Max Powers, Vice President for National Lending, has instructed the computer programmer to use a 365-day year to calculate interest expense on the company's liabilities, which are loans they have taken out. He has also instructed the programmer to use a 360-day year to calculate interest revenue on assets, which are the loans they have given out to clients. 1. What are the financial ramifications of using a 365-day year opposed to a 360-day year on both the interest expense and interest revenue? 2. Which method should be used? 3. Can both methods be used? 4. Discuss whether Max is behaving in a professional manner. 5. Is there a method that banks normally use on loans?
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Max Powers, Vice President for National Lending, has instructed the computer programmer to use a 365-day...
Max Powers, Vice President for National Lending, has instructed the computer programmer to use a 365-day year to calculate interest expense on the company's liabilities, which are loans they have taken out. He has also instructed the programmer to use a 360-day year to calculate interest revenue on assets, which are the loans they have given out to clients. 1. What are the financial ramifications of using a 365-day year opposed to a 360-day year on both the interest expense...
With $2.3 Trillion Injection, Fed’s Plan Far Exceeds Its 2008 Rescue The Federal Reserve said it would buy some municipal bonds and some riskier debt to help governments and companies. The Federal Reserve said it could pump $2.3 trillion into the economy through new and expanded programs it announced on Thursday, ramping up its efforts to help companies and state and local governments suffering financial damage from the coronavirus. The central bank rolled out its relief package just as the...
Please answer all the following questions.
When you rent out your home for more than 14 days per year, you have to declare your income and may have to pay taxes. However, it is not as bad as it sounds. This is because certain costs of running a home that would otherwise not be deductible, such as utilities and insurance, become partially deductible when the home is used to produce rental income. The textbook on page 14-18 (see PPTS below)...
Marin Inc.’s CFO has just left the office of the company president after a meeting about the draft SFP at April 30, 2020, and income statement for the year then ended. (Both are reproduced below.) “Our liquidity position looks healthy,” the president had remarked. “Look at the current and acid-test ratios, and the amount of working capital we have. And between the goodwill write off and depreciation, we have almost $23 million of non-cash expenses. I don’t understand why you’ve been...
BAYOU COMPUTER SERVICES, INC. Company Background Bayou Computer Services, Inc, is a popular computer service center that was started by Begona Perez-Mira and Brenda Henson. As individuals who devoted a great deal of their time assisting others with solving computer problems, they wanted a way to provide their services to other people in the local area. They established a computer service business that specialines in computer repairs, networking, vinus and spy ware protection, removing viruses from computers in order to...
Read the attached article. Do you feel one style of banking
control is more stable than the other? Why? Does one banking method
minimize market volatility and risk better or is it just packaged
differently? Do you feel the US (Western) Banking system can better
control the patterns of behavior going forward that have caused
economic damage in the past? Should the Fed continue its stimulus
policy, reduce it or abandon it entirely (Google some recent
articles to research this)? (Please...
Description of transaction June 1: Hudson Bloom invested $207,495.00 cash and computer equipment with a fair market value of $44,660.00 in his new business, Byte of Accounting. June 1: Check # 5000 was used to purchased office equipment costing $1,015.00 from Office Express. The invoice number was 87417. June 1: Check # 5001 was used to purchased computer equipment costing $12,180.00 from Aaron Reed. The invoice number was 20117. June 2: Check # 5002 was used to make a down...
Description of transaction 01. June 1: Hudson Bloom invested $164,684.00 cash and computer equipment with a fair market value of $40,560.00 in his new business, Byte of Accounting. 02. June 1: Check # 5000 was used to purchased office equipment costing $1,144.00 from Office Express. The invoice number was 87417. 03. June 1: Check # 5001 was used to purchased computer equipment costing $12,480.00 from Taylor Jones. The invoice number was 20117. 04. June 2: Check # 5002 was used...
On August 1, Terry issued a $1,600,000, semi-annual, 6 year,
4.5% bond. The market rate for similar bonds on that day was 5.0%.
Terry uses the effective interest method to record the amortization
or premiums and discounts. Terry’s management has decided to report
net bonds on the balance sheet, instead of reporting the bond and
its premium or discount separately. No entries have yet been made
for the bond. Terry’s management would like to know the effect of
the sale...
1. When it comes to financial matters, the views of Aristotle can be stated as: a. usury is nature’s way of helping each other. b. the fact that money is barren makes it the ideal medium of exchange. c. charging interest is immoral because money is not productive. d. when you lend money, it grows more money. e. interest is too high if it can’t be paid back. 2. Since 2008, when the monetary base was about $800 billion,...