be equal to zero.
E&Y reasoned this as it creates an exception to the general rule of reserving for expected future product returns at the gross sales price and deferring the recognition of an equal amount of revenue. This justification is invalid. The company’s customers are not “ultimate customers,” but are wholesalers that sold their product to retailers. In addition, Medicis’s returns were not returns of products in exchange for products of “the same kind, quality, and price,” but of unsalable product for
By following the matching principle all of the costs associated with a particular product, not just its wholesale price, is expensed when the item is sold. Requirement 2 - A Generally, the lower of cost or market method is used to value inventory in order to “avoid reporting inventory at an amount greater than the benefits it can provide” (Spiceland, Sepe, & Nelson, 2013, p. 476). According to Spiceland, Sepe, and Nelson (2013) the “change in replacement cost usually is a good indicator of the direction of change in selling price” (p. 477). When the change in replacement cost is negative the LCM method allows companies to apply the conservatism principle. The conservatism principle involves “recognizing expenses and liabilities as soon as possible when there is uncertainty about the outcome, but to only recognize revenues and assets when they are assured of being received” (The conservatism principle).
What other pricing policies might you use to increase your profits? No, you shouldn’t cut the price. The only way that you should cut the price is if someone like a senior citizen or a student is
That would be perfect for the company but will still put people in society at risk, which is ethically wrong. The estimated cost for the A-1 Trailers recalling the trailers and fixing them will cost about $18,000,000. After reviewing the possible outcomes, the only why to achieve the greatest net benefit within society is for A-1 Trailers to perform a recall on the trailers. If A-1 Trailers fell it is in the company’s best interest to proceed with the 18,000,000-dollar recall and simply settle the claims after fighting them (if any), A-1 have every right to this decision. A-1 is in no way obligated to make any decision based on the so-called "greater good".
Since the Walton Work Wear line is in the production stage, its accumulated development costs should be capitalized. The Carroway Cool Top has not started it commercial production which would allow the development costs not to be amortized yet. Also interest costs on loans to generate financing for the R&D activates of a product can be capitalized rather than expensed. The capitalization of interest would allow CCL to reduce taxable income in the future when it is more profitable. I would recommend that CCL make the above changes immediately so that the financail statements are not incorrect.
It would be my advice for Mr. Jones to not buy the stock because of the liability of current and future tax obligations which Mr. Jones would incur from the purchase of the stock. Since the tax identity of Smithon corporation would have not ceased, it is not a favorable purchase for Mr. Jones. Ina a case where the tax identity of a firm does not cease not to exist, the tax aspects will remain the same and so will the existing tax schedule. So in this case it would mean that Mr. Jones would not be allowed to change the financial year to end on December 31. The buyer in cases where he can’t change the legal entity is in a non -benefice situation, the buyer is limited to follow the current tax basis on the company’s assets even if the buyer paid more for the
To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common in your business. A necessary expense is one that is helpful and appropriate for your business. An expense does not have to be indispensable to be considered necessary. The expenses used to figure the cost of goods sold, capital expenses, and personal expenses are not considered business expenses and should be separated.
EXCEPTIONS: overcome rule by finding a REAL promise - frame illusory promise as unilateral contract => enforceable ex. Gurfein (99): had window to cancel, but didn’t => enforceable ➢ COULD HAVE bound other party if exercise option - Implied promises ➢ UCC §2-306 (2): a contract to engage in exclusive dealing gives rise to an implied promise to use best efforts Ex. Wood v. Lucy (104): mkt designs for profits ➢ ct implied promise: to make reasonable efforts b/c w/o implied promise, the contract would be meaningless b/c structural agreement = incentive to use best effort is built in Ex. Grouse (110): promised at-will job, not allowed to start work ➢ implied promise in at-will jobs = “good faith opportunity to perform satisfactorily’ - Structural agreements Ex. Lacledes(106): supply propane for long period ➢ although not bound to purchase, practical binding exists ➢ pipes connected to Amoco supply source ➢ hostage theory of contracts: voluntarily
I believe that this is a great way to help reduce healthcare cost, however, I do believe that there should be verbiage that allowed for higher pay outs dependent on the situation. Should a patient be able to sue for millions of dollars for a mistake that did not lead to a significant event or death? I do not believe that this should be allowed and should be capped. If the negligence leads to death or significant injury (i.e. laterality issue much like amputation of the incorrect limb); I believe that this does deserve to be compensated accordingly and not be capped.