Question & Answer

Don Juan, a single taxpayer, is the sole owner, of DJ’s Inc., an S corporation. In 2024, DJ’s Inc. incurred a massive $600,000 business loss, all of which is allocable to Don Juan as the sole shareholder. Assume that the $600,000 loss is not limited by the basis, at-risk, or passive loss rules and that Don Juan has no other business income or business losses. How much of the $600,000 loss will Don Juan be able to deduct this year? What happens to any loss not deducted this year?

Jurassic Company owns equipment that cost $900,000 and has accumulated depreciation of $380,000. The expected future net cash flows from the use of the asset are expected to be $500,000. The fair value of the equipment is $400,000. Prepare the journal entry, if any, to record the impairment loss.

Susmita purchased a car this year and uses it for both business and personal purposes. Susmita drove the car 11,000 miles on business trips and 9,000 miles for personal transportation. Describe how Susmita will determine the amount of deductible expenses associated with the auto.

Compare and contrast the three trial-level courts.

Diderot Drilling Company has leased property on which oil has been discovered. Wells on this property produced 18,000 barrels of oil during the past year that sold at an average sales price of $55 per barrel. Total oil resources of this property are estimated to be 250,000 barrels. The lease provided for an outright payment of $500,000 to the lessor (owner) before drilling could be commenced and an annual rental of $31,500. A premium of 5% of the sales price of every barrel of oil removed is to be paid annually to the lessor. In addition, Diderot (lessee) is to clean up all the waste and debris from drilling and to bear the costs of reconditioning the land for farming when the wells are abandoned. The estimated fair value, at the time of the lease, of this clean-up and reconditioning is $30,000. Instructions From the provisions of the lease agreement, you are to compute the cost per barrel for the past year, exclusive of operating costs, to Diderot Drilling Company.

10.9 Determine the shrink rule to be used by pattern makers for white cast iron. Using the shrinkage value in Table 10.1, express your answer in terms of decimal fraction inches of elongation per foot of length compared to a standard one-foot scale

What is meant by the term aspect ratio for a metallic particle?

} Devon owns 1,000 shares of stock worth $10,000. This year he received 200 additional shares of this stock from a stock dividend. His 1,200 shares are now worth $12,500. Must Devon include the dividend paid in stock in income?

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.

Assume the following S corporations, gross receipts, passive investment income, and corporate E&P. Will any of these corporations have its S election terminated due to excessive passive income? If so, in what year?  All became S corporations at the beginning of year 1.

Distinguish between FASB Accounting Standards Updatesand FASB Statements of Financial Accounting Concepts.

Contingent Costs List some costs that may be considered to be ‘contingent’ sustainability-related costs for the mining industry. (LO4)

The grinding wheel in a centerless grinding operation has a diameter = 200 mm, and the regulating wheel diameter = 125 mm. The grinding wheel rotates at 3000 rev/min and the regulating wheel rotates at 200 rev/min. The inclination angle of the regulating wheel = 2.5°. Determine the throughfeed rate of cylindrical workparts that are 25.0 mm in diameter and 175 mm long.

Under what circumstances can a taxpayer deduct medical expenses paid for a member of his family?  Does it matter if the family member reports significant amounts of gross income and cannot be claimed as a dependent?

Lowell Company’s December 31, 2014, trial balance includes the following accounts: Inventory $120,000; Buildings $207,000; Accumulated Depreciation—Equipment $19,000; Equipment $190,000; Land (held for investment) $46,000; Accumulated Depreciation—Buildings $45,000; Land $71,000; Timberland $70,000. Prepare the property, plant, and equipment section of the balance sheet.

Under what conditions would speculators sell a call option? What is the risk to speculators who sell put options? (LO3)

Suppose you asked your favorite AI query tool “How much tax depreciation could a taxpayer deduct on a computer acquired in January 2024 for $100,000?” and the AI tool provided the following response:

Explain the use of a balloon-payment mortgage. Why might a financial institution prefer to offer this type of mortgage? (LO2)

Simpson, age 45, is a single individual who is employed full time by Duff Corporation. This year Simpson reports AGI of $50,000 and has incurred the following medical expenses:

Write a short essay explaining why there is so much uncertainty surrounding the valuation of a firm that is engaged in an IPO. Why do you think some investors overvalue firms at the time of their IPO?

Explain how the interest rate risk of finance companies differs from that of savings institutions. (LO5)

What is a TPE?

You have been hired as a benefit consultant by Jean Honore, the owner of Attic Angels. She wants to establish a retirement plan for herself and her three employees. Jean has provided the following information. The retirement plan is to be based upon annual salary for the last year before retirement and is to provide 50% of Jean’s last-year annual salary and 40% of the last-year annual salary for each employee. The plan will make annual payments at the beginning of each year for 20 years from the date of retirement. Jean wishes to fund the plan by making 15 annual deposits beginning January 1, 2014. Invested funds will earn 12% compounded annually. Information about plan participants as of January 1, 2014, is as follows. Jean Honore, owner: Current annual salary of $48,000; estimated retirement date January 1, 2039. Colin Davis, fl ower arranger: Current annual salary of $36,000; estimated retirement date January 1, 2044. Anita Baker, sales clerk: Current annual salary of $18,000; estimated retirement date January 1, 2034. Gavin Bryars, part-time bookkeeper: Current annual salary of $15,000; estimated retirement date January 1, 2029. In the past, Jean has given herself and each employee a year-end salary increase of 4%. Jean plans to continue this policy in the future. Instructions (a) Based upon the above information, what will be the annual retirement benefit for each plan participant? (Round to the nearest dollar.) (Hint: Jean will receive raises for 24 years.) (b) What amount must be on deposit at the end of 15 years to ensure that all benefits will be paid? (Round to the nearest dollar.) (c) What is the amount of each annual deposit Jean must make to the retirement plan?

Brad purchased land for $45,000 this year. At year-end Brad sold the land for $51,700 and paid a sales commission of $450. What effect does this transaction have on Brad’s gross income? Explain.

Where can authoritative IFRS related to accounting changes be found?