Question

1. What is the excess of the purchase price of a company over the total of its net assets?

2. what is the concept that is based on that a dollar today is worth more than the same dollar a year from now.

3. What is the total amoutn of a compay's accounts receivable minus the allowance for doubtful accounts?

4. what is the corporate stoch which is repurchased by a corporation?

5. What is the method that is used to calculate the percentage change in a base year amount to that of a current year?

6. What is the bond which a company has the right to redeem prior to the maturity date?

7. Using the ,,,,,,,,,,,,,,,,,,,,,,,, method the same entry would be made with a debit to Bad Debt Expense and a credit to Accounts Receivable.

Answer 1

1. The excess of the purchase price of a company over the total of its Net Assets is known as Goodwill. When the acquiring company pays purchase consideration for acquring the business of the target company and such purchase consideration is higher than its net assets then it is said that the excess amount paid is the Goodwill.

2. The concept of Time Value of Money states that the present value of dollar is greater than the same dollar a year from now. It is basically due to factors such as Inflation and Interest rares. A high inflation would signify price rise and currency would depreciate. Low interest rates will lead to banks giving more loans and thus resulting in increased money supply.

3. Net Realisable Value is the total amount of a company's accounts receivable minus allowance for doubtful accounts. It can be defined as the debit balance of Accounts receivable less credit balance of Allowance for doubtful accounts.

4. Share Repurchase or Stock buy back refers to the process by which a company would repurchase its own shares in the market. As a result of such repurchase the Stock outstanding will reduce and shareholder's equity will also reduce as a result of stock repurchase.