Business, 31.08.2021 14:10 mauralawson
The focus of Positive Accounting Theory (PAT) is to forecast a firm's
actions concerned with accounting policy choices and the response of the
firm towards proposed new accounting standards. PAT adduce the
importance of accounting policy to management is related to the contracts
entered into by the firm
a) The political process in the article consists of the review of the rules and
regulation that govern the operations of the industry, such as the method
promotion of prescription drugs through educational events, based on
proposals by members of the public and input from consumer
organizations that are focused on protecting the end users of the
prescription drugs
b) According to the article, the maximum fines for companies that brake the
rules is expected to increase from $200,000 to $250,000, however the
consumer organization calls for a maximum fine of $1.1 million
Based on the expected increase of $50,000, the impact on small firms will
much more than impact of the fines on large companies in the
pharmaceutical industry that can afford such fines thereby promoting the
large firms to introduce more new prescription drugs that increases
revenue and market share
The increased fines will alter the accounting information of the firms which
can lead to more generalized expenses in order to avoid fines rather than
increased details. Therefore, expenses on advertisement may increase
alongside increase in revenue
c) (i) The proposed increase in fines from $200,000 to $250,000 will
further reduce the earnings of defaulting firms. However, the increased
revenue and market share that comes after promoting prescription drugs
at events can be easily made to offset the fine costs by increasing the
price of the drugs
(ii) The increase in fines indicates the level of effectiveness of the previous
fines was less than expected, therefore, the increase fines will not impact
the management compensation contract of firms that follow the rules, but
may increase incentives in other firms
Answers: 3
Business, 22.06.2019 00:00
Chance company had two operating divisions, one manufacturing farm equipment and the other office supplies. both divisions are considered separate components as defined by generally accepted accounting principles. the farm equipment component had been unprofitable, and on september 1, 2018, the company adopted a plan to sell the assets of the division. the actual sale was completed on december 15, 2018, at a price of $600,000. the book value of the division’s assets was $1,000,000, resulting in a before-tax loss of $400,000 on the sale. the division incurred a before-tax operating loss from operations of $130,000 from the beginning of the year through december 15. the income tax rate is 40%. chance’s after-tax income from its continuing operations is $350,000. required: prepare an income statement for 2018 beginning with income from continuing operations. include appropriate eps disclosures assuming that 100,000 shares of common stock were outstanding throughout the year. (amounts to be deducted should be indicated with a minus sign. round eps answers to 2 decimal places.)
Answers: 2
Business, 22.06.2019 10:30
Which maxim is being neglected in the following conversation? eli: how did you do at the track meet? caleb: i came in second place! eli: congratulations! what was your time? caleb: six minutes, four seconds. the guy who won only beat me by three seconds. eli: really? katie said the winning time was under 6 minutes. caleb: oh, well, he might have beat me by five seconds. a)maxim of quantity b)maxim of quality c)maxim of relevance d)maxim of manner
Answers: 1
Business, 22.06.2019 16:20
Stosch company's balance sheet reported assets of $112,000, liabilities of $29,000 and common stock of $26,000 as of december 31, year 1. if retained earnings on the balance sheet as of december 31, year 2, amount to $74,000 and stosch paid a $28,000 dividend during year 2, then the amount of net income for year 2 was which of the following? a)$23,000 b) $35,000 c) $12,000 d)$42,000
Answers: 1
Business, 22.06.2019 16:20
Suppose you hold a portfolio consisting of a $10,000 investment in each of 8 different common stocks. the portfolio's beta is 1.25. now suppose you decided to sell one of your stocks that has a beta of 1.00 and to use the proceeds to buy a replacement stock with a beta of 1.55. what would the portfolio's new beta be? do not round your intermediate calculations.
Answers: 2
The focus of Positive Accounting Theory (PAT) is to forecast a firm's
actions concerned with accou...
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