Question & Answer

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 wheel grade?

Briefly discuss how a transfer of securities from the available- for-sale category to the trading category affects stockholders’ equity and income.

Under what circumstances does property received by a corporation in a §351 transaction not receive a carryover basis?  What is the reason for this rule?

In robot programming, what is the difference between powered leadthrough and manual leadthrough?

How is the present value of a non-interest-bearing note computed?

Nieland Industries had one patent recorded on its books as of January 1, 2014. This patent had a book value of $288,000 and a remaining useful life of 8 years. During 2014, Nieland incurred research and development costs of $96,000 and brought a patent infringement suit against a competitor. On December 1, 2014, Nieland received the good news that its patent was valid and that its competitor could not use the process Nieland had patented. The company incurred $85,000 to defend this patent. At what amount should patent(s) be reported on the December 31, 2014, balance sheet, assuming monthly amortization of patents?

Fatima pays $120,000 cash for Brittany’s one-third interest in the Westlake Partnership. Just prior to the sale, Brittany’s basis in Westlake is $96,000. Westlake reports the following balance sheet: Assets: Tax Basis FMV Cash $ 96,000 $ 96,000 Land 192,000 264,000    Totals $ 288,000 $ 360,000 Liabilities and capital: Capital- Amy 96,000 - Brittany 96,000 - Ben 96,000   Totals $ 288,000 a. What are the amount and character of Brittany’s recognized gain or loss on the sale? b. What is Fatima’s basis in her partnership interest? What is Fatima’s inside basis? c. If Westlake were to sell the land for $264,000 shortly after the sale of Brittany’s partnership interest, how much gain or loss would the partnership recognize? d. How much gain or loss would Fatima recognize if the land were sold for 264,000? e. Suppose Westlake has a §754 election in place. What is Fatima’s special basis adjustment? How much gain or loss would Fatima recognize on a subsequent sale of the land in this situation?

Jackson Company adopts acceptable accounting for its defined benefit pension plan on January 1, 2013, with the following beginning balances: plan assets $200,000; projected benefit obligation $250,000. Other data relating to 3 years’ operation of the plan are as follows. 2013 2014 2015 Annual service cost $16,000 $ 19,000 $ 26,000 Settlement rate and expected rate of return 10% 10% 10% Actual return on plan assets 18,000 22,000 24,000 Annual funding (contributions) 16,000 40,000 48,000 Benefi ts paid 14,000 16,400 21,000 Prior service cost (plan amended, 1/1/14) 160,000 Amortization of prior service cost 54,400 41,600 Change in actuarial assumptions establishes a December 31, 2015, projected benefi t obligation of: 520,000 Instructions (a) Prepare a pension worksheet presenting all 3 years’ pension balances and activities. (b) Prepare the journal entries (from the worksheet) to reflect all pension plan transactions and events at December 31 of each year. (c) Indicate the pension-related amounts reported in the financial statements for 2015.

Name some of the important applications of FRPs.

Virginia Corporation is a calendar-year corporation.  At the beginning of 2024, its election to be taxed as an S corporation became effective.  Virginia Corp.’s balance sheet at the end of 2023 reflected the following assets (it did not have any earnings and profits from its prior years as a C corporation). Asset Adjusted basis FMV Cash $20,000 $20,000 Accounts receivable 40,000 40,000 Inventory 90,000 200,000 Land 150,000 175,000   Totals $300,000 $435,000   In 2024, Virginia Corp. reported business income of $50,000 (this would have been its taxable income if it were still a C corporation). What is Virginia’s built-in gains tax in each of the following alternative scenarios?

What are integral fasteners?

Hans runs a sole proprietorship. Hans has reported the following net §1231 gains and losses since he began business. Net §1231 gains shown are before the look-back rule.   Year Net §1231 Gains/(Losses) Year 1 ($65,000) Year 2 15,000 Year 3 0 Year 4 0 Year 5 10,000 Year 6 0 Year 7 (current year) 50,000   a. What amount, if any, of the year 7 (current year) $50,000 net §1231 gain is treated as ordinary income? b. Assume that the $50,000 net §1231 gain occurs in year 6 instead of year 7. What amount of the gain would be treated as ordinary income in year 6?

At December 31, 2014, Higley Corporation has one temporary difference which will reverse and cause taxable amounts in 2015. In 2014, a new tax act set taxes equal to 45% for 2014, 40% for 2015, and 34% for 2016 and years thereafter. Instructions Explain what circumstances would call for Higley to compute its deferred tax liability at the end of 2014 by multiplying the cumulative temporary difference by: (a) 45%. (b) 40%. (c) 34%.

Several years ago, your client, Brooks Robinson, started an office-cleaning service. His business was very successful, owing much to his legacy as the greatest defensive third baseman in major league history and his nickname, “The Human Vacuum Cleaner.”  Brooks operated his business as a sole proprietorship and used the cash-basis method of accounting. Brooks was advised by his attorney that it is too risky to operate his business as a sole proprietorship and that he should incorporate to limit his liability. Brooks has come to you for advice on the tax implications of incorporation. His balance sheet is presented below. Under the terms of the incorporation, Brooks would transfer the assets to the corporation in return for 100 percent of the company’s common stock. The corporation would also assume the company’s liabilities (payables and mortgage).

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.

Distinguish between minimum rental payments and minimum lease payments, and indicate what is included in minimum lease payments.

Shawn receives stock in an S corporation when it is formed in a tax-deferred transaction by contributing land with a tax basis of $50,000 and encumbered by a $20,000 mortgage. What is Shawn’s initial basis in his S corporation stock?

Turtle Creek Partnership had the following revenues, expenses, gains, losses, and distributions: Sales revenue $40,000 Long-term capital gains $2,000 Cost of goods sold ($13,000) Depreciation - MACRS ($3,000) Amortization of organization costs ($1,000) Guaranteed payments to partners for general management ($10,000) Cash distributions to partners ($2,000)

The total solidification times of three casting shapes are to be compared: (1) a sphere, (2) a cylinder, in which the length-to-diameter ratio = 1.0, and (3) a cube. For all three geometries, the volume = 1000 cm3 . The same casting alloy is used in the three cases. (a) Determine the relative solidification times for each geometry. (b) Based on the results of part (a), which geometric element would make the best riser? (c) If the mold constant = 3.5 min/cm2 in Chvorinov's rule, compute the total solidification time for each casting.

What will cause people to expect higher rates of inflation? How will expectations of inflation affect the actual rate of inflation?

Ottawa Corporation owns machinery that cost $20,000 when purchased on July 1, 2011. Depreciation has been recorded at a rate of $2,400 per year, resulting in a balance in accumulated depreciation of $8,400 at December 31, 2014. The machinery is sold on September 1, 2015, for $10,500. Prepare journal entries to (a) update depreciation for 2015 and (b) record the sale.

Until the end of year 0, Magic Carpets (MC) was a C corporation with a calendar year-end.  At the beginning of year 1, it elected to be taxed as an S corporation.  MC uses the LIFO method to value its inventory.  At the end of year 0, under the LIFO method, its inventory of rugs was valued at $150,000. Under the FIFO method, the rugs would have been valued at $170,000.  How much LIFO recapture tax must MC pay, and what is the due date of the first payment under the following alternative scenarios?

Jeremy and Alyssa Johnson have been married for five years and do not have any children.  Jeremy was married previously and has one child from the prior marriage.  He is self-employed and operates his own computer repair store.  For the first two months of the year, Alyssa worked for Office Depot as an employee.  In March, Alyssa accepted a new job with Super Toys Inc. (ST), where she worked for the remainder of the year.  This year, the Johnsons received $255,000 of gross income.  Determine the Johnsons’ AGI for 2024 given the following information:

Draw a similar diagram to Figure 24.7 showing how the price of an individual good imported into country A is determined.