Question & Answer

Would a corporation with a small amount of current-year taxable income (before the net operating loss deduction) and a large net operating loss carryover have a tax liability for the current year?  Explain.

Strickland Company owes $200,000 plus $18,000 of accrued interest to Moran State Bank. The debt is a 10-year, 10% note. During 2014, Strickland’s business deteriorated due to a faltering regional economy. On December 31, 2014, Moran State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $390,000, accumulated depreciation of $221,000, and a fair value of $180,000. Instructions (a) Prepare journal entries for Strickland Company and Moran State Bank to record this debt settlement. (b) How should Strickland report the gain or loss on the disposition of machine and on restructuring of debt in its 2014 income statement? (c) Assume that, instead of transferring the machine, Strickland decides to grant 15,000 shares of its common stock ($10 par) which has a fair value of $180,000 in full settlement of the loan obligation. If Moran State Bank treats Strickland’s stock as a trading investment, prepare the entries to record the transaction for both parties.

As you move down a straight-line demand curve, what happens to elasticity? Why?

What are the scientific and technical disciplines associated with nanoscience and nanotechnology?

A shielded metal arc-welding operation is performed on steel at a voltage = 30 volts and a current = 225 amps. The heat transfer factor = 0.85 and melting factor = 0.75. The unit melting energy for steel = 10.2 J/mm3. Determine (a) the rate of heat generation at the weld and (b) the volume rate of metal welded.

In its 2012 annual report, Gap Inc. reported inventory of $1,615 million on January 25, 2012, and $1,620 million on January 29, 2011, cost of sales of $9,275 million for fiscal year 2012, and net sales of $14,549 million. Compute Gap’s inventory turnover and the average days to sell inventory for the fiscal year 2012.

Table 6.4 illustrates five different short-run production functions: i.e. where the number of machines remains constant at one, two, three, four or five. In each case explain if there are diminishing or increasing marginal returns

Courtney recently received a speeding ticket on her way to the university.  Her fine was $200.  Is this considered a tax?  Why or why not?

Identify the five components that comprise pension expense. Briefly explain the nature of each component.

Consider the following letter and answer Shady’s question.

Create a balance sheet for a typical bank, showing its main liabilities (sources of funds) and assets (uses of funds). (LO2, LO3)

What is a part family?

Bob’s Lottery, Inc., has decided to offer winners a choice of $100,000 in ten years or some amount currently.  Assume that Bob’s Lottery, Inc., earns a 10 percent after-tax rate of return.  What amount should Bob offer lottery winners currently, in order for him to be indifferent between the two choices?

What are two methods of recording accounts receivable transactions when a cash discount situation is involved? Which is more theoretically correct? Which is used in practice more of the time? Why?

Why are both the price elasticity of demand and the price elasticity of supply likely to be greater in the long run?

Juanita, a Texas resident (5th Circuit), is researching a tax question and finds a 5th Circuit case ruling that is favorable and a 9th Circuit case that is unfavorable.  Which circuit case has more “authoritative weight” and why?  How would your answer change if Juanita were a Kentucky resident (6th Circuit)?

Complete Table 13.3 up to 9 cars per minute, assuming that the journey time increases to 24 minutes for the eighth car and 35 minutes for the ninth car.

On January 1, 2014, JWS Corporation issued $600,000 of 7% bonds, due in 10 years. The bonds were issued for $559,224, and pay interest each July 1 and January 1. JWS uses the effective-interest method. Prepare the company’s journal entries for (a) the January 1 issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry. Assume an effective-interest rate of 8%.

{Planning}Tesha works for a company that pays a year-end bonus in January of each defer the bonus income.  Assume Congress recently passed tax legislation that decreases individual tax rates as of next year.  Does this increase or decrease the benefits of the bonus deferral this year?  What if Congress passed legislation that increased tax rates next year?  Should Tesha ask the company to change its policy this year?  What additional information do you need to answer this question?year (instead of December of the preceding year) to allow employees to

Presented below are three independent situations. Situation 1: A company offers a one-year warranty for the product that it manufactures. A history of warranty claims has been compiled, and the probable amounts of claims related to sales for a given period can be determined. Situation 2: Subsequent to the date of a set of financial statements but prior to the issuance of the financial statements, a company enters into a contract that will probably result in a significant loss to the company. The amount of the loss can be reasonably estimated. Situation 3: A company has adopted a policy of recording self-insurance for any possible losses resulting from injury to others by the company’s vehicles. The premium for an insurance policy for the same risk from an independent insurance company would have an annual cost of $4,000. During the period covered by the financial statements, there were no accidents involving the company’s vehicles that resulted in injury to others. Instructions Discuss the accrual or type of disclosure necessary (if any) and the reason(s) why such disclosure is appropriate for each of the three independent sets of facts above.

ROI; residual income; breakeven point; contribution margin Mirror Industries laminating division, BrightShine, incurred the following costs and expenses in the last period.       During the period, BrightShine produced 300 000 units of industrial photo prints, which were sold for $2 each. Mirrors’s investment in BrightShine was $500 000 and $700 000 at the beginning and ending of the year, respectively. BrightShine’s weighted average cost of capital is 15 per cent.   Required (a)        Determine BrightShine’s return on investment for the year. (b)        Compute BrightShine’s residual income (loss) for the year. (c)        How many industrial photo print units did BrightShine have to sell during the year to break even? (d)        What was BrightShine’s contribution margin for the year?

What is the difference between adaptive expectations and rational expectations?

A sand core located inside a mold cavity has a volume of 157.0 in3 . It is used in the casting of a cast iron pump housing. Determine the buoyancy force that will tend to lift the core during pouring.

Koyuki transferred investment property she has owned for six years to XYZ Corporation in exchange for 40 percent of the corporation's stock (40 shares valued at $160,000) at the time XYZ was incorporated. The property's tax basis was $90,000 and its fair market value was $160,000. Assume the transfer qualifies under §351.  a. What gain or loss does Koyuki recognize on the transfer?   b. What is her basis in the stock she received in the exchange?   c. What is her holding period in the stock?

Using the IS/MP framework illustrate how the financial accelerator affects the extent of the rise in output following a positive demand-side shock.