Answer:
C. A change from expensing certain costs to capitalizing these costs due to a change in the period benefited, should be handled as a change in accounting estimate.
Explanation:
The statement above describes or the other hand talks about expenditure and capitalization.
Therefore, expenditure is explained as either capitalized as a cost of the asset on the company’s balance sheet or it is expensed in the income statement of the incurred period.
Under IFRS, the following rules govern the categorization of the expenditure as an asset:
If the expenditure is expected to give economic benefits in future over several accounting periods.
If one can measure the cost reliably. Also, increases the assets on the company’s balance sheet.
Recorded on the cash flow statement as a cash outflow for investing.
Answer:
Secondary market; Prospectus
Explanation:
The broker is talking about the secondary market. After initial public offering, shares are traded again privately, in the secondary market. Likewise, the broker wants to send a brochure or a prospectus to the client in order to help him understand about the company to finalize the decision. A prospectus consists of the company’s complete information.
Answer:
The answer is C.
Explanation:
A decrease in inventory means customers are buying inventories (goods) from the business. It is an inflow because money comes in.
Option A is incorrect because a decrease in common stock means shareholders are withdrawing their shareholding from the business and the business will pay them. This is an outflow.
Option B is incorrect because a decrease in long term debt means the business is paying its debt or redcuing its liability and this is an outflow.
Option D is also incorrect because an increase in fixed assets means the business is buying this asset with cash and this is an outflow
Answer:
Option a should be selected
Explanation:
After considering the PV of both options A and B the option that has been selected is A.
For option A:-
A total of the present value of option A= -25000-925.926-857.339-793.832 = -27577.097
Present value = 27577
For option B,:-
Total = -20,000-3703.704-2572.017-1587.664
= -27863.385
The present value of option B = 27863
From the calculations I have attached, it is evident that option A has lower present value compared to option B. Therefore option A should be selected.
