Question & Answer

Lacy is a single taxpayer. In 2024, her taxable income is $51,000.  What is her tax liability in each of the following alternative situations?

The board of directors of Gifford Corp. declared cash dividends of $260,000 during the current year. If dividends payable was $85,000 at the beginning of the year and $90,000 at the end of the year, how much cash was paid in dividends during the year?

1.       : If you were the leader of a newly formed team, what might you do to make sure the team developed norms of high performance?

Volunteer Corporation reported taxable income of $500,000 from operations this year. The company paid federal income taxes of $105,000 on this taxable income.  During the year, the company made a distribution of land to its sole shareholder, Rocky. The land’s fair market value was $75,000 and its tax and E&P basis to Volunteer was $25,000. Rocky assumed a mortgage attached to the land of $15,000. Volunteer had accumulated E&P of $750,000 at the beginning of the year.

Determine the bending force required in Problem 20.11 if the bend is to be performed in a V-die with a die opening width dimension = 1.25 in. The material has a tensile strength = 70,000 lb/in2 .

Explain hedge funds’ motivation to rely on expert networks in recent years. (LO4)

Juan and Bonita are married and have two dependent children living at home. This year, Juan is killed in an avalanche while skiing.

ROI; residual income; explaining the better measure The following financial data are for the evaluation of performance for Sandy Point Construction:       Sandy Point Construction currently uses return on investment to evaluate investment centre managers. An accounting intern from the local university suggested to the controller that residual income may be a better performance measure.   Required (a)     Calculate ROI for Sandy Point Construction. (b)     Calculate residual income for Sandy Point Construction. (c)     Write a brief memo to the controller explaining why residual income is a better performance measure.

Define thermal diffusivity.

Classify the following items as (1) operating, (2) investing, (3) financing, or (4) significant non-cash investing and financing activities, using the direct method. (a) Cash payments to employees. (b) Redemption of bonds payable. (c) Sale of building at book value. (d) Cash payments to suppliers. (e) Exchange of equipment for furniture. (f) Issuance of preferred stock. (g) Cash received from customers. (h) Purchase of treasury stock. (i) Issuance of bonds for land. (j) Payment of dividends. (k) Purchase of equipment. (l) Cash payments for operating expenses.

Reward plan structure Whistlestop Adventure has grown from a one-man operation into a large, soon to be listed, adventure clothing and equipment company. For much of its four-year history, Whistlestop has used one company-wide incentive plan that all employees and managers participated in. The plan is based on equal sharing of a bonus pool determined on the basis of 10 per cent of all profits earned over $2 million. As the company has grown, the benchmark profit figure has changed, but otherwise the plan has remained substantially the same. The company founder explained that the plan was structured this way to encourage an organisational and team view, an objective that has permeated the company’s activities since its beginning.   With the impending stock exchange listing, the newly constituted remuneration committee has been working on the development of new incentive plan for executives and managers. The brief from the board includes the requirement to ‘develop an incentive plan in line with company’s strategy of revenue growth through high-quality products and customer service, and align the interests of the new executive team with shareholders’.   Required (a) If you were a member of the remuneration committee of Whistlestop how would you suggest the incentive plan be structured to meet the requirements set by the board? (b) What are the dangers for Whistlestop in moving away from the current incentive plan to a new one? How could these dangers be overcome? (LO2 and 4)

Slaton Corporation traded a used truck for a new truck. The used truck cost $20,000 and has accumulated depreciation of $17,000. The new truck is worth $35,000. Slaton also made a cash payment of $33,000. Prepare Slaton’s entry to record the exchange. (The exchange has commercial substance.)

Does it matter if a country has a large national debt as a proportion of its national income?

Explain why investors that provided guarantees on commercial paper were exposed to so much risk during the credit crisis. (LO1)

Like mutual funds, commercial banks and stock-owned savings institutions sell shares, but the proceeds received by mutual funds are used in a different way. Explain. (LO1)

Two economists disagree over the best way of tackling the problem of unemployment. For what types of reasons might they disagree? Are these reasons positive or normative?

Moxley Corporation had January 1 and December 31 balances as follows. 1/1/14 12/31/14 Inventory $95,000 $113,000 Accounts payable 61,000 69,000 For 2014, cost of goods sold was $500,000. Compute Moxley’s 2014 cash payments to suppliers.

Why will exporters probably welcome a ‘deterioration’ in the terms of trade?

For what possible reasons may a country experience a persistently faster rate of economic growth than another?

List two common situations that will cause a partner’s inside and outside basis to differ.

You have two clients that are considering trading machinery with each other. Although the machines are different from each other, you believe that an assessment of expected cash flows on the exchanged assets will indicate the exchange lacks commercial substance. Your clients would prefer that the exchange be deemed to have commercial substance, to allow them to record gains. Here are the facts: Client A Client B Original cost $100,000 $150,000 Accumulated depreciation 40,000 80,000 Fair value 80,000 100,000 Cash received (paid) (20,000) 20,000 Instructions (a) Record the trade-in on Client A’s books assuming the exchange has commercial substance. (b) Record the trade-in on Client A’s books assuming the exchange lacks commercial substance. (c) Write a memo to the controller of Company A indicating and explaining the dollar impact on current and future statements of treating the exchange as having, versus lacking, commercial substance. (d) Record the entry on Client B’s books assuming the exchange has commercial substance. (e) Record the entry on Client B’s books assuming the exchange lacks commercial substance. (f) Write a memo to the controller of Company B indicating and explaining the dollar impact on current and future statements of treating the exchange as having, versus lacking, commercial substance.

Tan Chin Company purchases a building for $11,300,000 on January 2, 2014. An engineer’s report shows that of the total purchase price, $11,000,000 should be allocated to the building (with a 40-year life), $150,000 to 15-year property, and $150,000 to 5-year property. No residual (salvage) value should be considered. Compute depreciation expense for 2014 using component depreciation.

Can a shareholder’s basis in S corporation stock ever be adjusted to a negative number? Why or why not?

Briefly describe some of the similarities and differences between GAAP and IFRS with respect to the accounting for stockholders’ equity.

Can C corporations use the cash method of accounting?  Explain.