BUSINESS COLLEGE

Machinery purchased for $66,000 by Metlock Co. in 2016 was originally estimated to have a life of 8 years with a salvage value of $4,400 at the end of that time. Depreciation has been entered for 5 years on this basis. In 2021, it is determined that the total estimated life should be 10 years with a salvage value of $4,950 at the end of that time. Assume straight-line depreciation.Required:
a. Prepare the entry to correct the prior year's depreciation, if necessary.
b. Prepare the entry to record depreciation for 2021.

Answers

Answer 1
Answer:

Answer:

a. Prepare the entry to correct the prior year's depreciation, if necessary.

  • When an asset's useful life is extended, the extension is done prospectively, not retrospectively. This means that past depreciation does not need to be adjusted.

b. Prepare the entry to record depreciation for 2021.

  • Dr Depreciation expense 4,510
  •     Cr Accumulated depreciation - machinery 4,510

Explanation:

purchase cost of machinery $66,000

estimated useful life 8 years

estimated salvage value $4,400

depreciation has been recorded using the previous basis during the first 5 years, but now the estimated useful life was extended to 10 years and the salvage value = $4,950

depreciation expense per year (during first 5 years) = ($66,000 - $4,400) / 8 = $7,700 per year

accumulated depreciation up to year 5 = $7,700 x 5 = $38,500

the carrying value of the asset on January 1, 2021 = $66,000 - $38,500 = $27,500

the new depreciation expense per year = ($27,500 - $4,950) / 5 = $4,510

depreciation expense for 2021:

Dr Depreciation expense 4,510

    Cr Accumulated depreciation - machinery 4,510

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Malaya Ramirez is organizing marketing research in Central American countries for a large American corporation that is interested in expanding its market. The survey Malaya is using was written in English and then translated into Spanish for use by Spanish-speaking respondents. Which of the following is it most important for Malaya do before administering this questionnaire to a sample of the market?A) make sure that the survey includes both open-ended and closed-ended questions
B) decide whether to focus on primary or secondary data
C) determine which type of research instrument to use
D) have the questionnaire translated back into English to check for accuracy
E) determine whether to focus on descriptive or causal objectives

Answers

The questionnaire was translated back into English to check for accuracy. Thus option D is correct.

What is the marketing research ?

Marketing research is the systematic gathering, recording, and analysis of the information that is qualitative and quantitative related to the marketing of products and services. It is the marketing of the business activities.

The research includes the B2B and B2C. The main objective is to provide relevant and accurate reliable information. The research relies on surveys and questionnaires as tools of gathering information.

Find out more information about the Malaya Ramirez.

brainly.com/question/2889076.

Answer:

The correct answer is letter "D": have the questionnaire translated back into English to check for accuracy.

Explanation:

Translating is the activity by which the message given in a language is provided written in a different language. However, all languages are not the same and during the translation, meaning can be lost. Besides, specific terminology could make the translation difficult for the translator.

Thus, for accuracy purposes Malaya Ramirez should have the English-Spanish translation checked, making it be translated back into English.

Gelb Company currently manufactures 51,500 units per year of a key component for its manufacturing process. Variable costs are $5.15 per unit, fixed costs related to making this component are $65,000 per year, and allocated fixed costs are $78,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.90 per unit. Calculate the total incremental cost of making 51,500 units and buying 51,500 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier?

Answers

Answer:

$343,725; $200,850

Explanation:

(a) The total incremental cost of making 51,500 units is calculated as below:

Total Relevant Costs:

= Variable Cost Per Unit + Fixed Manufacturing Costs

= (Relevant Amount Per Unit × No. of units) + Fixed Manufacturing Costs

= ($5.15 × 51,500) + $78,500

= $265,225 + $78,500

= $343,725

Therefore, the total incremental cost of making 51,500 units is $343,725.

(b) The total incremental cost of buying 51,500 units is determined as below:

Total Relevant Costs = Purchase Price Per Unit × No. of units

                                   = $3.90 × 51,500

                                   = $200,850

Therefore, the total incremental cost of buying 51,500 units is $200,850.

(c) The company should buy the component from outside supplier as it results in a lower total incremental cost of $200,850.

Plush Corporation purchased 100 percent of Common Corporation’s common stock on January 1, 20X3, and paid $450,000. The fair value of Common’s identifiable net assets at that date was $430,000. By the end of 20X5, the fair value of Common, which Plush considers to be a reporting unit, had increased to $485,000; however, Plush’s external auditor made a passing comment to the company’s chief accountant that Plush might need to recognize impairment of goodwill on one or more of its investments.Prepare a memo to Plush’s chief accountant indicating the tests used in determining whether goodwill has been impaired. Include in your discussion one or more possible conditions under which Plush might be required to recognize impairment of goodwill on its investment in Common Corporation.In preparing your memo, review the current accounting literature, including authoritative pronouncements of the FASB and other appropriate bodies. Support your discussion with citations and quotations from the applicable literature.

Answers

Answer:

Please refer the detail answer in the memo below

Explanation:

Date: 24 January 20XX

Subject: Review of Impairment of Goodwill

From: External Auditors

To: Chief Accountant, Plush Corporation

Upon review of the investment made by your company in Common Corporation, we believe that there are possible indications of the impairment of the goodwill initially recognized in the books upon acquisition.

At the time of Acquisition:

Consideration = $450,000

Fair Value of Net Assets = $430,000

Goodwill = $450,000 - $430,000 = $20,000

The new guidance issued by FASB, requires only a one-step quantitative impairment test, whereby a goodwill impairment loss will be measured as the excess of a reporting unit’s carrying amount over its fair value.

However, if we follow the previous guidance of FASB, we have to test the impairment with the following three steps:

Step 1: We will compare the carrying amount of the net assets with the Fair value of Reporting Unit, and if the carrying amount exceeds the fair value, we will record the impairment.

Step 1: We will compute, implied value of goodwill by comparing the fair value of the reporting unit with the fair value of the identifiable net assets, if FV of net assets are higher, then there is no impairment, otherwise we will jump to Step 3.

Step 3: If the calculated implied value of the goodwill is lower than the actual goodwill at acquisition, than the difference is the impairment loss, however in case the implied value of the goodwill is higher than the actual goodwill at acquisition, no impairment shall be recorded.

Apparently, since the fair value of Common had increased to $485,000, there is no need to recognize the impairment loss on goodwill; however we believe that the estimated fair value of Common is less than the $430,000 and therefore impairment should be recorded.

Perfect Fit Company sells men's shirts and jeans. The average selling price and variable cost for each product follow: Selling price per shirt $22 Selling price per jean $27 Variable cost per shirt $14 Variable cost per jean $19 Fixed costs $3,200 Calculate the breakeven point in units assuming the sales mix is 1:1.

Answers

Answer:

Jeans= 200 units

Shirt= 200 units

Explanation:

To calculate the break-even point in units, we need to use the following formula:

Break-even point (units)= Total fixed costs / Weighted average contribution margin

Weighted average contribution margin= (weighted average selling price - weighted average unitary variable cost)

Weighted average contribution margin= (22*0.5 + 27*0.5) - (14*0.5 + 19*0.5)

Weighted average contribution margin= 8

Break-even point (units)= 3,200/8

Break-even point (units)= 400 units

Jeans= 0.5*400= 200 units

Shirt= 0.5*400= 200 units

Checker Clackers, Inc. manufactures clackers. Checker’s transactions and accounts included the following during June: Raw materials inventory, beginning $1,200 Raw materials inventory, ending 1,400 Work in process inventory, beginning 7,100 Work in process inventory, ending 6,800 Raw materials acquired 27,800 Cost of direct materials used in production 27,600 Sales commissions to sell clackers 2,100 Direct labor cost 20,000 Total manufacturing overhead 28,900 How much is cost of goods manufactured for June?

Answers

Answer:

The cost of goods manufactured is $ 76,800

Explanation:

Computation of cost of goods manufactured

Raw Materials consumed

Opening raw materials inventory                     $    1,200

Add: Raw materials purchased                         $ 27,800

Less: Closing raw materials inventory              $ ( 1,400)

Raw materials consumed                                                                 $ 27,600

Direct labor Cost                                                                               $ 20,000

Manufacturing Overhead                                                                 $ 28,900        

Total manufacturing input                                                                $ 76,500  

Add: Opening work in process                                                        $    7,100

Less: Ending work in process                                                           $( 6,800)

Cost of goods manufactured                                                          $ 76,800

_____ occurs when a creditor obtains a court order that directs an employer to set aside a portion of an employee's wages to pay a debt owed to the creditor.

Answers

Answer:

Garnishment

Explanation:

Garnishment refers to an order in which a person directs a third party with respect to seize assets  i.e salary earned from employment or money in a bank account so that the unpaid debt amount could be settled out

In the given case, the same situation occurs so this is a case of garnishment and the same is to be considered

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