Which of the following reasons encourages companies to buy a product rather than make it?
A) Buying a product gives managers greater control over the production process.
B) Buying a product decreases the company's total costs significantly compared to making the product in-house.
C) Buying a product ensures non-flexibility to local market conditions.
D) Buying a product enables a company to gain a great deal of power in their relationships with suppliers.
D
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In 2008, the Bear Stearns Company collapsed could not be saved and was sold to JP Morgan Chase for $10 per share, a price far below its pre-crisis 52-week high of $133.20 per share
Prior to the collapse, many of the company's employees had all of their retirement money invested only in Bear Stearns common stock. This was a very risky financial strategy for just such a reason: What if the company dissolves? What financial principle from Chapter 1 did they need to understand better? A) Risk and return go hand in hand. B) Nothing happens without a plan. C) The time value of money D) Stuff happens, the importance of liquidity.
Several years ago, Pilot International purchased 70% of the outstanding stock of Skyway Incorporated, at a time when Skyway's book values were equal to its fair values
On January 1, 2011 Skyway purchased a truck for $80,000 which had no salvage value with a useful life of 8 years, depreciated on a straight-line basis. On January 1, 2014, Skyway sold the truck to Pilot Corporation for $28,000. The truck was estimated to have a five-year remaining life on this date, and no salvage value. All affiliates use the straight-line depreciation method. Required: Prepare all relevant entries with respect to the truck. 1. Record the journal entries on Pilot's books for 2014. 2. Record the journal entries on Skyway's books for 2014. 3. Prepare the consolidation entries required for Pilot and subsidiary for 2014 as a result of this transaction. What will be an ideal response?