Question & Answer

Andrews Company has five employees participating in its defined benefit pension plan. Expected years of future service for these employees at the beginning of 2014 are as follows. Future Employee Years of Service Jim 3 Paul 4 Nancy 5 Dave 6 Kathy 6 On January 1, 2014, the company amended its pension plan, increasing its projected benefit obligation by $72,000. Instructions Compute the amount of prior service cost amortization for the years 2014 through 2019 using the years-ofservice method, setting up appropriate schedules.

Explain how state and local governments benefit from the provisions that allow taxpayers to exclude interest on state and local bonds from their gross income.

Explain why taxpayers are allowed to exclude gifts and inheritances from gross income even though these payments are realized and clearly provide taxpayers with the wherewithal to pay

Describe the kinds of insurance premiums an employer can pay on behalf of an employee without triggering includible compensation to the employee.

A cup-shaped part is to be drawn without a blankholder from sheet metal whose thickness = 0.25 in. The inside diameter of the cup = 2.5 in, its height = 1.5 in, and the corner radius at the base = 0.375 in. (a) What is the minimum starting blank diameter that can be used, according to Eq. (20.14)? (b) Does this blank diameter provide sufficient material to complete the cup?

How are state-sponsored 529 educational savings plans taxed if investment returns are used for educational purposes? Are the returns taxed differently if they are not ultimately used to pay for education costs?

If a bond’s coupon rate is greater than the investor’s required rate of return on the bond, would the bond’s price be greater than or less than its par value? Explain. (LO1)

Assume that Amazon.com has a stock-option plan for top management. Each stock option represents the right to purchase a share of Amazon $1 par value common stock inthe future at a price equal to the fair value of the stock at the date of the grant. Amazon has 5,000 stock options outstanding, which were granted at the beginning of 2014. The following data relate to the option grant. Exercise price for options $40 Market price at grant date (January 1, 2014) $40 Fair value of options at grant date (January 1, 2014) $6 Service period 5 years Instructions (a) Prepare the journal entry(ies) for the first year of the stock-option plan. (b) Prepare the journal entry(ies) for the first year of the plan assuming that, rather than options, 700 shares of restricted stock were granted at the beginning of 2014. (c) Now assume that the market price of Amazon stock on the grant date was $45 per share. Repeat the requirements for (a) and (b). (d) Amazon would like to implement an employee stock-purchase plan for rank-and-file employees, but it would like to avoid recording expense related to this plan. Which of the following provisions must be in place for the plan to avoid recording compensation expense? (1) Substantially all employees may participate. (2) The discount from market is small (less than 5%). (3) The plan offers no substantive option feature. (4) There is no preferred stock outstanding.

What are the differences between bulk deformation processes and sheet metal processes?

Louis files as a single taxpayer.  In April of this year he received a $900 refund of state income taxes that he paid last year.  How much of the refund, if any, must Louis include in gross income under the following independent scenarios?  Assume the standard deduction last year was $6,300. a.       Last year Louis claimed itemized deductions of $6,550.  Louis’s itemized deductions included state income taxes paid of $1,750. b.       Last year Louis had itemized deductions of $4,800 and he chose to claim the standard deduction.  Louis’s itemized deductions included state income taxes paid of $1,750. c.       Last year Louis claimed itemized deductions of $7,740.  Louis’s itemized deductions included state income taxes paid of $2,750.

Why do managers need to measure, monitor, and motivate performance?

What is an autoclave

1.    : The technique of stakeholder mapping lets managers classify which stakeholders they will consider more important and will invest more time to satisfy. Is it appropriate for management to define some stakeholders as more important than others? Explain.

When stock market volatility is high, corporate bond yields tend to increase. Which market forces cause the increase in corporate bond yields under these conditions? (LO2)

Suppose you asked your favorite AI query tool “How much tax depreciation could a taxpayer deduct on a computer acquired in January 2024 for $100,000?” and the AI tool provided the following response:

a.       Because Nikki’s 28.57% discount ($14,000 – $10,000/$14,000) is less than Shine Company’s gross profit percentage, the bargain purchase from her employer does not result in taxable income. b.     Nikki will recognize $25 of taxable income from the discounted services provided by Shine Company.  Discounts more than 20% for services are taxable. Thus, Nikki’s taxable discount is $25 ($125 Discount received – (20% x $500)=$25).

Distinguish between redrawing and reverse drawing.

For purposes of the deduction for qualified business income, what is a specified service trade or business and why is it important?

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

Compare the relative merits of (a) quotas on output, (b) limits to the amount of land used for a particular product and (c) farmers being required to take land out of food production.

Why did Lehman Brothers experience financial problems during the credit crisis? (LO5)

When the records of Debra Hanson Corporation were reviewed at the close of 2015, the errors listed below were discovered. For each item, indicate by a check mark in the appropriate column whether the error resulted in an overstatement, an understatement, or had no effect on net income for the years 2014 and 2015. 2014 2015 Over- Under- No Over- Under- No Item statement statement Effect statement statement Effect 1. Failure to record amortization of patent in 2015. 2. Failure to record the correct amount of ending 2014 inventory. The amount was understated because of an error in calculation. 3. Failure to record merchandise purchased in 2014. Merchandise was also omitted from ending inventory in 2014 but was not yet sold. 4. Failure to record accrued interest on notes payable in 2014; that amount was recorded when paid in 2015. 5. Failure to refl ect supplies on hand on balance sheet at end of 2014.

Identify three situations in which accounting measures are based on present values. Do these present value applications involve single sums or annuities, or both single sums and annuities? Explain.

Cammie received 100 NQOs (each option provides a right to purchase 10 shares of MNL stock for $10 per share). She started working for MNL Corporation four years ago (5/1/Y1) when MNL’s stock price was $8 per share. Now( 8/15/Y5) that MNL’s stock price is $40 per share, she intends to exercise all of her options. After acquiring the 1,000 MNL shares with her stock options, she held the shares for over one year and sold (on 10/1/Y6) them at $60 per share. What are Cammie’s taxes due on the grant date (5/1/Y1), exercise date (8/15/Y5), and sale date (10/1/Y6), assuming her ordinary marginal rate is 32 percent and her long-term capital gains rate is 15 percent?

What are the two basic mechanisms of corrosion protection?