Thomas Company Compiled the Following Information from Its Financial Records

question 56

Multiple Choice

Thomas Company compiled the following information from its financial records for the year ending December 31, 2014:
$\begin{array}{ll}\text {Research and development costs incurred during 2014 }& \$1,200,000\\\text {Total assets }&5,200,000 \\\text { Current liabilities, interest bearing}&300,000 \\\text {Current liabilities, noninterest-bearing }& 800,000\\\text {Net income }&950,000 \\\text { Sales}&11,300,000 \\\text {Interest expense }&670,000 \\\text {Cost of capital }& 10\%\\\text {income tax rate }& 30\%\\\end{array}$

Thomas' amortization policy is 4 years. How much is the accounting distortion adjustment to NOPAT when calculating EVA?

• A) $900,000
• B) $630,000
• C) $840,000
• D) $270,000

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Definitions:

Night's Sleep

The period of natural rest experienced during the night when the body and mind undergo recovery and rejuvenation.

Last Dream Period

Often refers to the REM (Rapid Eye Movement) phase of sleep where vivid dreams are most likely to occur.

Dream Period

Also known as REM (Rapid Eye Movement) sleep, a stage of sleep characterized by vivid dreams and physiological changes.

REM Sleep

A stage of sleep characterized by random movement of the eyes, low muscle tone throughout the body, and the propensity of the sleeper to dream vividly.