Question & Answer

Differentiate between “loss carryback” and “loss carryforward.” Which can be accounted for with the greater certainty when it arises? Why?

Are the tax consequences to the corporation the same whether a shareholder contributes property to a corporation in a §351 transaction or as a capital contribution? Explain.

The following information relates to the debt securities investments of Wildcat Company. 1. On February 1, the company purchased 10% bonds of Gibbons Co. having a par value of $300,000 at 100 plus accrued interest. Interest is payable April 1 and October 1. 2. On April 1, semiannual interest is received. 3. On July 1, 9% bonds of Sampson, Inc. were purchased. These bonds with a par value of $200,000 were purchased at 100 plus accrued interest. Interest dates are June 1 and December 1. 4. On September 1, bonds with a par value of $60,000, purchased on February 1, are sold at 99 plus accrued interest. 5. On October 1, semiannual interest is received. 6. On December 1, semiannual interest is received. 7. On December 31, the fair value of the bonds purchased February 1 and July 1 are 95 and 93, respectively. Instructions (a) Prepare any journal entries you consider necessary, including year-end entries (December 31), assuming these are available-for-sale securities. (b) If Wildcat classified these as held-to-maturity investments, explain how the journal entries would differ from those in part (a).

1.    : Suggest two personal traits that you would admire in a business leader today. Might these traits be more valuable in some situations than in others? Explain.

Among the synthetic fiber materials, which are the most important?

Which is likely to show the greater variation from one person to another at any given level of income: the short-run mpc or the long-run mpc?

Relative to arm’s-length transactions, why do related-party transactions receive more IRS scrutiny?

If banks operated a rigid 5 per cent cash ratio and the government reduced the supply of cash by £1 million, how much must credit contract? What is the bank deposits multiplier?

Explain why the expenses incurred to get an asset in place and operable should be included in the asset’s basis.

Explain why interest rates tend to decrease during recessionary periods. Review historical interest rates to determine how they react to recessionary periods. Explain this reaction. (LO1, LO2)

Dean Kastner is 78 years old and lives by himself in an apartment in Chicago. Dean’s gross income for the year is $2,500. Dean’s support is provided as follows: himself (5 percent), his daughters Camille (25 percent) and Rachel (30 percent), his son Zander (5 percent), his friend Frankie (15 percent), and his niece Sharon (20 percent).    a. Absent a multiple support agreement, of the parties mentioned in the problem, who may claim Dean as a dependent?

Why are government bonds which still have 11 months to run regarded as liquid, whereas overdrafts granted for a few weeks are not?

In examining the costs of pension plans, Helen Kaufman, CPA, encounters certain terms. The components of pension costs that the terms represent must be dealt with appropriately if generally accepted accounting principles are to be reflected in the financial statements of entities with pension plans. Instructions (a) (1) Discuss the theoretical justification for accrual recognition of pension costs. (2) Discuss the relative objectivity of the measurement process of accrual versus cash (pay-as-yougo) accounting for annual pension costs. (b) Explain the following terms as they apply to accounting for pension plans. (1) Market-related asset value. (2) Projected benefit obligation. (3) Corridor approach. (c) What information should be disclosed about a company’s pension plans in its financial statements and its notes?

Should a liability be recorded for risk of loss due to lack of insurance coverage? Discuss.

1. Trace through the effects in both factor and goods markets of the following:                (a) An increase in the productivity of a particular type of labour.                (b) An increase in the supply of a particular factor. 2. Show in each case how initially social efficiency will be destroyed and then how market adjustments will restore social efficiency.

Why will the price elasticity of demand for holidays in Crete be greater than that for holidays in general? Is this difference the result of a difference in the size of the income effect or the substitution effect? Is there anything the suppliers of holidays in Crete can do to reduce this higher price elasticity?

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

How might the possibility of labour shirking affect the real wage firms are willing to pay?

What explanations can you give for the increase in both unemployment and inflation in the 1970s?

1.       : Have you experienced any of the five contributions of teams shown in Exhibit 18.2 with a team in which you have participated? Describe your experience and why you think the team was able to make that specific contribution.

Which gamble would you be more likely to accept, a 60:40 chance of gaining or losing £10 000, or a 50:50 chance of gaining or losing £1? Explain why.

Why are aluminum and copper alloys unsuitable for use in hot chamber die casting?

Name the three basic categories of materials

1.       : Explain the basic idea underlying the contingency view. How would you go about identifying key contingencies facing an organization?

Describe how the new purpose of a corporation as defined by the Business Roundtable differs from the previously defined corporate purpose.