The fastest method of economic recovery lies in the creation of commercial construction jobs. The fact being, that when you build a structure it creates an immediate demand on both the skilled labor and manufacturing sectors to produce.

 

Obviously, residential construction is not what is being advocated due to the high inventory of unsold homes already on the market, but rather the thousands of private commercial capital improvement projects which are on hold resulting from the lack of credit needed to finance their projects.

 

Even after receiving the first $700 billion from the Bush administration, banks are not willing to lend money to institutions who can demonstrate that the proposed improvements will create cash flow in repaying the debt.

 

There are aspects to the Obama stimulus package that will create jobs in the “long term”, however the package lacks any near term benefits. When you look at some of the larger elements of the package they break out as follows:

 

Energy: $60 billion; Tax cuts: $275 billion; Education: $140 billion; Infrastructure: $90 billion; Financial Aid: $102 billion; Healthcare: $110 billion

 

With the exception of infrastructure, tax cuts, and about half of what is allocated for energy, the rest is strictly financial aid and cannot be considered stimulus. Tax cuts, on the other hand, will spur some level of spending, but in this economic climate will most likely go to basic necessities as opposed to the purchase of non-necessities.

 

Construction activity creates manufacturing demand and when combined together, construction and manufacturing represent the largest pool of workers in the country.

 

During post WWII and early 50’s an infrastructure boom occurred with the Interstate Highway System project, which rolled back unemployment lines to the lowest levels ever.

 

The intent of the Obama infrastructure stimulus is the same, however falls short when you consider the years of planning required before breaking ground as well as the level of technological advances that have occurred since post WWII in reducing labor man hours for road work projects. Over the last 50 years, construction technology and equipment in terms of road and highway construction has improved to the point where they are now considered “Material heavy” and “Labor light”.

 

Additionally, seeing as how most of our infrastructure already exists, these projects would be relegated to improvements rather than full scale construction projects – the lackluster notion being, “building a house is more labor intensive than painting a house.”

 

Although maintaining roadway infrastructure is important, the economic benefit of aiding private commercial projects would be realized immediately.

 

Commercial building projects are labor intensive involving the entire spectrum of work trades ranging from carpentry to electrical to mechanical disciplines. In addition, the components required for the structure are manufactured and engineered which compliments the broader manufacturing industry as a whole.

 

The opportunities exist in the Healthcare, Institutional, and Research sectors and come in the form of building additions and large interior renovations for existing facilities.

 

The demand for these projects is created by the need to keep up with the technological innovations of capital equipment. Additionally advancements have been made in building science; most notably in the areas of operating efficiency and environmentally friendly construction solutions.

 

If banks will not lend money for commercial building projects the unemployment lines will continue to swell.

 

Commercial construction is and has always been the catalyst to economic prosperity and will undoubtedly create an instant demand in our manufacturing sectors. Government stimulus in the form of financing will put people back to work almost immediately as most of these projects are already designed and considered to be “shovel ready”. 

 

Even though Obama may not care for Joe the Plumber from Ohio for his tough questions, he has the ability to win the respect of Joe the Plumber by putting him back to work and getting our economy back on track.

Eric Kaad
http://www.articlesbase.com/economics-articles/obama-economic-stimulus-package-lacks-stimulus-for-the-average-joe-738326.html

1. A company purchased land for $90,000 cash. Real estate brokers’ commission was $5,000 and $7,000 was spent for demolishing an old building on the land before construction of a new building could start. Under the cost principle, the cost of land would be recorded at

A. $102,000.
B. $95,000.
C. $97,000.
D. $90,000.

2. The four subdivisions for plant assets are

A. property, plant, equipment, and land.
B. furnishings and fixtures, land, buildings, and equipment.
C. intangibles, land, buildings, and equipment.
D. land, land improvements, buildings, and equipment.

3. Gagner Clinic purchases land for $130,000 cash. The clinic assumes $1,500 in property taxes due on the land. The title and attorney fees totaled $1,000. The clinic has the land graded for $2,200. What amount does Gagner Clinic record as the cost for the land?

A. $132,200
B. $132,500
C. $130,000
D. $134,700

4. Hull Company acquires land for $86,000 cash. Additional costs are as follows:
Removal of shed $300
Filling and grading1,500
Salvage value of lumber of shed120
Broker commission1,130
Paving of parking lot 10,000
Closing costs560

Hull will record the acquisition cost of the land as

A. $89,610.
B. $86,000.
C. $87,690.
D. $89,370.

5. Engler Company purchases a new delivery truck for $45,000. The sales taxes are $3,000. The logo of the company is painted on the side of the truck for $1,200. The truck license is $120. The truck undergoes safety testing for $220. What does Engler record as the cost of the new truck?

A. $49,540
B. $49,420
C. $48,000
D. $47,420

6. Interest may be included in the acquisition cost of a plant asset

A. during the construction period of a self-constructed asset.
B. if the asset is purchased on credit.
C. if the asset acquisition is financed by a long-term note payable.
D. if it is a part of a lump-sum purchase.

7. The balance in the Accumulated Depreciation account represents the

A. amount charged to expense since the acquisition of the plant asset.
B. amount to be deducted from the cost of the plant asset to arrive at its fair market value.
C. amount charged to expense in the current period.
D. cash fund to be used to replace plant assets.

8. All of the following are intangible assets except

A. copyrights.
B. patents.
C. goodwill.
D. research and development costs.

9. A purchased patent has a legal life of 20 years. It should be

A. expensed in the year of acquisition.
B. not amortized.
C. amortized over 20 years regardless of its useful life.
D. amortized over its useful life if less than 20 years.

10. The asset turnover ratio is computed by dividing

A. net income by average total assets.
B. net income by ending total assets.
C. net sales by average total assets.
D. net sales by ending total assets.

11. The relationship between current liabilities and current assets is

A. useful in evaluating a company’s liquidity.
B. called the matching principle.
C. useful in determining the amount of a company’s long-term debt.
D. useful in determining income.

12. A current liability is a debt that can reasonably be expected to be paid

A. out of currently recognized revenues.
B. out of cash currently on hand.
C. within one year.
D. between 6 months and 18 months.

13. Liabilities are classified on the balance sheet as current or

A. long-term.
B. unearned.
C. deferred.
D. accrued.

14. From a liquidity standpoint, it is more desirable for a company to have current

A. assets equal current liabilities.
B. liabilities exceed long-term liabilities.
C. assets exceed current liabilities.
D. liabilities exceed current assets.

15. The entry to record the issuance of an interest-bearing note credits Notes Payable for the note’s

A. cash realizable value.
B. maturity value.
C. face value.
D. market value.

16. Admire County Bank agrees to lend Givens Brick Company $200,000 on January 1. Givens Brick Company signs a $200,000, 8%, 9-month note. The entry made by Givens Brick Company on January 1 to record the proceeds and issuance of the note is

A. Cash200,000 Notes Payable 200,000
B. Cash200,000 Interest Expense12,000 Notes Payable 200,000 Interest Payable 12,000
C. Interest Expense12,000 Cash188,000 Notes Payable 200,000
D. Cash200,000 Interest Expense12,000 Notes Payable 212,000

17. Admire County Bank agrees to lend Givens Brick Company $200,000 on January 1. Givens Brick Company signs a $200,000, 8%, 9-month note. What entry will Givens Brick Company make to pay off the note and interest at maturity assuming that interest has been accrued to September 30?

A. Notes Payable212,000 Cash 212,000
B. Notes Payable200,000 Interest Payable12,000 Cash 212,000
C. Interest Expense12,000 Notes Payable200,000 Cash 212,000
D. Interest Payable8,000 Notes Payable200,000 Interest Expense4,000 Cash 212,000

18. The interest charged on a $100,000 note paya

Please don’t cut and paste your homework here.
It’s best you attempt these question on your own merits.

Good luck in your studies,
~ Mitch ~

All you hear these days is that credit markets are tightening and small business is having a harder time financing equipment. That’s not always true, though. You just have to know where to look.

Financing equipment for your small business becomes an even more important strategy when the economy is down. As it may be harder to obtain any new lines of credit, it is important to preserve your current lines of credit and working capital.

Most businesses need some sort of equipment in order to operate. If you are looking to financing medical equipment, IT software and equipment, trucking or commercial, construction and heavy equipment, the needs may vary but the common goal is the same.

The primary goal of business equipment financing is to invest in capital while managing your cash flow and balance sheet. Financing comes in two basic forms: secured lending and leasing. In secured financing you own the equipment while the lender has a lien against it, and you make regular payments until the lien is paid off. In leasing, a lessor controls the asset, and transfers possession of that asset to the business for a specific time period in exchange for periodic payments.

So what are the advantages of financing?

Preserving your working capital is one such advantage. Paying cash for a large expenditure creates a risk on many levels, especially for a small business. What if your business equipment does not have the effects you hoped for, i.e. increased profits, efficiency, etc? If you paid cash, your cash flow can become tighter. Using your existing lines of credit can be risk as well; what if your lines of credit are maxed out by purchasing equipment and the bank is not willing to open any more lines for you?

You can even still find lenders that do not require a down payment. When you finance the full cost of equipment, it reduces your risk and transfers it to the lender.

Financing equipment also offers a hedge against inflation. When you finance equipment, the lender has a delayed use of funds because it does not get its money all at once. You pay over time. Your money loses value over time due to inflation. However, because you are locked in to a set payment, the risk of inflation is transferred to the lender.

Another thing to consider are the tax advantages. In addition to the usual tax advantages, from time to time Congress may vote for additional benefits as well, as they did for 2008. You lose certain tax advantages when you pay cash rather than finance your equipment.

You could also acquire more or better equipment by the use of equipment financing rather than dipping into your cash.

If you do your research, you can still find small business equipment financing loan options. The internet is a good source. There are still lenders who are willing to invest in your business, even in down times.

Jeffrey Roh
http://www.articlesbase.com/business-articles/equipment-leasing-finance-still-available-when-you-know-where-to-look-714166.html