Money Ltd acquired equipment on 1 July 2021 at $105,000. The equipment is depreciated using straight-line method and subsequently measured using the revaluation model. Money Ltd expects the equipment to have 7 years useful life and a zero residual value. The information below is available regarding the equipment in the following periods. Date Fair Value Cost to Sell Value in Use 30 June 2023 $ 85,000 $ 2,000 $90,000 30 June 2025 $ 45,000 $ 3,000 $40,000 Required Assuming indications of impairment exist on the dates above, please prepare the general journal entries (as per template below) to account for the equipment on the following dates: 30 June 2023 30 June 2025 General Journal Date Accounts Debit…Details
Glenelg Bay Ltd has a Cash-Generating Unit (CGU) comprised of assets as follows:
On 30 June 2020, Glenelg Bay performed an impairment test for this CGU and determined that the recoverable amount is $120,000.
- Calculate the impairment loss as at 30 June 2020.
- Prepare a table as provided below to allocate the above impairment loss:
|ASSETS||Carrying amount||Proportion||Loss allocated||Adjusted carrying amount|
(c) Prepare a general journal (as per template below) to record the above impairment loss for the year ended 30 June 2020. Include a narration.
On 1 August 2020, Candy Ltd issued a disclosure document inviting applications for 10,000 of $80 debentures at par, payable in full on application. The debentures carry an 8% annual interest charge and will be redeemed at nominal value in 5 years. The interest payment is made semi-annually on 31 December and 30 June each year. By 30 September 2020, Candy Ltd received application money for 11,000 debentures. On 1 October 2020, Courtney Ltd issued 10,000 debentures and refunded monies to 1,000 unsuccessful applicants. Required: Prepare a general journal template as per example below based on the information above, for Candy Ltd for the year ended 30 June 2021. Include a narration. General Journal Date Accounts Debit Credit …
A manufacturing company HES Inc. has two product lines. Traditional product has unit price of $340 and Classic has a unit price of $480. Firm’s manufacturing overhead costs are applied as $420 per direct labor hour. HES Inc Budgeted statement of gross margin 2020 Products Traditional Classic Total Sales in units 10000 8000 18000 Beginning finished goods $480,000.00 $500,000.00 $980,000.00 Direct material $2,000,000.00 $3,400,000.00 $5,400,000.00 Direct labor $370,370.00 $185,186.00 $555,556.00 Ending finished goods $480,000.00 …
Jan-Stone Limited is looking into the following two (2) investment projects:
|Cost of Investment||$450,000||$560,000|
|Estimated net cash flows|
The company’s required rate of return for both projects is 15%.
a. Calculate the net present value (NPV) for both projects.
b. Evaluate and advise the management which one of the projects to opt for, if any.
The following summary of information extracted from Jan-Stones Limited, are for a typical month:
|Total Sales Revenue:
Total Variable cost:
Fixed costs per month:
Units sold per month:
(i) Calculate the contribution per unit.
(ii) Compute the monthly break-even point in units.
(iii) If a monthly net profit of $40,000 is to be achieved, how many units would have to be sold?
Jan-Stones Limited has compiled the 4-month data below:
Applying the high-low method, answer the following questions:
(i) Calculate the variable cost per unit.
(ii) Calculate the fixed cost portion of the total costs.
(iii) If the company uses 1,800 units in September, how much will the total costs be?
What would be the expected price of a stock when dividends are expected to grow at a 25% rate for three years, then grow at a constant rate of 5%, if the stock’s required return is 13% and next year’s dividend will be $4.00?
What rate of return is expected from a stock that sells for $30 per share, pays $1.50 annually in dividends, and is expected to sell for $33 per share in one year?
The ordinary shares of FED Limited are selling for $26.75 on the open market. A dividend of $3.68 is expected to be distributed, and the growth rate of this company is estimated to be 5.5%. If Bob Dean, an average investor, is considering purchasing this share at the market price, what is his expected rate of return?
Healthy Foods Company (HFC) currently processes seafood with a unit it purchased several years ago. The unit, which originally cost $500,000, has a current book value of $250,000. HFC is considering replacing the existing unit with a newer, more efficient one. The new unit will cost $750,000 and will also require an initial increase in net working capital of $40,000. The new unit will be depreciated on a straight‐line basis over five years to a zero balance. The existing unit is being depreciated at a rate of $50,000 per year. HFC expects to sell the existing machine today for $275,000. HFC’s tax rate is 30%. If HFC purchases the new unit, annual revenues are expected to increase by $100,000 (due to…
The table below gives the amount invested and betas for three stocks.
Stock Amount Invested Beta
GM K10, 000 1.2
IBM K10, 000 1.0
WMT K20, 000 0.7
- Using the CAPM, if the expected return for the market is 6% and the risk-free rate is 1.5%, what is the expected return for each stock?
- What is the beta for this portfolio based on the invested amounts?
- Using the CAPM, what is the expected return for this portfolio?