Question & Answer

Question: No Doubt Company includes 1 coupon in each box of soap powder that it packs, and 10 coupons are redeemable for a premium (a kitchen utensil). In 2014, No Doubt Company purchased 8,800 premiums at 80 cents each and sold 110,000 boxes of soap powder at $3.30 per box; 44,000 coupons were presented for redemption in 2014. It is estimated that 60% of the coupons will eventually be presented for redemption. Instructions Prepare all the entries that would be made relative to sales of soap powder and to the premium plan in 2014.

Jackie has just opened her copy of the Code for the first time.  She looks at the table of contents and wonders why it is organized the way it is.  She questions whether it makes sense to try and understand the Code’s organization.  What are some reasons why understanding the organization of the Internal Revenue Code may prove useful?

How would marginal utility and market demand be affected by a rise in the price of a complementary good?

Describe the installment-sales method of accounting.

Jekyll and Hyde formed a corporation (Halloween Inc.) on October 31 to develop a drug to address spilt personalities. Jekyll will contribute a patented formula valued at $200,000 in return for 50 percent of the stock in the corporation. Hyde will contribute an experimental formula worth $120,000 and medical services in exchange for the remaining stock.  Jekyll’s tax basis in the patented formula is $125,000, whereas Hyde has a basis of $15,000 in his experimental formula.

Using a diagram similar to Figure 7.6 to derive a long-run market supply curve for (a) a constant- cost industry and (b) a decreasing-cost industry.

Heartland Company’s budgeted sales and budgeted cost of goods sold for the coming year are $144,000,000 and $99,000,000, respectively. Short-term interest rates are expected to average 10%. If Heartland can increase inventory turnover from its present level of 9 times a year to a level of 12 times per year, compute its expected cost savings for the coming year.

Describe what is meant by qualified business income for purposes of the deduction for qualified business income.

Should regulators of utilities that have been privatised into several separate companies allow (a) horizontal mergers (within the industry); (b) vertical mergers; (c) mergers with firms in other industries?

As the new staff person in your company’s treasury department, you have been asked to conduct research related to a proposed transfer of receivables. Your supervisor wants the authoritative sources for the following items that are discussed in the securitization agreement. Instructions If your school has a subscription to the FASB Codification, go to http://aaahq.org/asclogin.cfm to log in and prepare responses to the following. Provide Codification references for your responses. (a) Identify relevant Codification section that addresses transfers of receivables. (b) What are the objectives for reporting transfers of receivables? (c) Provide definitions for the following: (1) Transfer. (2) Recourse. (3) Collateral. (d) Provide other examples (besides recourse and collateral) that qualify as continuing involvement.

] There are two recovery period classifications for real property. What reasons might Congress have to allow residential real estate a shorter recovery period than nonresidential real property?

In general terms, identify the similarities and differences between the corporate taxable income formula and the individual taxable income formula.

To help pay for the city’s new stadium, the city of Birmingham recently enacted a 1 percent surcharge on hotel rooms. Is this a tax?  Why or why not?

Isabella provides 30 percent of the support for her father Hastings, who lives in an apartment by himself and has no gross income. Is it possible for Isabella to claim her father as a dependent? Explain.

A cylindrical billet that is 100 mm long and 50 mm in diameter is reduced by indirect (backward) extrusion to a 20 mm diameter. The die angle is 90°. The Johnson equation has a = 0.8 and b = 1.4, and the flow curve for the work metal has a strength coefficient of 800 MPa and strain hardening exponent of 0.13. Determine (a) extrusion ratio, (b) true strain (homogeneous deformation), (c) extrusion strain, (d) ram pressure, and (e) ram force.

Willow Corp. (a calendar-year C corporation) reported taxable income before the net operating loss deduction (NOL) in the amount of $100,000 in 2024. Willow had an NOL carryover of $90,000 to 2024 How much tax will Willow Corp. pay for 2024, what is its NOL carryover to 2025, and when will the NOL expire under the following assumptions?

What is the GAAP definition of fair value?

Draw a similar diagram to Figure 25.9 showing how an appreciation of the exchange rate would similarly be reduced by stabilising speculation.

Fosbre Corporation’s April 30 inventory was destroyed by fire. January 1 inventory was $150,000, and purchases for January through April totaled $500,000. Sales revenue for the same period were $700,000. Fosbre’s normal gross profit percentage is 35% on sales. Using the gross profit method, estimate Fosbre’s April 30 inventory that was destroyed by fire.

Halle just acquired a vacation home. She plans on spending several months each year vacationing in the home and renting out the property for the rest of the year. She is projecting tax losses on the rental portion of the property for the year. She is not too concerned about the losses because she is confident she will be able to use the losses to offset her income from other sources. Is her confidence misplaced? Explain.

What are the relative advantages and disadvantages of mechanical presses versus hydraulic presses in sheet metalworking?

Describe international ETFs, and explain how ETFs are exposed to exchange rate risk. How do you think an investor decides whether to purchase an ETF representing Japan, Spain, or some other country? (LO7)

Explain the analysis at the account level approach to developing a cost function.

GAAP requires the statement of cash flows be presented when financial statements are prepared. Instructions (a) Explain the purposes of the statement of cash flows. (b) List and describe the three categories of activities that must be reported in the statement of cash flows. (c) Identify and describe the two methods that are allowed for reporting cash flows from operations. (d) Describe the financial statement presentation of noncash investing and financing transactions. Include in your description an example of a noncash investing and financing transaction.

What is the basis for distinguishing between operating and nonoperating items?