Shutters Company adopted a defined benefit pension plan on January 1 . 2014 . Shutters amortizes the prior service cost over 1 . years and funds prior service cost by making equal payments to the fund trustee at the end of each of the first ten years. The service cost is fully funded at the end of each year. The following data are available for 2014: Service cost
.......................................... $440,000 Prior service cost: Amortized ........................................... 166,800 Funded .............................................. 228,800 If interest cost for 2014 is equal to the return on plan assets, then Shutters's prepaid pension cost at December 31 . 2014, is
a. $228,800.
b. $166,800.
c. $62,000.
d. $0
C
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Answer the following statement true (T) or false (F)
During 2018, Dragon Company determined, based on new information, that equipment previously depreciated using a ten-year life and a salvage value of $100,000 had a total estimated life of only six years and a salvage value of $50,000. The equipment was acquired on January 1, 2016 at a cost of $600,000, and was depreciated using the straight-line method. Dragon made an accounting change in 2018 to
reflect this additional information, and the change was approved by the IRS. Dragon has an income tax rate of 30%. Dragon's income before depreciation, before income taxes, and before any retroactive effect of the accounting change (if any) for the year ended December 31, 2018, was $180,000. What is the amount of Dragon's net income for 2018? A) $80,000 B) $67,500 C) $56,000 D) $47,250
Accounts payable $ 30,000 Accounts receivable 65,000 Accrued liabilities 7,000 Cash 20,000 Intangible assets 40,000 Inventory 72,000 Long-term investments 100,000 Long-term liabilities 75,000 Marketable securities 36,000 Notes payable (short-term) 20,000 Property, plant, and equipment 625,000 Prepaid expenses 2,000 Based on the above data, what is the amount of quick assets?
A) $163,000 B) $195,000 C) $121,000 D) $56,000
Exhibit 8A.1You have been asked to use a CAPM analysis to choose between Stocks R and S, with your choice being the one whose expected rate of return exceeds its required return by the widest margin. The risk-free rate is 4.00%, and the required return on an average stock (or the "market") is 10.00%. Your security analyst tells you that Stock S's expected rate of return is equal to 11.00%, while Stock R's expected rate of return is equal to 12.00%. The CAPM is assumed to be a valid method for selecting stocks, but the expected return for any given investor (such as you) can differ from the required rate of return for a given stock. The following past rates of return are to be used to calculate the two stocks' beta coefficients, which are then to be used to determine the stocks' required
rates of return: Year Stock R Stock S Market 1 –22.00% –3.00% –11.00% 2 3.00% 6.00% 8.00% 3 21.00% 15.00% 25.00% Note: The averages of the historical returns are not needed, and they are generally not equal to the expected future returns. Refer to Exhibit 8A.1. Calculate both stocks' betas. What is the difference between the betas? That is, what is the value of betaR? betaS? (Hint: The graphical method of calculating the rise over run, or (Y2? Y1) divided by (X2? X1) may aid you.) A. 0.7785 B. 0.8493 C. 0.7864 D. 0.8178 E. 0.6606