Question & Answer

What is the distinguishing feature of a radial drill press?

In choosing a trial-level court, how should a court’s previous rulings influence the choice?  How should circuit court rulings influence the taxpayer’s choice of a trial-level court?

Laura Davis is a member in a limited liability company that has historically been profitable but is expecting to generate losses in the near future because of a weak local economy. In addition to the hours she works as an employee of a local business, she currently spends approximately 150 hours per year helping to manage the LLC. Other LLC members each work approximately 175 hours per year each in the LLC, and the time Laura and other members spend managing the LLC has remained constant since she joined the company three years ago. Laura’s tax basis and amount at-risk are large compared to her share of projected losses; however, she is concerned that her ability to deduct her share of the projected losses will be limited by the passive activity loss rules. a. As an LLC member, will Laura’s share of losses be presumed to be passive as they are for limited partners? Why or why not? [Hint: See §469(h)(2); Garnett v. Comm’r, 132 TC 368 (2009); and Prop. Reg. § 1.469-5(e)(3)(i).] b. Assuming Laura’s losses are not presumed to be passive, is she devoting sufficient time to the LLC to be considered a material participant? Why or why not? c. What would you recommend to Laura to help her achieve a more favorable tax outcome?

A national company, Fast Print, decided to expand into several developing countries. The company has been managed under a centralised organisational form, but is considering changing to a decentralised form. List the advantages and disadvantages of making this change.

The accounting staff of Holder Inc. has prepared the following postretirement benefit worksheet. Unfortunately, several entries in the worksheet are not decipherable. The company has asked your assistance in completing the worksheet and completing the accounting tasks related to the pension plan for 2014.   Instructions (a) Determine the missing amounts in the 2014 postretirement worksheet, indicating whether the amounts are debits or credits. (b) Prepare the journal entry to record 2014 postretirement expense for Holder Inc. (c) What discount rate is Holder using in accounting for the interest on its other postretirement benefit plan? Explain.

What is the main purpose of the Pension Benefit Guarantee Corporation (PBGC)? (LO3)

Describe how a business adopts a permissible accounting method. Explain whether a taxpayer can adopt an impermissible accounting method.

What role does a corporation’s audited income statement play in determining its taxable income?

Discuss why an incentive package might include individual, divisional and        corporate-level performance targets.

What is strategic decision making? What role does it play in the balanced scorecard?

What are the criteria necessary to meet the “not essentially equivalent to a dividend” change-in-stock-ownership test in a stock redemption?

What is the difference between internal broaching and external broaching?

Explain why the loan loss provisions of most banks could increase in a particular period. (LO2)

Matt Perry, Inc. had outstanding $6,000,000 of 11% bonds (interest payable July 31 and January 31) due in 10 years. On July 1, it issued $9,000,000 of 10%, 15-year bonds (interest payable July 1 and January 1) at 98. A portion of the proceeds was used to call the 11% bonds at 102 on August 1. Unamortized bond discount and issue cost applicable to the 11% bonds were $120,000 and $30,000, respectively. Instructions Prepare the journal entries necessary to record issue of the new bonds and the refunding of the bonds.

Alan inherited $100,000 with the stipulation that he “invest it to financially benefit his family.”  Alan and Alice decided they would invest the inheritance to help them accomplish two financial goals: purchasing a Park City vacation home and saving for their son Cooper’s education.     Vacation Home Cooper’s Education Initial Investment $50,000 $50,000 Investment Horizon 5 years 18 years   Alan and Alice have a marginal income tax rate of 32 percent (capital gains rate of 15 percent) and have decided to investigate the following investment opportunities.     5 Years Annual After-Tax Rate of Return 18 Years Annual After-Tax Rate of Return Corporate bonds (ordinary interest taxed annually) 5.75%   4.75%   Dividend-paying stock (no appreciation and dividends are taxed at 15%)   3.50%     3.50%   Growth stock Future Value is $65,000   Future Value is $140,000   Municipal bond (tax-exempt) 3.20%   3.10%     Complete the two Annual After-Tax Rate of Return columns for each investment and provide investment recommendations for Alan and Alice.

What is an electrolyte?

Contingent Costs List some costs that may be considered to be ‘contingent’ sustainability-related costs for the mining industry. (LO4)

How are FASB preliminary views and FASB exposuredrafts related to FASB “statements”?

Assume Jack and Jill, 25 and 75 percent shareholders, respectively, in UpAHill Corporation, have tax bases in their shares at the beginning of year 1 of $24,000 and $56,000, respectively. Also assume no distributions were made. Given the income statement above, what are their tax bases in their shares at the end of year 1?

What is the difference between the traditional ceramics and the new ceramics, as far as raw materials are concerned?

Which factors influence the shape of the yield curve? Describe how financial market participants use the yield curve. (LO3)

At what amount should trading, available-for-sale, and held-to-maturity securities be reported on thebalance sheet?

Suppose the percent completion of ending WIP is overestimated at the end of year 1. How does this measurement error affect the process costing results in year 1 and year 2?

For the current year, LNS Corporation reported the following taxable income at the end of its first, second, and third quarters.  What are LNS’s minimum first, second, third, and fourth quarter estimated tax payments using the annualized income method?

If an entity has a mixed cost function, a 10 per cent increase in sales volume should increase income by more than 10 per cent. Explain why.