When calculating the weighted average cost of capital (WACC), the weights used are typically based on market values. The market values represent the market capitalization or the total market value of a company's equity and debt.
The weights are used to determine the proportion of each component (equity and debt) in the overall capital structure of the company. By using market values, the WACC calculation takes into account the current market prices and valuations, providing a more accurate reflection of the capital structure and the cost of capital for the company.
Using book values or market betas would not accurately capture the current market conditions and may lead to inaccurate WACC calculations.
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Orin is a corporate officer for Pacific Trade Inc. In this capacity, Orin Group of answer choices makes and announces financial decisions. authorizes major corporate policy decisions. manages corporate day-to-day operations. makes executive personnel decisions.
Orin manages corporate day-to-day operations.
A corporation's day-to-day activities are managed by corporate executives. Hence Orin supervises the day-to-day activities of Pacific Trade, Inc in his position as a corporate officer. Directors are responsible for making and announcing financial choices, authorizing important company policy decisions, and appointing executive employees. As a result, further possibilities are beyond Orin's capabilities.
Corporate or business titles are given to company and organization executives to indicate their roles and responsibilities inside the organization. For-profit corporations, both publicly and privately held, use such designations.
Therefore, the correct option is manages corporate day-to-day operations.
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LGIPs offered by municipal broker-dealers are: A investment vehicles available to the general public that permit tax-deferred saving for higher education B investment vehicles available to the general public that permit tax-deferred saving for education below the college level C investment vehicles available to local government entities that permit investment of excess funds D investment vehicles available to local government entities that permit borrowing of funds as needed Review
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1. Give a brief description of the Business and Industry Endorsement.
Answer:
siness and Industry Endorsement.
;,;l,
Explanation:
What criteria cannot be used to create a custom segment?.
Answer:
The segment builder lets you create the component filters of a segment based on Analytics dimensions and metrics.You choose a dimension or metric a comparative operator and you enter a value to set the condition for the filter.
Explanation:
hope this helps if not please let me now
Cover pages should include
a. The name of your class
b. The date you turn in the paper
c. Your teacher's name
d. All of these
Please select the best answer from the choices provided
O A
B
Ос
Answer:
the answer is D
Explanation:
Wilson manufacturing relies on an extensive __________ system, where its employees share information between departments. for example, departments such as human resources can share payroll information with employees. persons outside the firm do not have access to this network.
Answer:
Wilson manufacturing relies on an extensive Intranet system, where its employees share information between departments. for example, departments such as human resources can share payroll information with employees. persons outside the firm do not have access to this network.
A 6.60 percent coupon bond with 15 years left to maturity is priced to offer a yield to maturity of 7.4 percent. You believe that in one year, the yield to maturity will be 6.9 percent. What is the change in price the bond will experience in dollars?
Answer:
The price will increase by $44.67
Explanation:
Price of the bond now
Use following formula to calculate the price of the bond
Price of the Bond = C x [ ( 1 - ( 1 + r )^-n ) / r ] + [ F / ( 1 + r )^n ]
Where
F = Face value of the bond = $1,000
C = Coupon payment= $1,000 x 6.60% = $66
n = Number of periods = 15 years
Market Rate = 7.4% annually
( Assumptions:
Face value of the bond is $1,000
Coupon payments ares made annually )
Placing values in the formula
Price of the Bond = $66 x [ ( 1 - ( 1 + 7.4% )^-15 ) / 7.4% ] + [ $1,000 / ( 1 + 7.4% )^15 ]
Price of the Bond = $928.94
Now calculate the price after one year
Where
F = Face value of the bond = $1,000
C = Coupon payment= $1,000 x 6.60% = $66
n = Number of periods = 15 years - 1 = 14 years
Market Rate = 6.9% annually
( Assumptions:
Face value of the bond is $1,000
Coupon payments ares made annually )
Placing values in the formula
Price of the Bond = $66 x [ ( 1 - ( 1 + 6.9% )^-14 ) / 6.9% ] + [ $1,000 / ( 1 + 6.9% )^14 ]
Price of the Bond = $973.61
Change in price = $973.61 - $928.94 = $44.67
Sarah has decided that she never wants to go into debt. Therefore, she only uses her
debit card and cash for purchases. The store where she is planning to purchase a dining
room set charges a 15% annual interest rate for all store credit card purchases. If Sarah
saves up the cash and uses her debit card to purchase her new $1,200 dining room set,
how much will she have to pay in interest?
The amount that Sarah will have to pay as interest will be $180
Based on the information given, the following can be depicted:
Cost of dining room set = Principal = $1200
Interest rate = 15%
Time = 1 year
The simple interest will be calculated using the formula:
= PRT/100
= (1200 × 15 × 1) / 100
= 18000/100
= 180
Therefore, based on the calculations above, the interest that'll be paid by Sarah is $180.
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WACC for a company: Contemporary Products Ltd currently has $200
million of market value
debt outstanding. The 9 percent
coupon bonds (semiannual pay) have a maturity of 15 years, a face
value of $100
The company's weighted average cost of capital (WACC) is approximately 11.32%.
How did we get the value?To calculate the weighted average cost of capital (WACC), consider the different sources of capital for the company and their respective weights. In this case, the sources of capital are market value debt, preference shares, and ordinary shares.
Step 1: Calculate the weights of each source of capital.
Total market value debt = $200 million
Total market value of preference shares = 2 million shares * $20 per share = $40 million
Total market value of ordinary shares = 14 million shares * $20 per share = $280 million
Total market value of all sources of capital = $200 million + $40 million + $280 million = $520 million
Weight of debt = Market value of debt / Total market value of all sources of capital
Weight of debt = $200 million / $520 million = 0.3846 (approximately 38.46%)
Weight of preference shares = Market value of preference shares / Total market value of all sources of capital
Weight of preference shares = $40 million / $520 million = 0.0769 (approximately 7.69%)
Weight of ordinary shares = Market value of ordinary shares / Total market value of all sources of capital
Weight of ordinary shares = $280 million / $520 million = 0.5385 (approximately 53.85%)
Step 2: Calculate the cost of each source of capital.
Cost of debt:
Coupon rate = 9% (semiannual pay)
Bond price = $1,024.87
Face value = $1,000
Number of periods = 15 years * 2 (since semiannual payments) = 30 periods
We can use the following formula to calculate the cost of debt:
Cost of debt = Coupon payment / Bond price + (Face value - Bond price) / Number of periods / (Face value + Bond price) / 2
Coupon payment = Coupon rate × Face value / 2
Coupon payment = 9% × $1,000 / 2 = $45
Cost of debt = $45 / $1,024.87 + ($1,000 - $1,024.87) / 30 / ($1,000 + $1,024.87) / 2 ≈ 0.0438 (approximately 4.38%)
Cost of preference shares:
Dividend per preference share = $1.20
Market price per preference share = $20
Cost of preference shares = Dividend / Market price
Cost of preference shares = $1.20 / $20 ≈ 0.06 (approximately 6%)
Cost of ordinary shares:
Dividend in the next year = $2.20
Expected dividend growth rate = 7%
We can use the Gordon growth model to calculate the cost of ordinary shares:
Cost of ordinary shares = (Dividend / Share price) + Dividend growth rate
Cost of ordinary shares = ($2.20 / $20) + 7% ≈ 0.17 (approximately 17%)
Step 3: Calculate the weighted average cost of capital (WACC).
WACC = (Weight of debt × Cost of debt) + (Weight of preference shares × Cost of preference shares) + (Weight of ordinary shares × Cost of ordinary shares)
WACC = (0.3846 × 0.0438) + (0.0769 × 0.06) + (0.5385 × 0.17)
WACC ≈ 0.0169 + 0.0046 + 0.0917
WACC ≈ 0.1132 (approximately 11.32%)
Therefore, the company's weighted average cost of capital (WACC) is approximately 11.32%.
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The complete question goes thus:
WACC for a company: Contemporary Products Ltd currently has $200 million of market value debt outstanding. The 9 per cent coupon bonds (semiannual pay) have a maturity of 15 years, a face value of $1000 and are currently priced at $1,024.87 per bond. The company also has an issue of 2 million preference shares outstanding with a market price of $20. The preference shares offer an annual dividend of $1.20. Contemporary Products also has 14 million ordinary shares outstanding with a price of $20.00 per share. The company is expected to pay a $2.20 ordinary dividend 1 year from today, and that dividend is expected to increase by 7 per cent per year forever. If the corporate tax rate is 40 per cent, then what is the company’s weighted average cost of capital?
1. Workplaces that grow plants, such as farms, nurseries, greenhouses,
gardens, and parks are part of
Plant Systems
Animal Systems
Food Products & Processing Systems
Environmental Service Systems
Answer:
Plant Systems
Explanation:
The plant system entails the science of how plants grow. It is the study of the different types of plants and how they impact our world. Gardens, farms, nurseries, greenhouses, and parks also form part of the plant's system.
Plant Systems specialists help feed the nation by monitoring our plant food quality and safety. They provide information that aids consumers in making sensible nutritional decisions.
Crystal, age 45, furnishes more than 50% of the support of her married son, Andy (age 18), and his wife, Paige (age 19) who live with her. During the year, Andy earned $8,400 from a part-time job. All parties live in Iowa (a common law state). (Assume the joint return test rule does not apply.)
In this situation, Crystal would be able to claim Andy and Paige as her dependents on her tax return, as she provides over 50% of their support and they live with her. However, Andy's income from his part-time job, $8,400, would not be included in Crystal's income for tax purposes, as he is not her dependent.
What is tax return?A tax return is a document that individuals, businesses, and organizations file with a government tax agency (such as the IRS in the US) to report their income and taxes paid for a specific tax year. The tax return typically includes information on the filer's income, deductions, credits, and other tax-related information.
Individuals typically file their tax return annually, usually by April 15th of each year. The tax return can be filed on paper or electronically using tax preparation software.
On a personal tax return, an individual reports their income from all sources, such as wages, salaries, tips, and investment income, and claims deductions and credits to lower their taxable income. Deductions are expenses that can be subtracted from one's income to lower the amount of taxes owed. Tax credits are dollar-for-dollar reductions of the taxes owed.
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Shepherds company. Manufactures two types of shoes sneakers and boots .Each sneakers requires 2 direct labor hours and boots require 1.5 direct labor hours.The overhead rate. Per direct hour is $2 .Direct materials for sneakers and boots is $15-$20 .Respectivelay.The total unit cost for each product.
The question is incomplete. The complete question is :
Shepherd Company manufactures two types of shoes - sneakers and boots. Each sneaker requires 2 direct labor hours and boots require 1.5 direct labor hours. The overhead rate per direct labor hour is $2. Direct materials for sneakers and boots is $15 and $20, respectively. Direct labor for sneakers and boots is $5 and $7, respectively. The total unit cost for each product is:
Solution :
The total unit cost for a product = direct materials cost + direct labor cost + overhead cost
The total unit cost for the sneakers and the boots are :
Particulars Sneakers Boots
Direct material cost $15 $20
Direct labor cost $5 $7
Overhead cost $4 $3
Total unit cost $24 $30
The overhead rate per direct labor hour is $2
So, the overhead cost per unit of :
Sneakers : 2 hours at the rate $2 per hour = $4
Boots : 1.5 hours at the rate of $2 per hour = $3
Hence the answer is : total unit cost = Sneakers: $24; Boots: $30
The phrase the customer is always right is most often associated with what term?
The phrase the customer is always right is most often associated with c) consumer sovereignty.
Many brands treated clients as if they lacked brain cells in the 1950s and 1960s, employing loud and abrasive voices and plainly inflated print. Ogilvy wanted to emphasize the importance of connecting with clients and treating them intelligently.
His beliefs mirrored a prevalent notion in the early 1900s: "The customer is always right."
This viewpoint was novel and significant at the time. Consider a world in which the consumer truly had some power. Today, thanks to social media, we live in a world where the customer may not always be correct in your opinion, but they are armed with social media and can use it against you.
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Correct question:
he phrase "the customer is always right" is most often associated with what term?
a) entrepreneurship
b) mixed economy
c) consumer sovereignty
d) regulatory government
How is the operations management function related to activities in human resources, information systems, and accounting?
links the operations management function with the financial, information systems, and human resources divisions.
Operations management (OM) and human resources management (HRM) have traditionally been very different fields. The main areas of communication between operations managers and human resource managers are, in fact, administrative issues with payroll and other challenges. In academia, several research communities on the two subjects, mostly from various disciplinary backgrounds, disseminate their findings in various collections of papers. However, operations and human resources are inextricably linked at a fundamental level. Human resource operations including pay, training, staffing, and communications frequently have an explanation or a way to restrict their effects. Variations or abnormalities would normally be interpreted by conventional procedures as randomness or error variance;
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reminding people of what they already know best describes which of the 4e frameworks
Reminding people of what they already know best describes educate of the 4E frameworks. Option B is the correct answer.
When you interact with your consumers, you develop their devotion to your business and your customer relationships while also teaching them. You can do a lot with just one tweet or post! Responding to questions is the simplest method to do this. It is one of the best methods to humanize your business in the eyes of customers, while being obvious. Option B is the correct answer.
On social media, ignoring any consumer may have severe effects. If a consumer is being unpleasant, you should be eager to teach them rather than ignore them or give them an automatic reply. Give your customers a direct line to customer service, offer discounts on services, or switch a customer from a service that isn't working to one that is—all of these things offer opportunities for customer engagement that educate both them and the rest of your fans and followers.
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The complete question is, "Reminding people of what they already know best describes which of the 4e frameworks
A. Engage
B. Educate
C. Experience
D. Excite"
The term reminding people of what they already know best describes the Educate framework of the 4E framework.
The 4E framework is a digital marketing framework created to define and enhance online marketing strategies. It includes four crucial steps, namely Entertain, Educate, Engage, and Excite. This framework offers a simple and straightforward way for businesses to enhance their online marketing strategies and increase their online visibility. Entertain Framework: This framework aims to generate curiosity among consumers. It helps to catch their attention with the help of engaging and compelling content. Through this framework, businesses aim to increase their visibility and website traffic.
Educate Framework: The educate framework is designed to educate consumers. It involves sharing relevant information that is useful for customers. It focuses on reminding people of what they already know. In this framework, marketers should aim to establish themselves as thought leaders.
Engage Framework: This framework aims to engage customers and establish a connection with them. It helps to create a relationship with the customers, which can help to create a loyal customer base. Marketers use various channels, including social media and email, to engage with their customers.
Excite Framework: The excite framework aims to excite customers about a product or service. It helps to create a sense of urgency among consumers, which can motivate them to make a purchase. This framework involves creating limited-time offers and promotions that can encourage customers to take action.
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Should the managerial discretion that CEO and top management
exercise in making decisions be monitored
Yes, the managerial discretion that CEO and top management exercise in making decisions should be monitored.
The decisions taken by the CEO and top management of an organization have a significant impact on the operations, employees, shareholders, and other stakeholders of the organization. The CEO and top management make strategic decisions, which have far-reaching consequences for the organization. Therefore, it is important to monitor their discretion in decision-making. A lack of oversight can lead to poor decision-making and even unethical behavior.
By monitoring managerial discretion, organizations can ensure that the decisions made by the CEO and top management are in the best interests of the organization and its stakeholders. Moreover, monitoring the managerial discretion of the CEO and top management can also promote transparency and accountability in the decision-making process.
It can help prevent conflicts of interest and ensure that the decisions made by the CEO and top management are fair and equitable.
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Question 26 Listen A manufacturer is considering a switch from manufacturers' representatives to an internal sales force. The following cost estimates are available. Manufacturers' reps are paid 7.9% commission and incur $645,000 in fixed costs, while an internal sales force has fixed costs projected at $2,080,000 and would receive 3.0% commission. At what sales volume would the manufacturer be indifferent between the two alternatives? Report your answer in dollars. Your Answer: Answer Question 27 4) Listen ► A manufacturer is considering a switch from manufacturers' representatives to an internal sales force. The following cost estimates are available. Manufacturers' reps are paid 8.8% commission and incur $600,000 in fixed costs, while an internal sales force has fixed costs projected at $1,750,000 and would receive 3.3 % commission. Assume that sales revenue is double the breakeven volume or the point at which the manufacturer would be indifference between reps and an internal sales force. At this volume, how much would the manufacturer save, assuming the company had switched to an internal sales force? Report your answer in dollars. Your Answer:
The manufacturer would be indifferent between manufacturers' representatives and an internal sales force at a sales volume of approximately $29,285,714.29. The savings achieved by switching to an internal sales force at double the breakeven volume can be calculated using the provided cost estimates.
To determine the sales volume at which the manufacturer would be indifferent between manufacturers' representatives and an internal sales force, we need to equate the costs of both options.
For the manufacturers' representatives:
Total cost = Commission + Fixed costs
Total cost = 7.9% of sales + $645,000
For the internal sales force:
Total cost = Commission + Fixed costs
Total cost = 3.0% of sales + $2,080,000
To find the sales volume, we set the total costs of both options equal to each other:
7.9% of sales + $645,000 = 3.0% of sales + $2,080,000
Subtracting 3.0% of sales from both sides gives:
4.9% of sales + $645,000 = $2,080,000
Subtracting $645,000 from both sides gives:
4.9% of sales = $2,080,000 - $645,000
4.9% of sales = $1,435,000
Dividing both sides by 4.9% gives:
sales = $1,435,000 / 4.9%
sales ≈ $29,285,714.29
Therefore, the manufacturer would be indifferent between manufacturers' representatives and an internal sales force at a sales volume of approximately $29,285,714.29.
For the second question, we need to find the savings achieved by switching to an internal sales force at double the breakeven volume.
Assuming the breakeven volume is the sales volume at which the manufacturer would be indifferent, which is $29,285,714.29, we can calculate the savings.
Savings = Total cost with manufacturers' reps - Total cost with internal sales force
Savings = (8.8% of sales + $600,000) - (3.3% of sales + $1,750,000)
At the breakeven volume, the sales would be $29,285,714.29:
Savings = (8.8% of $29,285,714.29 + $600,000) - (3.3% of $29,285,714.29 + $1,750,000)
Calculating this equation will give the amount saved by switching to an internal sales force.
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What sports have been founded by an entrepreneur?
An individual who plans, manages, and takes on the risk of a sport-related business enterprise is known as a sports entrepreneur. There are numerous instances of professional players succeeding in business after leaving sports.
The most well-known professional sport players who successfully transitioned from athletics to entrepreneurship include Payton Manning, David Beckham, John Elway, Magic Johnson, and Venus Williams, to name just a few. Many of you are familiar with his court movements. It is less typical to be aware of his entrepreneur side. However, how many companies does Shaq actually own? Even though the solution is not obvious, it is still amazing.
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a decrease in government spending and the enactment of an investment tax credit would definitely cause question 6 options: a) the quantity of loanable funds traded to decrease. b) the interest rate to decrease. c) the quantity of loanable funds traded to increase. d) the interest rate to increase.
When the government decreases its spending and enacts an investment tax credit, it can have an impact on the loanable funds market.
The loanable funds market represents the supply and demand of funds available for borrowing and lending.
1. Quantity of loanable funds traded: Both actions, decreasing government spending and enacting an investment tax credit, can increase the quantity of loanable funds traded.
- Decreasing government spending: When the government spends less, it reduces its borrowing needs. This reduces the demand for loanable funds by the government sector, freeing up funds to be borrowed and invested by the private sector. As a result, the quantity of loanable funds available for private investment increases.
- Enacting an investment tax credit: An investment tax credit encourages private investment by providing a tax incentive. This increases the demand for loanable funds by the private sector as businesses seek to take advantage of the credit to finance their investment projects. Consequently, the quantity of loanable funds demanded increases.
Overall, the combined effect of these actions is an increase in the quantity of loanable funds traded in the market.
2. Interest rate: The impact on the interest rate is not as definitive and can depend on other factors.
- Decreasing government spending: When the government reduces its borrowing, it decreases the demand for loanable funds, which could put downward pressure on interest rates. However, if the decrease in government spending leads to expectations of lower economic growth or reduced investment, it could also reduce the supply of loanable funds and put upward pressure on interest rates.
- Enacting an investment tax credit: The investment tax credit encourages investment, which increases the demand for loanable funds. Depending on the magnitude of the increase in demand, it could put upward pressure on interest rates. However, if the increased investment leads to higher economic growth and increased saving, it could also increase the supply of loanable funds and put downward pressure on interest rates.
Therefore, while a decrease in government spending and the enactment of an investment tax credit generally lead to an increase in the quantity of loanable funds traded, the impact on interest rates is less certain and depends on various factors in the economy.
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Products produced in a competitive market are
differentiated
unique
standardized and differentiated
standardized
Answer:
Standardized
Explanation:
Firms that are purely competitive provide a standardised (same or homogenous) product. Consumers will be unconcerned about whose vendor they acquire the goods from as long as the pricing is the same.
Monopolistically competitive companies make a typical profit in the long run since entrance into the market is easy. The sort of goods supplied distinguishes oligopoly from perfect competition.
harmful substances which contaminate water are collectively called
Answer:
Ground Water Contamination
Explanation:
I'll be honest I'm not 100% sure.
Unit contribution margin divided by the constrained resource per unit is the formula for computing:
a. The optimal number of units that should be manufactured.
b. Degree of operating leverage.
c. Contribution margin per unit of constrained resource.
d. Sales mix
Unit contribution margin divided by the constrained resource per unit, which is used for computing the contribution margin per unit of constrained resource. The correct option is c.
The formula "Unit contribution margin divided by the constrained resource per unit" is used to calculate the contribution margin per unit of the constrained resource. The constrained resource is the resource that limits the production of a product or service, such as a machine, labor, or raw material.
By calculating the contribution margin per unit of the constrained resource, a business can determine which products or services generate the highest profit contribution for each unit of the constrained resource used. This information can be used to make decisions about how to allocate the constrained resource among different products or services, to maximize profitability.
The optimal number of units that should be manufactured would require additional information beyond the formula given. The degree of operating leverage is calculated by dividing the contribution margin by the operating income, and the formula given does not include any information about operating income. Sales mix refers to the relative proportion of different products or services sold and is not related to the formula provided.
The correct option is c.
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When labor productivity increases over time, generally A) it is due to increases in the number of workers B) So do average wages C) It results in higher For prices for goods and services .
Answer:
The answer is B.
Explanation:
Labour productivity is given as output per unit of labour input.
When output increases in an industry, ceteris paribus, the industry may have to lower prices in order to sell that increase. When output increases(labor productivity increases), workers will demand for higher wages. This is so because the efficiency of the workers has improved and there is need for compensation.
An application, a course guidebook, and a counselor’s phone number are all a. Expert resources c. Material resources b. Support resources d. Leader resources Please select the best answer from the choices provided A B C D
Answer:
c.Material Resources
Explanation:
Answer:
c
Explanation:
Robin, who is self-employed, contributes $6000 a year into a keogh account. How much will they have in the account after 10 years if the account earns interest at the rate of 6. 75% per year compounded annually?.
After 10 years of contributing $6000 per year with an interest rate of 6.75% compounded annually, Robin will have approximately $10,319.92 in their Keogh account.
To calculate the amount in Robin's Keogh account after 10 years with an interest rate of 6.75% per year compounded annually, we can use the formula for compound interest:
1. Calculate the annual interest rate in decimal form: 6.75% = 0.0675.
2. Determine the total number of periods: 10 years.
3. Calculate the future value using the formula:
FV = PV * (1 + r)^n
Where:
FV = Future Value (final amount in the account)
PV = Present Value (initial contribution)
r = Interest rate per period
n = Number of periods
4. Substituting the given values into the formula:
FV = $6000 * (1 + 0.0675)^10
5. Calculate the result:
FV ≈ $10,319.92
Therefore, after 10 years, Robin would have approximately $10,319.92 in the Keogh account if the interest rate is 6.75% per year compounded annually.
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The four "Ps" has been used the longest in industry.
O True
O False
Answer:
True
Explanation:
explain how a school's published price (also known as
sticker price) and net price differs.
Answer:
Sticker price is the published tuition and fees whereas net price is what the student pays after financial aid (much lower than sticker price).
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common misconception about entrepreneurship
Answer:
1. Entrepreneurs can only be successful if they have large funding backing them.
2. Entrepreneurs have cushy hours.
3. Entrepreneurs have to do everything themselves.
5. Entrepreneurs have to take huge risks.
7. Entrepreneurs are never stressed out.
8. Entrepreneurs are all wealthy.
9. Entrepreneurs are their own boss.
10. Entrepreneurs have more personal time.
Why would the stock exchange insitst that all listed compaines abide by a strict code of rules and procedures
In order to maintain the integrity of the stock market and protect investors, stock exchanges typically require all listed companies to abide by a strict code of rules and procedures.
The stock exchange is a marketplace where publicly traded companies can raise capital by selling shares of their stock to investors. One key reason for this is to ensure transparency and accountability.
Companies that are listed on a stock exchange are required to disclose certain financial information and adhere to strict accounting standards, which helps to provide investors with a clear picture of the company's financial health and performance.
Another reason for these rules and procedures is to prevent insider trading and other forms of market manipulation. By requiring all listed companies to follow the same set of rules and procedures, the stock exchange can help to ensure a level playing field for all investors.
Finally, these rules and procedures help to maintain investor confidence in the stock market. By ensuring that all listed companies are held to the same high standards, the stock exchange can help to prevent fraudulent activity and other forms of misconduct that could undermine investor confidence and lead to a loss of trust in the market.
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The entity’s manufacturing division, whose assets constituted 75% of its total assets at September 30, Year 5 (end of year), was sold on November 1, Year 5. The new owner assumed the bonded indebtedness associated with this property. How should this event be presented in the financial statements?
The event should be presented in the financial statements as follows:
1. The assets side of the balance sheet will be reduced by 75%, with its accompanying accumulated depreciation.
2. The bonded liability on the balance sheet is eliminated by the relevant amount.
3. The journal entry should debit the Bonded Liability and accumulated depreciation, while the assets worth 75% are credited.
4. If the bonded indebtedness is more than 75% of the assets, the company records a profit on disposal on the income statement. Otherwise, it records a loss. If they are equal, there is no profit or loss.
Thus, the difference between the debit and credit entries constitutes either profit or loss on disposal.
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