Income statement is a statement which presents the revenues and expenses of the company in a structured way to reflect the net income/loss earned by the company. Primarily, there are two methods of presenting the income statement, i.e., condensed and detailed. To ascertain: The difference between the income statement presented in exhibit 3.1 and the one given in the question.

Question

Want to see the full answer?

Answer 1

Question

Chapter 3, Problem 3.2P

(a)

To determine

Introduction:Income statement is a statement which presents the revenues and expenses of the company in a structured way to reflect the net income/loss earned by the company. Primarily, there are two methods of presenting the income statement, i.e., condensed and detailed.

To ascertain:The difference between the income statement presented in exhibit 3.1 and the one given in the question.

(b)

To determine

Introduction: Depreciation is a method of allocation of cost of an asset over the period of its useful life. There are various methods of depreciation primarily being straight line method and written down value method. Depreciation helps in increasing the profit margin of the company by increasing the cost which leads to decrease in tax liability.

To find: Whether B Co. spends $367,000 on new fixed assets during 2015 and the economic rationale behind it if it not so.

(c)

To determine

Introduction:Total profit margin is calculated by dividingthe net income of the company with the total revenue. A lower profit margin indicates higher risk i.e. decline in sales will erase profits and lead to net loss. The net profit margin reflectsthe efficiency in production, effective company's pricing policies and robust cost structure.

To compute: The total profit margin of B Co. and interpretation of the same.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

what is the net effect of the errors in the 2018 net income?

In year 2022, cash sales is credited to Rent Income. What is the effect of the error in the year 2022 net income?

a. Fill in the missing numbers in the following income statement: (Do not round intermediate calculations and round your answers to the nearest whole number, e.g. 32.) Sales Costs Depreciation EBIT Taxes (22%) Net income b. b. What is the OCF? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g. 32.) c. What is the depreciation tax shield? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g. 32.) C. $ OCF 586,900 364,300 114,100 Depreciation tax shield

Answer 2

Question

Chapter 3, Problem 3.2P

(a)

To determine

Introduction:Income statement is a statement which presents the revenues and expenses of the company in a structured way to reflect the net income/loss earned by the company. Primarily, there are two methods of presenting the income statement, i.e., condensed and detailed.

To ascertain:The difference between the income statement presented in exhibit 3.1 and the one given in the question.

(b)

To determine

Introduction: Depreciation is a method of allocation of cost of an asset over the period of its useful life. There are various methods of depreciation primarily being straight line method and written down value method. Depreciation helps in increasing the profit margin of the company by increasing the cost which leads to decrease in tax liability.

To find: Whether B Co. spends $367,000 on new fixed assets during 2015 and the economic rationale behind it if it not so.

(c)

To determine

Introduction:Total profit margin is calculated by dividingthe net income of the company with the total revenue. A lower profit margin indicates higher risk i.e. decline in sales will erase profits and lead to net loss. The net profit margin reflectsthe efficiency in production, effective company's pricing policies and robust cost structure.

To compute: The total profit margin of B Co. and interpretation of the same.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 3, Problem 3.2P

(a)

To determine

Introduction:Income statement is a statement which presents the revenues and expenses of the company in a structured way to reflect the net income/loss earned by the company. Primarily, there are two methods of presenting the income statement, i.e., condensed and detailed.

To ascertain:The difference between the income statement presented in exhibit 3.1 and the one given in the question.

(b)

To determine

Introduction: Depreciation is a method of allocation of cost of an asset over the period of its useful life. There are various methods of depreciation primarily being straight line method and written down value method. Depreciation helps in increasing the profit margin of the company by increasing the cost which leads to decrease in tax liability.

To find: Whether B Co. spends $367,000 on new fixed assets during 2015 and the economic rationale behind it if it not so.

(c)

To determine

Introduction:Total profit margin is calculated by dividingthe net income of the company with the total revenue. A lower profit margin indicates higher risk i.e. decline in sales will erase profits and lead to net loss. The net profit margin reflectsthe efficiency in production, effective company's pricing policies and robust cost structure.

To compute: The total profit margin of B Co. and interpretation of the same.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 3, Problem 3.2P

(a)

To determine

Introduction:Income statement is a statement which presents the revenues and expenses of the company in a structured way to reflect the net income/loss earned by the company. Primarily, there are two methods of presenting the income statement, i.e., condensed and detailed.

To ascertain:The difference between the income statement presented in exhibit 3.1 and the one given in the question.

(b)

To determine

Introduction: Depreciation is a method of allocation of cost of an asset over the period of its useful life. There are various methods of depreciation primarily being straight line method and written down value method. Depreciation helps in increasing the profit margin of the company by increasing the cost which leads to decrease in tax liability.

To find: Whether B Co. spends $367,000 on new fixed assets during 2015 and the economic rationale behind it if it not so.

(c)

To determine

Introduction:Total profit margin is calculated by dividingthe net income of the company with the total revenue. A lower profit margin indicates higher risk i.e. decline in sales will erase profits and lead to net loss. The net profit margin reflectsthe efficiency in production, effective company's pricing policies and robust cost structure.

To compute: The total profit margin of B Co. and interpretation of the same.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 3, Problem 3.2P

(a)

To determine

Introduction:Income statement is a statement which presents the revenues and expenses of the company in a structured way to reflect the net income/loss earned by the company. Primarily, there are two methods of presenting the income statement, i.e., condensed and detailed.

To ascertain:The difference between the income statement presented in exhibit 3.1 and the one given in the question.

(b)

To determine

Introduction: Depreciation is a method of allocation of cost of an asset over the period of its useful life. There are various methods of depreciation primarily being straight line method and written down value method. Depreciation helps in increasing the profit margin of the company by increasing the cost which leads to decrease in tax liability.

To find: Whether B Co. spends $367,000 on new fixed assets during 2015 and the economic rationale behind it if it not so.

(c)

To determine

Introduction:Total profit margin is calculated by dividingthe net income of the company with the total revenue. A lower profit margin indicates higher risk i.e. decline in sales will erase profits and lead to net loss. The net profit margin reflectsthe efficiency in production, effective company's pricing policies and robust cost structure.

To compute: The total profit margin of B Co. and interpretation of the same.

Answer 6

Chapter 3, Problem 3.2P

(a)

To determine

Introduction:Income statement is a statement which presents the revenues and expenses of the company in a structured way to reflect the net income/loss earned by the company. Primarily, there are two methods of presenting the income statement, i.e., condensed and detailed.

To ascertain:The difference between the income statement presented in exhibit 3.1 and the one given in the question.

Answer 7

Chapter 3, Problem 3.2P

(a)

To determine

Introduction:Income statement is a statement which presents the revenues and expenses of the company in a structured way to reflect the net income/loss earned by the company. Primarily, there are two methods of presenting the income statement, i.e., condensed and detailed.

To ascertain:The difference between the income statement presented in exhibit 3.1 and the one given in the question.

Answer 8

(b)

To determine

Introduction: Depreciation is a method of allocation of cost of an asset over the period of its useful life. There are various methods of depreciation primarily being straight line method and written down value method. Depreciation helps in increasing the profit margin of the company by increasing the cost which leads to decrease in tax liability.

To find: Whether B Co. spends $367,000 on new fixed assets during 2015 and the economic rationale behind it if it not so.

Answer 9

(b)

To determine

Introduction: Depreciation is a method of allocation of cost of an asset over the period of its useful life. There are various methods of depreciation primarily being straight line method and written down value method. Depreciation helps in increasing the profit margin of the company by increasing the cost which leads to decrease in tax liability.

To find: Whether B Co. spends $367,000 on new fixed assets during 2015 and the economic rationale behind it if it not so.

Answer 10

(c)

To determine

Introduction:Total profit margin is calculated by dividingthe net income of the company with the total revenue. A lower profit margin indicates higher risk i.e. decline in sales will erase profits and lead to net loss. The net profit margin reflectsthe efficiency in production, effective company's pricing policies and robust cost structure.

To compute: The total profit margin of B Co. and interpretation of the same.

Answer 11

(c)

To determine

Introduction:Total profit margin is calculated by dividingthe net income of the company with the total revenue. A lower profit margin indicates higher risk i.e. decline in sales will erase profits and lead to net loss. The net profit margin reflectsthe efficiency in production, effective company's pricing policies and robust cost structure.

To compute: The total profit margin of B Co. and interpretation of the same.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 15

Ch. 3 - Prob. 1.1STQ Ch. 3 - Prob. 1.2STQ Ch. 3 - Prob. 2.1STQ Ch. 3 - Prob. 2.2STQ Ch. 3 - Prob. 2.3STQ Ch. 3 - Prob. 3.1STQ Ch. 3 - Prob. 3.2STQ Ch. 3 - Prob. 3.3STQ Ch. 3 - Prob. 3.4STQ Ch. 3 - Prob. 3.5STQ

Solution Summary: The author explains the difference between the income statement presented in exhibit 3.1 and the one given in the question.

Videos

Want to see the full answer?

Chapter 3 Solutions