Question & Answer

Which of the following markets do you think are contestable? (a) credit cards; (b) brewing; (c) petrol retailing; (d) insurance services; (e) compact discs?

What are the advantages and disadvantages of local collaborations, such as LEPs, as compared to geographically larger collaboration?

What are some of the limitations of a mixed model line compared to a batch model line?

Assume you asked your favorite AI learning tool “What accounting method choices are linked to the gross receipts test?” and the AI tool responded as follows: Is the AI answer to the question correct?  Explain.

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)

Are satisficing firms more likely to suffer from X inefficiency (see Box 7.5) than firms which seek to maximise profit or sales revenue?

} Assume you asked your favorite AI learning tool “Please describe the all events test for recognizing taxable income.” and the AI tool responded as follows: The all events test is a rule that determines when an item of income or expense is recognized for tax purposes. The test is based on the principle that income or expense should be reported in the period in which it is earned or incurred, rather than when it is received or paid. For income, the all events test is met when: • The taxpayer has a fixed right to receive the income, and • The amount of the income can be determined with reasonable accuracy. For example, if a taxpayer sells goods or services on credit, the income is recognized when the sale is made, not when the payment is received. The taxpayer has a fixed right to receive the income at the time of the sale, and the amount of the income can be determined with reasonable accuracy. For expenses, the all events test is met when: • All events have occurred that establish the fact of the liability, and • The amount of the liability can be determined with reasonable accuracy, and • Economic performance has occurred. For example, if a taxpayer incurs an expense for services rendered by another person, the expense is recognized when the services are performed, not when the payment is made. The fact of the liability is established when the services are performed, the amount of the liability can be determined with reasonable accuracy, and economic performance occurs when the services are provided. The all events test is modified by certain provisions of the Internal Revenue Code that provide special methods of accounting for certain items of income or expense. For instance, Section 451(b) provides that an accrual method taxpayer cannot defer the recognition of income beyond the period in which it is reported as revenue in an applicable financial statement or other specified financial statement. Section 451(c) provides that an accrual method taxpayer can elect to defer the recognition of certain advance payments for goods, services, or other items until the next taxable year. Section 1275 provides rules for the recognition of income or expense from certain debt instruments with original issue discount or market discount.   Is the AI answer to the question correct?  Explain.

Presented below is selected information related to the financial instruments of Dawson Company at December 31, 2014. This is Dawson Company’s first year of operations. Carrying Fair Value Amount (at December 31) Investment in debt securities (intent is to hold to maturity) $ 40,000 $ 41,000 Investment in Chen Company stock 800,000 910,000 Bonds payable 220,000 195,000 Instructions (a) Dawson elects to use the fair value option whenever possible. Assuming that Dawson’s net income is $100,000 in 2014 before reporting any securities gains or losses, determine Dawson’s net income for 2014. (b) Record the journal entry, if any, necessary at December 31, 2014, to record the fair value option for the bonds payable.

1. If V is constant, will (a) a £10 million rise in M give a £10 million rise in MV; (b) a 10 per cent rise in M give a 10 per cent rise in MV ? (Test your answer by fitting some numbers to the terms.) 2. If both V and Y are constant, will (a) a £10 million rise in M lead to a £10 million rise in P; (b) a 10 per cent rise in M lead to a 10 per cent rise in P? (Again, try fitting some numbers to the terms.)

If a business places several different assets in service during the year, must it use the same depreciation method for all assets? If not, what restrictions apply to the business’s choices of depreciation methods?

1.              What other strategies might Amara adopt to work with the oil company men as an active member of the team? What are the pros and cons of each strategy?

What technological developments are likely to have reduced menu costs in recent years?

A business buys two identical tangible personal property assets for the same price. It buys one at the beginning of the year and one at the end of year. Under what conditions would the taxpayer’s depreciation on each asset be exactly the same? Under what conditions would it be different?

] There are two recovery period classifications for real property. What reasons might Congress have to allow residential real estate a shorter recovery period than nonresidential real property?

A prototype of a tube with a square cross section is to be fabricated using stereolithography. The outside dimension of the square = 100 mm and the inside dimension = 90 mm (wall thickness = 5 mm except at corners). The height of the tube (z-direction) = 80 mm. Layer thickness = 0.10 mm. The diameter of the laser beam (“spot size”) = 0.25 mm, and the beam is moved across the surface of the photopolymer at a velocity of 500 mm/s. Compute an estimate for the time required to build the part, if 10 s are lost each layer to lower the height of the platform that holds the part. Neglect the time for postcuring.

Would the world benefit from the general imposition of controls on the movement of international finance?

Allison, Keesha, and Steven each own an equal interest in KAS Partnership, a calendar-year-end, cash-method entity. On January 1 of the current year, Steven’s basis in his partnership interest is $27,000. During January and February, the partnership generates $30,000 of ordinary income and $4,500 of tax-exempt income. On March 1, Steven sells his partnership interest to Juan for a cash payment of $45,000. The partnership has the following assets and no liabilities at the sale date: Tax Basis FMV Cash $ 30,000 $ 30,000 Land held for investment 30,000 60,000   Totals $ 60,000 $ 90,000 a. Assuming KAS’s operating agreement provides for an interim closing of the books when partners’ interests change during the year, what is Steven’s basis in his partnership interest on March 1 just prior to the sale? b. What are the amount and character of Steven’s recognized gain or loss on the sale? c. What is Juan’s initial basis in the partnership interest? d. What is the partnership’s basis in the assets following the sale?

How suitable are legal restrictions in the following cases? (a)  Ensuring adequate vehicle safety (e.g. that tyres have sufficient tread or that the vehicle is roadworthy). (b)  Reducing traffic congestion. (c)  Preventing the abuse of monopoly power. (d)  Ensuring that mergers are in the public interest. (e)  Ensuring that firms charge a price equal to marginal cost.

Starr Co. had sales revenue of $540,000 in 2014. Other items recorded during the year were: Cost of goods sold $330,000 Salaries and wages expense 120,000 Income tax expense 25,000 Increase in value of company reputation 15,000 Other operating expenses 10,000 Unrealized gain on value of patents 20,000 Prepare a single-step income statement for Starr for 2014. Starr has 100,000 shares of stock outstanding.

Would this argument still hold if prices rose?

True or False. For purposes of determining head of household filing status, the taxpayer’s mother or father is considered to be a qualifying person of the taxpayer (even if the mother or father does not qualify as the taxpayer’s dependent) as long as the taxpayer pays more than half the costs of maintaining the household of the mother or father. Explain.

Tamika Meer purchased a new car for use in her business during 2024 for $75,000. The auto was the only business asset she purchased during the year, and her business was very profitable. Calculate Tamika’s maximum depreciation deductions for the automobile in 2024 and 2025 under the following scenarios: a. Tamika does not want to take §179 expense and she elects out of bonus depreciation. b. Tamika wants to maximize her 2024 depreciation using bonus depreciation.

LEW Company purchased a machine at a price of $100,000 by signing a note payable, which requires a single payment of $123,210 in 2 years. Assuming annual compounding of interest, what rate of interest is being paid on the loan?

On December 31, 2014, Kate Holmes Company has $7,000,000 of short-term debt in the form of notes payable to Gotham State Bank due in 2015. On January 28, 2015, Holmes enters into a refinancing agreement with Gotham that will permit it to borrow up to 60% of the gross amount of its accounts receivable. Receivables are expected to range between a low of $6,000,000 in May to a high of $8,000,000 in October during the year 2015. The interest cost of the maturing short-term debt is 15%, and the new agreement calls for a fluctuating interest at 1% above the prime rate on notes due in 2019. Holmes’s December 31, 2014, balance sheet is issued on February 15, 2015. Instructions Prepare a partial balance sheet for Holmes at December 31, 2014, showing how its $7,000,000 of short-term debt should be presented, including footnote disclosure.

What is the relationship between the mpc, the mpcd and the mpw?