Complete Question:
Which of the following is an objection of using the Consumer Price Index (CPI) to measure changes in the cost of living?
A. The calculated inflation rate is only accurate for an individual who purchases all the goods and services in the basket.
B. The inflation rate is always understated due to substitution bias.
Answer:
Consumer Price Index (CPI)
A. The calculated inflation rate is only accurate for an individual who purchases all the goods and services in the basket.
Explanation:
To obtain the Consumer Price Index (CPI), a predetermined basket of consumer goods and services is obtained. Weights are assigned to the goods according to their relative values in the basket. The price changes are calculated. The resulting figures are averaged to determine the CPI.
Answer:
The calculated inflation rate is only accurate for an individual who purchases all the goods and services in the basket.
Explanation:
Answer
The answer and procedures of the exercise are attached in the following archives.
Explanation
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Answer:
Income statement
Explanation:
Statement of change in equity: It records beginning balance of equity, ending balance of equity, net income or loss, dividend paid if any.
Balance sheet: It records the assets and the liabilities side of the balance sheet which equals to
Total assets = Total liabilities + Stockholder equity
Statement of cash flows: It records three types of activities:
1. Operating activities: It includes those transactions which affect the working capital, and it records transactions of cash receipts and cash payments.
2. Investing activities: It records those activities which include purchase and sale of the fixed assets
3. Financing activities: It records those activities which affect the long term liability and shareholder equity balance.
Income statement: It records all income and expenses of a particular period.
In the given question, the increase in assets records under the revenue part whereas if the asset decreases, it records under expenses part of the income statement.
Answer:
D. recorded as an indefinite-lived intangible asset, and annually tested for impairment.
Explanation:
In-process research and development acquired in a business combination is recorded as an indefinite-lived intangible asset, and annually tested for impairment.
In-process research and development costs are essential part of the financial income statement, it assist investors to make good, well-informed and tangible investment decisions in a newly acquired company.
D. Recorded as an indefinite-lived intangible asset, and annually tested for impairment, consistent with accounting standards for intangible assets.
In-process research and development (IPR&D) acquired in a business combination is accounted for as follows:
D. Recorded as an indefinite-lived intangible asset, and annually tested for impairment.
Here's why:
1. Indefinite-Lived Intangible Asset: IPR&D represents the value associated with ongoing research and development projects that have not yet reached the point of commercialization or technological feasibility. It is recognized as an indefinite-lived intangible asset because its future benefits are not constrained by a specific time period. This is in contrast to definite-lived intangible assets, which have a finite useful life and are subject to amortization.
2. Annual Impairment Testing: While IPR&D is initially recognized as an indefinite-lived asset, it is subject to annual impairment testing. This means that, at least annually, the company must assess whether there has been any impairment in the value of the IPR&D asset. If there is an indication that the asset's value has decreased (e.g., the research project is no longer viable or promising), an impairment charge is recorded to reduce the asset's carrying value to its recoverable amount.
3. Consistency with Accounting Standards: The accounting treatment of IPR&D acquired in a business combination is consistent with international accounting standards (e.g., IFRS) and generally accepted accounting principles (GAAP) in many jurisdictions. It reflects the economic reality that IPR&D represents valuable intellectual property that can contribute to the company's future profitability once successfully developed.
In summary, IPR&D acquired in a business combination is initially recognized as an indefinite-lived intangible asset, and it is subject to annual impairment testing to ensure its carrying value accurately reflects its recoverable amount based on its expected future benefits. This accounting treatment aligns with the treatment of other intangible assets and financial reporting standards.
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Answer:
$1,684,084.19
Explanation:
If the company needs $31 million, and it must deposit 5% of what it borrows in a non-interest bearing account, then to have a net borrowing of $31 million, the amount it must borrow, B, is
B * (1 - 5%) = 31 million
= 0.95B = 31 million
and B = $32,631,578.95.
At 0.631% interest rate per month, for 8 months, the amount to be repaid after 8 months
=
Therefore, the amount paid in interest = 34,315,663.14 - 32,631,578.95
= $1,684,084.19.