As a firm grows, it must support increases in revenue with new investments in assets. The self-supporting, or sustainable, growth model helps a firm assess how rapidly it can grow, while maintaining a balance between its cash outflows (increases in noncash assets) and inflows (funds resulting from increases in liabilities or equity).

Consider the following case of Blue Elk Manufacturing:

Blue Elk Manufacturing has no debt in its capital structure and has $100,000,000 in assets. Its sales revenues last year were $30,000,000 with a net income of $1,500,000. The company distributed $145,000 as dividends to its shareholders last year.

Given the information above, what is Blue Elk Manufacturing’s sustainable growth rate?

2.946184%

4.3402367%

1.37%

0.1452622%

Which of the following are assumptions of the sustainable (self-supporting) growth model? Check all that apply.

A. The firm maintains a constant net profit margin.

B. The firm’s total asset turnover ratio remains constant.

C. The firm pays no dividends.

D. The firm maintains a constant ratio of liabilities to equity.

There are several differences between IFRS and GAAP in regards to revenue recognition. First, there are differences in the conditions that must exist to recognize revenue from the sale of goods. For example, under IFRS, one of the conditions is that “The entity has transferred to the buyer the significant risks and rewards of the goods.” Where as one of the GAAP conditions is simply that “Delivery has occurred.” Second, there are differences in recognizing revenue from construction contracts. For example, in GAAP, “If certain criteria are met, the percentage-of-completion method is used. If those criteria are not met, the completed contract method is used.” In IFRS, “The completed contract method is prohibited. If the percentage-of-completion method is not used because the final outcome cannot be reliably estimated, revenue is limited to the amount of recoverable costs incurred.” Third, there are differences in recognizing revenue involving contingent consideration. For example, under IFRS, if there is “the probability that economic benefits associated with the transaction will flow to the entity…revenue might be recognized prior to resolution of the contingency.” However, with GAAP, “Revenue related to contingent consideration should not be recognized until the contingency is resolved.” Lastly, in regards to customer loyalty programs, “there is not specific guidance related to accounting for customer loyalty programs. However, IFRS states that “Credits awarded to program participants must be treated as a separately identifiable component of a sales transaction.” PLEASE COMMENT ON THIS POST

Suppose an investor invested $400 in a project that is expected to generate revenue of $440 a year later. The required rate of return is the minimum return an investor expects to achieve by investing in a project. The required rate of return is influenced by the following factors: the risk-free rate of return is 4% , the expected return from the market is 8%, and beta is 1.5.

5-     How much is the residual earnings?

6-     If the required rate of return (cost of capital) for the project is 12%, do you think the project is making a profit or loss? Explain your answer?

7-     If the project were to generate revenues of $448, how much is the residual earnings? (assume that the required rate of return for the project is 10 percent)

8-     If the project for one-period with an expected rate of return of 10 percent, what is the value of the project? (use the residual earnings model)

9-     If the project were expected to earn at a 12 percent rate, , what is the value of the project?

The revenue equation​ (in hunderds of millions of​ dollars) for barley production in a certain country is approximated by Upper R left parenthesis x right parenthesisequals0.0688 x squared plus 1.2121 x plus 2.2234 where x is in hundreds of millions of bushels. Find the​ marginal-revenue equation and use it to find the marginal revenue for the production of the given number of bushels. ANSWERS NEEDED - Marginal revenue for 400,000,000 bushels for 550,000,000 bushels

Expenses are costs incurred by an organization in the process of earning revenue during a given time period. Expense accounts have a direct impact on the profitability of an organization. List three expense accounts related to payroll. Describe when you would expect the account to be cleared to zero. Explain the methods you could use to reconcile these accounts.

pay roll fundamental 2 chapter 1

The revenue function for a company can be defined as; TR = Price (P) ´ Quantity Demanded (Q). If the ordinary demand function for your firm is Q = 75 - 0.4P:

1.    What is the total revenue function for this firm in terms of Q?
2.    What is the average revenue function for this firm in terms of Q?
3.    What is the MR function for this firm in terms of Q?
4.    Show that MR will be less than AR for any positive level of Q. Why is that?
5.    What is the quantity level that maximizes total revenue? What is the price?

For each of the following revenue transactions affecting a city, identify the class in which the revenue falls and prepare an appropriate fund journal entry for the current year (2021) as necessary. Provide a brief explanation of, or justification for, your entry.

1. In December, the state in which the city is located announced that it would grant the city $20 million to bring certain public facilities into compliance with the state’s recently enacted disability/accessibility laws. As of year-end, the city had not yet received the funds, and it had not yet expended any funds on the state-mandated facility improvements.

2. The city imposes a $100 tax on each sale of real estate. The tax is collected by the title companies that process the sales and must be forwarded to the city within 30 days of the transaction. In December, there were 600 sales of real estate. As of year-end, the city had collected $40,000 of the $60,000 that it was owed.

3. In December, the state announced that the city’s share of state assistance for the calendar year 2022 would be $120 million.

4. The city imposes a tax on all boats owned by residents. The tax is equal to 1 percent of the assessed value of a boat (determined by the city, taking into account the boat’s original cost and age). The tax is payable on the last day of the year prior to the year for which the tax is applicable. In 2021, the city levied $640,000 of 2022 boat taxes, of which it collected $450,000.

5. A local resident sends to the city a copy of her will in which she bequeaths $3 million to the city museum upon her death.

6. The U.S. Department of Justice announces that it will reimburse the city up to $400,000 for the purchase of telecommunications equipment. As of year-end, the city had incurred only $200,000 in allowable expenditures.

7. A resident donates $10 million in securities to the city to support a cultural center. Only the income from the securities, not the principal, can be spent.

For each of the following situations, indicate the amount of revenue that the government should recognize in an appropriate governmental fund as well as in its government-wide statement of activities in its fiscal year ending December 31, 2021. Briefly justify your response, making certain that, as appropriate, you identify the key issue of concern.

1. In October 2020, a state received a federal grant of $300 million (in cash) to assist local law enforcement efforts. The federal government has established specific criteria governing how the funds should be distributed and will monitor the funds to ensure that they are used in accordance with grant provisions. The grant is intended to cover any allowable expenditure incurred in the calendar years 2021 through 2022. In 2021, the state incurred $160 million of allowable expenditures.

2. In December 2020, a city levied property taxes of $500 million for the calendar year 2021. The taxes are due on June 30, 2021. The city collects the taxes as follows:

December 2020 $30 million

January 1, 2021, to December 31, 2021 $440 million

January 1, 2022, through March 31, 2022 ($8 million per month) $24 million Total $494 million

3. It estimates the balance will be uncollectible.

4. In January 2021, a city received a cash gift of $1 million to support its museum of city history. Per the wishes of the donor the funds are to be invested and only the income may be expended. In 2021, the endowment generated $50,000 in income, none of which was spent during the year.

5. For the year 2021, the teachers of the Nuvorich School District earned $26 million in pension benefits. In January 2022, the state in which the district is located paid the entire amount into the State Teachers Retirement Fund.

What is the accrual basis of accounting? When should revenue and expense be recognized in the accrual basis? Provide an example