Selling the defective units as they are would generate $500 while reworking them would cost an additional $750. On selling the reworked units for $1500, the company would still make a loss of $250. Therefore, it's best to sell the units as they are.
Explanation:The company incurred a cost of $1,000 to produce 500 units, if it sells the units as they are, defective, it earns $1 * 500 units = $500. Reworking the units would cost an extra $1.50 * 500 units = $750. After reworking the units, they can be sold for $1,500, which results in profit of $1,500 - ($1,000 original cost + $750 reworking cost) = -$250. If these costs are considered, it seems the company should sell the defective units as they are rather than reworking them due to additional costs that exceed their revenue.
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Reworking the defective units results in a smaller loss ($250) compared to selling them as is ($500). Therefore, the company should choose to rework the defective units.
Handling Defective Units
Given the company's situation, it needs to decide between two options: selling the defective units as is or reworking them. Here are the calculations for both options:
Option 1: Selling Defective Units As Is
Revenue from selling as is: 500 units x $1.00/unit = $500Cost: already incurred $1,000 for productionTotal loss: $1,000 - $500 = $500Option 2: Reworking the Units
Additional cost to rework: 500 units x $1.50/unit = $750Total cost after reworking: $1,000 (initial cost) + $750 (reworking cost) = $1,750Revenue after reworking: 500 units x $3.00/unit = $1,500Total loss: $1,750 - $1,500 = $250Summary: Reworking the units results in a lower loss ($250) compared to selling them as is ($500). Therefore, the company should choose to rework the defective units.
Among the many factors that influence purchasing decisions are _____, who control the flow of information within an organization.
a. influencers
b. users
c. deciders
d. buyers
e. gatekeepers
Answer: gatekeepers
Explanation: Gatekeeper refers to a member of a judgment-making system or social circle acting to suppress or deter purchasing by restricting the flow of details and information exposure to the purchasing center's members.
A parent who does not permit her children in the store to choose from a sweetened cereal serves as just a gatekeeper. In a company, the gatekeeper is almost the same as the picture that the term brought to mind — anyone sitting right at an access point to avoid undesired traffic.
This is the individual tasked with keeping a judgment-maker from being distracted by what they or he find insignificant and distracting guests and interviewees to be.
In July 2007 The Wall Street Journal (WSJ) reported that a growing shortage of skilled labor in Eastern European countries such as Slovakia was driving up wages in key industries and reducing business income. The reason for the shortages was a large migration of skilled Eastern European workers to Western European countries. According to the simple immigration model, the supply of workers will a. rise in both Western European and Eastern European countries until the wage rates fall in both countries.
b. fall in both Western European and Eastern European countries until the wage rates rise in both countries.
c. fall in Western European countries and rise in Eastern European countries until the wage rates become more equal.
d. rise in Western European countries and fall in Eastern European countries until the wage rates become more equal.
Answer:
D) rise in Western European countries and fall in Eastern European countries until the wage rates become more equal.
Explanation:
Two important factors must be considered:
wages in western European nations are still much higher than those in eastern European nationsworkers that come from member countries of the European Union may travel freely and work in any country that they can and that belongs to the European Union.As long as the wages in western European countries continue to be higher and European workers can establish themselves in those counties, the supply of workers will continue to flow from poorer eastern European countries to richer western European countries.
rise in Western European countries and fall in Eastern European countries until the wage rates become more equal.
The Virginia House of Burgesses:____________
A) Was dissolved by King James because he objected to all representative government.
B) Was created as part of the Virginia Company’s effort to encourage the colony’s survival.
C) Banned the importation of servants.
D) Had more power than the governor.
E) Was included in the original charter for the Jamestown Colony.
Answer:
B)
Explanation:
The Virginia House of Burgesses was created as part of the Virginia Company’s effort to encourage the colony’s survival. This house was created in 1642 as the elected representative element of the Virginia General Assembly which had been established in the year 1619. Which is known today only as the General Assembly.
Final answer:
The Virginia House of Burgesses was established by the Virginia Company in 1619 to provide a form of representative government in the American colonies, evolving into the lower house of the Virginia General Assembly.
Explanation:
The Virginia House of Burgesses is significant for being the first legislative assembly in the American colonies, established by the Virginia Company in 1619. Initially meeting in Jamestown's church, it included property-owning white men as members who were selected to vote on matters such as taxation and local laws, reflecting the influence of the British Parliament. Over time, the House of Burgesses expanded and evolved, becoming the lower house of the Virginia General Assembly, with the Governor's Council acting as the upper house. The council members were appointed by the Crown and served for life, indicating a level of governance separate from the governor's immediate control.
Regarding the options provided in the student's question, Option B is the most accurate: The Virginia House of Burgesses was created as part of the Virginia Company’s effort to encourage the colony’s survival. It was not included in the original charter for Jamestown Colony, it did not ban the importation of servants, and it did not have more power than the governor. King James did not dissolve it specifically because he objected to all representative government, rather it was part of the company's efforts to ensure the colony thrived economically and politically.
Bulldog, Inc. has budgeted sales for the first quarter of the next year to be 35,000 units. The inventory on hand at the beginning of quarter is 5,000 units. The desired ending inventory is 3,000 units. Calculate the budgeted production for the first quarter.
A. 2,000 units
B. 42,000 units
C. 32,000 units
D. 30,000 units .
The budgeted production for the first quarter is 32,000 units. This is calculated by adding the budgeted sales (35,000 units) to the desired ending inventory (3,000 units) and subtracting the beginning inventory (5,000 units). Option C is correct.
To calculate the budgeted production for the first quarter, we need to consider the desired ending inventory.
[tex]\[ \text{Budgeted Production} = \text{Budgeted Sales} + \text{Desired Ending Inventory} - \text{Beginning Inventory} \][/tex]
- Budgeted Sales = 35,000 units
- Beginning Inventory = 5,000 units
- Desired Ending Inventory = 3,000 units
Substitute these values into the formula:
Budgeted Production = 35,000 + 3,000 - 5,000
Budgeted Production = 33,000
Therefore, the correct answer is:
C. 32,000 units
Assume the current equilibrium level of income is $200 billion as compared to the full-employment income level of $240 billion. If the MPC is 0.625, what change in aggregate expenditures is needed to achieve full employment?
Answer:
increase the aggregate expenditure to $15 billion ($40-$25)
to achieve full employment.
Explanation:
Note:
If change in aggregate expenditures is equal to change in aggregate income then MPC=1.
Formula for MPC:
MPC=Change in Consumption or expenditure/ Change in Income
Given MPC=0.62
0.625=Change in Consumption or expenditure/ (240-200)
Change in Consumption or expenditure=[tex]0.625 * 40\\[/tex]
Change in Consumption or expenditure=$ 25 billion
Since the change in income is $40 billion($240-$200) and Change in aggregate expenditure we calculated above is $25 billion so we need to increase the aggregate expenditure to $15 billion ($40-$25)
to achieve full employment i.e to make MPC to 1.
The sympathetic and parasympathetic divisions of the ANS:_______ A. Never innervate the same organ. B. May work together, each controlling a stage of a complex process. C. Cannot work independently. D. Always have opposing effects.
Answer:
B. May work together, each controlling a stage of a complex process.
Explanation:
The sympathetic and parasympathetic divisions of the ANS: May work together, each controlling a stage of a complex process.
Explain what a debit memorandum is by completing the following sentence.When a buyer returns or takes an allowance on merchandise, the __________ issues a debit memorandum to inform the __________ of a debit made to the seller's account inthe buyer's records
When a buyer returns or takes an allowance on merchandise, the Buyer issues a debit memorandum to inform the Seller of a debit made to the seller's account in the buyer's records
Explanation:
A debit memorandum is an information recording adjustment for three particular cases: reducing the account balance of a bank customer, under filling goods or services or a small credit balance internally offset to a customer account.
A debit receipt is provided to an account holder in financial institutions stating that now the balance of the account was reduced due to a cause apart from cash withdrawal or cash search. Because of bank fees or bundled check expenses, debit memos may arise. Usually, the memos and their monthly bank statements are forwarded to bank clients.
Which of the following is a way to recognize potentially disruptive innovations?
A. Pay attention to slow-expensive advancements in technology.
B. Seeking the opinions of venture capitalists, research academics, and passionate internal engineering staff.
C. Become more consumer-focused. Indulge in bottom-line obsession.
D. Increase conversation within same product groups.
Answer:
B. Seeking the opinions of venture capitalists, research academics, and passionate internal engineering staff.
Explanation:
Seeking the opinions of venture capitalists, research academics, and passionate internal engineering staff is a way to recognize potentially disruptive innovations.
B. Seeking the opinions of venture capitalists, research academics, and passionate internal engineering staff.
Recognizing potentially disruptive innovations involves identifying unique, transformative ideas that could alter the market landscape. One effective approach is to consult with venture capitalists, who often have insights into emerging technologies and market trends.
Additionally, research academics provide valuable theoretical knowledge and empirical data on technological advancements, while passionate internal engineering staff can offer practical perspectives on the feasibility and implementation of these innovations.
By combining these diverse viewpoints, businesses can better identify innovations that might seem unimportant initially but could eventually transform industries. This collaborative evaluation process helps in spotting technologies that have the potential to disrupt existing markets effectively.
Ignoring the conventional approach of focusing solely on current consumer needs or internal product discussions enables companies to foresee future trends and invest in groundbreaking innovations earlier, ensuring competitiveness in a rapidly evolving market.
Which of the following happens when there are market failures? A) Firms compete more leading to more efficiency. B) The invisible hand automatically lowers prices and increases quality of products. C) The private sector promotes competition D) The public sector steps in to help allocate resources E) Firms temporarily seek society’s goals rather than maximize profit.
Answer:
The correct answer is option D.
Explanation:
A market failure refers to the situaion where the market forces fail to efficiently allocate resources. It happens because of a number of reasons such as externalities, monopoly, asymmetrical information, tragedy of commons etc.
In case of market failure, the government has to intervene to efficiently allocate resources. The failure of price mechanism to produce goods efficiemtly results in government to intervene.
A landowner conveyed his land to his wife, son, and daughter "as joint tenants with right of survivorship." The daughter then conveyed her interest to a friend. The wife subsequently executed a will devising her interest to the daughter. Then the son mortgaged his interest to a lender, who promptly and properly recorded the mortgage. The wife died, then the daughter's friend died, leaving a will that bequeathed her entire estate to the daughter. The daughter and the son survived. If the jurisdiction follows the title theory, who owns what interest in the land?
Answer:
The daughter and the son, unless the son does not pay his debt, which result in the lender owning interest to the land.
In this case the land was owned by three tenants, and the actions of one tenant may affect only their interest on the land, not the interest of the other tenants. Therefore the brother is still owner of the land unless he doesn't pay and the lender takes possession of joint tenancy of the land with the sister (or daughter to the deceased parents).
When the daughter conveyed her interest to a friend she only severed her own interest in the land, not the other tenants'. Since the friend and the wife stated in their will that the daughter was to inherit their share in the land, when they died the daughter regained ownership of the land (at least 2/3 ownership of the land).
At the end, the daughter will own 2/3 of the land and the son (or lender if he doesn't pay) will own the other 1/3 of the land.
By diversifying, the risk of holding stock
a. can be reduced but not eliminated. On average over the past two centuries stocks paid a lower average real return than bonds.
b. can be eliminated. On average over the past two centuries stocks paid a higher average real return than bonds.
c. can be reduced but not eliminated. On average over the past two centuries stocks paid a higher average real return than bond econ
Answer: Option C
Explanation: In simple words, diversification refers to the process in which the holder of a portfolio purchases and includes different types of securities with no or negative correlation between them. By doing so, the risk of the portfolio can be reduced but cannot be eliminated as the systematic risk due to the market inefficiencies cannot be eliminated.
It is evident that over the past two years stocks paid higher returns than bond due to the fact that globalization has increased the market for the companies leading to hoover share which further results in higher return for stock holders in comparison to bond holders who have a fixed return.
The Hackman's home is valued at $650,000. Properties in their area are assessed at 60% of the value, and the local tax rate is $2.85 per one hundred dollars of assessed value. How much are the Hackman's MONTHLY taxes?
Answer:
$926.25
Explanation:
First, we obtain the assessed value:
$650,000 * 60% = $390,000
Now, we obtain the benchmark for determining the yearly tax. We divide the assessed value by one hundred because the local tax rate is $2.85 per one hundred dollars of assessed value. In other words, one hundred dollars is the benchmark:
$390,000 / 100 = $3,900
Now, to find the total tax paid in a year we simply multiply the local tax rate by the benchmark:
$2.85 x 3,900 = $11,115
Finally, we divided the yearly value by twelve to obtain the monthly value:
$11,115 / 12 = $926.25
Final answer:
The Hackman's' monthly property taxes are $926.25.
Explanation:
To calculate the Hackman's' monthly property taxes, first determine the assessed value of the home by multiplying the home's value by the assessment rate. Then, calculate the annual taxes by applying the local tax rate to the assessed value. Finally, divide the annual taxes by 12 to find the monthly taxes.
The assessed value is 60% of the home's value:
$650,000 x 0.60 = $390,000.
The annual tax is then calculated by the tax rate per hundred dollars of assessed value:
$390,000 / 100 = 3,900 (hundreds of dollars);
3,900 x $2.85 = $11,115 (annual taxes).
To find the monthly taxes, divide by 12:
$11,115 / 12 = $926.25.
Therefore, the Hackman's' monthly property taxes are $926.25.
Ceteris paribus, if the price of Pepsi increases, the equilibrium price of Coca-Cola will ________ and the equilibrium quantity of Coca-Cola will ________.
Answer:
Rise
Rise
Explanation:
Pepsi and Coca cola are considered substitutes. If the price of Pepsi increases, consumers would begin to consume more coca cola and the demand for coca cola would increase. This would lead to an excess of demand for coca cola over supply and prices would rise.
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Final answer:
Ceteris paribus, if the price of Pepsi increases the equilibrium price of Coca-Cola will increase, and the equilibrium quantity of Coca-Cola will increase as well.
Explanation:
Ceteris paribus, if the price of Pepsi increases, we can expect a substitution effect where consumers switch their preference to a similar but cheaper alternative like Coca-Cola. Assuming Pepsi and Coca-Cola are close substitutes, the equilibrium price of Coca-Cola will increase, and the equilibrium quantity of Coca-Cola will increase as well.
This is because the demand for Coca-Cola will rise as consumers look for a substitute for the more expensive Pepsi. The market for Coca-Cola adjusts to this higher demand by increasing the price and the quantity supplied to reach a new equilibrium.
Bernard's firm has set corporate direction to become one of the leaders in each of its significant market segments. It was Bernard's job to examine the firm's pricing strategy to determine how to maximize market share, even at the expense of profits in the short run. What kind of company objective would guide Bernard's effort?
Answer:
Sales-Oriented Pricing objective
Explanation:
Sales-oriented pricing objective focuses on increasing sales and gaining a greater market share.
This strategy prioritizes increasing sales over increasing profits, and it can be achieved by cutting costs and reducing prices to attract more customers.
Lifeworks is a nongovernment not-for-profit organization that recently received a large gift from a donor in the amount of $3,000,000 in cash. The donor wishes to leave a legacy and therefore specified that Lifeworks cannot spend the $3,000,000 but can invest the $3,000,000 and use any earnings from the investments to support the organization. In the first year, $100,000 was earned but has not yet been spent. How would the $3,000,000 gift and the $100,000 in earnings impact the net assets of Lifeworks?
Answer:
Explanation:
The net assets would increase. This is because the $100,000 earnings from investments are additional cash inflows hence an increase in current assets. For the $3,000,000 if invested, it will be considered an asset. It is a cash donation invested to generate earnings for the non-profit organization. Thus, these two instances add onto the net asset value of Lifeworks.
The voting paradox suggests that the "voting market," as represented by elections,
A) Leads to a superior outcome in representing consumer preferences compared to the private market for goods and services.
B) May often lead to an inefficient outcome in representing consumer preferences compared to the private market for goods and services.
C) Is no different from the private market for goods and services in terms of representing consumer preferences.
D) May not lead to an efficient outcome but certainly leads to a more equitable outcome in terms of distributing goods and services.
Answer:
B) May often lead to an inefficient outcome in representing consumer preferences compared to the private market for goods and services.
Explanation:
By definition the "Condorcet paradox (or th voting paradox) in social is a situation noted by the Marquis de Condorcet in the late 18th century, in which collective preferences can be cyclic, even if the preferences of individual voters are not cyclic". And that can be extrapolated to Business since the people tend to change their preferences in a cyclic process.
A) Leads to a superior outcome in representing consumer preferences compared to the private market for goods and services.
False the paradox is not about the comparison between consumer and private market.
B) May often lead to an inefficient outcome in representing consumer preferences compared to the private market for goods and services.
Correct duee to the cyclic change we will have an inefficient outcome in order to describe the consumer preferences in all the markets.
C) Is no different from the private market for goods and services in terms of representing consumer preferences.
That's FALSE the private market have own characteristics and typical patterns associated to the consumer preferences.
D) May not lead to an efficient outcome but certainly leads to a more equitable outcome in terms of distributing goods and services.
We can't ensure that we will have more equitable outcome since the the paradox not ansure this, but we can say that we will have an ineffcient outcome since the preferences will change.
The production budget is the first component of the operating budget. true or false
Answer:
false
Explanation:
The first component of an operational budget is the Income statement. The income statement shows all the earnings of the business.
Each bank must report its legal reserves as well as its deposit liabilities (depositors’ funds) to the __________________ in order to show compliance with the required reserves policy ..
Answer: Federal Reserve
Explanation: The Federal Reserve is USA's central banking system. The Federal Reserve is responsible for issuing money to banks in the US, and setting the policy on monetary affairs in America. In essence every bank operates under the Federal Reserve and because of this, must report their financial status, which includes their legal reserves and deposit liabilities to the Federal Reserve. This ensures that the banks comply with the reserves policy.
Answer:
The Federal Reserve
Explanation:
Also known as the Fed represents United State's Central Bank. Like every other Central Bank around the world, it is responsible for ensuring the stability, safety and flexibility of the United State's monetary system.
Basically, there are four functions of the Federal Reserve:
1. Monitoring national monetary policies to ensure the stability of the financial system
2. Supervision of banks and protection of the right of citizens
3. Ensuring the stability of the financial market by containing any risk that may occur
4. Providing specific monetary or financial services to the government of the United States.
The need for banks to report their legal reserves and depositors' funds to the Federal Reserve is apparently a part of the supervisioning responsibility of the Federal Reserve.
The impact of inflation places ______________ and risk in the savings and borrowing relationships.
a) guacamole (the possibility that you may end up with green spots on your shirt)
b) mayonnaise (the possibility that you may end up with white spots on your chin)
c) uncertainty (the possibility that benefits may be less than expected)
d) none of the above
Answer:
The correct answer is the option C: uncertainty (the possibility that benefits may be less than expected).
Explanation:
To begin with, the concept of inflation refers to the sustained increase in the general price level of goods and services produced inside an economy and therefore consequently a reduction in the purchasing power per unit of money.
Secondly, it is understandable that the inflation causes that the uncertainess and riskness both take places in the saving and borrowing relationships due to the fact that the price that products and services will have in the future are not determinated and will probably increase in an unexpected way and therefore causing that benefits may be less than expected as well too.
When Simple Semiconductors was operating at the minimum efficient scale of 10,000-12,000 units per month, the firm's cost per unit was $45. However, when the output level was increased beyond 12,000 units, the cost per unit increased to $47. This increase was attributed to the wear-and-tear of the machinery, and complexities of managing and coordinating. What is this phenomenon known as?A) Minimum efficient scaleB) Diseconomies of scaleC) Experience curve effectD) Learning-curve effect
Answer:
Option A
Explanation:
It is the lowest point on the cost curve where company produces at competitive price while producing at maximum output.
suppose american winemakers convince the federal government to issue a directive to serve only domestically produced wine at governement functions. This would be an example of.
a) principle agent problem
b) rent seeking behavior
c) moral hazard
d) logrolling
Answer:
B) rent seeking behavior
Explanation:
Rent seeking behavior refers to actions carried out by businesses that try to seek benefits through government policies. In other words, the businesses will try to make the government give them some type of special treatment or special benefit at the expense of the general population.
In this case, the American winemakers were able to convince government officials to only serve domestic wine at government events. The problem is that the general population (taxpayers) are the ones that pay for that wine. American winemakers will benefit at the expense of the taxpayers.
The city council of Lake Jefferson wants to establish a small botanical garden in the city park. The council decided to put aside funds in the amount of $22,000 to build and establish the botanical garden. At the end of the fiscal year, $3,000 of the funds had been spent. How should the remainder of the funds be reported?
Answer:
These are the options for the question:
A) Committed Fund Balance
B) Assigned Fund Balance
C) Restricted Fund Balance
D) Nonspendable Fund Balance
And the correct answer is:
B) Assigned Fund Balance
Explanation:
Assigned Fund Balance is the cateogry of the government fund that is intended to be used in something specific, as determined by the respective legislative or executive authority.
In this case, the city council has already assigned a total of $22,000 for the construction of the botanical garden, and after $3,000 have been spent, it needs to keep the remaining $19,000 in the Assigned Fund Balance category.
A primary reason that a firm would use average-cost pricing is that it
A primary reason that a firm would use average-cost pricing is that it helps in making decisions about production output and purchasing during short run period.
What is average cost?Average cost refers to the cost per unit of goods produced or manufactured in production, which comprises fixed costs, which are important for production, that does not change no matter the output.
Average cost represents the average amount of money spent to produce a product. However, average-cost pricing works well if the firm actually sells the quantity it used to calculate the average-cost price.
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In presidential elections, voters often find that they do not agree with any single candidate in all issues that matter to them this is known as
a. rent seekingbehaviorb. lack of accountabilityc. principal agent problemd. limited and bundled choice problem
In presidential elections, voters often find that they do not agree with any single candidate in all issues that matter to them this is known as limited and bundled choice problem.
Option d
Explanation:
In presidential elections, the voter has to select the candidate who is going to have the power of selecting the public services and goods that has to be financed by the tax money given by the voters.
The limited and bundled choice issue reduces the economic efficiency as a politician selects the programs with either positive or negative net benefits. The choices are bundled in that the limited set of candidates would govern over a multiple issues, and the preferences of the voters may not be perfectly aligned with any candidate.
Ace company's inventory was destroyed by fire. Their records show net sales of $90,000, beginning inventory of $20,000, net purchases of $75,000 and a gross profit rate of 30%. What is the estimated value of the ending inventory?
Answer:
$32,000
Explanation:
Gross profit = (sales - cost of sales)/sales
30% = ($90000-Cost of sale)/$90000
cost of sale = $63000
Closing inventory = (opening inventory + purchases) - cost of sale
closing inventory = (20000 + 75000) - 63000
"Securitization" is used to pool contractual debt together and resell this debt in the form of securities to investors. Which of the following debt can be "securitized"?
I. Residential Mortgages
II. Commercial Mortgages
III. Student Loans
IV. FHA Mortgages
Answer:
the correct answer is ALL OF THEM
Explanation:
Most forms of contractual debt can be securitized. This includes all of the choices listed here, as well as auto loans, personal loans, credit card debt, etc. CMOs are one of the most common "securitizations" that exist
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Securitization can apply to a range of debts, including residential and commercial mortgages, student loans, and FHA mortgages. It allows banks to sell loans as securities to investors, providing advantages like risk diversification and balance sheet improvements, although it can also lead to credit assessment issues.
Securitization is a financial technique that pools various types of contractual debts such as residential mortgages, commercial mortgages, student loans, and FHA mortgages and sells consolidated debt as securities to investors. The debt that can be securitized includes:
I. Residential Mortgages
II. Commercial Mortgages
III. Student Loans
IV. FHA Mortgages
This process has been made easier and more cost-effective due to technological improvements, especially the use of computers. These securitized loans offer diversification against default risk and are attractive to institutional investors seeking large, round sums. Through securitization, banks can specialize in originating loans and improve their balance sheets by selling off loans, which in turn enables them to fund new loans. Investors are drawn to these securities for their assumed steady stream of income. However, the reliance on credit rating agencies during the rise of mortgage-backed securities sometimes led to overly lenient credit assessments, presenting significant risk exposure.
Every licensed broker must keep and maintain a file of agency disclosures, listings, offers, closing statements and other transaction-related documents for a period of _________ years.
Answer:
3 years
Explanation:
Based on the information provided within the question it can be said that the licensed brokers must keep and maintain all of this information for a period of 3 years. This is in case that the information is needed in the future for any kind of reason such as an audit. The auditor can ask for the information and the broker must present it or risk prosecution.
A recession tends to cause the federal budget deficit to ________ because tax revenues ________ and government spending on transfer payments ________. increase; rise; falls decrease; fall; rises increase; fall; rises decrease; rise; falls'
Answer:
increase; fall; rises
Explanation:
A recession is when there's a contraction in economic activities. It is when the GDP of a country is negative for two consecutive quarters.
When there's a recession, the government undertakes expansionary fiscal policy to stimulate the economy. Therefore, the government would increase its spending or reduce amount of tax paid. Therefore , government spending rises.
Also, during a recession, tax revenues falls because income of individuals, firms fall and therefore revenue from tax would fall.
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The amount of capital equipment used up or destroyed is called the ____________..
Answer:
Consumption of fixed capital (CFC)
Explanation:
Consumption of fixed capital (CFC) is a phrase used for the depreciation of fixed assets ,or write-offs, in business accounts, tax assessments and national accounts.
CFC is used in addition to depreciation to demonstrate how fixed capital is used up as a result of creating new revenue.
CFC can also include certain expenses incurred in the use or construction of fixed assets beyond real depreciation costs.
The term normally applies only to manufacturing companies, but it sometimes also applies to real estate assets.
Texarkana Company exchanged equipment that cost $85,000 and has accumulated depreciation of $29,800 and a fair value of $60,000. It receives in exchange an equipment with a fair value of $48,000 and received $12,000 cash. The exchange lacks commercial substance. The gain to be recognized from the exchange is __________.
Final answer:
The gain to be recognized from the exchange of equipment lacking commercial substance is $960. This is calculated by determining the book value of the old equipment, the total gain on disposal, and then recognizing the proportion of cash received as part of the gain.
Explanation:
The question relates to the accounting treatment of non-monetary exchanges, specifically when an exchange lacks commercial substance. To calculate the gain to be recognized on the exchange of equipment, we first need to determine the book value of the old equipment and then the gain on disposal.
The book value of the old equipment is the original cost minus the accumulated depreciation. In this case, the book value is $85,000 cost - $29,800 accumulated depreciation = $55,200 book value.
The next step is to calculate the total gain on disposal, which is the difference between the fair value and the book value of the old equipment. This gives us a total gain of $60,000 fair value - $55,200 book value = $4,800.
However, because the exchange lacks commercial substance and cash is received, the gain to be recognized is the proportion of cash to total consideration received. We calculate this as $12,000 cash received / ($48,000 fair value of new equipment + $12,000 cash) total consideration = 20%.
The gain that is recognized is then 20% of the total gain, which is 0.20 × $4,800 = $960.