Question & Answer

(a) 6.71008. (c) .46319. (b) 2.15892. (d) 14.48656. Jose Oliva is considering two investment options for a $1,500 gift he received for graduation. Both investments have 8% annual interest rates. One offers quarterly compounding; the other compounds on a semiannual basis. Which investment should he choose? Why?

Presented below is net asset information related to the Carlos Division of Santana, Inc.   The purpose of the Carlos Division is to develop a nuclear-powered aircraft. If successful, traveling delays associated with refueling could be substantially reduced. Many other benefits would also occur. To date, management has not had much success and is deciding whether a write-down at this time is appropriate. Management estimated its future net cash flows from the project to be $400 million. Management has also received an offer to purchase the division for $335 million. All identifiable assets’ and liabilities’ book and fair value amounts are the same. Instructions (a) Prepare the journal entry (if any) to record the impairment at December 31, 2014. (b) At December 31, 2015, it is estimated that the division’s fair value increased to $345 million. Prepare the journal entry (if any) to record this increase in fair value.

Should management be upset if all variances for the period are unfavourable?

Name some of the principal bonding materials used in grinding wheels

What are the three basic steps in the manufacture of a pneumatic tire?

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?

] Manny hired his brother’s firm to provide accounting services to his business. During the current year, Manny paid his brother’s firm $82,000 for services even though other firms were willing to provide the same services for $40,000. How much of this expenditure, if any, is deductible as an ordinary and necessary business expenditure?

Name the four basic categories of processes used to shape rubber

Given the following tax structure, what tax would need to be assessed on Venita to make the tax horizontally equitable?

Consider the following tax rate structure.  Is it horizontally equitable?  Why or why not?  Is it vertically equitable?  Why or why not?

Consider the following tax rate structure.  Is it horizontally equitable?  Why or why not?  Is it vertically equitable?  Why or why not?

Consider the following tax rate structure.  Is it horizontally equitable?  Why or why not?  Is it vertically equitable?  Why or why not?

Consider the following tax rate structure.  Is it horizontally equitable?  Why or why not?  Is it vertically equitable?  Why or why not?

Congress would like to increase tax revenues by 10 percent.  Assume that the average taxpayer in the United States earns $65,000 and pays an average tax rate of 15 percent.  If the income effect is in effect for all taxpayers, what average tax rate will result in a 10 percent increase in tax revenues?  This is an example of what type of forecasting?   Answer:

Using the Internet, find a comparison of income tax rates across states.  What state currently has the highest income tax rate?  In considering individual tax burdens across states, what other taxes should you consider?

Benita is concerned that she will not be able to complete her tax return by April 15.  Can she request an extension to file her return?  By what date must she do so? Assuming she requests an extension, what is the latest date that she could file her return this year without penalty?

Approximately what percentage of tax returns does the IRS audit?  What are the implications of this number for the IRS’s strategy in selecting returns for audit?

Explain the difference between the DIF system and the National Research Program. How do they relate to each other?

Consider the existing economic conditions, including inflation and economic growth. Do you think the Fed should increase interest rates, reduce interest rates, or leave interest rates at their present levels? Offer some logic to support your answer. (LO2; LO3)

Describe the differences between the three types of audits in terms of their scope and taxpayer type.

Simon just received a 30-day letter from the IRS indicating a proposed assessment. Does he have to pay the additional tax?  What are his options?

Compare and contrast the three trial-level courts.

Assessing rewards based on accounting profit Stevan is the divisional manager with the Liberty Property Development Group. His performance report shows a positive divisional margin but a loss for the year. Stevan has complained to the CEO about the common costs that have been charged to his division, and questions the method of charging. If they were not charged or were allocated in a different way, he would have a favourable profit figure and would be awarded his bonus.   Required Should Stevan’s bonus be awarded based on the profit or loss figure? Why? (LO2 and 4)

What are the basic differences between regulations, revenue rulings, and private letter rulings?

Compare and contrast the three types of tax law sources and give examples of each.