Answer:
Interest expense and a gain.
Explanation:
US GAAP allows companies to report their financial assets or financial liabilities at their fair market value, this is called the fair value option.
If interest rates increase, and of course the coupon rate is fixed, then they value of bonds will decrease. The same logic applies to bonds sold at a discount.
In this case, the company must report an interest expense in the income statement regardless of what happens to the interest rate, since the company must pay the coupon rate.
Since the price of the bonds decreased, then the company's liabilities (bonds payable) decrease, so the company must report a gain = bond's previous value - bond's current value
Answer:
The opportunity cost is the income earned from her balance on savings account at the interest rate of 3% per year that Reece would received if she had not opened her owned brewery business. This opportunity cost is $600 per year.
Explanation:
Please find the below for further explanation and calculations:
The opportunity cost per one year = Income earned on saving account per one year = 20,000 x 3% = $600;
The reason why it is an opportunity cost is because as a result of opening brewery business, Reece sacrifices the income earned on this saving, instead, she contributes the saving fund to her brewery business.
Answer:
Member B: Works 10 hours per week at $5.85 per hour
Member D: Works 9 hours per week at $6.35 per hour
Answer:
a. A cost that is necessary for the overall operation of the business but not directly related to a contract
Explanation:
Option B - Allocable costs cannot be considered if the contractor is doing business with the government.
Option C - If the cost is exempted, it cannot be specifically allowable for a contract, or a cost that is beneficial to both the contract and other work.
Option D - Indirect costs cannot be allowable.
Option A - It is the right answer because allowable cost should be significant for the operations with an indirect relation with the contract. If it is linked with the overall operations, it can be considered as allowable to a contract.
Answer:
A
Explanation:
Optimization using total value calculates the total value of each feasible option and then picks the option with the highest total value.
Optimization using marginal analysis calculates the change in total value when a person switches from one feasible option to another, and the uses these marginal comparisons to choose the option with the highest total value.
Both gives identical answers.
Optimization can be implemented using many different techniques.
One of it, is Total value total benefit - total cost (net benefit).
It translate all cost and benefits into common units, like dollar per month.
Calculate the total net benefit of each alternative.
Pick the alternative with the highest net benefit.
