Chapter 9 Practice Problems S9-2. Asset Market Value Percentage of Total Value × Total Purchase Price = Assigned Cost of Each Asset Land $ 80‚000 $80‚000 / $160‚000 = 50% × $150‚000 = $ 75‚000 Building 60‚000 $60‚000 / $160‚000 = 38% × $150‚000 = 57‚000 Equipment 20‚000 $20‚000 / $160‚000 = 12% × $150‚000 = 18‚000 Total $ 160‚000 100% $ 150‚000 Date Accounts and Explanation Debit Credit Land 75‚000 Building 57‚000 Equipment 18‚000 Notes Payable 150‚000 To record
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“wholly and exclusively for the purpose of the business” – what kind of expenditure does it exclude? What do you understand by the terms “remoteness” and “duality of purpose”? The phrase” wholly and exclusively for the purpose of business” would means the taxpayer or company sole purpose for incurring the business expenditure is only for their trade or business. Any purposes that not related to trade or that if the business expenditure would consist of two or more business purposes would not qualify
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(“Corporation”‚ n.d.) Overhead -- “business expenses (as rent‚ insurance‚ or heating) not chargeable to a particular part of the work or product”. (“Overhead”‚ n.d.) Capitalism – “an economic system characterized by private or corporate ownership of capital
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Contributor Calculating the amount of financing required is one of the greatest challenges that corporate managers face. Capital markets are extremely complex‚ and it can be difficult to determine how much‚ if any‚ external financing to raise. The amount of external financing your company needs will depend upon the operating budget for your business as well as the company’s current capital resources. Determining how much external financing to raise will be much easier if you develop a solid operating budget
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From the Desk of: Imran Omer Case Study: WorldCom From its beginnings as a long distance call player to handler of Internet data traffic‚ WorldCom was a spectacular firework in the sky before it crashed out as one of the biggest bankruptcies America has witnessed in its corporate history. WorldCom carried more international voice traffic than any other company. It carried a large amount of the world‟s Internet traffic. WorldCom owned and operated a global IP (Internet Protocol) backbone that
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already a possibility without additional outputs. The reality of the situation is that the business should be seeking to increase efficiencies‚ resulting in higher output and ultimately a better value proposition to its customers and a higher return on capital. Transport Division: The transport division has suggested that the cost of the rail carts should be included in the cost of the project‚ as the additional output from the upgrade will need to be accommodated by the transport division. Although the
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insights needed to make sound financial decisions. The main purpose of accounting is to identify and record all activities of the income and the outcome that will affect the organisation financially. All activities‚ including purchases‚ sales‚ the capital and interest earned from investments are recorded in ledgers or journals. Entrepreneurs have to understand and complete a variety of business functions. An important business function when starting a business is accounting. Although many entrepreneurs
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their communication networks‚ was classified as capital expenditures rather than current expenses (Lyke and Jickling‚ 2). Since expenses were understated and capitalized expenses were treated as an asset‚ WorldCom was able to increase both its net income and asset and cover up the fact that the company had actually been experiencing net losses. This maneuver also allow WorldCom to spread out its line costs over future years‚ as capitalized expenditures are depreciated over their lifetime (Lyke and
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Situational Analysis and Problem Definition: The Shouldice Hospital in Ontario‚ Canada is a pioneer in the field of treating patients suffering from external abdominal hernias. With its current capacity‚ it can treat up to 6850 patients annually. The patients are treated using the Shouldice Method‚ and on an average each patient has to spend about four days in the hospital recuperating. The USP of the Shouldice Hospital is it’s distinct surgical procedure. The speedy ambulation coupled with it’s
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overdue capital improvement‚ or reducing the dividend payment to National. Being a ready-mix concrete company‚ Alliance’s obligation is to have their product deliver to the customers on time. However‚ the main issue of Alliance Concrete is the negligent to upgrade their old equipment which cost the company $2.6 million and two-week shutdown. Thus‚ Alliance needs to focus on improving operating efficiencies by investing in capital improvement. Capital Improvement Spend $2 million on expenditures before
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