Question & Answer

Presented below are data taken from the records of Alee Company.December 31, December 31, 2014 2013Cash $ 15,000 $ 8,000 Current assets other than cash 85,000 60,000 Long-term investments 10,000 53,000 Plant assets 335,000 215,000 $445,000 $336,000 Accumulated depreciation $ 20,000 $ 40,000 Current liabilities 40,000 22,000 Bonds payable 75,000 202 Capital stock 254,000 254,000 Retained earnings 56,000 20,000 $445,000 $336,000 Additional information: 1. Held-to-maturity securities carried at a cost of $43,000 on December 31, 2013, were sold in 2014 for $34,000. The loss (not extraordinary) was incorrectly charged directly to Retained Earnings. 2. Plant assets that cost $50,000 and were 80% depreciated were sold during 2014 for $8,000. The loss (not extraordinary) was incorrectly charged directly to Retained Earnings. 3. Net income as reported on the income statement for the year was $57,000. 4. Dividends paid amounted to $10,000. 5. Depreciation charged for the year was $20,000. Instructions Prepare a statement of cash flows for the year 2014 using the indirect method.

Surface roughness is a measurable aspect of surface texture; what does surface roughness mean?

In the current year, Jolt Inc. reported $40,000 of taxable income before any charitable contribution deduction. Jolt contributed $10,000 this year to Goodwill Industries, a public charity. Compute Jolt’s current E&P.

In addition to cash contributions to charity, Dean decided to donate shares of stock and a portrait painted during the earlier part of the last century. Dean purchased the stock and the portrait many years ago as investments. Dean reported the following recipients in 2024: Charity Property Cost FMV State University Cash $ 15,000 $15,000 Red Cross Cash 14,500 14,500 State History Museum Antique painting 5,000 82,000 City Medical Center Dell stock 28,000 17,000 a. Determine the maximum amount of charitable deduction for each of these contributions ignoring the AGI ceiling on charitable contributions. b. Assume that Dean’s AGI this year is $150,000. Determine Dean’s itemized deduction for his charitable contributions this year and any carryover. c. Suppose Dean is a dealer in antique paintings, and he held the painting for sale before the contribution. What is Dean’s charitable contribution deduction for the painting in this situation? d. Suppose that Dean’s objective with the donation to the museum was to finance expansion of the historical collection. Hence, Dean was not surprised when the museum announced the sale of the portrait because of its limited historical value. What is Dean’s charitable contribution deduction for the painting in this situation (ignoring AGI limitations)?

In researching a tax question, you find only one authority (a trial-level court opinion) that is directly on point.  Which court would you least prefer to have heard this case, and why?

Malone Company determined its ending inventory at cost and at lower-of-cost-or-market at December 31, 2013, December 31, 2014, and December 31, 2015, as shown below. Cost Lower-of-Cost-or-Market 12/31/13 $650,000 $650,000 12/31/14 780,000 712,000 12/31/15 905,000 830,000 Instructions (a) Prepare the journal entries required at December 31, 2014, and at December 31, 2015, assuming that the cost-of-goods-sold method of adjusting to lower-of-cost-or-market is used. (b) Prepare the journal entries required at December 31, 2014, and at December 31, 2015, assuming that the loss method of adjusting to lower-of-cost-or-market is used.

Kyle, a single taxpayer, worked as a freelance software engineer for the first three months of 2024.  During that time, he earned $44,000 of self-employment income.  On April 1, 2024, Kyle took a job as a full-time software engineer with one of his former clients, Hoogle Inc.  From April through the end of the year, Kyle earned $178,000 in salary.  What amount of FICA taxes (self-employment and employment related) does Kyle owe for the year?

In 2024, Elaine paid $2,800 of tuition and $600 for books for her dependent son to attend State University this past fall as a freshman.  Elaine files a joint return with her husband.  What is the maximum American opportunity tax credit Elaine can claim for the tuition payment and books in each of the following alternative situations? a.  Elaine’s AGI is $80,000.

1. Could the long run and the very long run ever be the same length of time? 2. What will the long-run and very long-run market supply curves for a product look like? How will the shape of the long-run curve depend on returns to scale? 3. In the very long run, new isoquants will have to be drawn as factor productivity changes. An increase in productivity will shift the isoquants inwards towards the origin: less capital and labour will be required to produce any given level of output. Will this be a parallel inward shift of the isoquants? Explain.

Define and sketch a groove weld.

How have money market rates changed since the beginning of the semester? Consider the current economic conditions. Do you think money market rates will increase or decrease during the semester? Offer some logic to support your answer. (LO1)

Richardson Company is contemplating the establishment of a share-based compensation plan to provide long-run incentives for its top management. However, members of the compensation committee of the board of directors have voiced some concerns about adopting these plans, based on news accounts related to a recent accounting standard in this area. They would like you to conduct some research on this recent standard so they can be better informed about the accounting for these plans. Instructions If your school has a subscription to the FASB Codification, go to http://aaahq.org/ascLogin.cfm to log in and prepare responses to the following. Provide Codification references for your responses. (a) Identify the authoritative literature that addresses the accounting for share-based payment compensation plans. (b) Briefly discuss the objectives for the accounting for stock compensation. What is the role of fair value measurement? (c) The Richardson Company board is also considering an employee share-purchase plan, but the Board does not want to record expense related to the plan. What criteria must be met to avoid recording expense on an employee stock-purchase plan?

What is the unit melting energy in welding, and what are the factors on which it depends?

Lanny and Shirley are recently divorced and do not live together.  Shirley has custody of their child, Art, and Lanny pays Shirley $22,000 per year.  All property was divided equally. a.       How much should Shirley include in income if Lanny’s payments are made in cash but will cease if Shirley dies or remarries? b.       How much should Shirley include in income if $12,000 of Lanny’s payments is designated as “nonalimony” in the divorce decree? c.       How much should Shirley include in income if Lanny’s payments drop to $15,000 once Art reaches the age of 18?

Wolverine Corporation made a distribution of $500,000 to Jin Inc. in partial liquidation of the company on December 31 of this year. Jin Inc. owns 100 percent of Wolverine Corporation. The distribution was in exchange for 50 percent of Jin Inc.’s stock in the company. At the time of the distribution, the shares had a fair market value of $200 per share. Jin Inc.’s tax basis in the shares was $50 per share. Wolverine had E&P of $8,000,000 at the time of the distribution.

In the movie Wall Street, Bud Fox is a broker who conducts trades for Gordon Gekko’s firm. Gekko purchases shares of firms that he believes are undervalued. Various scenes in the movie offer excellent examples of concepts discussed in this chapter. (LO3, LO4, LO6) a. Bud Fox comments to Gordon Gekko that a firm’s breakup value is twice its market price. What is Bud suggesting in this statement? How would employees of the firm respond to Bud’s statement? b. When Bud informs Gekko that another investor, Mr. Wildman, is secretly planning to acquire a target firm in Pennsylvania, Gekko tells Bud to buy a large amount of this stock. Why? c. Gekko says “Wonder why fund managers can’t beat the S&P 500? Because they are sheep.” What is Gekko’s point? How does it relate to market efficiency?

Shimei Inc. purchased computer equipment on March 1, 2014, for $31,000. The computer equipment has a useful life of 10 years and a salvage value of $1,000. For tax purposes, the MACRS class life is 5 years. Instructions (a) Assuming that the company uses the straight-line method for book and tax purposes, what is the depreciation expense reported in (1) the financial statements for 2014 and (2) the tax return for 2014? (b) Assuming that the company uses the double-declining-balance method for both book and tax purposes, what is the depreciation expense reported in (1) the financial statements for 2014 and (2) the tax return for 2014? (c) Why is depreciation for tax purposes different from depreciation for book purposes even if the company uses the same depreciation method to compute them both?

What does viscoelasticity mean, when applied to a polymer melt?

Describe the characteristics that a measure of money should have if it is to be manipulated by the Fed. (LO2)

What is the fundamental feature that distinguishes fusion welding from solid-state welding?

Outline the key steps in a costing framework.

Elaine pays $40,000 cash for Martha’s one-third interest in Lakewood Partnership. Just prior to the sale, Martha’s basis in Lakewood is $140,000. Lakewood reports the following balance sheet: Assets: Tax Basis FMV Cash $ 50,000 $ 50,000 Land 370,000 70,000    Totals $ 420,000 $ 120,000 Liabilities and capital: Capital- Mary $140,000 - Martha 140,000 - Margaret 140,000   Totals $ 420,000 Assume the land had been purchased several years ago and the partnership does not have a §754 election in place. a. What are the amount and character of Martha’s recognized gain or loss on the sale? b. What is Elaine’s basis in her partnership interest? c. If Lakewood were to sell the land for $70,000 shortly after the sale of Martha’s partnership interest, how much gain or loss would Elaine recognize?

What does vulcanization do to the rubber?

On its year 1 financial statements, Seatax Corporation, an accrual-method taxpayer, reported federal income tax expense of $570,000.  On its year 1 tax return, it reported a tax liability of $650,000. During year 1, Seatax made estimated tax payments of $700,000. What book-tax difference, if any, associated with its federal income tax expense should Seatax have reported when computing its year 1 taxable income?  Is the difference favorable or unfavorable?  Is it temporary or permanent?

Consider the prevailing conditions for inflation (including oil prices), the economy, interest rates, and any other factors that could affect exchange rates. Based on these conditions, do you think the euro’s value will likely appreciate or depreciate against the dollar for the remainder of this semester? Offer some logic to support your answer. Which factor do you think will have the biggest impact on the euro’s exchange rate? (LO2)