The following questions relate to Clouds Inc. which operates under ideal conditions with the following circumstances:

Operates a single asset with a two year useful life

Asset will have no value after two years and no disposal costs

Interest rate economy wide is 10%

The asset will generate $600 if it is sunny (good) and $250 if it is cloudy (bad)

There is a 75% chance that it will be sunny (good), and 25% chance that it will be cloudy (bad).

Round all answers to the nearest dollar

Questions-

1- What is the amortization of the asset in year 2 if it is sunny (good)?

2- What are the total assets at the end of year 2 if it is cloudy (bad) in year 1 and sunny (good) in year 2?

3- What is the amortization of the asset in year 1 if it is cloudy (bad)?

4- Management of Flowers Inc. has told their shareholders that they do not have any estimates in their accounting policies, is this true or false?

5- What is shareholders equity at the end of year 2 if it is is cloudy (bad) in year 1 and sunny (good) in year 2?

6- What is net income (loss) in year 1 if it is cloudy (bad)?

7- What are the total assets at the end of year 1 if it is cloudy (bad)?

8- What is the assets value at time 1?

9-What is the assets value at time 0?

10-What is net income in year 2 if it is sunny (good) and cloudy (bad) in year 1?

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