Question & Answer

Based on the definition of gross income in §61 and related regulations, what is the general presumption regarding the taxability of income realized?

Based on the definition of gross income in §61, related regulations, and judicial rulings, what are the three criteria for recognizing taxable income?

Describe the concept of realization for tax purposes.

Compare and contrast realization of income with recognition of income.

1.       : Some critics argue that Six Sigma is a collection of superficial changes that often results in doing a superb job of building the wrong product or offering the wrong service. Do you agree or disagree? Explain.

What issue precipitated the return of capital principle?  Explain.

Compare how the return of capital principle applies when (1) a taxpayer sells an asset and collects the sale proceeds all immediately and (2) a taxpayer sells an asset and collects the sale proceeds over several periods (installment sales).  If Congress wanted to maximize revenue from installment sales, how would they have applied the return of capital principle for installment sales?

A dual-in-line package has a total of 48 leads. Use Rent's rule with C = 4.5 and m = 0.5 to determine the approximate number of logic gates that could be fabricated in the IC chip for this package.

The cash method of accounting means that taxpayers don’t recognize income unless they receive cash or cash equivalents.  True or false?  Explain.

Explain the strategies managers can use to help organizations adapt to an uncertain or turbulent environment.

Contrast the constructive receipt doctrine with the claim of right doctrine.

What are some of the factors that managers should consider when implementing sustainability practices in their organisations?

Tiffany is unmarried and has a 15-year-old qualifying child.Tiffany has determined her tax liability to be $3,525, and her employer has withheld $1,500 of federal taxes from her paycheck.Tiffany is allowed to claim a $1,000 child tax credit for her qualifying child.What amount of taxes will Tiffany owe (or what amount will she receive as a refund) when she files her tax return?

Can a partnership have unrealized receivables if it has no accounts receivable?

An entity uses variable costing for internal reports. It must convert the variable costing results to absorption costing results for external reports. How can this conversion be accomplished?

Shane has never filed a tax return despite earning excessive sums of money as a gambler.  When does the statute of limitations expire for the years in which Shane has not filed a tax return?

Dakota Bank has a branch overseas with the following balance sheet characteristics: 50 percent of the liabilities are rate-sensitive and denominated in Swiss francs; the remaining 50 percent of liabilities are rate-insensitive and are denominated in dollars. With regard to assets, 50 percent are rate-sensitive and are denominated in dollars; the remaining 50 percent of assets are rate-insensitive and are denominated in Swiss francs. (LO3, LO7) A. Is the performance of this branch susceptible to interest rate movements? Explain. B. Assume that Dakota Bank plans to replace its short-term deposits denominated in U.S. dollars with short-term deposits denominated in Swiss francs because Swiss interest rates are currently lower than U.S. interest rates. The asset composition would not change. This strategy is intended to widen the spread between the rate earned on assets and the rate paid on liabilities. Offer your insights into how this strategy could backfire. C. One consultant has suggested to Dakota Bank that it could avoid exchange rate risk by making loans in whatever currencies it receives as deposits. In this way, it will not have to exchange one currency for another. Offer your insights into whether this strategy has any disadvantages.

What are the computational guidelines for determining whether a convertible security is to be reported as part of diluted earnings per share?

Define reorder point inventory system.

If Remmers, Inc. uses the composite method and its composite rate is 7.5% per year, what entry should it make when plant assets that originally cost $50,000 and have been used for 10 years are sold for $14,000?

What is the basic accounting problem created by the monetary unit assumption when there is significant inflation? What appears to be the FASB position on a stable monetary unit?

Occidental Petroleum Corporation reported the following information in a recent annual report.   Instructions (a) What items other than coin and currency may be included in “cash”? (b) What items may be included in “cash equivalents”? (c) What are compensating balance arrangements, and how should they be reported in financial statements? (d) What are the possible differences between cash equivalents and short-term (temporary) investments? (e) Assuming that the sale agreement meets the criteria for sale accounting, cash proceeds were $345 million, the carrying value of the receivables sold was $360 million, and the fair value of the recourse liability was $15 million, what was the effect on income from the sale of receivables? (f) Briefly discuss the impact of the transaction in (e) on Occidental’s liquidity.

Omar Morena has recently completed his first year of studying accounting. His instructor for next semester has indicated that the primary focus will be the area of financial accounting. Instructions (a) Differentiate between financial accounting and managerial accounting. (b) One part of financial accounting involves the preparation of financial statements. What are the financial statements most frequently provided? (c) What is the difference between financial statements and financial reporting?

The trend line developed using regression analysis provides a more accurate representation of a mixed cost function than the two-point or high-low methods. Explain why.

1.    : Some people say an organization could never be “prepared” for a disaster such as the shooting at a Walmart in El Paso, Texas; the Japan nuclear disaster; or the huge BP oil spill in the Gulf of Mexico. Discuss the potential value of crisis planning in situations like these, even if the situations are difficult to plan for.