Question & Answer

Are exports likely to continue growing faster than GDP indefinitely? What will determine the outcome?

Beaver Corporation reported taxable income of $500,000 from operations this year. In addition, Beaver distributed land to its sole shareholder, Eugenia. The land’s fair market value was $20,000 and its income tax and E&P basis to Beaver was $50,000. Eugenia assumed a mortgage on the land of $25,000. Beaver Corporation had accumulated E&P of $1,500,000 at the beginning of the year.

Dana Ashbrook Inc. has negotiated the purchase of a new piece of automatic equipment at a price of $8,000 plus trade-in, f.o.b. factory. Dana Ashbrook Inc. paid $8,000 cash and traded in used equipment. The used equipment had originally cost $62,000; it had a book value of $42,000 and a secondhand fair value of $47,800, as indicated by recent transactions involving similar equipment. Freight and installation charges for the new equipment required a cash payment of $1,100. Instructions (a) Prepare the general journal entry to record this transaction, assuming that the exchange has commercial substance. (b) Assuming the same facts as in (a) except that fair value information for the assets exchanged is not determinable, prepare the general journal entry to record this transaction.

Amelie, a retired physician, is 66 years old. Determine her standard deduction in 2024 under the following scenarios. a. Amelie is married to Roget, age 52, and they file married filing jointly. b. Amelie is not married. c. Amelie is not married and her 10-year-old granddaughter, Emma, lives with her. Amelie supports Emma and claims her as a dependent.

1. Draw a similar diagram to Figure 24.9, only this time assume that the two goods are good a measured on the vertical axis and good b measured on the horizontal axis. Assume that the country has a comparative advantage in good a. (Note that the world price ratio this time will be shallower than the domestic pre-trade price ratio.) Mark the level of exports of a and imports of b. 2. Is it possible to gain from trade if competition is not perfect?

Describe an inventoriable product cost.

Why are single station assembly cells generally not suited to high-production jobs?

Gopher Corporation reported taxable income of $500,000 this year.  Gopher paid a dividend of $100,000 to its sole shareholder, Sven Anderson. The dividend meets the requirements to be a qualified dividend, and Sven is subject to a tax rate of 15 percent on the dividend. What income tax is imposed on the corporate income earned by Gopher and the income tax on the dividend distributed to Sven?

{Research} XYZ declared a $1 per share dividend on August 15.  The date of record for the dividend was September 1 (the stock began selling ex-dividend on September 2).  The dividend was paid on September 10.  Ellis is a cash-method taxpayer.  Determine if he must include the dividends in gross income under the following independent circumstances

Troy operates an editorial service that often entertains prospective authors to encourage them to use Troy's service. This year Troy paid $3,000 for the cost of meals and $6,200 for the cost of entertaining authors. Describe the conditions under which Troy can deduct a portion of the cost of the meals as a business expense.

Discuss some of the difficulties regulators face when attempting to provide regulatory oversight over fintech. (LO5)

What impact has the SEC’s Regulation Fair Disclosure (FD) had on securities firms? (LO2)

This year Elizabeth agreed to a three-year service contract with an engineering consulting firm to improve efficiency in her factory. The contract requires Elizabeth to pay the consulting firm $1,500 for each instance that Elizabeth requests its assistance. The contract also provides that Elizabeth only pays the consultants if their advice increases efficiency as measured 12 months from the date of service. This year Elizabeth requested advice on three occasions, and she has not yet made any payments to the consultants.  a) How much should Elizabeth deduct this year under this service contract if she uses the accrual method of accounting?  b) How much should Elizabeth deduct this year under this service contract if she uses the cash method of accounting?

The UK government introduced the Soft Drinks Industry Levy in April 2018. Explain how this tax works and discuss its impact on both soft drinks companies and consumer behaviour.

Given the following tax structure, what minimum tax would need to be assessed on Shameika to make the tax progressive with respect to average tax rates?

Explain the meaning of efficient markets. Why might we expect markets to be efficient most of the time? In recent years, several securities firms have been guilty of using inside information when purchasing securities, thereby achieving returns well above the norm (even when accounting for risk). Does this suggest that the security markets are not efficient? Explain. (LO2)

Ludwick Steel Company as lessee signed a lease agreement for equipment for 5 years, beginning December 31, 2014. Annual rental payments of $40,000 are to be made at the beginning of each lease year (December 31). The taxes, insurance, and the maintenance costs are the obligation of the lessee. The interest rate used by the lessor in settingthe payment schedule is 9%; Ludwick’s incremental borrowing rate is 10%. Ludwick is unaware of the rate being used by the lessor. At the end of the lease, Ludwick has the option to buy the equipment for $1, considerably below its estimated fair value at that time. The equipment has an estimated useful life of 7 years, with no salvage value. Ludwick uses the straight-line method of depreciation on similar ownedequipment. Instructions (a) Prepare the journal entry or entries, with explanations, that should be recorded on December 31, 2014, by Ludwick. (b) Prepare the journal entry or entries, with explanations, that should be recorded on December 31, 2015, by Ludwick. (Prepare the lease amortization schedule for all five payments.) (c) Prepare the journal entry or entries, with explanations, that should be recorded on December 31, 2016, by Ludwick. (d) What amounts would appear on Ludwick’s December 31, 2016, balance sheet relative to the lease arrangement?

Angela Lansbury Company deposits all receipts and makes all payments by check. The following information is available from the cash records.   Instructions (a) Prepare a bank reconciliation going from balance per bank and balance per book to correct cash balance. (b) Prepare the general journal entry or entries to correct the Cash account.

Using the facts in problem 39, if Jorge and Anita earn an additional $100,000 of taxable income, what is their marginal tax rate on this income?  What is their marginal rate if, instead, they reported an additional $100,000 in deductions?

Explain the current environment regarding revenue recognition.

Flagstad Inc. presented the following data. Net income $2,500,000 Preferred stock: 50,000 shares outstanding, $100 par, 8% cumulative, not convertible 5,000,000 Common stock: Shares outstanding 1/1 750,000 Issued for cash, 5/1 300,000 Acquired treasury stock for cash, 8/1 150,000 2-for-1 stock split, 10/1 Instructions Compute earnings per share.

Explain how symbols, stories, heroes, slogans, and ceremonies can be used to interpret and shape corporate culture.

Jasper and Crewella Dahvill were married in year 0. They filed joint tax returns in years 1 and 2. In year 3, their relationship was strained and Jasper insisted on filing a separate tax return. In year 4, the couple divorced. Both Jasper and Crewella filed single tax returns in year 4. In year 5, the IRS audited the couple’s joint year 2 tax return and each spouse’s separate year 3 tax returns. The IRS determined that the year 2 joint return and Crewella’s separate year 3 tax return understated Crewella’s self-employment income, causing the joint return year 2 tax liability to be understated by $4,000 and Crewella’s year 3 separate return tax liability to be understated by $6,000. The IRS also assessed penalties and interest on both of these tax returns. Try as it might, the IRS has not been able to locate Crewella, but they have been able to find Jasper.

Developing a reward system and reward targets You are a remuneration consultant. The board of a large multi-national bank has asked you to draft a proposal for a new reward system for senior executives. Currently all senior executives are paid a fixed salary. Your investigations at the entity reveal its mission is to be ‘the number one provider of quality banking services in the southern hemisphere’. You note that the entity has planned for 10 per cent profit growth over the next five years with a corresponding growth in share price. The entity has identified customer satisfaction, product quality and product innovation as the key indicators of success.   The directors are concerned as company profits have been declining. They consider a revised remuneration scheme may motivate senior executives to grow profits and the share price.   Required Prepare a report to the board outlining a new remuneration plan for the executives of the entity.             (LO2, 3 and 4)

Indicate whether the following statements about the conceptual framework are true or false. If false, provide a brief explanation supporting your position. (a) The fundamental qualitative characteristics that make accounting information useful are relevance and verifiability. (b) Relevant information only has predictive value, confirmatory value, or both. (c) Information that is a faithful representation is characterized as having predictive or confirmatory value. (d) Comparability pertains only to the reporting of information in a similar manner for different companies. (e) Verifiability is solely an enhancing characteristic for faithful representation. (f) In preparing financial reports, it is assumed that users of the reports have reasonable knowledge of business and economic activities.