Question & Answer

During the coronavirus pandemic, between 2020 and 2022, the Fed implemented two different monetary policies. Explain the circumstances that led the Fed to change the monetary policy. (LO2; LO3)

How are the tax consequences of a cash distribution different from those of a noncash property distribution to both the S corporation and the shareholders?

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.

Deluxe Ezra Company purchases equipment on January 1, Year 1, at a cost of $469,000. The asset is expected to have a service life of 12 years and a salvage value of $40,000. Instructions (a) Compute the amount of depreciation for each of Years 1 through 3 using the straight-line depreciation method. (b) Compute the amount of depreciation for each of Years 1 through 3 using the sum-of-the-years’- digits method. (c) Compute the amount of depreciation for each of Years 1 through 3 using the double-declining-balance method. (In performing your calculations, round constant percentage to the nearest one-hundredthof a point and round answers to the nearest dollar.)

In 2024, Sheryl is claimed as a dependent on her parents’ tax return.  Her parents report taxable income of $600,000 (married filing jointly). Sheryl did not provide more than half her own support.  What is Sheryl’s tax liability for the year in each of the following alternative circumstances?

What are the four basic assumptions that underlie the financial accounting structure?

The Sarbanes-Oxley Act was enacted to combat fraud andcurb poor reporting practices. What are some key provisionsof this legislation?

How do open-end mutual funds differ from closed-end funds? (LO1, LO5)

What are diversified companies? What accounting problems are related to diversified companies?

was founded in 1969 as Trus Joist International. The firm, a manufacturer of specialty building products, has its headquarters in Boise, Idaho. The company, through its partnership in the Trus Joist MacMillan joint venture, develops and manufactures engineered lumber. This product is a high-quality substitute for structural lumber and uses lower-grade wood and materials formerly considered waste. The company also is majority owner of the Outlook Window Partnership, which is a consortium of three wood and vinyl window manufacturers. Following is T J International’s adapted income statement and information concerning inventories from its annual report.     Instructions (a) How much would income before taxes have been if FIFO costing had been used to value all inventories? (b) If the income tax rate is 46.6%, what would income tax have been if FIFO costing had been used to value all inventories? In your opinion, is this difference in net income between the two methods material? Explain. (c) Does the use of a different costing system for different types of inventory mean that there is a different physical flow of goods among the different types of inventory? Explain.

Whitney received $75,000 of taxable income in 2024.  All of the income was salary from her employer.  What is her income tax liability in each of the following alternative situations?

Cecil cashed in a Series EE savings bond with a redemption value of $14,000 and an original cost of $9,800. For each of the following independent scenarios, calculate the amount of interest Cecil will include in his gross income assuming he files as a single taxpayer:

Chuck, a single taxpayer, earns $75,000 in taxable income and $10,000 in interest from an investment in City of Heflin bonds.  Using the U.S. tax rate schedule (see Appendix C), how much federal tax will he owe?  What is his average tax rate?  What is his effective tax rate?  What is his current marginal tax rate?

Why is a shareholder’s basis in an S corporation stock adjusted annually?

There are 13 correct answers in the following multiple choice questions (some questions have multiple answers that are correct). To attain a perfect score on the quiz, all correct answers must be given. Each correct answer is worth 1 point. Each omitted answer or wrong answer reduces the score by 1 point, and each additional answer beyond the correct number of answers reduces the score by 1 point. Percentage score on the quiz is based on the total number of correct answers. 18.1 Which of the following are bulk deformation processes (three correct answers): (a) bending, (b) deep drawing, (c) extrusion, (d) forging, (e) rolling, and (f) shearing? 18.2 Which of the following is typical of the starting work geometry in sheet metal processes: (a) high volume-to-area ratio or (b) low volume-to-area ratio? 18.3 The flow curve expresses the behavior of a metal in which of the following regions of the stress-strain curve: (a) elastic region or (b) plastic region? 18.4 The average flow stress is the flow stress multiplied by which of the following factors: (a) n, (b) (1+n), (c) 1/n, or (d) 1/(1+n), where n is the strain-hardening exponent? 18.5 Hot working of metals refers to which one of the following temperature regions relative to the melting point of the given metal on an absolute temperature scale: (a) room temperature, (b) 0.2Tm, (c) 0.4Tm, or (d) 0.6Tm? 18.6 Which of the following are advantages and characteristics of hot working relative to cold working (four correct answers): (a) fracture of workpart is less likely, (b) friction is reduced, (c) increased strength properties, (d) isotropic mechanical properties, (e) less overall energy is required, (f) lower deformation forces is required, (g) more significant shape changes are possible, and (h) strain-rate sensitivity is reduced? 18.7 Increasing strain rate tends to have which one of the following effects on flow stress during hot forming of metal: (a) decreases flow stress, (b) has no effect, or (c) increases flow stress? 18.8 The coefficient of friction between the part and the tool in cold working tends to be (a) higher, (b) lower, or (c) no different relative to its value in hot working?

Clark owns stock in BCS Corporation that he purchased in January of the current year. The stock has appreciated significantly during the year. It is now December of the current year, and Clark is deciding whether he should sell the stock. What tax and nontax factors should Clark consider before making the decision on whether to sell the stock now?

What two factors increase the difference between present and future values?

What are the three types of static stresses to which materials are subjected?

On April 15, 2015, fire damaged the office and warehouse of Stanislaw Corporation. The only accounting record saved was the general ledger, from which the trial balance below was prepared.   The following data and information have been gathered. 1. The fiscal year of the corporation ends on December 31. 2. An examination of the April bank statement and canceled checks revealed that checks written during the period April 1–15 totaled $13,000: $5,700 paid to accounts payable as of March 31, $3,400 for April merchandise shipments, and $3,900 paid for other expenses. Deposits during the same period amounted to $12,950, which consisted of receipts on account from customers with the exception of a $950 refund from a vendor for merchandise returned in April. 3. Correspondence with suppliers revealed unrecorded obligations at April 15 of $15,600 for April merchandise shipments, including $2,300 for shipments in transit (f.o.b. shipping point) on that date. 4. Customers acknowledged indebtedness of $46,000 at April 15, 2015. It was also estimated that customers owed another $8,000 that will never be acknowledged or recovered. Of the acknowledged indebtedness, $600 will probably be uncollectible. 5. The companies insuring the inventory agreed that the corporation’s fire-loss claim should be based on the assumption that the overall gross profit rate for the past 2 years was in effect during the current year. The corporation’s audited financial statements disclosed this information: Year Ended December 31 2014 2013 Net sales $530,000 $390,000 Net purchases 280,000 235,000 Beginning inventory 50,000 66,000 Ending inventory 75,000 50,000 Inventory with a cost of $7,000 was salvaged and sold for $3,500. The balance of the inventory wasm a total loss. Instructions Prepare a schedule computing the amount of inventory fire loss. The supporting schedule of the computation of the gross profit should be in good form.

Finley Corporation had income from continuing operations of $10,600,000 in 2014. During 2014, it disposed of its restaurant division at an after-tax loss of $189,000. Prior to disposal, the division operated at a loss of $315,000 (net of tax) in 2014. Finley had 10,000,000 shares of common stock outstanding during 2014. Prepare a partial income statement for Finley beginning with income from continuing operations.

1.    : Somnio, a start-up customizable running shoe company in California, decided to start selling its products around the world from the very beginning. In general terms, name some of the challenges that a start-up company such as Somnio might face internationally.

Under what circumstances will the gain or loss on the sale of a partnership interest be characterized as ordinary rather than capital?

Remmers Company manufactures desks. Most of the company’s desks are standard models and are sold on the basis of catalog prices. At December 31, 2014, the following finished desks appear in the company’s inventory. Finished Desks A B C D 2014 catalog selling price $450 $480 $900 $1,050 FIFO cost per inventory list 12/31/14 470 450 830 960 Estimated current cost to manufacture (at December 31, 2014, and early 2015) 460 430 610 1,000 Sales commissions and estimated other costs of disposal 50 60 80 130 2015 catalog selling price 500 540 900 1,200 The 2014 catalog was in effect through November 2014, and the 2015 catalog is effective as of December 1, 2014. All catalog prices are net of the usual discounts. Generally, the company attempts to obtain a 20% gross profit on selling price and has usually been successful in doing so. Instructions At what amount should each of the four desks appear in the company’s December 31, 2014, inventory, assuming that the company has adopted a lower-of-FIFO-cost-or-market approach for valuation of inventories on an individual-item basis?

Roquan, a single taxpayer, is an attorney and practices as a sole proprietor. This year, Roquan had net business income of $90,000 from his law practice (net of the associated for AGI self-employment tax deduction). Assume that Roquan pays $40,000 wages to his employees, has $10,000 of property (unadjusted basis of equipment he purchased last year), and has no capital gains or qualified dividends. His taxable income before the deduction for qualified business income is $100,000. a. Calculate Roquan’s deduction for qualified business income. b. Assume the same facts provided above, except Roquan’s taxable income before the deduction for qualified business income is $300,000.