## [answered] A company purchased equipment for \$325,000 on January 1, 20

Q1: Read the following hypothetical cases and answer all questions based on the US law:? (1 mark)

AMC, Inc.?s board of directors have appointed Mr. Ahmed to be the Chief Financial Officer (CFO) of the corporation. The directors declared this appointment during a welcoming corporate dinner in AMC, Inc.?s head office. Mr. Ahmed signed the employment contract on December 15th, 2015. According to the employment contract, the employment takes effect in January 1st 2016. . However, In December 18th, Mr. Ahmed attended a meeting with HP Company and signed a service contract, on behalf on AMC, Inc., for 2 million SR.

• From your point of view, discuss whether Ahmad?s act was legal or illegal. Can third party rely on the fact that he is representing the company? Could the court consider this transaction and enforce it? In which cases this transaction could be considered legally binding?
• You can create and illustrate your own scenario using the facts mentioned above. (You can add facts).

Q1. A company purchased equipment for \$325,000 on January 1, 2010. The company expects the

equipment to last for eight years or 60,000 hours of operation, with an estimated salvage value of

\$25,000. During 2010, the equipment was in operations for 8,000 hours, while in 2011 the equipment

was in operations for 8,700 hours. Compute the depreciation expense relating to the equipment for 2010

and 2011 using the following depreciation methods:

a. Straight-line

b. Double-declining-balance

c. Units-of-production. Q2. Wal-Mart had income before interest expense and income taxes of \$12,581 million and interest

expense of \$1,063 million. Sears had income before interest expense and income taxes of \$3,596 million

and interest expense of \$1,143 million. Calculate the times interest earned ratio for each company and

comment on the results.

Q3. Explain the present value concept and how it applies to long-term liabilities. Q1: Read the following hypothetical cases and answer all questions based on the US law: (1

mark)

AMC, Inc.?s board of directors have appointed Mr. Ahmed to be the Chief Financial Officer

(CFO) of the corporation. The directors declared this appointment during a welcoming

corporate dinner in AMC, Inc.?s head office. Mr. Ahmed signed the employment contract on

December 15th, 2015. According to the employment contract, the employment takes effect in

January 1st 2016. . However, In December 18th, Mr. Ahmed attended a meeting with HP

Company and signed a service contract, on behalf on AMC, Inc., for 2 million SR. From your point of view, discuss whether Ahmad?s act was legal or illegal. Can

third party rely on the fact that he is representing the company? Could the court

consider this transaction and enforce it? In which cases this transaction could be

considered legally binding?

You can create and illustrate your own scenario using the facts mentioned above.

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