Question & Answer

What are the two basic methods of arc shielding?

How do the tax laws treat family members for purposes of limiting the number of owners an S corporation may have?

What is a route sheet?

Planning} Matteo,who is single and has no dependents, was planning on spending the weekend repairing his car.On Friday, Matteo’s employer called and offered him $500 in overtime pay if he would agree to work over the weekend.Matteo could get his car repaired over the weekend at Autofix for $400.If Matteo works over the weekend, he will have to pay the $400 to have his car repaired, but he will earn $500. Assume Matteo pays tax at a flat 15 percent rate. Strictly considering tax factors, should Matteo work or repair his car if the $400 he must pay to have his car fixed is not deductible?

Cost driver; cost categories; appropriateness of regression; relevant information Susan looked at her long-distance telephone bill with dismay. After leaving her job last year to become a self-employed consultant, her long-distance charges had grown considerably. She had not changed long-distance plans for years, partly because she hated taking the time to review the range of service providers and plans. However, the size of her long-distance bill made it clear that it was time to make a change. She had recently seen numerous advertisements by telephone companies offering much lower rates than she was currently paying, but she was sure that at least some of those plans offered low rates only for night and weekend calls. Susan called her current long-distance service provider and asked how she could obtain a lower rate. She mentioned hearing that a competitor was currently offering long distance at 5c per minute. In responding to the service representative’s questions, Susan verified that most of her long-distance calls are weekday and out of state. She also agreed that her activity over the past two months—approximately 500 minutes of long distance per month—was her best estimate for future calling activity. Given this information, the service representative suggested that Susan buy the following long-distance service plan:                                (i)                             Up to 500 minutes of long distance for a flat fee of $20 per month.                              (ii)                             No refunds would be provided for usage less than 500 minutes per month.                            (iii)                             Any minutes over 500 per month would be billed at 10c per minute.                            (iv)                             No service change fee or cancellation fee would apply.                                                                                 Required (a)          What is the cost driver for Susan’s long-distance telephone costs, assuming that the cost object is her consulting business? (b)          In the proposed service plan, which of the costs are fixed and which are variable? Explain. (c)           Would regression analysis be an appropriate tool for Susan to use in deciding whether to buy the new service plan? Why? (d)          Is the cost of Susan’s current long-distance service plan relevant to this decision? Why? (e)           Explain why Susan cannot be certain whether the new service plan will reduce her long-distance costs. (f)           List additional information that might be relevant to Susan in deciding whether to buy the new service plan. (g)          Are Susan’s long-distance services most likely a discretionary cost? Explain. (h)          Are Susan’s long-distance services most likely a direct or indirect cost, assuming that the cost object is an individual consulting job? Explain. (i)            Describe the pros and cons of the new service plan.

Explain why some meme stocks were misvalued by investors.

What is wheel grade?

What are inside basis and outside basis, and why are they relevant for taxing partnerships and partners?

Bill Novak is working on an audit of an IFRS client. In his review of the client’s interim reports, he notes that the reports are prepared on a discrete basis. That is, each interim report is viewed as a distinct period. Is this acceptable under IFRS? If so, explain how that treatment could affect comparisons to a GAAP company.

Briggs and Stratton reported unamortized debt issue costs of $5.1 million. How should the costs of issuing these bonds be accounted for and classified in the financial statements?

Explain the least aggregate deferral test for determining a partnership’s year-end and discuss when it applies

What is a composite material?

In what circumstances could a calendar-year C corporation make an election on February 1, year 1, to be taxed as an S corporation in year 1 but not have the election effective until year 2?

Identify the selective surface-hardening methods.

: How do you think that the team evolved to this low level of cooperation and cohesiveness?

Gramps purchased a joint survivor annuity that pays $500 monthly over his remaining life and that of his wife, Gram. Gramps is 70 years old and Gram is 65 years old. Gramps paid $97,020 for the contract. How much income will Gramps recognize on the first payment?

Using the data shown on the pie charts in Figure 11.1, construct two Lorenz curves (on the same diagram), corresponding to the before- and after-tax income figures. Interpret and comment on the diagram you have drawn.

What is a tolerance?

For tax purposes, how is the compensation paid to an S corporation shareholder similar to compensation paid to an owner of an entity taxed as a partnership?  How is it different?

For tax purposes, why is the married filing jointly tax status generally preferable to the married filing separately filing status?Why might a married taxpayer prefer not to file a joint return with the taxpayer’s spouse?

What is a eutectic alloy?

Craig Brokaw, newly appointed controller of STL, is considering ways to reduce his company’s expenditures on annual pension costs. One way to do this is to switch STL’s pension fund assets from First Security to NET Life. STL is a very well-respected computer manufacturer that recently has experienced a sharp decline in its financial performance for the first time in its 25-year history. Despite financial problems, STL still is committed to providing its employees with good pension and postretirement health benefits. Under its present plan with First Security, STL is obligated to pay $43 million to meet the expected value of future pension benefits that are payable to employees as an annuity upon their retirement from thecompany. On the other hand, NET Life requires STL to pay only $35 million for identical future pension benefits. First Security is one of the oldest and most reputable insurance companies in North America. NET Life has a much weaker reputation in the insurance industry. In pondering the significant difference in annual pension costs, Brokaw asks himself, “Is this too good to be true?” Instructions Answer the following questions. (a) Why might NET Life’s pension cost requirement be $8 million less than First Security’s requirement for the same future value? (b) What ethical issues should Craig Brokaw consider before switching STL’s pension fund assets? (c) Who are the stakeholders that could be affected by Brokaw’s decision?

Ivan incorporated his sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation’s stock. The property transferred to the corporation had the following fair market values and adjusted tax bases.       FMV    Adjusted Tax Basis Inventory$    10,000$  15,000 Building      50,000    40,000 Land      60,000    30,000 Total$  120,000$  85,000   The fair market value of the corporation’s stock received in the exchange equaled the fair market value of the assets transferred to the corporation by Ivan. The transaction met the requirements to be tax-deferred under §351.

A perfectly competitive firm faces a price of £14 per unit. It has the following short-run cost schedule: Output 0 1 2 3 4 5 6 7 8 TC (£) 10 18 24 30 38 50 66 91 120 (a)  Copy the table and put in additional rows for average cost and marginal cost at each level of output. (Enter the figures for marginal cost in the space between each column.) (b)  Plot AC, MC and MR on a diagram. (c)  Mark the profit-maximising output. (d)  How much (supernormal) profit is made at this output? (e)  What would happen to the price in the long run if this firm were typical of others in the industry? Why would we need to know information about long-run average cost in order to give a precise answer to this question?

The four axes are the three linear axes: X, Y, and Z; and the rotational axis: