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tamaranim1 [39]
2 years ago
9

Harrison, Inc. acquires 100% of the voting stock of Rhine Company on January 1, 2012 for $400,000 cash. A contingent payment of

$16,500 will be paid on April 15, 2013 if Rhine generates cash flows from operations of $27,000 or more in the next year. Harrison estimates that there is a 20% probability that Rhine will generate at least $27,000 next year, and uses an interest rate of 5% to incorporate the time value of money. The fair value of $16,500 at 5%, using a probability weighted approach, is $3,142.
What will Harrison record as its Investment in Rhine on January 1, 2012?
Business
1 answer:
Luden [163]2 years ago
3 0

Answer:

$403,142

Explanation:

To calculate the amount of money that Harrison Inc. should record for its investment in Rhine Company on January 1, we have to add the initial cash payment plus the weighted future value of contingency.

total investment = $400,000 + $3,142 = $403,142

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2 years ago
Juan purchased shares in ABC company for​ $5,000 three years ago. During these three years he received​ $600 in dividends. He ju
7nadin3 [17]

Answer:

B) –2%

Explanation:

The total return on an investment is calculated by,

Total Return = Capital gains ÷ Initial Investment x 100

First we will have to calculate capital gains of his investment,

He got 600 in dividends and 4,300 after selling the stock against the initial investment of $5,000.

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7 0
2 years ago
Fizzzle Inc. sold a piece of equipment during the period for $230,000 and recorded a gain of $45,000 on the sale. How should thi
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Answer:

The gain is subtracted from net income in the operating activities section

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Given that

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And, the gain on the sale = $45,000

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4 0
2 years ago
You have calculated the pro forma net income for a new project to be $46,050. The incremental taxes are $22,540 and incremental
Delicious77 [7]

Answer:

The multiple choices are:

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Option E is the correct option,$62,650

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2 years ago
A country's economic data indicates that there has been a substantial reduction in the financial capital available to private se
NeTakaya

Answer:

D. especially large and sustained government borrowing

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