When a common stock subscription has been fully paid, the account that is credited to show record of the stock being issued is option B: Capital stock- common
What is the Capital stock?When a company issues common stock through a common stock subscription, it is recorded in the company's books as the issuance of new shares. When the subscription has been fully paid, the cash received from the investor is recorded as a debit in the Cash account and the new shares are recorded as a credit in the Capital Stock - Common account.
Therefore, This shows that the company has issued new shares of common stock in exchange for cash received from the investor. The Stock Subscription - Common account would be used to track the amounts received for the subscriptions before the shares have been issued.
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Changes in the ___ or ___ system in the US has an effect on business
Changes in the political or economic system in the US can have an effect on businesses.
How does the political or economic system affect businesses?
Political changes can affect businesses in a variety of ways. For example, changes in government policies or regulations can affect the costs of doing business, such as taxes, labor laws, and environmental regulations. Changes in trade policies, such as tariffs or trade agreements, can also affect businesses that import or export goods. Additionally, changes in government leadership can also bring about changes in the overall direction and priorities of the government, which can also impact businesses.
Economic changes can also have a significant impact on businesses. For example, changes in interest rates can affect the cost of borrowing for businesses and consumers, which can in turn affect spending and investment. Changes in consumer spending patterns can also affect businesses, as they can change the demand for their products or services. Additionally, changes in the overall economic conditions, such as a recession or a period of growth, can also have a big impact on businesses.
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grand resorts has acquired the services of elegant inc. to develop advertisements for their organization. elegant inc. has advised them to add a panoramic view to billboard ads and to portray tourists lounging by the sea. elegant inc. is an example of a
As Elegant Inc. has advised them to add a panoramic view to billboard ads and to portray tourists lounging by the sea, this is an example of creative boutique.
Elegant Inc. is revolutionizing the way businesses advertise with their creative boutique approach.
By suggesting to add a panoramic view to billboard ads and to depict tourists lounging by the sea, they are pushing the boundaries of traditional advertising.
Their unique approach to advertising is sure to capture the attention of potential customers and leave a lasting impression on them.
This is the perfect way for businesses to differentiate themselves from their competition and stand out from the crowd.
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What economic problem would be solved by taking money out of circulation
(away from people)? What could the Fed do to contract the money supply? What is a contractionary action Congress could take? Why do these contractionary actions help with this problem?
A central bank's employment about an expansionary policy involves really an effort to stimulate the economy by increasing demand through fiscal and fiscal stimulus.
What harms does expansive policy produce?Accommodative monetary policy increase the amount of cash available, which in turn boosts spending and accelerates economic growth. Because businesses have access to more money, they boost production, which raises demand for all production-related inputs, including human capital.
What do expansionary policies make more?A central bank's use of its resources to boost the economy is known as expansionary monetary policy. This boosts the money supply, brings down interest rates, and boosts demand. Economic growth is boosted.
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Identify the accounting​ concept, assumption, or principle that best applies to each of the following​ situations: a. Inflation has been abound​ 2.5% for some time. VillageVillage Realtors is considering measuring its land values in​ inflation-adjusted amounts. b. You get an especially good buy on a laptoplaptop​, paying only $ 300$300 when it normally costs $ 800$800. What is your accounting value for this laptoplaptop​? c. Burger KingBurger King​, the restaurant​ chain, sold a store location to McDonaldMcDonald​'s. How can Burger KingBurger King determine the sale price of the storelong dash—by a professional​ appraisal, Burger KingBurger King​'s original​ cost, or the amount actually received from the​ sale? d. General MotorsGeneral Motors wants to determine which division of the companylong dash—ChevroletChevrolet or CadillacCadillaclong dash—is more profitable.
A Stable Monetary unit assumption .B Historical cost principle. C Historical cost principle. D Entity assumption.
What kind of business expense is this, specifically?A company must incur expenses in order to provide its customers with a good or service. These expenses cover things like employee wages, stock replacement purchases, and storefront rent.
What advantages does cost have for business?To ensure that all expenses are covered and that the organisation chooses a price that always generate a profit, costing is required. The first and most important step is to identify ALL of an expenses, including production, sales, administration, waste, etc. After that, costs are separated into variable and fixed costs.
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Cost Definitions Wyandotte Company provided the following information for the last calendar year: Beginning inventory: Direct materials $32,400 Work in process 48,000 Ending inventory: Direct materials $22,000 Work in process 20,400 During the year, direct materials purchases amounted to $255,600, direct labor cost was $185,200, and overhead cost was $310,800. There were 40,000 units produced. Required: 1. Calculate the total cost of direct materials used in production. $ 266,000 2. Calculate the cost of goods manufactured. $ 789,600 Calculate the unit manufacturing cost. If required, round your answer to the nearest cent. $19. 74 per unit 3. Of the unit manufacturing cost calculated in Requirement 2, $6. 65 is direct materials and $7. 77 is overhead. If required, round intermediate calculations and your final answers to the nearest cent. What is the prime cost per unit? $ 11. 97 per unit What is the conversion cost per unit?
The cost of direct material procurement was $254,800, the cost of direct labor was $166,400, and the cost of overhead was $304,800.
What does the word "cost" really mean?The sum paid for anything, or its equivalent is called the price. The average price of a college degree has significantly increased. the money invested or spent to accomplish a goal.
What do the terms "cost" mean differently?Cost refers to a price or a sacrifice that must be made in return for something. Using the word cost as a verb is to demand payment or even to cause a loss of something. As a noun phrase, cost has numerous more meanings.
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Louisa has a savings account that pays interest at an annual percentage rate of 2 percent. The current annual inflation rate is 4 percent. Based on this information, and assuming these rates stay constant in the future, which statement is true?
A dollar generally buys 2% fewer goods and services today than it did last year at an annual inflation rate of 2%. It's crucial to realize that while prices have increased through time, so have wages.
What is inflation rate?Price increases, or inflation, can be thought of as the gradual loss of purchasing power. The average price increase of a selection of products and services over time can serve as a proxy for the rate at which buying power declines.
A unit of currency effectively buys less as a result of the increase in pricing, which is sometimes stated as a percentage. Deflation, which happens when prices fall and buying power rises, can be compared to inflation.
Commodities like food grains, metal, and fuel are among them, as are utilities like power and transportation, as well as services like labor, entertainment, and health care.
The objective of measuring inflation is to determine the overall effect of changes in price for a variety of goods.
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once a year at the annual employee meeting, the president of northwest bank, incorporated, reminds his employees of his belief that there are certain values everyone can agree on, such as honesty, fairness, and respect for life. which ethical system does the president believe in?
It is moral universalism type of ethical system in which president believes in.
The recognition of a single underlying truth is another essential component of universalism. Limitations or interpretations of that one truth based on national, cultural, or religious considerations are viewed as being less expansive than the actual truth. truth is one; sages have referred to it by many names. People from diverse backgrounds may be accepted by a group that identifies as universalist and emphasises the universal qualities present in the majority of religions. The pursuit of true global or universalist frameworks, such as human rights or international law, are both examples of contemporary universalism. The goal of the West to unify all people across geographic and other barriers under Western norms. number of firms believes in this ethical system as best suited system for efficient working.
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one of the effects of gas prices rising from about $2 to about $4 per gallon was airlines ordering new, fuel-efficient aircraft.
a. True b. b. False
True is the correct answer, if one of the effects of gas prices rising from about $2 to about $4 per gallon was airlines ordering new, fuel-efficient aircraft.
What does fuel-efficient mean?Fuel efficiency is a type of thermal efficiency and refers to the effort-to-result ratio of a process that transforms the chemical potential energy present in a carrier (fuel) into kinetic energy or work. Depending on the device, which in turn depends on the application, overall fuel efficiency may vary. This spectrum of variation is frequently depicted as a continuous energy profile.
Increased fuel efficiency is advantageous for non-transportation applications like industry, especially for fossil fuel power plants or combustion-related industries like those that make ammonia during the Haber process.
Fuel economy, when used in relation to transportation, refers to a vehicle's energy efficiency as measured by the ratio of the distance travelled to the amount of fuel consumed.
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how long does it take after irs accepts your return?
Your refund should indeed be issued at around 6 to 8 weeks from the moment the IRS receives your print tax return if it is filed accurately and completely.
A refunding firm is what?A refunding services is a scam operation in which a skilled refunder promises to get refunds for customers in return for a charge. Refunders often use social media and other digital channels to market their brands, and they use messaging applications to communicate with their customers.
How long does it take to refund the amount?Typically, it takes three to seven days max for a reimbursement to be completely processed, although this might change depending on the circumstance. The credit issuer has a big impact on how fast the transaction unfolds.
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henry and rita disagree about how to manage their finances after their marriage, and their children are concerned about receiving their inheritances. which of the following strategies would you recommend to address these issues? a) have henry and rita execute a premarital property agreement b) have henry and rita title all of their assets as jtwros after they get married c) have the families enter into a family settlement agreement d) have each spouse draft a will disinheriting the other
Have henry and rita execute a premarital property agreement and have henry and rita title all of their assets as jtwros after they get married.
What is meant by assets ?
An asset is anything that you own, usually something valuable. Your possessions, such as your home and clothing, can be considered assets.
Your equity is the value of the shares you purchased from a corporation.
Intangible assets include intellectual property rights, royalties, and other patents, as well as tangible goods such as machinery, real estate, raw materials, and inventories.
Common asset types include current, non-current, physical, intangible, operating, and non-operating assets.
If you can sell your possessions for cash, you have assets.
In accounting, an asset is any resource that a company owns or manages.
Anything that can be sold for money is eligible. We can calculate the equity value by looking at the assets and liabilities on a balance sheet.
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Select the correct answer from the drop-down menu if a society decides to produce consumer goods from its available resources, it is answering the basic economic question, how to produce? What to produce? For whom to produce?
A) how to produce
B) what to produce
C) to whom to produce
pann, a nongovernmental not-for-profit organization, received a cash gift with the stipulation that the principal be held for at least 20 years. how should the cash gift be recorded?
When a nongovernmental not-for-profit organization spends money for the purpose for which an external donor intended, then the expense is reported as Decrease in temporarily restricted net assets.
Pledges receivable, valued at their present values should unconditional pledges received by a nongovernmental not-for-profit entity that will be collected over more than one year be reported. A nongovernmental not-for-profit organization reports operating expenses only in the changes in unrestricted net assets section of the statement of activities. Balance sheet, income statement, statement of cash flows and statement of functional expenses are the required financial statements for nongovernmental not-for-profit organizations. Gains and losses can only be reported net of expenses in the statement of activities should a nongovernmental not-for-profit organization classify gains and losses on investments purchased with permanently restricted assets. Nonprofit organizations use public relations to help educate the public, increase donations and find volunteers.
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select all that apply which of the following is/are true about the impact of variability on managing processes? multiple select question. customers understand that process variability occurs and accept that delays are inevitable. variability in processes can make planning and managing the process more challenging. process variability can lead to product delays and shortages, which can lead to a damaged company reputation.
Option B is correct. Variability in processes can make planning and managing the process more challenging. Process variability can lead to product delays and shortages, which can lead to a damaged company reputation.
What is process variability?Process variability highlights the underlying variations and oscillations in a process's outcome. A number of things, including variances in building ingredients, logistics planning, human mistake, or ecological factors, might contribute to it. Process variability can cause problems including delays, faults, and higher costs while also affecting a process's effectiveness, efficiency, and quality. To maintain quality and consistency of output, businesses must track and manage process variability. To recognize and minimize process variability, strategies like Statistical Process Control (SPC) and Six Sigma can be applied.
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Carefully specified objectives should have all of the following characteristics EXCEPT _______.
a. to provide motivation to employees b. to guide marketing strategies and tactics for the organization c. to have unspecified end dates d. to be consistent with the firm's mission statement
Carefully specified objectives should have all of the following characteristics EXCEPT to have unspecified end dates
Correct option is: c
What is specified objectives?Determine how the workplace influences performance, for instance, may be your general purpose. The exact goals you may have in this situation are "Determine whether sunshine helps performance" and "Measure how performance varies as work environment changes."
Instead of focusing on the performance of the trainer or the expected results of the instructional method on the job site, specific learning objectives characterize performance in terms of knowledge, attitudes, competence, ambition, and conduct.
Thus, correct option: c
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You are an investment counselor, and your new 65-year-old client has come in for some advice. He is considering retiring in a year and wants to know more about how to make a return suitable for retirement income and still maintain his principle initial investment. Like most people, he knows very little about investing money and the many different investment securities available to him. Discuss what you would tell him
A diversified portfolio that includes both low-risk, low-return investments like bonds high-risk, increasing investment like stocks is what I advise, investing in securities that generate income, dividends or rental property.
Portfolio? What do you mean?A portfolio is a group of financial assets, such as securities, bonds, commodities, cash, as well as cash equivalents, such as closed-end funds and exchange-traded funds (ETFs). Most people think that a portfolio's core consists of stocks, bonds, and cash.
A portfolio with an example is what?A portfolio is, in the most basic sense, a grouping of investment opportunities that includes stocks, bond funds, cash, and other kinds of assets. Investing in various asset classes, such as stocks, bonds, and commodities, is common, but
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using a spreadsheet you have written and the data for the hoko river near sekiu, wa, below, determine the required storage volume for a uniform demand of 0.35 m3 /s for the period january 1969 through december 1973. assume a regulatory restriction that allows only 6% of the flowrate to be withdrawn. what size reservoir is required? is it full at the end of december, 1973? ignore the need for increased volume for sediment.
The reservoir would not be full at the end of December 1973, as the total withdrawal rate is only 0.35 m3/s, while the average flowrate is 0.84 m3/s.
What is Average Flowrate? Average flowrate is the measurement of the average volumetric flow rate of a fluid over a certain period of time. It is calculated by taking the total volume of fluid that has passed through a system over a given period of time and dividing it by the length of that time period. The common unit for flowrate is liters per second (L/s). Average flowrate is used to measure the amount of fluid that is passing through a system or a pipe over a certain period of time. It is also used to determine the power output of pumps and other machinery. Average flowrate is an important parameter in the design and operation of water treatment plants, irrigation systems, and other hydraulic systems. It can also be used to determine the efficiency of cooling systems, fans, and other equipment. Average flowrate can also be used to calculate the energy efficiency of a system or the cost of energy used by a system.To learn more about Average Flowrate refer to:
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When considering the implications of its decision to provide an electric version of its cars, VWa. must use moral imagination.b. put the demands of shareholders above stakeholders.c. should avoid moral courage and focus on cultural relativism.d. must engage ethics officers to ensure the legality of its decisions.e. should encourage nobles oblige at the expense of corporate social responsibility.
When considering the implications of its decision to provide an electric version of its cars, it must use moral imagination according to the decision making. The correct option is A.
The decision making is the process in which is used in the business while making the new decision into the product or services. The decision making process will be performed according to the steps of decision making.
The decision making have the steps identifying the goal, detail about the goal, resource to manufacturing, distribution to the consumer. The decision making use the implications of its decision to provide an electric version of its cars, it must use moral imagination.
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give 4 measurements a manager can take to improve working enviroment in an office
The 4 measurements a manager can take to improve working environment in an office are:
Proper working time with a break
Giving reward on time to time
Some fun activities
Proper interaction with the subordinates
Who is a manager?A manager is a person in a company or a business or a firm, who has the responsibility of managing and coordinating the assignments and projects or any work of a company.
A manager is like a coordinator of a school who manages work o a company. They can be in charge of a department or a small unit of department and the people who work in it.
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on june 1, 2020, england inc. reported a cash balance of $42,000. during june, england made cash sales of $16,000 and made cash payments totaling $48,000. what is the cash balance at the end of june? $58.000 debit balance. $10,000 debit balance. $58,000 credit balance. $10,000 credit balance
England Inc. reported a $42,000 cash balance as of June 1st, 2020. England made cash transactions and payments of $16,000 and $48,000 in june. There would be a $10,000 negative balance in the cash balance at the end of June.
You may use the following formula to determine the final cash balance:
Ending Cash Balance = Beginning Cash Balance + Cash Sales - Cash Payments.
Adding the specified values:
$42,000 plus $16,000 less $48,000 is a $10,000 deficit.
A debit balance in accounting denotes a negative cash balance, indicating debt for the business. This indicates that the business has to raise extra dollars to pay its expenditures since it has spent more money than it has brought in via sales.
The sum of money that a business has on hand at the moment is called its cash balance. This cash is held in reserve to cover any unforeseen financial shortfalls. Without this financial safety net, companies could find themselves unable to cover their expenses.
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what is the total market supply, qs, for laundry detergent in the united states if the only two suppliers inverse supply
The entire market supply for laundry detergent in the US would be Qs = 7 + 2P
If the two suppliers' inverse supply functions were P = -5 + Qs and P = -2 + Qs, respectively. This is due to the fact that the sum of the quantities supplied by each supplier at a given price point would represent the overall quantity supplied at that price point.
If there are just two providers and their inverse supply functions are P - 5 + Qs and P - 2 + Qs Z, then the total market supply for laundry detergent in the United States is provided by the formula: Qs = 7 + 2P.
Due to the fact that the total supply is the horizontal sum of all quantities supplied at a specific price point, this is the case. In this instance, the inverse supply functions for the two providers are P - 5 + Qs and P - 2 + Qsz.
Qs = 7 + 2P is the overall market supply as a result.
The horizontal total of all quantities supplied at a certain price point is known as the total market supply.
Therefore, the total market supply curve would look like this:
P = 0 → Qs = 7
P = 1 → Qs = 8
P = 2 → Qs = 9
and it will go on like this.
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what is the core characteristic that defines a zero-based budget?
A budgeting method known as a zero-based budget entails allocating every dollar of monthly income. After taking into consideration all of your costs, income, and purchasing.
Which income do you refer to?The lot of cash, properties, and many other changes of value obtained over a predetermined length of time in return for services or goods are often referred to as "income." Income is defined in relation to the context to which the word is employed; there isn't single, universal definition.
What do business income and profit mean?Profit is the sum that remains after all costs have been deducted from the revenue, to put it simply. Simply said, income is the real amount of money that a business makes.
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4. There are two goods, X and Y. The absolute price of X rises and the
absolute price of Y does not change. Prove that the relative price of X rises in
terms of Y.
When the absolute price of x increases while keeping the cost of y constant, the relative cost also increases.
What does absolute price mean?The amount of money required to trade a particular quantity of an item for an absolute price.
Let the absolute price of x be 2 and that of y be 4 ,now let the price of y remains unchanged and that of x rises to 4, relative price means the price of one good with respect to the other, so in the first case relative price x/y =2/4 = 0.5
Now as it rises to 4,
new relative price =4/4 =1
1>0.5
So, when absolute price of x rises keeping that of y constant, then the relative price also rises.
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company a has break-even sales of 89,000 units and budgeted sales of 109,000 units. what is the margin of safety as expressed as a percentage?
The margin of safety is 18.34% as expressed as a percentage.
The margin of safety = (Budgeted sales - Break even sale)/Budgeted sales *100
MOS = (109,000 - 89,000)/109,000 * 100
MOS = 18.34%
In typography, a margin is an area between the main content of a page and the web page edges. The margin enables to outline wherein a line of text starts and ends. while a page is justified the textual content is spread out to be flush with the left and right margins. when pages of content are combined next to every other (called a -page spread), the distance between the 2 pages is referred to as the gutter.
Margins are an essential method of organizing written phrases and feature-long records. In ancient Egypt, writing changed into recorded on papyrus scrolls. Egyptian papyrus scrolls could attain as much as 30 meters in period and contained textual content organized in columns laid out from left to proper along the scroll. Columns were referred to as pagina (or pages) and were separated by margins, so that scrolls may be unrolled horizontally, uncovering person sections one at a time. for that reason, in papyrus scrolls margins performed the characteristic of visually signaling to readers while forestalling analyzing, and moving down to the following line of textual content.
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The margin of safety, stated as a percentage, is 18.34%.
A margin in typography is the space between a page's primary text and its edges. The margin makes it possible to mark the beginning and end of each line of text. When text is justified, the left and right borders of the page are flush with the text. The gutter is the space between two pages when content pages are arranged next to one another (this is known as a page spread).
The use of margins is crucial for structuring extensive records and written words. Writing was replaced by recording on papyrus scrolls in ancient Egypt.
The margin of safety is determined by multiplying the budgeted sales by the break-even sale.
MOS = (109,000 - 89,000)/109,000 * 100
MOS = 18.34%
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harrison needs a new toaster. he ask his friends what brands they have, and is looking for one that can handle bagels. he does not think about looking at any other attributes such as energy consumption or warranties. what type of problem solving is harrison undertaking?
Harrison uses an approach to problem solving called heuristic problem solving. Heuristic problem solving is a type of problem solving that relies on a person's experience and intuition to correctly guess and develop a solution.
In Harrison's case, he relies on his friends' experiences to determine which brand of toaster is best for him. He doesn't consider any other factors like energy consumption or warranties because he relies on their experience to decide which toaster to buy. In this case, Harrison is trying to find a toaster that can handle bagels, so he uses the knowledge available to him (his friends) to make a decision. Heuristic problem solving is often a quick and efficient way to solve a problem because it relies on the person's current knowledge and experience.
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which of the scattergraph plots above suggests a mixed cost relationship between direct labor-hours and manufacturing overhead? multiple choice (a) (b) (c) (d)
The scattergraph plots above show an expanding graph that indicates a mixed cost relationship between direct worker hours and manufacturing overhead.
The association between two numerical variables measured for the same individuals is displayed in a scatterplot. One variable's values are displayed on the horizontal axis, and the other variable's values are displayed on the vertical axis. On the graph, each individual in the data is represented by a point.
In order to anticipate and budget for future expenses, the scattergraph (or scatter graph) method is a visual tool used in accounting for separating the fixed and variable components of a semi-variable expense (also known as a mixed cost).
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amazon's predictive delivery and lowe's lowebots are essentially trying to master which step of the marketing process?
The step of the marketing process is understanding of customers need and wants. In fact, customers’ needs and wants often don’t know what they need.
They are focused on what they want for emotional and/or social reasons, and companies that give them what they want are better equipped to build profitable and sustainable relationships with their customers. Yes, customers know what they want and why they want it, at least now, so knowing gives them a sense of power and control, and that sense of “Inflame” companies can get more support from their customers. This means that there is a desire between customer needs and wants. They are what drive the customer to buy, and the job of the company is to ask what the customer wants, listen carefully, and deliver it to the customer faster than the competition. Desire fuels passion and the desire to “own” a particular product. The business of companies is to satisfy these desires as often and as quickly as possible. Research shows that customers are happier and appreciate companies that give them what they want. This has proven to be a significant competitive advantage for the company.
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when business managers are asked to rank the communication skills that are most crucial to their jobs, which do they usually rank as number one?
For business managers, active listening is the most important communication ability. It is the capability to completely focused on, comprehend, and remember information via spoken conversation.
This talent enables managers to comprehend their workers', customers', and other stakeholders' wants and concerns, which is critical for successful decision making and problem solving.Active listening is essential for developing and keeping relationships since it demonstrates that the manager values the ideas and opinions of others.
It also makes managers to have a broader understanding of their team members and clients, so that they can take better decisions,on solving issues and future problems more efficiently, and to establish better relationships with their teammates at and clients.
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almost all economists agree that a large federal budget deficit _____
Almost all economists concur that the economy is negatively impacted by a substantial federal budget deficit.
Describe a budget.An expenditure plan for your firm based on your profits and expenses is called a business budget. It determines your available cash, calculates your expenses, and aids in income forecasting. A budget can aid in the planning of your business operations and serve as a benchmark for the establishment of financial objectives.
Why is a corporate budget important?One of the crucial tools for directing your organization is a comprehensive and practical budget. A budget offers crucial knowledge for living within your means, dealing with unforeseen difficulties, and making a profit.
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Unicorn Toys faces stiff competition from Playtime Inc. , a rival firm with which Unicorn Toys has achieved differentiation parity. Both firms have invested in state-of-the art production facilities and have similar learning curves of 85 percent. Assuming neither firm can reduce the cost of its input factors, how can Unicorn Toys achieve a competitive advantage as a cost leader? Multiple Choice Reduce the manufacturing staff by half to save on labor costs. Increase spending on product features. Have a cumulative output that is greater than Playtime Inc. S Eliminate several features that customers value to cut costs
As a cost leader, Unicorn Toys gains a competitive edge. by option A. Cut the manufacturing staff in half to save money on labour.
A cost leader is a firm that is able to produce goods or services at a lower cost than its competitors. In this case, Unicorn Toys has achieved differentiation parity with Playtime Inc. and both firms have similar learning curves of 85%. So, the only way for Unicorn Toys to achieve a competitive advantage as a cost leader is to reduce its costs. One way to do this is to reduce the manufacturing staff by half to save on labor costs. This would allow Unicorn Toys to produce goods at a lower cost than Playtime Inc. This would be a cost-cutting strategy, which would give a competitive advantage to Unicorn Toys.
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a house cost $395,000 to build new. it is 5 years old and has sustained a total of 10% depreciation. it sits on a lot worth $65,000. what is its indicated value by the cost approach?
A house cost $395,000 to build new. it is 5 years old and has sustained a total of 10% depreciation. it sits on a lot worth $65,000. The indicated value of the property amounts to $421,500.
What is the cost approach?The cost approach is a method used to determine the value of a property by estimating the cost to reproduce or replace the property, less any accumulated depreciation.
To calculate the indicated value of the house using the cost approach, we would use the following formula:
Indicated value = Reproduction or replacement cost - Accumulated depreciation + Land value
In this case, the house cost $395,000 to build new, is 5 years old, and has sustained a total of 10% depreciation. The land value is $65,000
The accumulated depreciation can be calculated as:
$395,000 x 10% = $39,500
So the indicated value of the house would be:
$395,000 - $39,500 + $65,000 = $421,500
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