Question & Answer

Describe the differences between a proportional, progressive, and regressive tax rate structures.

1.      : How accurate is Adam Wainwright’s analysis of the situation at Guitarras Torres? Do you think craftsmanship is incompatible with increasing productivity in this company? Why or why not?

Molten metal can be poured into the pouring cup of a sand mold at a steady rate of 1000 cm3 /s. The molten metal overflows the pouring cup and flows into the downsprue. The cross section of the sprue is round, with a diameter at the top = 3.4 cm. If the sprue is 25 cm long, determine the proper diameter at its base so as to maintain the same volume flow rate.

Why do some financial institutions remain exposed to interest rate risk, even when they believe that the use of interest rate futures could reduce their exposure? (LO2)

Describe how a piece of glass is heat treated to produce tempered glass.

Draw a diagram with MC and MR curves. Mark the output (a) at which profits are maximised; (b) at which sales revenue is maximised.

What is a tolerance?

Badger Corporation declared a stock distribution to all shareholders of record on March 25 of this year. Shareholders will receive one share of Badger stock for every 10 shares of stock they already own. Madison owns 1,000 shares of Badger stock with a tax basis of $100 per share. The fair market value of the Badger stock was $110 per share on March 25 of this year.

Explain the guidelines for credit rating agencies that resulted from the Financial Reform Act of 2010. (LO2)

Compare and contrast the similarities and differences between organizational expenditures and start-up costs for tax purposes.

Show the effect of an increase in government expenditure by using (a) the injections and withdrawals diagram; (b) the income/expenditure diagram (see Figures 17.8 and 17.10).

If banks choose to operate a 20 per cent liquidity ratio and receive extra cash deposits of £10 million: (a)  how much credit will ultimately be created? (b)  by how much will total deposits have expanded? (c)  what is the size of the bank deposits multiplier?

Cammie received 100 NQOs (each option provides a right to purchase 10 shares of MNL stock for $10 per share). She started working for MNL Corporation four years ago (5/1/Y1) when MNL’s stock price was $8 per share. Now( 8/15/Y5) that MNL’s stock price is $40 per share, she intends to exercise all of her options. After acquiring the 1,000 MNL shares with her stock options, she held the shares for over one year and sold (on 10/1/Y6) them at $60 per share. What are Cammie’s taxes due on the grant date (5/1/Y1), exercise date (8/15/Y5), and sale date (10/1/Y6), assuming her ordinary marginal rate is 32 percent and her long-term capital gains rate is 15 percent?

Compare the federal income tax to sales taxes using the “certainty” criterion.

Under what circumstances is relative sales value an appropriate basis for determining the price assigned to inventory?

What is the difference between bulk micromachining and surface micromachining?

When we were looking at wage rates, were we talking about the price of labour or the price of labour services? Is this distinction between the price of a factor and the price of factor services a useful one in the case of labour? Was it in Roman times?

Using the facts from the previous problem, when should Reese pay the bill if she expects her marginal tax rate to be 35 percent next year? 24 percent next year?

Sarah is a cash-method, calendar-year taxpayer, and she is considering making the following cash payments related to her business. Calculate the after-tax cost of each payment assuming she has a 37 percent marginal tax rate.

Explain the possible signal that would be transmitted to the market if a country abandoned its use of the euro. (LO1)

Stan Conner and Mark Stein were discussing the statement of cash flows of Bombeck Co. In the notes to the statement of cash flows was a schedule entitled “Non-cash investing and financing activities.” Give three examples of significant non-cash transactions that would be reported in this schedule.

At the beginning of 2014, Aristotle Company acquired a mine for $970,000. Of this amount, $100,000 was ascribed to the land value and the remaining portion to the minerals in the mine. Surveys conducted by geologists have indicated that approximately 12,000,000 units of the ore appear to be in the mine. Aristotle incurred $170,000 of development costs associated with this mine prior to any extraction of minerals. It also determined that the fair value of its obligation to prepare the land for an alternative use when all of the mineral has been removed was $40,000. During 2014, 2,500,000 units of ore were extracted and 2,100,000 of these units were sold. Instructions Compute the following. (a) The total amount of depletion for 2014. (b) The amount that is charged as an expense for 2014 for the cost of the minerals sold during 2014.

1.      : Don’t require Rukman “connectors” to reveal their affiliation with the corporate word-of-mouth marketing campaign. They don’t have to recommend a product they don’t believe in.

If inventory physically increases during the period, income under absorption costing will be higher than income using variable costing. Explain.

Explain why the medical expense and casualty loss provisions are sometimes referred to as “wherewithal” deductions and how this rationale is reflected in the limits on these deductions.