Answer:
B. good for Jon but bad for Tony
Explanation:
Before he went to college, Jon bought a car from his brother Tony. They agreed that Jon would pay Tony $10,000 when Jon graduated from college. While Jon was at college, inflation was higher than expected. Thinking only about the car transaction, this unexpectedly high inflation was<u> good for Jon but bad for Tony .</u>
Generally, inflation favors borrowers and hurts lenders. Technically, Jon is owing Tony $10,000.
With an inflation rate of 5% the value of that money depreciates to 95% of its real value because inflation rate depletes the real rate of money and is the biggest factor of lose of monetary value.
The money that Jon will eventually pay Tony will be lesser in value which is good for Jon and bad for Tony.
Answer:
The correct option is D,$41,200
Explanation:
The fact that inventory reduced by 1,400 units implies that the fixed costs of 1,400 units added to closing inventory under absorption costing method has now been released into income statement as an additional cost in the current year,as result profit under absorption costing method reduce by the increased fixed costs:
net operating income under variable costing $52,400
less:additional fixed costs (1,400*$8) ($11,200)
Profit under absorption costing method $41,200
The correct option is D,$41,200
Answer:
C. $250000
Explanation:
Given:
Total assets = $600,000
Liabilities = $160,000
Stockholders’ equity = $540,000.
Fair value of the restaurant assets = $680,000
Alice Company pays = $770,000
Goodwill is when a company looking to acquire another company is willing to pay a price significantly higher than the fair market value of the company’s net assets.
Net Assets = Fair value of assets - Total Liabilities
= $680000 - $160,000
= $520,000
Amount of Goodwill = cash paid - net assets
= $770,000 - $520,000
= $250000
