Question & Answer

Explain whether a corporation’s assumption of shareholder liabilities will always constitute boot in a §351 transaction.

1.    : Walt Disney Company has four major strategic business units: movies (including Pixar and Touchstone), theme parks (Walt Disney World and Disneyland), consumer products (the Disney Store), and television (the ABC/Disney Television Group and ESPN). Place each of these SBUs on the BCG matrix based on your knowledge of them.

Hobbs Co. has the following defined benefit pension plan balances on January 1, 2014. Projected benefi t obligation $4,600,000 Fair value of plan assets 4,600,000 The interest (settlement) rate applicable to the plan is 10%. On January 1, 2015, the company amends its  agreement so that prior service costs of $600,000 are created. Other data related to the pension plan are: 2014 2015 Service cost $150,000 $170,000 Prior service cost amortization –0– 90,000 Contributions (funding) to the plan 200,000 184,658 Benefi ts paid 220,000 280,000 Actual return on plan assets 252,000 350,000 Expected rate of return on assets 6% 8% Instructions (a) Prepare a pension worksheet for the pension plan in 2014. (b) Prepare any journal entries related to the pension plan that would be needed at December 31, 2014. (c) Prepare a pension worksheet for 2015 and any journal entries related to the pension plan as of December 31, 2015. (d) Indicate the pension-related amounts reported in the 2015 financial statements.

What is precision in measurement?

Describe the type of event that qualifies as a casualty for tax purposes.

Identify the four different types of responsibility centres and explain the general objectives of each.

Last year, TBA Corporation, a calendar-year taxpayer, reported a tax liability of $100,000. TBA confidently anticipates a current-year tax liability of $240,000. Compute the minimum estimated tax payments TBA should make for the first, second, third, and fourth quarters respectively (ignore the annualized income method), assuming the following:

The molten filler metal in brazing is distributed throughout the joint by capillary action. What is capillary action?

74. Fizbo Corporation is in the business of breeding and racing horses. Fizbo has taxable income of $5,000,000 other than from these transactions. It has nonrecaptured §1231 losses of $10,000 from 2020 and $13,000 from 2018.    Consider the following transactions that occur during 2024: a. A building with an adjusted basis of $300,000 is totally destroyed by fire. Fizbo receives insurance proceeds of $400,000 but does not plan to replace the building. The building was built 12 years ago at a cost of $420,000 and was used to provide lodging for employees.  b. Fizbo sells four acres of undeveloped farmland (used for grazing) for $50,000. Fizbo purchased the land 15 years ago for $15,000. c. Fizbo sells a racehorse for $250,000. The racehorse was purchased four years ago for $200,000. Total depreciation taken on the racehorse was $160,000.  d. Fizbo exchanges equipment that was purchased three years ago for $300,000 for $100,000 of IBM common stock. The adjusted basis of the equipment is $220,000. If straight-line depreciation had been used, the adjusted basis would be $252,000. e. On November 1, Fizbo sold XCON stock for $50,000. Fizbo had purchased the stock on December 12, 2023, for $112,000.   Part (1): After all netting is complete, what is Fizbo’s total amount of income from these transactions to be treated as ordinary income or loss? What is its capital gain or loss?   Part (2):  What is Fizbo’s taxable income for the year after including the effects of these transactions?

What impact has the SEC’s Regulation Fair Disclosure (FD) had on securities firms? (LO2)

What kinds of products are produced by blow molding?

What is meant by the term transfer efficiency in organic coating technology?

What cost concepts are there other than those based on opportunity cost? Would the use of these concepts be likely to lead to an output greater or less than the profit-maximising one?

A steel collar whose outside diameter = 3.000 in at room temperature is to be shrink fitted onto a steel shaft by heating it to an elevated temperature while the shaft remains at room temperature. The shaft diameter = 1.500 in. For ease of assembly when the collar is heated to an elevated temperature of 1000°F, the clearance between the shaft and the collar is to be 0.007 in. Determine (a) the initial inside diameter of the collar at room temperature so that this clearance is satisfied, (b) the radial pressure and (c) maximum effective stress on the resulting interference fit at room temperature (70°F). For steel, the elastic modulus = 30,000,000 lb/in2 and coefficient of thermal expansion = 6.7 x 10-6 in/in per °F.

How might a balanced scorecard be used?             (LO4)

Why is the profit-maximising price under monopoly greater than marginal cost? In what way can this be seen as inefficient?

Among the synthetic fiber materials, which are the most important?

James Kirk is a financial executive with McDowell Enterprises. Although James Kirk has not had any formal training in finance or accounting, he has a “good sense” for numbers and has helped the company grow from a very small company ($500,000 sales) to a large operation ($45 million in sales). With the business growing steadily, however, the company needs to make a number of difficult financial decisions in which James Kirk feels a little “over his head.” He therefore has decided to hire a new employee with “numbers” expertise to help him. As a basis for determining whom to employ, he has decided to ask each prospective employee to prepare answers to questions relating to the following situations he has encountered recently. Here are the questions. (a) In 2013, McDowell Enterprises negotiated and closed a long-term lease contract for newly constructed truck terminals and freight storage facilities. The buildings were constructed on land owned by the company. On January 1, 2014, McDowell took possession of the leased property. The 20-year lease is effective for the period January 1, 2014, through December 31, 2033. Advance rental payments of $800,000 are payable to the lessor (owner of facilities) on January 1 of each of the first 10 years of the lease term. Advance payments of $400,000 are due on January 1 for each of the last 10 years of the lease term. McDowell has an option to purchase all the leased facilities for $1 on December 31, 2033. At the time the lease was negotiated, the fair value of the truck terminals and freight storage facilities was approximately $7,200,000. If the company had borrowed the money to purchase the facilities, it would have had to pay 10% interest. Should the company have purchasedrather than leased the facilities? (b) Last year the company exchanged a piece of land for a non-interest-bearing note. The note is to be paid at the rate of $15,000 per year for 9 years, beginning one year from the date of disposal of the land. An appropriate rate of interest for the note was 11%. At the time the land was originally purchased, it cost $90,000. What is the fair value of the note? (c) The company has always followed the policy to take any cash discounts on goods purchased. Recently, the company purchased a large amount of raw materials at a price of $800,000 with terms 1/10, n/30 on which it took the discount. McDowell has recently estimated its cost of funds at 10%. Should McDowell continue this policy of always taking the cash discount?

Equipment was purchased on January 2, 2014, for $24,000, but no portion of the cost has been charged to depreciation. The corporation wishes to use the straight-line method for these assets, which have been estimated to have a life of 10 years and no salvage value. What effect does this error have on net income in 2014? What entry is necessary to correct for this error, assuming that the books are not closed for 2014?

Benjamin, a new staff accountant for Local Firm CPAs, LLC, takes a CPA review course to help prepare for the CPA exam. Benjamin is not reimbursed for the cost of the course ($1,500), but his firm expects him to take and pass the exam. Use an available tax research service to determine if Benjamin may deduct the cost of the CPA exam course.  Write a memo communicating the results of your research.

Name some manufacturing processes that produce very poor surface finishes.

Dave and his friend Stewart each owns 50 percent of KBS. During the year, Dave received $75,000 compensation for services he performed for KBS during the year. He performed a significant amount of work for the entity, and he was heavily involved in management decisions for the entity (he was not a passive investor in KBS). After deducting Dave’s compensation, KBS reported taxable income of $30,000. How much FICA and/or self-employment tax is Dave required to pay on his compensation and his share of the KBS income if KBS is formed as a C corporation, an S corporation, or a limited liability company (taxed as a partnership) (ignore the .9 percent additional Medicare tax)? How much FICA tax would the entity be required to pay on the compensation paid to Dave?

three factors that determine whether a taxpayer is required to file a tax return.

Fill in the missing figures in the Table 6.3. (Note that the figures for MC come in the spaces between each level of output.)

What is the meaning of an initial return for an IPO? (LO3)