Assume TTT (a) collected $420 million in 2018 for magazines that will be distributed later in 2018 and 2019, (b) provided $204 m
illion of services on these subscriptions in 2018, and (c) provided $216 million of services on these subscriptions in 2019.
Using the information given, indicate the accounts, amounts, and accounting equation effects of transactions (a), (b), and (c). (Enter any decreases to assets, liabilities, or stockholders equity with a minus sign. Enter your answers in whole dollars.)
Using the information given, indicate the accounts, amounts, and accounting equation effects of transactions (a), (b), and (c). (Enter any decreases to assets, liabilities, or stockholders equity with a minus sign. Enter your answers in whole dollars.)
1 answer:
Answer
The answer and procedures of the exercise are attached in the following archives.
Consider the excel document where the source of the results is plotted.
Explanation
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
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Answer:
<u>Floating exchange rate</u>
Here the market decides the value of the currency as it trade freely in the market based on supply and demand.
Argument For;
Market Based - It is market based therefore it reflects the true value of the currency.
Argument Against;
Uncertainty - As it trades according to the whims of supply and demand, telling which direction it will go in terms of value is a difficult undertaking therefore financial decisions based on such are riskier.
<u>Fixed exchange rate</u>
Here the value of the currency is fixed either to the value of another currency or to the price of gold.
Argument For;
No Uncertainty - As the currency is tied to another currency which is usually more stable or gold, the rate of the currency is more predictable.
Argument Against;
Unknown Elements
<u>Managed float</u>
In this exchange rate regime, the Central bank of a country intervenes in the Foreign exchange market to push or pull the currency in the direction that it prefers.
Argument For;
Government intervention - The Government Intervention ensures that the currency's value remains stable as well as allowing the Central bank to maintain a good balance of payments.
Argument Against;
Difficult - Maintaining the currency within the band preferred in a difficult undertaking that requires constant intervention in the Forex market.
<u>Pegged exchange rate</u>
The Central bank in this instance pegs the currency to a basket of currencies after setting an exchange rate it would prefer and then intervenes in forex market to keep it that way.
Argument For;
Reduces uncertainty - The movement of the currency is more predictable due to it being pegged to a basket of currencies.
Argument Against;
Continual government intervention - As this requires the currency to remain at a certain value, the government will keep intervening to ensure that it stays at that exact level.
<u>Target zone</u>
Here the Central Bank allows the currency to fluctuate on the market albeit with limits placed on how much it can do so.
Argument For;
Fluctuation with limits - By combining fixed regimes with floating regimes, the currency can maintain a semblance of true value whilst still be less uncertain.
Argument Against;
Limited options.
