Question & Answer

Explain why Congress allows self-employed taxpayers to deduct the employer portion of their self-employment tax.

Why might the role of the accountant be referred to as one of a ‘detective’ in relation to variance analysis?

Explain why Congress allows taxpayers to deduct interest forfeited as a penalty on the premature withdrawal from a certificate of deposit.

: Explain the processes of team cohesiveness, team norms, and the general stages of team development.

Describe the type of medical expenditures that qualify for the medical expense deduction.  Does the cost of meals consumed while hospitalized qualify for the deduction?  Do over-the-counter drugs and medicines qualify for the deduction?

What types of taxes qualify to be deducted as itemized deductions?  Would a vehicle registration fee qualify as a deductible tax?

What are “initial direct costs” and how are they accounted for?

Boyne Inc. had beginning inventory of $12,000 at cost and $20,000 at retail. Net purchases were $120,000 at cost and $170,000 at retail. Net markups were $10,000; net markdowns were $7,000; and sales revenue was $147,000. Compute ending inventory at cost using the conventional retail method.

How might clustering effects be incorporated into endogenous growth theories?

What requirements do an abandoned spouse and qualifying surviving spouse have in common?

Explain the argument that the deductions for charitable contributions and home mortgage interest represent indirect subsidies for these activities.

Describe the conditions in which a donation of property to a charity will result in a charitable contribution deduction of fair market value and when it will result in a deduction of the tax basis of the property.

Explain the differences between the installment-sales method and the cost-recovery method.

Describe a lockup provision and explain why it might be required by the lead underwriter. (LO3)

Describe the possible roles of securities firms in the swap market. (LO1)

How is present value related to the concept of a liability?

Takemoto Corporation borrowed $60,000 on November 1, 2014, by signing a $61,350, 3-month, zero-interest-bearing note. Prepare Takemoto’s November 1, 2014, entry; the December 31, 2014, annual adjusting entry; and the February 1, 2015, entry.

Presented below is information related to Bobby Engram Company. Cost Retail Beginning inventory $ 58,000 $100,000 Purchases (net) 122,000 200,000 Net markups 10,345 Net markdowns 26,135 Sales revenue 186,000 Instructions (a) Compute the ending inventory at retail. (b) Compute a cost-to-retail percentage (round to two decimals) under the following conditions. (1) Excluding both markups and markdowns. (2) Excluding markups but including markdowns. (3) Excluding markdowns but including markups. (4) Including both markdowns and markups. (c) Which of the methods in (b) above (1, 2, 3, or 4) does the following? (1) Provides the most conservative estimate of ending inventory. (2) Provides an approximation of lower-of-cost-or-market. (3) Is used in the conventional retail method. (d) Compute ending inventory at lower-of-cost-or-market (round to nearest dollar). (e) Compute cost of goods sold based on (d). (f) Compute gross margin based on (d).

Learning and growth perspective Markman Ltd, a large pharmaceutical company, is concerned about the ability of its research and development department to develop profitable new prescription drugs. Once a drug has been developed and patented, it takes 9 to 12 years to meet all of the regulatory requirements. The company can then market the drug for about 11.5 years, on average, before the patent expires. Then competitors produce generic drugs. Employees currently participate in profit-sharing plans, but the company wants to give additional bonuses to improve performance. Markman decided to implement a balanced scorecard approach.   Required (a)     Explain why monitoring and rewarding non-financial performance might be particularly important for Markman. (b)     List one objective for Markman’s learning and growth perspective. (c)     List two performance measures for the objective you picked in part (B).

What particular sectors might a distributional analysis of the impact of trade consider?

Describe the relation between the book-tax differences associated with depreciation expense and the book-tax differences associated with gain or loss on disposition of depreciable assets.

Describe two methods for enhancing self-awareness.

Derrick Company issues 4,000 shares of restricted stock to its CFO, Dane Yaping, on January 1, 2014. The stock has a fair value of $120,000 on this date. The service period related to this restricted stock is 4 years. Vesting occurs if Yaping stays with the company for 4 years. The par value of the stock is $5. At December 31, 2015, the fair value of the stock is $145,000. Instructions (a) Prepare the journal entries to record the restricted stock on January 1, 2014 (the date of grant), and December 31, 2015. (b) On March 4, 2016, Yaping leaves the company. Prepare the journal entry (if any) to account for this  forfeiture.

On June 30, 2006, County Company issued 12% bonds with a par value of $800,000 due in 20 years. They were issued at 98 and were callable at 104 at any date after June 30, 2014. Because of lower interest rates and a significant change in the company’s credit rating, it was decided to call the entire issue on June 30, 2015, and to issue new bonds. New 10% bonds were sold in the amount of $1,000,000 at 102; they mature in 20 years. County Company uses straight-line amortization. Interest payment dates are December 31 and June 30. Instructions (a) Prepare journal entries to record the redemption of the old issue and the sale of the new issue on June 30, 2015. (b) Prepare the entry required on December 31, 2015, to record the payment of the first 6 months’ interest and the amortization of premium on the bonds.

Describe the roles of market makers. (LO2)