Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Required information Problem 14-63, 14-64 (Algo) (LO 14-1, 2, 3, 4) Bentler Industries provides high-technology navigation and communication equipment for the oerospace and shipbuliding industries,

image text in transcribed
image text in transcribed
image text in transcribed
Required information Problem 14-63, 14-64 (Algo) (LO 14-1, 2, 3, 4) Bentler Industries provides high-technology navigation and communication equipment for the oerospace and shipbuliding industries, It is organized into two divisions, Aeronautics and Marine. The division presidents are given wide decisionmaking outhority that covers operations, marketing, and asset acquisition and disposal. Bentler evaluates the division presidents on, among other things. ROI in their respectlve divisions. ROI is based on after-tax divisional income and beginning-of-year assets. Divisional income includes allocated corporate overheod. For the most recent year (year 3), dota from the two divisions shows the following: The tax rate applied at Bentier is 20 percent. Problem 14-64 (Algo) Economic Value Added (EVA) (LO 14-4) Looking at the ROI results for year 3, the president of Aeronautics Division complains that the division is evaluated unfairly because of the accounting rules that R\&D expenditures be expensed in the year incurred. The president believes that the type of R\&D performed in both Aeronautics and Marine Division generate benefits over a three-year period. In order to consider the president's complaint, the company considers some additional information. First, divisional balance sheets as of January 1, year 3 follow. Historical information on R\&D expenditures follow here Historical information on R\&D expenditures follow here: a. Compute the economic value added (EVA) for each division for year 3. Assume that the R\&D expenditures are incurred uniformly over the year. Bentler uses a cost of capital of 12 percent. b. Which division performed better? Complete this question by entering your answers in the tabs below. Compute the economic value added (EVA) for each division for year 3. Assume that the R\&D expenditures are incurred uniformly over the year, Bentler uses a cost of capital of 12 percent. Note: Enter your answers in thousands of dollars

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fraud Analytics Using Descriptive Predictive And Social Network Techniques A Guide To Data Science For Fraud Detection

Authors: Bart Baesens, Veronique Van Vlasselaer, Wouter Verbeke

1st Edition

1119133122, 978-1119133124

More Books

Students also viewed these Accounting questions

Question

4. List four reasons firms might hold inventories.

Answered: 1 week ago

Question

Distinguish between poor and good positive and neutral messages.

Answered: 1 week ago

Question

Describe the four specific guidelines for using the direct plan.

Answered: 1 week ago