Posted: July 6th, 2016

When a supplier makes a downward adjustment in the amount owed by a creditor?

Machine Machine
Original cost of machine at acquisition……………………..$80,000 $120,000
Remaining useful life as of December 31, 2010…… 6yrs 6yrs
Expected annual cash operating expenses:
Variable cost per dozen……………………………… $.38 $.29
Total fixed costs…………………………………….. $21,000 $11,000

Assume that all operating revenues and expenses occur at the end of the year.

Required:
1. Use the net-present-value method to determine whether the ABC Company should retain the old machine or acquire the new machine. The organization’s hurdle rate is 16 percent.
2. Independent of your answer to requirement (1), suppose the quantitative differences are so small between the two alternatives that management is indifferent between the two proposals. Write a memo to the president of SPI that identifies and discusses any non-quantitative factors that management should consider.
02
Oct
When a supplier makes a downward adjustmen
Categories: Business
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When a supplier makes a downward adjustment in the amount owed by a creditor, the creditor will:
a) reduce the amount of the account payable to the supplier, and decrease an asset such as inventory.
b) increase the amount of the account payable to the supplier, and decrease an asset such as inventory.
c) reduce the amount of the account payable to the supplier, and increase cash.
d) reduce the account of the account payable to the supplier, and decrease cash.

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