a high price for a product or service assures the customer that the product or service is of a good value.

Answers

Answer 1

A high price for a product or service assures the customer that the product or service is of a good value: b. False.

What is a product?

A product can be defined as any physical object (tangible item) that is typically produced by a manufacturer so as to satisfy and meet the demands, needs or wants of every customer.

Also, some examples of a product include the following:

RefrigeratorTelevisionMicrowave ovenComputerShampooMobile phones or SmartphonesPencil

What is price?

Price can be define as an amount of money which is primarily set by the seller of a good (product), and it must be paid by a buyer to the seller, so as to enable the acquisition of this good (product).

In Business management, we can reasonably infer that a high demand rather than a high price for a product or service would assure the customer that a product or service is of a good value.

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Complete Question:

A high price for a product or service assures the customer that the product or service is of a good value.

a. True

b. False.


Related Questions

1. Margot works as a sales associate at a children’s clothing store. What education might Margot have needed to attain her position?

A.
high school diploma

B.
associate degree in childhood education

C.
bachelor’s degree in logistics

D.
master’s degree in business

Answers

Answer:

A. High school diploma

Explanation:

Answer:

A

Explanation:

in 1933, john maynard keynes, the father of demand-side economics, wrote to fdr that his new deal approach made him "the trustee for those in every country who seek to mend the evils of our condition by reasoned experiment within the framework of the existing social system."

Answers

Roosevelt hoped to restore democratic nature, liberalism, and economic prosperity and development. His New Deal was an alternative to socialism, Nazism, and the activities favored by supporters of unlimited capitalism.

Under the "New Deal," President Franklin D. Roosevelt carried out a number of measures between 1933 and 1939, involving public projects, regulations, and financial reforms. Among the important government initiatives and organizations were the Civilian Conservation Corps (CCC), Farm Security Administration (FSA), National Industrial Recovery Act of 1933 (NIRA), Civil Works Administration (CWA), and Social Security Administration (SSA). They provided aid to farmers, the unemployed, youth, and the elderly. The Additional Deal included further controls and safeguards for the banking industry as well as efforts to stimulate the economy after pricing had fallen sharply.

In 1933, John Maynard Keynes, the father of demand-side economics, wrote to FDR that his New Deal approach made him "the trustee for those in every country who seek to mend the evils of our condition by reasoned experiment within the framework of the existing social system."

What was Keynes implying about Roosevelt's approach? Complete the following passage.

Roosevelt hoped to reconcile democracy, individual liberty, and economic recovery and development. He conceived the New Deal as an alternative to socialism on the_____, Nazism on the_____, and the inaction favored by upholders of______ capitalism.

left

government-regulated

unregulated

right

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sales $ 8,600 assets 16,100 debt $ 6,400 costs 5,630 equity 9,700 net income $ 2,970 total 16,100 total $ 16,100 assets and costs are proportional to sales; debt and equity are not. no dividends are paid. next year’s sales are projected to be $10,578.

Answers

External Financing is nothing but how much money a company would need to borrow from the third party to carry out it's operations or to buy an asset.

To find out the external financing we need to calculate net income, assets and equity. Subtracting Costs from Sales we get Net Income.

After calculations we get $50 as External Finance needed.

Growth rate in sales = (10,578 - 8600) / 8600 = 23%

Sales = 10,578

Costs(5630*1.23) = 6924.9

Net income = Sales - Costs = 10,578 - 6924.9 =3653.1

Total assets would be = 16100*1.23 =19,803

Total equity would be=9700+3653.1 =13353.1

Total assets=Total equity +Total debt

Hence external financing needed=19803 - 13353.1 - 6400 =$50.

In the theory of capital structure, external financing is the funds that firms obtain from outside of the firm. it's contrasted to internal financing which consists mainly of profits retained by the firm for investment. There are many forms of external financing.

Subtract the company's projected capital needs and capital expenditures from profit to work out the quantity of external financing needed.

Hence External Financing needed is $50

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What is the external financing needed?

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cash and equivalents $ 23,069 cost of sales $ 126,336 accounts receivable, net 30,144 revenues 197,691 inventories 22,966 total assets 302,511 retained earnings 218,440 required: 1. compute common-size percents for samsung using the data given. 2. what is samsung's gross margin ratio on sales? 3. does samsung's gross margin ratio outperform or underperform the industry average of 25%?

Answers

Key Figures (KRW in millions) Samsung    

Cash and Equivalents 7.63 % 23069   =23069/ 302511

The question discusses more about: 

What is margin ratio?

Margin ratios quantify an organization's capacity to convert sales into profits. Without a comparison, stand-alone data are in some ways meaningless because they simply offer a glimpse. Applications for margin ratios include valuation, credit analysis, and business performance.  In general, a 10% net profit margin is regarded as typical, a 20% margin as high (or "excellent"), and a 5% margin as low. However, a decent margin will vary significantly per industry.

Therefore

Cash and equivalents $ 23,069 cost of sales $ 126,336 accounts receivable, net 30,144 revenues 197,691 inventories 22,966 total assets 302,511 retained earnings 218,440 required: 1. compute common-size percents for samsung using the data given. 2. what is samsung's gross margin ratio on sales? 3. does samsung's gross margin ratio outperform or underperform the industry average of 25%

Key Figures (KRW in millions) Samsung    

Cash and Equivalents 7.63 % 23069   =23069/ 302511  

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If allie purchases a car for $35,000 and pays $4,000 down and the balance in 24 monthly payments, what will her payments be if the lender requires 7.2ompounded monthly?

Answers

Her payment is $31000.

Divide the interest rate you're being charged by the number of payments you'll make each year, usually 12 months. Multiply that figure by the initial balance of your loan, which should start at the full amount you borrowed.

Compound interest is calculated by multiplying the initial loan amount, or principal, by one plus the annual interest rate raised to the number of compound periods minus one. This will leave you with the total sum of the loan including compound interest.

The monthly compound interest formula is used to find the compound interest per month. The formula of monthly compound interest is:

Car cost = $35,000

down payment = $4000

monthly payments = 24.

CI = P(1 + (r/12) )12t - P

rate of interest = 7.2 %

The payments if the lender requires 7.2 % interest.

Total financing required = 35000 - 4000 = $31000

Where, P is the principal amount, r is the interest rate in decimal form, and t is the time.

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what are two impediments to globalization that a company might face? multiple select question. tragedy of the commons domestic human relations transportation costs political risk

Answers

Two impediments to globalization that a company might face is

1. Transportation costs

2. political risk

The development of international trade between countries has frequently been significantly hampered by differences in political economics. Tariffs, consumer spending, consumer inflation, and conflicts are all factors that have an impact on global commerce. "Trade also brings disruption to those businesses and industries that cannot keep up. Businesses that must make difficult adjustments due to more capable foreign producers frequently advocate against trade.Ineffective shipping networks restrict globalization prospects and raise costs in some economic sectors, efficient transportation lowers costs across a variety of economic sectors.

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Marcus says that he would smoke one pack of cigarettes each day regardless of the price. if he is telling the truth, marcus's?

Answers

Marcus says that he would smoke one pack of cigarettes each day regardless of the price. if he is telling the truth, Marcus's.  Demand for cigarettes is perfectly inelastic.

When an item or service's quantity stays constant even when its price varies, it is said to be inelastic in the economic sense. When prices rise, consumers' purchasing patterns essentially stay the same, and when prices fall, those patterns also stay the same, which is what is meant by inelastic demand. When a good or service's price changes by 1%, it signifies that the amount sought or provided will vary by less than 1%. This is referred to as being inelastic. An essential prescription would be regarded as an inelastic good, for instance, if its price rose from $200 to $202, a 1% rise, and its demand fell from 1,000 units to 995 units, a less than 1% decline.

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Assume that montana mining, inc. borrows $5,000,000 for 120 days. the total interest paid is $150,000. what is the apy, or effective annual rate of interest that billings pays?

Answers

Interest is described as the quantity of cash paid for the use of someone else's cash. An example of interest is the $20 that was earned this yr on your financial savings account. An example of interest is the $2000 you paid in interest this year on your home loan.

APY=one hundred 1+hobby/principle-1

n is days in the time period and assuming the year has 360 days

APY=one hundred 1= 15000/5000000-1 =nine.27%

APY=100    1+interest/principle-1

n is days in term and assuming the year has 360 days

APY=100   1=  15000/5000000-1  =9.27%

If we speaking approximately a piece-associated hobby, make sure it's clear how your hobby makes you a stronger candidate. in case you speak to me about a private interest, we would possibly point out most of the competencies the interest has taught you, but you do not want to directly connect it returned to the job at hand.

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what would you identify as the biggest risk to delivery of the proposal on friday? select the one (1) best response option.

Answers

The biggest risk to the delivery of the proposal on Friday is: "Not receiving inputs form other stakeholders in time to complete the task by Friday" (Option E)

Why is the above risk the biggest risk?

The above is the biggest risk because, while the recipient of the email has control over their speed and internal environment, he or she has no control over the time of others hence the risk.

What is the best way to manage this risk?

The best way to manage the above risk is to leverage communication with colleagues horizontally and vertically.

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which of the following fields of specialization has been designated by the nih as a priority training area?

Answers

Health Psychology fields of specialization have been designated by the NIH as a priority training area.

The process of determining priorities is founded on a thorough and current study of pertinent data from the policy and research settings, taking into account any gaps in evidence that may be important for decision-making. Research priority setting (RPS) is an interpersonal activity that determines the important research questions or subjects that are prioritized. This may be primarily motivated by stakeholders, data analysis, or a combination of the two. The NIH's aims are outlined in the three Objectives in the areas of (1) biomedical and behavioral research, (2) research capacity, and (3) research conduct. Priorities must be established in order to complete everything that has to be done. The most popular methods used to establish priorities were surveys, focus groups, interviews, Delphi methodologies, and workshops.

Prioritization is crucial since it enables you to concentrate first on urgent and vital chores before moving on to lesser priority ones.

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Sharon is given two options. Option 1 allows her to take $5. Option 2 allows her a 1/3 chance of winning $50, but she risks losing $10, 2/3 of the time. Sharon chooses option 1. What best describes sharon?.

Answers

Risk averse best describes sharon.

In investing, risk equals price volatility. An investor who puts their money into a checking account with a coffee but guaranteed rate, instead of buying stocks, which might fluctuate in price but potentially earn much higher returns. because it implies, you – or more importantly, your financial situation – can tolerate risk, although you do not necessarily go seeking it.

If you're risk-averse, it generally means you do not prefer to take risks, or you're comfortable taking only small risks. When applied to investing behavior, the meaning changes slightly, and it can actually be damaging to your ability to provide the most effective returns over time. A risk lover is an investor who is willing to require additional risk for an investment that incorporates a relatively low additional expected return in exchange for that risk.

Risk-seeking confers a high degree of risk tolerance, or the number of potential losses an investor is willing to simply accept. In contrast with risk-seeking investors, risk-averse investors seek low-risk investments and are willing to simply accept a lower rate of return due to the need to preserve capital.

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you want to buy a new car, but you can make an initial payment of only $2,400 and can afford monthly payments of at most $500.

Answers

Maximum price we can pay for the car if the purchase is financed over 48 months = $21,386.98

If the APR on auto loans is 12% and you finance the purchase over 48 months, what is the maximum price you can pay for the car?

Generally, the equation for PV is  mathematically given as

[tex]$\mathrm{PV}=\quad \mathrm{C} * \frac{1-\left[1 /(1+r)^{\wedge} \mathrm{n}\right]}{\mathrm{r}}$[/tex]

C= Monthly Amount = 500

r= Interest Rate Per Period =12 %=0.12 / 12=0.001

n= Number of Periods =48 Months =48 Periods

Therefore

[tex]= 500^* \frac{1-\left[1 /(1+0.01)^{\wedge} 48\right]}{0.01}[/tex]

[tex]\begin{aligned}&=\$ 500^* \frac{1-\left[1 /(1.01)^{\wedge} 48\right]}{0.01} \\\\&=\$ 500^* \frac{1-[1 / 1.612226078]}{0.01} \\\\&=\$ 500 * \frac{1-0.620260405}{0.01}\end{aligned}[/tex]

In conclusion,

[tex]= 500^* \frac{0.379739595}{0.01}\\\\=\$ 500^*37.9739595\\\\=\$ 18,986.98$[/tex]

Maximum price we can afford:

= Initial Payment + Present value of monthly payments

=$ 2,400+$ 18,986.98

=$ 21,386.98

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CQ

you want to buy a new car, but you can make an initial payment of only $2,400 and can afford monthly payments of at most $500.

If the APR on auto loans is 12% and you finance the purchase over 48 months, what is the maximum price you can pay for the car? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Swapping an obligation to pay interest at a specified fixed or floating rate for payments representing the total return on a loan or a bond of a specified amount is an example of?

Answers

The correct answer B. Swapping an obligation to pay interest at a specified fixed or floating rate for payments representing the total return on a loan or a bond of a specified amount is an example of a credit swap.

In a credit default swap (CDS), the seller agrees to pay the buyer in the event that the debtor defaults on their obligations or another credit event. In other words, the buyer is protected against a reference asset default by the CDS seller. The CDS buyer pays the seller a series of payments in exchange for the possibility of receiving a settlement in the event that the asset defaults. Financial experts, policymakers, and the media can utilize CDS data to track how the market perceives the credit risk of any firm for which a CDS is available and compare it to the information given by the Credit Rating Agencies.

Swapping an obligation to pay interest at a specified fixed or floating rate for payments representing the total return on a loan or a bond of a specified amount is an example of

A. a commodity swap.

B. a credit swap.

C. a currency swap.

D. an equity swap.

E. an interest rate swap.

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A company has sales of $640,000, net profit after taxes of $23,000, a total asset turnover of 4.17 and an equity multiplier of 1.67. what is the return on equity?

Answers

The return on equity of the company is 25.03%

What is return on equity using Dupont analysis?

The return on equity is the rate of return earned by shareholders on their equity, which is traditionally determined as net income divided by shareholders equity, however, when additional details such as the assets turnover and the equity multiplier are provided, the return on equity is determined using the Dupont three-way formula shown below:

return on equity=net profit margin*assets turnover*equity multiplier

net profit margin=net profit after taxes/sales=$23,000/$640,000

net profit margin=3.59375%

assets turnover=4.17

equity multiplier=1.67

return on equity=3.59375%*4.17*1.67

return on equity=25.03%

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Marketers use ______ to inform, persuade, and remind potential buyers about a product or service to influence their opinions and elicit a response.

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Marketers use promotion to inform, persuade, and remind potential buyers about a product or service to influence their opinions and elicit a response.

What does it mean to promote a product?

The term product promotion has to do with all of the ways of putting out information about a product in order to create the needed awareness for that product. The goal is to create the needed environment through the dissemination of information so that the prospective buyers can get the needed info.

Hence we can say that Marketers use promotion to inform, persuade, and remind potential buyers about a product or service to influence their opinions and elicit a response.

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the following are the prices (in dollars) of the six all-terrain truck tires rated most highly by a magazine in 2018.

Answers

Mean of these 6 trucks are calculated by dividing the sum of the prices of trucks with the number of trucks. which is 147.91

Median is calculated by picking the middle most value after arranging the prices of the trucks in descending order which is 140.73

Mean is equal to Sum of the particles divided by Number of particles

Here, Mean = Sum of the prices of the terrain truck tires / No. of trucks

         Mean = (159+197+157+128.55+122.99+126) / 6 = 147.91

Median of the data can be solved by first arranging the data in descending order and then identifying the middle number of the data

If there are 2 numbers(a, b)  in the middle then median = (a + b) / 2

Descending Order: 198,159, 153, 128.45, 126, 122.99

Median =  (153+128.45) / 2 = 140.73

The "mean" is the standard "average," which is calculated by adding up all the numbers and dividing the result by the total number of numbers.

The middle value in a list of numbers is called the "median." You may need to redo your list before you can discover the median since your numbers must be listed in numerical order from smallest to greatest in order to determine the median.

Your question is missing. Kindly find the missing content below:

The following are the prices (In dollars) of the six all-terrain truck tires rated most highly by magazine In 2018. 159.00 198.00 153,00 128.45 122.99 126.00 Calculate the value of the mean, Calculate the value of the median. (Round your answers to the nearest cent )

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What education does a product developer or product designer that creates yugioh cards for Konami needs?

Answers

Answer:

100 students at college

What happens to the equilibrium price and quantity when demand increases and at the same time supply decreases, but the demand shift is larger than the supply shift?.

Answers

The shift of the demand curve typically shifts less than that of the supply curve when the increase in demand is less than the decrease in supply. In reality, equilibrium quantity decreases while equilibrium price increases.

When economic forces are in balance, a condition or state is said to be in equilibrium. In the absence of outside influences, economic variables essentially hold true to their equilibrium values. Market equilibrium and economic equilibrium are two different concepts. The only price at which consumer and producer plans coincide is the equilibrium price, which is reached when the quantity demanded by consumers and the quantity supplied by producers, respectively, are equal. The equilibrium quantity is the name given to this common quantity. Usually, as the supply of goods and services increases over time, prices decline, which leads to an increase in demand.

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The simple circular flow model shows that workers and capital-owners offer their services to firms through the?

Answers

The simple circular flow model shows that workers and capital-owners offer their services to firms through the resource markets.

This is further explained below.

What are resource markets.?

Generally, Sociologists and others involved in public policy often make use of the phrase "cultural change" to refer to how society evolves through time.

Because of this, society develops new cultural characteristics, patterns of behavior, and social norms, which in turn leads to the formation of new social structures.

In conclusion, The simple circular flow model illustrates how employees and owners of the capital provide their services to businesses by way of resource marketplaces.

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A defendant's sixth amendment right is diminished if juries are not instrumental in determining the outcome of a capital case. true false

Answers

A defendant's sixth amendment right is diminished if juries are not instrumental in determining the outcome of a capital case.

True

What do you understand by amendment , and explain sixth amendment right.

A revision is basically a rectification. It comes in numerous assortments, up to and including the most common way of adjusting something through either parliamentary or sacred method. In the US, the word is frequently utilized explicitly of a change to the U.S. Constitution.

The 6th Amendment ensures the privileges of criminal respondents, including the right to a public preliminary immediately, the right to a legal counselor, the right to a fair-minded jury, and the option to know who your informers are and the idea of the charges and proof against you.

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simone manages the importing seasonal fruits from supplies in chile, mexico, and in the united states. global competition collaboration and teams flattened management hierarchies

Answers

Simone manages the importing seasonal fruits from supplies in Chile, Mexico, and in the united states. A. global competition.

What is Global Competition?

Global competition is the competition that is around the globe, in this competition the products from around the world are sold and are sold to all the countries around the world. This makes the competition global.

There are many companies in the world who compete globally, this global competition is due to the nature of product as they offer imported goods around the world. The competitors also deal in the same or similar products which can be used as a substitute to the product of the company.

There are countries where a certain product is of a greater quality and so it is imported and purchased by many elites.

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A manager is someone who
accomplishes goals through
efficient use of

Answers

Answer:

acumen

Explanation:

the ability to make good judgements and take a quick decision even while under pressure

assume that england and france each has 40 labor hours available. if each country divides its time equally between the production of cheese and wine

Answers

if each country divides its time equally between the production of cheese and wine 24 units of cheese and 15 units of wine and it is known as production function.

What is the production function?

The technological relationship between the amounts of physical inputs and the amounts of the output of goods is given by a production function in economics. One of the foundational ideas of traditional neoclassical theories is the production function, which is used to describe the marginal products and distinguish between allocative efficiency, a crucial area of economics study. The production function's ability to handle allocative efficiency in the utilization of factor inputs during production and the ensuing distribution of income to those factors while avoiding the technical challenges associated with achieving technical efficiency, as understood by an engineer or professional manager, is one of its key functions.

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An individual taxpayer uses a fiscal year of march 1 to february 28. the due date of this taxpayer's federal income tax return is may 15 of each tax year. true false

Answers

An individual taxpayer uses a fiscal year of march 1 to February 28. The due date of this taxpayer's federal income tax return is may 15 of each tax year. This statement is False.

A taxpayer is a person or organization difficulty to pay a tax. Modern-day taxpayers may additionally have an identity range, a reference variety issued by using a government to residents or firms. The time period "taxpayer" generally characterizes one who will pay taxes.

How do I recognize if I am a taxpayer?

Kind "ATL (space) thirteen digits automatic countrywide identification Card (CNIC)" and send to 9966. Check energetic Taxpayer fame of AOP and company by using SMS via the subsequent system: Kind "ATL (space) 7 digits national Tax number (NTN)" and send to 9966.

Who qualifies as a taxpayer?

The inner sales Code defines “person” and units forth which humans are situation to federal taxes. phase 7701(a)(14) defines “taxpayer” as “any individual” subject to any inner revenue tax, and section 7701(a)(1) defines “character” to encompass an character, believe, estate, partnership, or agency.

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Which of these explains why a person would hesitate to save money? a fear of not having money for emergencies b desire to live paycheck-to-paycheck c social and cultural influences d low monthly income

Answers

A person hesitates in saving money because of a fear of not having money for emergencies.

What is saving?

When a person kept some amount aside from expenses is known as saving. This amount is used by him in the future.

In this question, we have to identify the reason for hesitation in saving money. Due to the fear of future emergencies a person hesitates to save money. He fears that if some uncertainties happen then he would not be able to use that amount of the savings to meet uncertainties.

Hence, option (a) is correct.

Option (b) is not correct because it is not the correct reason.

Option (c) is not correct because it is not the correct reason.

Option (d) is not correct because it is not the correct reason.

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Olivia+invests+$6,000+in+an+account+at+the+beginning+of+each+year+for+6+years.+if+she+earns+12%+per+year+on+her+investment,+what+is+the+equivalent+present+value+of+her+investment?

Answers

The equivalent present value of her investment is $71,057.62

Investment is an asset or object acquired with the aim of generating profits or appreciation. Appreciation refers to a boom in the value of an asset over time. when a man or woman purchases a good as funding, the purpose isn't to devour the best but as an alternative to applying it within the future to create wealth.

An investment is an effective manner to place your money to work and probably construct wealth. smart making an investment may also permit your money to outpace inflation and boom in price. The more boom ability to invest is more often than not because of the energy of compounding and the threat-go back tradeoff.

total investment for six-year = $6,000 × 6

                                                  = $36,000  

rate of interest = 12%

First, convert R as a percent to r as a decimal

r = R/100

r = 12/100

r = 0.12 rate per year,

Then solve the equation for A

A = P(1 + r/n)nt

 = 36,000.00(1 + 0.12/1)(1)(6)

 = 36,000.00(1 + 0.12)(6)

 = $71,057.62

The equivalent present value of her investment is $71,057.62

Disclaimer:- The correct format of the question is given below.

Olivia invests $6,000 in an account+at the beginning of each year for 6 years. if she earns 12% per year on her investment, what is the equivalent present value of her investment?

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Which profession has trouble finding work if a countries educational system has produced more than the country can employ?

Answers

Doctors have trouble finding work if a countries educational system has produced more than the country can employ.

Doctor emigration, commonly referred to as "brain drain," is brought on by a mismatch between demand and supply in wealthy nations and a lack of work satisfaction in developing nations. This effect is caused by a variety of push and pull factors, with media and the internet having a role. Large-scale doctor migration may cause issues for both the donor and recipient nations, thus widening the gap between developed and poor nations.

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ll other things being equal, if kitts company increases its total fixed cost, the number of units necessary to reach the break-even point will multiple choice increase. decrease. remain constant.

Answers

All other things being equal, if Kitts company increases its total fixed cost, the number of units necessary to reach the break-even point will increase.

All recurring, non-variable expenses a business incurs are added together to form total fixed costs. Picture a business that hires office space for $10,000 per month, rents equipment for $5,000 per month, and pays $1,000 per month for utilities. In this scenario, the total fixed costs for the business would be $16,000. No matter how many items a company produces or sells, all of its operating expenses, known as total fixed costs, must be covered. No matter how much or how little is produced, the total fixed cost remains constant. When production is completely stopped, fixed costs are still present.

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The demand for nike shoes is _________________ than the demand for shoes in general.
a. less elastic
b. more inelastic
c. less inelastic
d. more elastic

Answers

The demand for Nike shoes is less inelastic than the demand.

The price elasticity of call for is calculated by dividing the share trade-in by the amount demanded via the share change in charge. If the quotient is greater than or equal to one, the demand is taken into consideration to be elastic. If the fee is less than one, demand is considered inelastic.

Inelastic refers to the static quantity of a terrific whilst its rate changes. when the charge of a very good provider changes and the quantity demanded of that right does not extensively alternate, the coolest or service is taken into consideration inelastic.

An inelastic call for is one wherein the trade-in quantity demanded due to a trade-in price is small. If the method creates an absolute price of more than 1, the call is elastic. In other phrases, quantity changes faster than the fee. If the cost is much less than 1, demand is inelastic.

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employees of bishop, inc. exercised 100 nonqualified employee stock options when the bargain element was $4 per option. bishop had previously expensed a total of $100 per books as the options vested. what is the effect on the book-tax difference at exercise?

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If bishop had previously expensed a total of $100 per books as the options vested. The effect on the book-tax difference at exercise is: $100 reversal of an unfavorable temporary difference and a $300  permanent favorable difference.

Effect on the book-tax difference at exercise

The amount of $100 unfavorable difference will be reversed while the extra tax benefit of the amount of $300 will create a favorable permanent difference.

The favorable difference of the amount of $300  will  be reported in shareholders' equity as  wind fall tax benefit and as well recorded as additional paid-in capital.

The favorable permanent difference is calculated as:

Favorable permanent difference=(100× $4 per option)- $100

Favorable permanent difference=$400-$100

Favorable permanent difference=$300

Therefore the effect on the book-tax difference at exercise is: $100 reversal of an unfavorable temporary difference and a $300  permanent favorable difference.

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