Question & Answer

Jorge and Anita, married taxpayers, earn $150,000 in taxable income and $40,000 in interest from an investment in City of Heflin bonds.  Using the U.S. tax rate schedule for married filing jointly (see Example 1-3), how much federal tax will they owe?  What is their average tax rate?  What is their effective tax rate?  What is their current marginal tax rate?

Assume that the US economy expands. What will determine the size of the multiplier effect on other countries?

On December 31, 2014, Faital Company acquired a computer from Plato Corporation by issuing a $600,000 zero-interest-bearing note, payable in full on December 31, 2018. Faital Company’s credit rating permits it to borrow funds from its several lines of credit at 10%. The computer is expected to have a 5-year life and a $70,000 salvage value. Instructions (Round answers to the nearest cent.) (a) Prepare the journal entry for the purchase on December 31, 2014. (b) Prepare any necessary adjusting entries relative to depreciation (use straight-line) and amortization (use effective-interest method) on December 31, 2015. (c) Prepare any necessary adjusting entries relative to depreciation and amortization on December 31, 2016.

Who pays the second level of tax on a C corporation’s income? What is the tax rate applicable to the second level of tax, and when is it levied?

Explain why securities firms have used a high level of financial leverage in the past. How does such leverage affect their expected return and their risk? (LO4)

A composite has a matrix of polyester with Kevlar-29 fibers. The volume fractions of polyester and Kevlar are 60% and 40%, respectively. The Kevlar fibers have a modulus of elasticity of 60 GPa in the longitudinal direction and 3 GPa in the transverse direction. The polyester matrix has a modulus of elasticity of 5.6 GPa in both directions. (a) Determine the modulus of elasticity for the composite in the longitudinal direction. (b) Determine the modulus of elasticity in the transverse direction

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

How have international mutual funds (IMFs) increased the international integration of capital markets among countries? (LO7)

On November 1, 2014, Columbo Company adopted a stock-option plan that granted options to key executives to purchase 30,000 shares of the company’s $10 par value common stock. The options were granted on January 2, 2015, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $40, and the fair value option-pricing model determines the total compensation expense to be $450,000. All of the options were exercised during the year 2017: 20,000 on January 3 when the market price was $67, and 10,000 on May 1 when the market price was $77 a share. Instructions Prepare journal entries relating to the stock option plan for the years 2015, 2016, and 2017. Assume that the employee performs services equally in 2015 and 2016.

Solve Problem 24.26 only using maximum production rate as the objective rather than minimum piece cost. Use of a spreadsheet calculator is recommended

The yield strength of a certain metal = 50,000 lb/in2 and its modulus of elasticity = 22 x 106 lb/in2. It is to be used for the outer ring of a press-fit assembly with a mating shaft made of the same metal. The nominal inside diameter of the ring is 1.000 in and its outside diameter = 2.500 in. Using a safety factor = 2.0, determine the maximum interference that should be used with this assembly.

What is the distinction between plastic sheet and film?

Why must an S corporation report separately stated items to its shareholders? How is the character of a separately stated item determined?  How does the S corporation report this information to each shareholder?

Sally Medavoy will invest $8,000 a year for 20 years in a fund that will earn 12% annual interest. If the first payment into the fund occurs today, what amount will be in the fund in 20 years? If the first payment occurs at year-end, what amount will be in the fund in 20 years?

What are the basic requirements to exclude the gain on the sale of a personal residence?

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?

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.

Explain why participants in the stock market monitor the VIX. What does a decline in VIX imply about a change in expected volatility by market participants? (LO4)

Assume that a firm discharges waste into a river. As a result, the marginal social costs (MSC) are greater than the firm’s marginal (private) costs (MC). The following table shows how MC, MSC, AR and MR vary with output. 1 2 3 4 5 6 7 8 MC 23 21 23 25 27 30 35 42 MSC 35 34 38 42 46 52 60 72 TR 60 102 138 168 195 219 238 252 AR 60 51 46 42 39 36.5 34 31.5 MR 60 42 36 30 27 24 19 14 (a)  How much will the firm produce if it seeks to maximise profits? (b)  What is the socially efficient level of output (assuming no externalities on the demand side)? (c)  How much is the marginal external cost at this level of output? (d)  What size tax would be necessary for the firm to reduce its output to the socially efficient level? (e)  Why is the tax less than the marginal externality? (f)   Why might it be equitable to impose a lump-sum tax on this firm? (g)  Why will a lump-sum tax not affect the firm’s output (assuming that in the long-run the firm can still make at least normal profit)?

The U.S. government intervened to resolve problems in the mortgage markets during the credit crisis. Summarize the advantages and disadvantages of the government intervention during the credit crisis. Should the government intervene when mortgage market conditions are very weak? (LO5)

Hanson Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2014, the following balances related to this plan. Plan assets (market-related value) $520,000 Projected benefi t obligation 700,000 Pension asset/liability 180,000 Cr. Prior service cost 81,000 Net gain or loss (debit) 91,000 As a result of the operation of the plan during 2014, the actuary provided the following additional data for 2014. Service cost $108,000 Settlement rate, 9%; expected return rate, 10% Actual return on plan assets 48,000 Amortization of prior service cost 25,000 Contributions 133,000 Benefi ts paid retirees 85,000 Average remaining service life of active employees 10 years Instructions Using the preceding data, compute pension expense for Hanson Corp. for the year 2014 by preparing a pension worksheet that shows the journal entry for pension expense. Use the market-related asset value to compute the expected return and for corridor amortization.

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.

Determine the bending force required in Problem 20.11 if the bend is to be performed in a V-die with a die opening width dimension = 1.25 in. The material has a tensile strength = 70,000 lb/in2 .

Using the facts in problem 40, if Scot and Vidia earn an additional $80,000 of taxable income, what is their marginal tax rate on this income?  How would your answer differ if they, instead, had $80,000 of additional deductions?

1.    : Why do some organizations seem to have a new CEO every two or three years, whereas others have top leaders who stay with the company for many years (e.g., Warren Buffett’s 50 years at Berkshire Hathaway)? What factors about the manager or about the company might account for this difference?