Solve the Problem Assume That , for 2005, Total Receipts Are $1,058,586, Operating

question 245

Multiple Choice

Solve the problem.
-Budget Summary for the Wonderful Widget Company (all amounts in thousands of dollars) $$\begin{array} { l r r r r } \text { Total Receipts } & 2001 & 2002 & 2003 & 2004 \\\text { Outlays } & \$ 854 & \$ 908 & \$ 950 & \$ 990 \\\quad \text { Operating } & 525 & 550 & 600 & 600 \\\quad \text { Employee Benefits } & 200 & 220 & 250 & 250 \\\quad \text { Security } & 275 & 300 & 320 & 300 \\\quad \text { Interest on Debt } & \underline { 0 } & \underline { 12 } & \underline { 26 } & \underline { 47 } \\\text { Total Outlays } & 1000 & 1082 & 1196 & 1197 \\\text { Surplus/Deficit } & - 146 & - 174 & - 246 & - 207 \\\text { Debt (accumulated) } & \mathbf { - 1 4 6 } & \mathbf { - 3 2 0 } & \mathbf { - 5 6 6 } & \mathbf { - 7 3 3 }\end{array}$$ Assume that , for 2005, total receipts are $1,058,586, operating expenses are $531,674, employee benefits are $189,561, security costs are$133,107, and interest on debt is $63,000. Calculate the
Year-end surplus or deficit.

• A)$267,244.00
• B)$779,473.00
• C)$141,244.00
• D)$912,580.00

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Definitions:

Accumulated Depreciation

The cumulative depreciation of an asset up to a single point in its life, reflecting the decrease in value due to wear, tear, or obsolescence.

Equity Method

An accounting technique used by firms to assess the profits earned by their investments in other companies, where the investment is accounted for initially at cost and adjusted thereafter for the post-acquisition change in the investor's share of the investee's net assets.

Joint Venture Investment

A joint venture investment is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task or business activity.

Acquisition Differential

The difference between the purchase price of an acquired company and the fair value of its identifiable tangible and intangible assets.