Question & Answer

Bart is the favorite nephew of his aunt Thelma. Thelma transferred several items of value to Bart. For each of the following transactions, determine the effect on Bart’s gross income:

Paladin Inc. reported taxable income of $1,000,000 this year and paid federal

What does the term advanced composites mean?

Elastomers and thermosetting polymers are both cross-linked. Why are their properties so different?

In 2014, Gurney Construction Company agreed to construct an apartment building at a price of $1,200,000. The information relating to the costs and billings for this contract is shown below. 2014 2015 2016 Costs incurred to date $280,000 $600,000 $ 785,000 Estimated costs yet to be incurred 520,000 200,000 –0– Customer billings to date 150,000 500,000 1,200,000 Collection of billings to date 120,000 320,000 940,000 Instructions (a) Assuming that the percentage-of-completion method is used, (1) compute the amount of gross profit to be recognized in 2014 and 2015, and (2) prepare journal entries for 2015. (b) For 2015, show how the details related to this construction contract would be disclosed on the balance sheet and on the income statement.

Describe the roles of market makers. (LO2)

1.    : What should Ali Boyer do? What would you actually do if you were in her place? Explain.

Why is it desirable to use energy sources for welding that have high heat densities?

Tom was just hired by Acme Corporation and has decided to purchase disability insurance.  This insurance promises to pay him weekly benefits to replace his salary should he be unable to work because of disability.  Disability insurance is also available through Acme as part of its compensation plan.  Acme pays these premiums as a nontaxable fringe benefit, but the plan promises to pay about 10 percent less in benefits.  If Tom elects to have Acme pay the premiums, then his compensation will be reduced by an equivalent amount.  Should tax considerations play a role in Tom’s choice to buy disability insurance through Acme or on his own?  Explain.

What is graphite?

What are the primary characteristics of an annuity?Differentiate between an “ordinary annuity” and an “annuity due.”

What are some of the simple measures used to assess the feasibility of a proposed cup-drawing operation?

Your friend just told you about a penny stock that they purchased, which increased in price from $0.10 to $0.50 per share. You start investigating penny stocks, and after conducting a large amount of research, you find a stock with a quoted price of $0.05. Upon further investigation, you notice that the ask price for the stock is $0.08 and that the bid price is $0.01. Discuss the possible reasons for this wide bid–ask spread. (LO2)

A sheet-metal part 3.0 mm thick and 20.0 mm long is bent to an included angle = 60° and a bend radius = 7.5 mm in a V-die. The metal has a yield strength = 220 MPa and a tensile strength = 340 MPa. Compute the required force to bend the part, given that the die opening dimension = 15 mm.

An end milling operation is carried out along a straight line path that is 325 mm long. The cut is in a direction parallel to the x-axis on an NC machining center. Cutting speed = 30 m/min and chip load = 0.06 mm. The end milling cutter has two teeth and its diameter = 16.0 mm. The x-axis uses a DC servomotor connected directly to a leadscrew whose pitch = 6.0 mm. The feedback sensing device is an optical encoder that emits 400 pulses per revolution. Determine (a) feed rate and time to complete the cut, and (b) rotational speed of the motor and the pulse rate of the encoder at the feed rate indicated.

Wertz Construction Company decided at the beginning of 2014 to change from the completedcontract method to the percentage-of-completion method for financial reporting purposes. The company will continue to use the completed-contract method for tax purposes. For years prior to 2014, pretax income under the two methods was as follows: percentage-of-completion $120,000, and completed-contract $80,000. The tax rate is 35%. Prepare Wertz’s 2014 journal entry to record the change in accounting principle.

Collinsworth Co. reported sales on an accrual basis of $100,000. If accounts receivable increased $30,000 and the allowance for doubtful accounts increased $9,000 after a write-off of $2,000, compute cash sales.

In what ways can interventionist industrial policy work with the market, rather than against it? What are the arguments for and against such policy?

What is accomplished when a bank integrates its liability management with its asset management? (LO1)

Sandy and John Ferguson got married eight years ago and have a seven-year-old daughter, Samantha.  In 2024, Sandy worked as a computer technician at a local university earning a salary of $152,000, and John worked part time as a receptionist for a law firm earning a salary of $29,000.  Sandy also does some Web design work on the side and reported revenues of $4,000 and associated expenses of $750.  The Fergusons received $800 in qualified dividends and a $200 refund of their state income taxes.  The Fergusons always itemize their deductions, get the full benefit of deducting the entire amount of state income taxes paid, and their itemized deductions were well over the standard deduction amount last year.

61. Joaquin is a 30 percent partner in the SBD Partnership, a calendar-year-end entity. As of the end of this year, Joaquin has an outside basis in his interest in SBD of $188,000, which includes his share of the $60,000 of partnership liabilities. On December 31, SBD makes a proportionate distribution of the following assets to Joaquin: Tax BasisFMV Cash $ 40,000 $40,000 Inventory 55,000 65,000 Land 30,000 45,000 Totals $ 125,000 $150,000 a. What are the tax consequences (amount and character of recognized gain or loss, basis in distributed assets) of the distribution to Joaquin if the distribution is an operating distribution? b. What are the tax consequences (amount and character of recognized gain or loss, basis in distributed assets) of the distribution to Joaquin if the distribution is a liquidating distribution? c. Compare and contrast the results from parts (a) and (b).

Is the LIFO recapture tax a C corporation tax or an S corporation tax?  Explain.

Fontenot Corporation sold some machinery to its majority owner Gray (an individual who owns 60 percent of Fontenot). Fontenot purchased the machinery for $100,000 and has claimed a total of $40,000 of depreciation expense deductions against the property. Gray will provide Fontenot with $10,000 of cash today and a $100,000 note that will pay Fontenot $50,000 one year from now and $50,000 two years from now.  a. What gain or loss does Fontenot realize on the sale? b. What are the amount and character of the gain or loss that Fontenot must recognize in the year of sale (if any) and each of the two subsequent years? (Hint: Use the Internal Revenue Code and start with §453; please give appropriate citations.)

The table in Box 1.2 shows time-series data for four different variables for four different countries. Would there have been any advantage in giving the figures for each separate year? Would there have been any disadvantage?

What is the tax base for the Social Security and Medicare taxes for an employee or employer?  What is the tax base for Social Security and Medicare taxes for a self-employed individual?  Is the self-employment tax in addition to or in lieu of federal income tax?