Pacific Green Company is considering buying a unique bar-coding machine to help them track their plant inventory. They are using the payback period and accounting rate of return methods to evaluate the purchase. They will consider the project further if the payback period is less than four years and it has a minimum accounting rate of return of 7%. Relevant information on the machine is as follows:Acquisition cost = $48,000Expected salvage value = $0Expected annual cash inflow benefits = $13,000 per year for 5 yearsExpected useful life = 5 yearsRequired: Compute the payback period and ARR. Advise GPC on their appropriate action.
What will be an ideal response?
Payback period = $48,000/$13,000 = 3.7 years
ARR = ($13,000 - $9,600 depreciation expense)/$48,000 = 7.1%
It meets the thresholds for further evaluation.
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Reciprocity is sometimes, but not always, unethical behavior. Which of the following situations is an example of reciprocity which is unethical behavior?
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Culture shock can cause significant problems for the expatriate employee, and in fact there is evidence that up to ______% of employees fail to complete their international assignment.
A. 2 B. 80 C. 50 D. 25
The right side of a T-account is a(n):
A. Credit. B. Decrease. C. Account balance. D. Increase. E. Debit.
Marquis Company's liabilities exceed its assets, but the firm's employees falsify its books to reflect a positive net worth. Marquis hires Nan & Ollie, an accounting firm, to prepare a balance sheet, which is certified to show a net worth. Pure Credit Corporation relies on the balance sheet to make a loan to Marquis. When the firm defaults, Pure Credit files a suit against Nan & Ollie. Under the Ultramares rule, the accounting firm is most likely
A. liable because Nan & Ollie owed a duty of care to all third parties. B. liable because Nan & Ollie owed a duty of care to Marquis. C. liable because Nan & Ollie owed a duty to any foreseeable user. D. not liable because Nan & Ollie and Pure Credit were not in privity.