Question & Answer

Claude purchased raw land three years ago for $1,500,000 to develop into lots and sell to individuals planning to build their dream homes. Claude intended to treat this property as inventory, like his other development properties. Before completing the development of the property, however, he decided to contribute it to South Peak Investors LLC when it was worth $2,500,000, in exchange for a 10 percent capital and profits interest. South Peak’s strategy is to hold land for investment purposes only and then sell it later at a gain. a. If South Peak sells the property for $3,000,000 four years after Claude’s contribution, how much gain or loss is recognized and what is its character? [Hint: See §724.] b. If South Peak sells the property for $3,000,000 five and one-half years after Claude’s contribution, how much gain or loss is recognized, and what is its character?

Each of the following items must be considered in preparing a statement of cash flows for Cruz Fashions Inc. for the year ended December 31, 2014. 1. Fixed assets that had cost $20,000 61⁄2 years before and were being depreciated on a 10-year basis, with no estimated scrap value, were sold for $4,750. 2. During the year, goodwill of $15,000 was considered impaired and was completely written off to expense. 3. During the year, 500 shares of common stock with a stated value of $25 a share were issued for $32 a share. 4. The company sustained a net loss for the year of $2,100. Depreciation amounted to $2,000 and patent amortization was $400. 5. Uncollectible accounts receivable in the amount of $2,000 were written off against Allowance for Doubtful Accounts. 6. Investments (available-for-sale) that cost $12,000 when purchased 4 years earlier were sold for $10,600. The loss was considered ordinary. 7. Bonds payable with a par value of $24,000 on which there was an unamortized bond premium of $2,000 were redeemed at 101. The gain was credited to ordinary income. Instructions For each item, state where it is to be shown in the statement and then how you would present the necessary information, including the amount. Consider each item to be independent of the others. Assume that correct entries were made for all transactions as they took place.

In general, how are unincorporated business entities classified for tax purposes?

How is raw rubber recovered from the latex that is tapped from a rubber tree?

1.      : Place Farhad with a more sympathetic account manager who is open to finding ways to help him improve his English and has the time to help him develop his assertiveness and telephone skills. Send Hazel Putnam to diversity awareness training.

Use the information for Boyne Inc. from BE9-8, and assume the price level increased from 100 at the beginning of the year to 115 at year-end. Compute ending inventory at cost using the dollar-value LIFO retail method.

Compare and contrast the different year-ends available to sole proprietorships, flow-through entities, and C corporations.

What is the sequence of processing steps required to produce finished rubber goods?

What is the continuity law as it applies to the flow of molten metal in casting?

On April 1, 2014, Gloria Estefan Company received a condemnation award of $430,000 cash as compensation for the forced sale of the company’s land and building, which stood in the path of a new state highway. The land and building cost $60,000 and $280,000, respectively, when they were acquired. At April 1, 2014, the accumulated depreciation relating to the building amounted to $160,000. On August 1, 2014, Estafan purchased a piece of replacement property for cash. The new land cost $90,000, and the new building cost $400,000. Instructions Prepare the journal entries to record the transactions on April 1 and August 1, 2014.

Compare and contrast the recovery periods used by MACRS and those used under generally accepted accounting principles (GAAP).

What are the common forms of the reinforcing phase in composite materials?

What are electronic communication networks? (LO2)

(Threshold Concept 5) 1. Give two other examples of perverse incentives. How could the incentives be improved? (Threshold Concept 5) 2. Suppose that the kitchen is very untidy – what are the incentives for you to address this? What incentives could you use to get someone else to do it for you? (Threshold Concept 5) 3. Many students undertake voluntary work while at university. What do you think the incentives are for this? Identify any perverse incentives associated with volunteering and how they could be addressed.

Compare and contrast the tax treatment for rental income received in advance with advance payments for goods and services.

What is isothermal forming?

Under what circumstances would a higher rate of investment lead to a higher rate of economic growth?

Lonnie Davis has been a general partner in the Highland Partnership for many years and is also a sole proprietor in a separate business. To spend more time focusing on his sole proprietorship, he plans to leave Highland and will receive a liquidating distribution of $50,000 in cash and land with a fair market value of $100,000 (tax basis of $120,000). Immediately before the distribution, Lonnie’s basis in his partnership interest is $350,000, which includes his $50,000 share of partnership debt. Highland Partnership does not hold any hot assets. a. What are the amount and character of any gain or loss to Lonnie? b. What is Lonnie’s basis in the land? c. What are the amount and character of Lonnie’s gain or loss if he holds the land for 13 months as investment property and then sells it for $100,000? d. What are the amount and character of Lonnie’s gain or loss if he places the land into service in his sole proprietorship and then sells it 13 months later for $100,000? e. Do your answers to parts (c) and (d) above suggest a course of action that would help Lonnie to achieve a more favorable tax outcome?

Compare and contrast when taxpayers are allowed to deduct the cost of warranties provided by others to the taxpayer (i.e., purchased by the taxpayer) and when taxpayers are allowed to deduct the costs associated with warranties they provide (sell) to others.

The qualitative characteristics that make accounting information useful for decision-making purposes are as follows. Relevance Neutrality Verifi ability Faithful representation Completeness Understandability Predictive value Timeliness Comparability Confi rmatory value Materiality Free from error Instructions Identify the appropriate qualitative characteristic(s) to be used given the information provided below. (a) Qualitative characteristic being employed when companies in the same industry are using the same accounting principles. (b) Quality of information that confirms users’ earlier expectations. (c) Imperative for providing comparisons of a company from period to period. (d) Ignores the economic consequences of a standard or rule. (e) Requires a high degree of consensus among individuals on a given measurement. (f) Predictive value is an ingredient of this fundamental quality of information. (g) Four qualitative characteristics that are related to both relevance and faithful representation. (h) An item is not recorded because its effect on income would not change a decision. (i) Neutrality is an ingredient of this fundamental quality of accounting information. (j) Two fundamental qualities that make accounting information useful for decision-making purposes. (k) Issuance of interim reports is an example of what enhancing quality of relevance?

What is the form of the starting material in thermoforming?

What are the two joint types most commonly used in brazing?

Balanced scorecard measures for customer perspective Leyland College is in the process of developing a balanced scorecard. The administrators decided that their customers are parents and future employers of their students. They believe the students are their products.   Required Discuss whether each of the following potential measures would be useful for the customer perspective in the balanced scorecard. (a)     Parent ratings of satisfaction with the high school curriculum (b)     Graduation rate (c)     Percentage of students employed during the summer after graduation (d)     Employer satisfaction ratings for Flowing Wells High School graduates (e)     Monthly earnings of graduates (f)      Number of graduates attending classes beyond high school (g)     Cost per student per year (h)     Number of classes per student per semester (i)      Average number of college credit hours completed per teacher

Consider the following tax rate structure.  Is it horizontally equitable?  Why or why not?  Is it vertically equitable?  Why or why not?

Aishwarya’s husband passed away in 2023. She needs to determine whether Jasmine, her 17-year-old stepdaughter who is single, qualifies as her dependent in 2024. Jasmine is a resident but not a citizen of the United States. She lived in Aishwarya’s home from June 15 through December 31, 2024. Aishwarya provided more than half of Jasmine’s support for 2024.