Question & Answer

A motor vehicle assembly plant closes every August to retool for the next year’s model. How should August’s cost data be used in estimating the overhead cost function?

Describe the annualized income method for determining a corporation’s required estimated tax payments.  What advantages does this method have over other methods?

Latrell recently used his Delta Skymiles to purchase a free roundtrip ticket to Milan, Italy (value $1,200).  The frequent flyer miles used to purchase the ticket were generated from Latrell’s business travel as a CPA.  Latrell’s employer paid for his business trips, and he was not taxed on the travel reimbursement.   a.  Use an available tax research service to determine how much income, if any, does Latrell have to recognize as a result of purchasing an airline ticket with Skymiles earned from business travel.  b.  Write a memo communicating the results of your research.

Explain the effects of a stimulative monetary policy on a firm’s cost of capital. (LO2)

Explain why Congress allows self-employed taxpayers to deduct the cost of health insurance above the line (for AGI) when employees can only itemize this cost as a medical expense.  Would a self-employed taxpayer ever prefer to claim health insurance premiums as an itemized deductions rather than a deduction for AGI?  Explain.

Describe a scanning laser system.

A horizontal true centrifugal casting operation will be used to make copper tubing. The lengths will be 1.5 m with outside diameter = 15.0 cm, and inside diameter = 12.5 cm. If the rotational speed of the pipe = 1000 rev/min, determine the G-factor.

What are guaranteed payments, and how do partnerships and partners treat them for income and self-employment tax purposes?

Explain why gains from depreciable property sold to a related taxpayer are treated as ordinary income under §1239.

Carolyn Keene, Inc. decided to establish a petty cash fund to help ensure internal control over its small cash expenditures. The following information is available for the month of April. 1. On April 1, it established a petty cash fund in the amount of $200. 2. A summary of the petty cash expenditures made by the petty cash custodian as of April 10 is as follows. Delivery charges paid on merchandise purchased $60.00 Supplies purchased and used 25.00 Postage expense 33.00 I.O.U. from employees 17.00 Miscellaneous expense 36.00 The petty cash fund was replenished on April 10. The balance in the fund was $27. 3. The petty cash fund balance was increased $100 to $300 on April 20. Instructions Prepare the journal entries to record transactions related to petty cash for the month of April.

1.              : What would you do now if you were Rankin? How might you awaken more enthusiasm in your team for completing this project on time? Suggest specific steps.

If the general objective of our tax system is to raise revenue, why does the income tax allow deductions for charitable contributions and retirement plan contributions?

What conditions must exist for the retail inventory method to provide valid results?

Describe the type of event that qualifies as a casualty for tax purposes.

Why does the tax code allow taxpayers to defer gains on like-kind exchanges?  How do the tax laws ensure that the gains (or losses) are deferred and not permanently excluded from a taxpayer’s income?

Describe the method that blockchain technology utilizes to store data. (LO2)

Explain why some financial institutions prefer to sell the mortgages they originate. (LO4)

What does the assets/equity ratio of a bank indicate? (LO3)

Why are laminated FRP products made by the spray-up method not as strong as similar products made by hand lay-up?

Explain why systemic risk is a source of concern in the bond and other debt markets. Also explain how the Financial Reform Act of 2010 was intended to reduce systemic risk. (LO2)

Explain how cost of goods is treated when a business sells inventory.

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.

Could each of these types of resources be increased in quantity or quality? Is there a time dimension to your answer?

Outline the so-called ‘disposition effect’. Provide an explanation of why it might occur.

Explain how stock volatility changed during the credit crisis of 2008–2009. (LO4)