DJ
Diana Jiang
Answers (6)
DJ
Answered
Explain the key differences between an options contract and a forward contract. For each contract, give an example of how it might be used by a firm.
On Jul 22, 2024
The key differences are (1) a forward contract obligates both parties to act while the options contract is exercised only if the buyer so chooses and (2) an option premium is paid by the buyer to the seller at the time an option contract is entered whereas there is no such payment on a forward contract. The examples given by students will vary but should illustrate these two key differences.
DJ
Answered
Assume that a 4 percent increase in income across the economy produces an 8 percent increase in the quantity demanded of good X.The coefficient of income elasticity of demand is:
A) negative and therefore X is an inferior good.
B) negative and therefore X is a normal good.
C) positive and therefore X is an inferior good.
D) positive and therefore X is a normal good.
A) negative and therefore X is an inferior good.
B) negative and therefore X is a normal good.
C) positive and therefore X is an inferior good.
D) positive and therefore X is a normal good.
On Jul 14, 2024
D
DJ
Answered
You are little late planning your retirement,but are looking forward to retiring in 10 years.You expect to save $6,000 a year at an annual rate of 8%.How much will you have accumulated when you retire?
On Jun 17, 2024
$86,919.60
The FV factor on the Future Value of an Annuity table when n = 10 and i = 8% is 14.4866.
Future Value of an Annuity = Annuity * FV Factor
Future Value of an Annuity = $6,000 * 14.4866 = $86,919.60
The FV factor on the Future Value of an Annuity table when n = 10 and i = 8% is 14.4866.
Future Value of an Annuity = Annuity * FV Factor
Future Value of an Annuity = $6,000 * 14.4866 = $86,919.60
DJ
Answered
Which of the following is not a component of aggregate expenditure?
A) Consumption expenditures
B) Investment
C) Imports
D) Rent
E) Government purchases
A) Consumption expenditures
B) Investment
C) Imports
D) Rent
E) Government purchases
On Jun 14, 2024
D
DJ
Answered
Gifford Construction Corporation has entered into a long-term fixed contract to build a performing arts center for Philbin University.The fixed price is $71,500,000.The costs,estimated costs,and billing activity for the three years of the contract are shown below:
20120142015 Construction costs incurred to date 20,000,00045,000,00070,000,000 Estimated future costs 35,000,00030,000,0000 Billings to date 24,700,00043,758,00071,500,000 Cash collections to date 20,995,00041,570,10071,500,000\begin{array}{llrr}&201&2014&2015\\\text { Construction costs incurred to date } & 20,000,000 & 45,000,000 & 70,000,000 \\\text { Estimated future costs } & 35,000,000 & 30,000,000 & 0 \\\text { Billings to date } & 24,700,000 & 43,758,000 & 71,500,000 \\\text { Cash collections to date } & 20,995,000 & 41,570,100 & 71,500,000\end{array} Construction costs incurred to date Estimated future costs Billings to date Cash collections to date 20120,000,00035,000,00024,700,00020,995,000201445,000,00030,000,00043,758,00041,570,100201570,000,000071,500,00071,500,000
Required:
a.Compute the gross profit to be recognized under the percentage-of-completion method on Gifford's income statements for each year under the contract.
b.Compute construction in progress net of billings under the percentage-of-completion method at the end of 2013 and 2014.Be sure to indicate whether the balance is classified as an asset or liability.
c.Compute the gross profit to be recognized under the completed contract method on Gifford's income statements for each year under the contract.
d.Which method is more conservative:the percentage-of-completion method or the completed contract method? Explain.
20120142015 Construction costs incurred to date 20,000,00045,000,00070,000,000 Estimated future costs 35,000,00030,000,0000 Billings to date 24,700,00043,758,00071,500,000 Cash collections to date 20,995,00041,570,10071,500,000\begin{array}{llrr}&201&2014&2015\\\text { Construction costs incurred to date } & 20,000,000 & 45,000,000 & 70,000,000 \\\text { Estimated future costs } & 35,000,000 & 30,000,000 & 0 \\\text { Billings to date } & 24,700,000 & 43,758,000 & 71,500,000 \\\text { Cash collections to date } & 20,995,000 & 41,570,100 & 71,500,000\end{array} Construction costs incurred to date Estimated future costs Billings to date Cash collections to date 20120,000,00035,000,00024,700,00020,995,000201445,000,00030,000,00043,758,00041,570,100201570,000,000071,500,00071,500,000
Required:
a.Compute the gross profit to be recognized under the percentage-of-completion method on Gifford's income statements for each year under the contract.
b.Compute construction in progress net of billings under the percentage-of-completion method at the end of 2013 and 2014.Be sure to indicate whether the balance is classified as an asset or liability.
c.Compute the gross profit to be recognized under the completed contract method on Gifford's income statements for each year under the contract.
d.Which method is more conservative:the percentage-of-completion method or the completed contract method? Explain.
On May 16, 2024
a. Gross profit for percentage-of-completion method 201320142015 Total expected gross profit: Contract price - (costs incurred to date + expected costs) 16,500,000(3,500,000)1,500,000 Percent complete = costs to date ÷ total costs 36.36%60.00%100.00% Gross profit earned in year: Percent complete × expected gross profit - gross profit in prior years 6,000,000(9,500,000)5,000,000\begin{array}{l}\text { a. Gross profit for percentage-of-completion }\\\text { method }&2013&2014&2015\\\text { Total expected gross profit: }\\\text { Contract price - (costs incurred to date }+\\\text { expected costs) } & 16,500,000 & (3,500,000) & 1,500,000 \\\text { Percent complete }=\text { costs to date } \div \text { total costs } & 36.36 \% & 60.00 \% & 100.00 \%\\\text { Gross profit earned in year: }\\\text { Percent complete } \times \text { expected gross profit - }\\\text { gross profit in prior years }&6,000,000&(9,500,000)&5,000,000\end{array} a. Gross profit for percentage-of-completion method Total expected gross profit: Contract price - (costs incurred to date + expected costs) Percent complete = costs to date ÷ total costs Gross profit earned in year: Percent complete × expected gross profit - gross profit in prior years 201316,500,00036.36%6,000,0002014(3,500,000)60.00%(9,500,000)20151,500,000100.00%5,000,000
b. Net construction in progress 20132014 Construction in progress: Costs to date 20,000,00045,000,000 Gross profit to date 6,000,000(3,500,000)26,000,00041,500,000 Billings to date (24,700,000)(43,758,000) Net construction in progress 1,300,000(2,258,000) Balance is classified as a: Net asset Net liability \begin{array}{lrr}\text { b. Net construction in progress }&2013&2014\\\text { Construction in progress: } & & \\\quad \text { Costs to date } & 20,000,000 & 45,000,000 \\\text { Gross profit to date } & 6,000,000 & (3,500,000) \\& 26,000,000 & 41,500,000 \\\text { Billings to date } & (24,700,000) & (43,758,000) \\\text { Net construction in progress } & 1,300,000 & (2,258,000) \\\text { Balance is classified as a: } & \text { Net asset } & \text { Net liability }\end{array} b. Net construction in progress Construction in progress: Costs to date Gross profit to date Billings to date Net construction in progress Balance is classified as a: 201320,000,0006,000,00026,000,000(24,700,000)1,300,000 Net asset 201445,000,000(3,500,000)41,500,000(43,758,000)(2,258,000) Net liability
c. Gross profit under completed contract method
method 201320142015 Gross profit: 0(3,500,000)5,000,000\begin{array}{lrrr}\text { method } & \mathbf{2 0 1 3} & \mathbf{2 0 1 4} & \mathbf{2 0 1 5} \\\text { Gross profit: } & 0 & (3,500,000) & 5,000,000\end{array} method Gross profit: 201302014(3,500,000)20155,000,000 d.The completed contract method is more conservative because no profits are recognized until the end of the contract,and losses are recognized as soon as they are predicted.Under the percentage-of-completion method,profits are recognized in accounting periods prior to the end of the contract.
b. Net construction in progress 20132014 Construction in progress: Costs to date 20,000,00045,000,000 Gross profit to date 6,000,000(3,500,000)26,000,00041,500,000 Billings to date (24,700,000)(43,758,000) Net construction in progress 1,300,000(2,258,000) Balance is classified as a: Net asset Net liability \begin{array}{lrr}\text { b. Net construction in progress }&2013&2014\\\text { Construction in progress: } & & \\\quad \text { Costs to date } & 20,000,000 & 45,000,000 \\\text { Gross profit to date } & 6,000,000 & (3,500,000) \\& 26,000,000 & 41,500,000 \\\text { Billings to date } & (24,700,000) & (43,758,000) \\\text { Net construction in progress } & 1,300,000 & (2,258,000) \\\text { Balance is classified as a: } & \text { Net asset } & \text { Net liability }\end{array} b. Net construction in progress Construction in progress: Costs to date Gross profit to date Billings to date Net construction in progress Balance is classified as a: 201320,000,0006,000,00026,000,000(24,700,000)1,300,000 Net asset 201445,000,000(3,500,000)41,500,000(43,758,000)(2,258,000) Net liability
c. Gross profit under completed contract method
method 201320142015 Gross profit: 0(3,500,000)5,000,000\begin{array}{lrrr}\text { method } & \mathbf{2 0 1 3} & \mathbf{2 0 1 4} & \mathbf{2 0 1 5} \\\text { Gross profit: } & 0 & (3,500,000) & 5,000,000\end{array} method Gross profit: 201302014(3,500,000)20155,000,000 d.The completed contract method is more conservative because no profits are recognized until the end of the contract,and losses are recognized as soon as they are predicted.Under the percentage-of-completion method,profits are recognized in accounting periods prior to the end of the contract.
DJ
Answered
As you deliver your planned sales presentation, you become increasingly aware your buyer is sending you caution signals. Which of the following courses of action would be the best one to try?
A) Continue with the visual aid portion of the planned presentation
B) Ask closed-ended questions to increase the buyer's involvement
C) Depart from the planned presentation
D) Speed up the presentation
E) Request a purchase order
A) Continue with the visual aid portion of the planned presentation
B) Ask closed-ended questions to increase the buyer's involvement
C) Depart from the planned presentation
D) Speed up the presentation
E) Request a purchase order
On May 13, 2024
C