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On February 20, 2014, Barbara Brent Inc., purchased a machine for $1,500,000 for the purpose of leasing it. The machine is expected to have a 10-year life, no residual value, and will be depreciated on the straight-line basis. The machine was leased to Rudy Company on March 1, 2014, for a 4-year period at a monthly rental of $19,500. There is no provision for the renewal of the lease or purchase of the machine by the lessee at the expiration of the lease term. Brent paid $30,000 of commissions associated with negotiating the lease in February 2014. Instructions (a) What expense should Rudy Company record as a result of the facts above for the year ended December 31, 2014? Show supporting computations in good form. (b) What income or loss before income taxes should Brent record as a result of the facts above for the year ended December 31, 2014? (Hint: Amortize commissions over the life of the lease.)
Under what conditions might investors consider short selling a specific stock? (LO1)
Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $20,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $20,000 bill anytime before January 30 of next year without penalty. Assume her marginal tax rate is 37 percent this year and next year, and that she can earn an after-tax rate of return of 12 percent on her investments. When should she pay the $20,000 bill—this year or next?
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Are exports likely to continue growing faster than GDP indefinitely? What will determine the outcome?
Assume Alexa receives $30,000 in gross rental receipts. a. What effect do the expenses associated with the property have on her AGI? b. What effect do the expenses associated with the property have on her itemized deductions?
Dillon rented his personal residence at Lake Tahoe for 14 days while he was vacationing in Ireland. He resided in the home for the remainder of the year. Rental income from the property was $6,500. Expenses associated with use of the home for the entire year were as follows:
Explain why certain long-lived assets are capitalized and recovered over time rather than immediately expensed.
Some bank managers argue that U.S. banks’ access to capital is restricted because the capital requirements imposed by U.S. regulators are too high. Write a short essay that offers logical insights into why high capital requirements may restrict a bank’s access to capital. Also, describe why high capital requirements for all banks in the United States might actually allow the banks to have easier access to capital. Which of the arguments do you believe?
What are some of the limitations of a mixed model line compared to a batch model line?
How will the following reduce the moral hazard problem? (a) A no-claims bonus in an insurance policy. (b) You having to pay the first so many pounds of any insurance claim (an ‘excess’). (c) The use of performance-related pay.
The following are the trial balance and the other information related to Yorkis Perez, a consulting engineer. 1. Fees received in advance from clients $6,000. 2. Services performed for clients that were not recorded by December 31, $4,900. 3. Bad debt expense for the year is $1,430. 4. Insurance expired during the year $480. 5. Equipment is being depreciated at 10% per year. 6. Yorkis Perez gave the bank a 90-day, 10% note for $7,200 on December 1, 2014. 7. Rent of the building is $750 per month. The rent for 2014 has been paid, as has that for January 2015. 8. Office salaries and wages earned but unpaid December 31, 2014, $2,510. Instructions (a) From the trial balance and other information given, prepare annual adjusting entries as of December 31, 2014. (Omit explanations.) (b) Prepare an income statement for 2014, a statement of owner’s equity, and a classified balance sheet. Yorkis Perez withdrew $17,000 cash for personal use during the year.
What is dressing, in reference to grinding wheels?
Would it in theory be possible for this long-run Phillips curve to be horizontal or even upward sloping over part of its length?
When are partnerships eligible to use the cash method of accounting?
Explain how an equity swap could allow Marathon Insurance Company to capitalize on expectations of a strong stock market performance over the next year without altering its existing portfolio mix of stocks and bonds. (LO2)
How would a redistribution of income to the powerful be likely to affect GNY?
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Question: What is the dollar-value method of LIFO inventory valuation? What advantage does the dollar-value method have over the specific goods approach of LIFO inventory valuation? Why will the traditional LIFO inventory costing method and the dollar-value LIFO inventory costing method produce different inventory valuations if the composition of the inventory base changes?
: Describe functional, divisional, matrix, team, and virtual network approaches to structure
Describe the activity in the secondary T-bill market. How can this degree of activity benefit investors in T-bills? Why might a financial institution sometimes consider T-bills as a potential source of funds? (LO1)
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