Choose the correct answer in the following statements about financial and real assets.Required:a. Toyota takes out a bank loan to finance the construction of a new factory.arealJasset-the factory. The loan is a financialasset that is createdToyota destroystransaction.b. Toyota pays off its loan.When the loan is repaid, the realasset is destroyedc. Toyota uses $10 million of cash on hand to purchase additional inventory of spare auto parts.The cash is a [(Click to select) asset that is traded in exchange for a [(Click to select) asset, Inventory.but the (Click to select) asset continues to exist.in the

Real assets are the tangible assets which means which can be seen and touched and they are able to…

Answered: Required: a. Toyota takes out a bank…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 6CE

See similar textbooks

Similar questions

Handy Ltd is a glove manufacturer in Melbourne. The managers decide to obtain an automated machine worth $1,000,000. As a result of obtaining such a machine, there will be a $100,000 reduction in total expense. The managers are considering the following options: Option 1: Purchase the machine with existing cash at the business bank account, assuming Handy Ltd has sufficient cash at bank. Option 2: The owner contributes the machine to the business. The managers have provided you with following information prior to obtaining the machine: Sales revenue $500,000 $100,000 $400,000 $900,000 $1,500,000 $1,900,000 Net profit Total current liabilities Total liabilities Total current assets Total assets Required: Calculate the Debt (to assets) Ratio, Current Ratio and Net Profit Margin after obtaining the machine if either Option 1 or Option 2 is taken. Option 1 Option 2 Debt (to assets) Ratio Current Ratio Net Profit Margin Handy Ltd has an existing loan agreement with Hilltop Bank, which…
Suppose that you have been given a summer job as an intern at Issac Aircams, a company that manufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately owned, has approached a bank for a loan to help finance its growth. The bank requires financial statements before approving the loan. Required: Classify each cost listed below as either a product cost or a period cost for the purpose of preparing financial statements for the bank. 8 00-45-49 Costs Product Cost / Period Cost 1. Depreciation on salespersons' cars. 2. Rent on equipment used in the factory. 3 lubricants used for machine maintenance Salaries of personnel who work in the finished goods warehouse 5. Soap and paper towels used by factory workers at the end of a shift. 6. Factory supervisors' salaries. 7. Heat, water, and power consumed in the factory. 8. Materials used for boxing products for shipment overseas. (Units are not normally boxed.) 9. Advertising…
A company manufacturing high precision polycarbonate plastic lenses wants to expand its manufacturing operations. The company is financially reasonably sound and has sufficient funds for the expansion. For purchase of machinery, the management has two options Option 1: Purchase new machinery by taking a bank loan Option 2: Purchase second-hand used machinery by utilizing its own funds Is it advisable for the company to purchase used equipment / machinery? What are the sources of used equipment / machinery?
- Classify the following list of items as: revenue/expense/current asset/non-current asset/current liability/non-current liability/capital a machine for manufacturing widgets bill of air conditioning used in a factory sales of 1,000 widgets for cash to Mr. Mohammad, a customer £3,000 borrowed from the bank a heap of metal on the yard, to be used for manufacturing widgets £4,000 owed to Pyron Ltd for the metal in item 5 a Toyota Lexus car, used by an employee but owned by his/her employer, Yen Ltd £10,000 of personal savings used by someone starting up a business.
(Ignore income taxes in this problem.) Your Company purchased a van to use in orders directly to customers. The auto was purchased for $28,000 and will have a 6-year useful life and a $7,000 salvage value. Delivering fees should increase gross revenues by at least $6,350 per year. Depreciation on the van will be $3,500 per year. In what year will the payback for the van occur? please solve and show work.
Suppose that you have been given a summer job as an intern at Issac Aircams, a company that man- ufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately owned, has approached a bank for a loan to help it finance its growth. The bank requires financial statements before approving such a loan. You have been asked to help prepare the financial statements and were given the following list of costs: Depreciation on salespersons’ cars. Rent on equipment used in the factory. Lubricants used for machine maintenance. Salaries of personnel who work in the finished goods warehouse. Soap and paper towels used by factory workers at the end of a shift. Factory supervisors’ salaries. Heat, water, and power consumed in the factory. Materials used for boxing products for shipment overseas. (Units are not normally boxed.) Advertising costs. Workers’ compensation insurance for factory employees. Depreciation on…
A company has an external sales agency. The company allows the sales agency to incur and pay for all its expenses and approved asset purchases. The company has never transferred any tangible assets to the agency and created the agency by simply establishing an agency working capital fund of P40,000. Whenever the sales agency needs more working capital it transmits the receipts for what it has spent back to the main office which then sends cash back to the agency to cover the remitted items. Small amounts of merchandise inventory are sent to the agency for display and demonstration purposes. These items are transferred at cost. An operation such as the one descried above most closely resembles a(n): Petty Cashsystem Accounts receivable subsidiaryledger Accounts payable subsidiaryledger Vouchersystem
A company has an external sales agency. The company allows the sales agency to incur and pay for all its expenses and approved asset purchases. The company has never transferred any tangible assets to the agency and created the agency by simply establishing an agency working capital fund of P40,000. Whenever the sales agency needs more working capital it transmits the receipts for what it has spent back to the main office which then sends cash back to the agency to cover the remitted items. Small amounts of merchandise inventory are sent to the agency for display and demonstration purposes. These items are transferred at cost. An operation such as the one descried above most closely resembles a Accounts payable subsidiary ledger Accounts receivable subsidiary ledger Voucher system Petty Cash system
A company has an external sales agency. The company allows the sales agency to incur and pay for all its expenses and approved asset purchases. The company has never transferred any tangible assets to the agency and created the agency by simply establishing an agency working capital fund of P40,000. Whenever the sales agency needs more working capital it transmits the receipts for what it has spent back to the main office which then sends cash back to the agency to cover the remitted items. Small amounts of merchandise inventory are sent to the agency for display and demonstration purposes. These items are transferred at cost. An operation such as the one descried above most closely resembles a(n): A. Accounts payable subsidiary ledgerB. Accounts receivable subsidiary ledgerC. Petty Cash systemD. Voucher system
Reynolds Construction (RC) needs a piece of equipment that costs 200. RC can either lease the equipment or borrow 200 from a local bank and buy the equipment. Reynoldss balance sheet prior to the acquisition of the equipment is as follows: a. (1) What is RCs current debt ratio? (2) What would be the companys debt ratio if it purchased the equipment? (3) What would be the debt ratio if the equipment were leased and the lease not capitalized? (4) What would be the debt ratio if the equipment were leased and the lease were capitalized? Assume that the present value of the lease payments is equal to the cost of the equipment. b. Would the companys financial risk be different under the leasing and purchasing alternatives?
An owner of a business found a great deal and pays $5,000 for a truck to be used in the business. The owner estimates that the truck had a market value of $8,000, and decides to record the new asset for $8,000 in the books of the business. What principle or concept of GAAP has the owner violated in recording the truck at the value of $8,000? O The Cost Concept O The Objectivity Concept The Unit of Measure Concept O The Matching Concept
Radley Co. is growing its business and is currently deciding how to finance this programme. Following some research, the business decides that it can either (1) issue bonds and use the money to buy the necessary assets, or (2) lease the assets for an extended period of time. Please respond to the following questions without understanding the relative costs involved: a. What benefits might leasing the assets have over purchasing them? b. What drawbacks can leasing the assets have in comparison to buying them? c. How would leasing the assets vary from issuing bonds and buying the assets in terms of how it will impact the Statement of Financial Position?

SEE MORE QUESTIONS

Recommended textbooks for you

Cornerstones of Cost Management (Cornerstones Ser…

Accounting

ISBN:

9781305970663

Author:

Don R. Hansen, Maryanne M. Mowen

Publisher:

Cengage Learning

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

Cornerstones of Cost Management (Cornerstones Ser…

Accounting

ISBN:

9781305970663

Author:

Don R. Hansen, Maryanne M. Mowen

Publisher:

Cengage Learning

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

SEE MORE TEXTBOOKS