Question & Answer

This year William provided $4,200 of services to a large client on credit. Unfortunately, this client has recently encountered financial difficulties and has been unable to pay William for the services. Moreover, William does not expect to collect for his services. William has “written off” the account and would like to claim a deduction for tax purposes.   a) What amount of deduction for bad debt expense can William claim this year if he uses the accrual method? b) What amount of deduction for bad debt expense can William claim this year if he uses the cash method?

Jones Co. is in a technology-intensive industry. Recently, one of its competitors introduced a new product with technology that might render obsolete some of Jones’s inventory. The accounting staff wants to follow the appropriate authoritative literature in determining the accounting for this significant market event. Instructions Access the IFRS authoritative literature at the IASB website (http://eifrs.iasb.org/). (Click on the IFRS tab and then register for free eIFRS access if necessary.) When you have accessed the documents, you can use the search tool in your Internet browser to respond to the following questions. (Provide paragraph citations.) (a) Identify the authoritative literature addressing inventory pricing. (b) List three types of goods that are classified as inventory. What characteristic will automatically exclude an item from being classified as inventory? (c) Define “net realizable value” as used in the phrase “lower-of-cost-or-net realizable value.” (d) Explain when it is acceptable to state inventory above cost and which industries allow this practice.

The financial statements of Marks and Spencer plc (M&S) are available at the book’s companion website or can be accessed at http://annualreport.marksandspencer.com/_assets/downloads/ Marks-and-Spencer-Annual-report-and-financial-statements-2012.pdf. Instructions Refer to M&S’s financial statements and the accompanying notes to answer the following questions. (a) How does M&S value its inventories? Which inventory costing method does M&S use as a basis for reporting its inventories? (b) How does M&S report its inventories in the statement of financial position? In the notes to its financial statements, what three descriptions are used to classify its inventories? (c) What costs does M&S include in Inventory and Cost of Sales? (d) What was M&S’s inventory turnover in 2012? What is its gross profit percentage? Evaluate M&S’s inventory turnover and its gross profit percentage.

How are qualified distributions from Roth IRAs taxed? How are nonqualified distributions taxed?

Assume that the (weekly) market demand and supply of tomatoes are given by the following figures: Price (£ per kilo) 4.00 3.50 3.00 2.50 2.00 1.50 1.00 Qd (000 kilos) 30 35 40 45 50 55 60 Qs (000 kilos) 80 68 62 55 50 45 38 (a)  What are the equilibrium price and quantity? (b)  What will be the effect of the government fixing a minimum price of (i) £3 per kilo; (ii) £1.50 per kilo? (c)  Suppose that the government paid tomato producers a subsidy of £1 per kilo. (i) Give the new supply schedule. (ii) What will be the new equilibrium price? (iii) How much will this cost the government? (d)  Alternatively, suppose that the government guaranteed tomato producers a price of £2.50 per kilo. (i) How many tomatoes would it have to buy in order to ensure that all the tomatoes produced were sold? (ii) How much would this cost the government? (e)  Alternatively, suppose it bought all the tomatoes produced at £2.50. (i) At what single price would it have to sell them in order to dispose of the lot? (ii) What would be the net cost of this action?

To what extent can the problems with privatisation be seen as arguments in favour of nationalisation?

1.      : Vote to reduce each of the three students’ penalties. Instead of a zero, each student will receive only half of the possible total points for the project, which would be an F. You’re still holding students responsible for the group project, but not imposing catastrophic punishment. This compromise both undercuts the professor’s policy and punishes “innocent” team members to some extent, but not as severely.

What is the defining characteristic of a Newtonian fluid?

List the types of environments that can be present during the sintering process according to the powder metallurgy video.

What is the constructive receipt doctrine?  What types of taxpayers does this doctrine generally affect?  For what tax planning strategy is the constructive receipt doctrine a potential limitation

Would it be desirable to have total equality in an economy, so that everyone receives the same share of resources?

1. Why are insurance companies unwilling to provide insurance against losses arising from war or ‘civil insurrection’? 2. Name some other events where it would be impossible to obtain insurance. 3. Explain why an insurance company could not pool the risk of flooding in a particular part of a country. Does your answer imply insurance against flooding is unobtainable?

Explain why diversification across different types of mutual funds is highly recommended. (LO2)

Jim was injured in an accident and his surgeon botched the medical procedure. Jim recovered $5,000 from the doctor for pain and suffering and $2,000 for emotional distress. Determine the taxability of these payments and briefly explain to Jim the apparent rationale for including or excluding these payments from gross income.

Cost variance analysis; use of variance information Baker Street Animal Clinic uses a particular serum routinely in its vaccination program. Veterinarian technicians give the injections. The standard dose is 10cc per injection, and the cost has been $100 per 1000cc. According to records, 2000 injections were administered last month at a serum cost of $2270. The veterinarian noted that the serum for the injections should have cost $2000 [($0.10 per cc) × (10cc per injection) × (2000 injections)]. Moreover, she noted some carelessness in handling the serum that could easily lead to unnecessary waste. When this issue was brought to the attention of the technicians, together with the $270 discrepancy in costs, they claimed that the $270 excess costs must be due to the inflated prices charged by the veterinarian supply company. Purchasing records reveal that the price for the serum used last month had indeed increased to $105 per 1000cc.   Required (a)     Provide variance calculations to help you evaluate the technicians’ argument. (b)     Discuss whether a significant waste of serum occurred last month. Include quantitative and qualitative information in your discussion. (c)     If you were the manager for the Baker Street Animal Clinic, how would you use the results of your analyses in parts (a) and (b)? Explain.

What is an “implicit tax,” and how does it affect a taxpayer’s decision to purchase municipal bonds?

What are the three basic components of an automated system?

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

1. What effect did these developments have on (a) the Phillips curve; (b) the aggregate supply curve? 2. What policy implications follow from these arguments?

What are the problems of relying on automatic fiscal stabilisers to ensure a stable economy at full employment?

Describe how the interaction between buyers and sellers affects the market value of a firm and explain how that value can subject a firm to the market for corporate control. (LO6)

1.   Mind your own business and just do your job. The company isn’t breaking any laws, and if Petro-Tech ‘s economic situation doesn’t improve, a lot of people will be thrown out of work.

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

Which is the largest tax collected by the U.S. government?  What types of taxpayers are subject to this tax?

Olga is married and files a joint tax return with her husband.  What amount of AMT exemption may she deduct under each of the following alternative circumstances?  a.  Her AMTI is $390,000.