Question & Answer

Under what circumstances would you expect the after-tax return from an investment in a capital asset to approach that of tax-exempt assets (assuming equal before-tax rates of return)?

Brooke, a single taxpayer, works for Company A for all of 2024, earning a salary of $50,000.     a. What is her FICA tax obligation for the year?

What is meant by the concept of ‘learning by exporting’?

Cullen Construction Company, which began operations in 2014, changed from the completed-contract to the percentage-of-completion method of accounting for long-term construction contracts during 2015. For tax purposes, the company employs the completedcontract method and will continue this approach in the future. The appropriate information related to this change is as follows. Pretax Income Percentage-of-Completion Completed-Contract Difference 2014 $880,000 $590,000 $290,000 2015 900,000 480,000 420,000 Instructions (a) Assuming that the tax rate is 40%, what is the amount of net income that would be reported in 2015? (b) What entry(ies) are necessary to adjust the accounting records for the change in accounting principle?

incorporating their sole proprietorship.  Using the married-joint tax brackets an]{Planning}Orie and Jane, husband and wife, operate a sole proprietorship.  They expect their taxable income next year to be $300,000, of which $125,000 is attributed to the sole proprietorship.  Orie and Jane are contemplating d the corporate tax brackets, find out how much current tax this strategy could save Orie and Jane.  How much income should be left in the corporation?

Kathleen Battle says, “Retained earnings should be reported as an asset, since it is earnings which are reinvested in the business.” How would you respond to Battle?

Discuss why an incentive package might include individual, divisional and        corporate-level performance targets.

What would the process of adjustment to the unanticipated size of the increase in aggregate demand look like if people had adjusted their inflationary expectation upwards from zero but to a rate less than p1?

Would the world benefit from the general imposition of controls on the movement of international finance?

1.       : What do you think is your dominant decision style? Is your style compatible with group techniques such as brainstorming and engaging in rigorous debate? Discuss.

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

1.              Give Owens a month’s notice and terminate him. He’s known as a good consultant, so he probably won’t have any trouble finding a new job, and you’ll avoid any further problems associated with his emotional difficulties and his possible alcohol problem.

A casualty loss from the complete destruction of a personal asset is limited to the lesser of fair market value or the property’s adjusted basis.  Explain the rationale for this rule as opposed to just allowing a deduction for the basis of the asset.

Relative to arm’s-length transactions, why do related-person transactions receive more IRS scrutiny?

The use of RPE systems for the evaluation of individual managers has been abandoned by many organisations.  Microsoft is one example.  Given this can be conclude that RPE is no good?

Name the three basic categories of commercial adhesives.

Danni is a single 30 percent owner of Kolt (a business entity). In the current year, Kolt reported a $1,000,000 business loss. Answer the following questions associated with each of the following alternative scenarios:

Explain why reclassification adjustments are necessary.

Using the same facts from the previous problem, how would your answer change if Randy estimates that there is only a 20 percent chance that the position will be sustained upon audit or judicial proceeding?

Assume the yield curve experiences a sudden shift such that the new yield curve is higher and more steeply sloped today than it was yesterday. If a firm issues new bonds today, would its bonds sell for higher or lower prices than if it had issued the bonds yesterday? Explain. (LO2)

Are satisficing firms more likely to suffer from X inefficiency (see Box 7.5) than firms which seek to maximise profit or sales revenue?

Charles has AGI of $50,000 and has made the following payments related to (1) land he inherited from his deceased aunt and (2) a personal vacation taken last year. Calculate the amount of taxes Charles may include in his itemized deductions for the year under the following circumstances:

} Marc and Michelle are married and earned salaries this year of $64,000 and $12,000, respectively. In addition to their salaries, they received interest of $350 from municipal bonds and $500 from corporate bonds.Marc and Michelle also paid $2,500 of qualifying moving expenses, and Marc paid alimony to a prior spouse in the amount of $1,500.Marc and Michelle have a 10-year-old son, Matthew, who lived with them throughout the entire year.Thus, Marc and Michelle are allowed to claim a $1,000 child tax credit for Matthew.Marc and Michelle paid $6,000 of expenditures that qualify as itemized deductions and they had a total of $5,500 in federal income taxes withheld from their paychecks during the course of the year. a.       What is Marc and Michelle’s gross income?

When a C corporation reports a loss for the year, can shareholders use the loss to offset their personal income? Why or why not?

Refer to the data in IFRS9-8 for Keyser’s Fleece Inc. Prepare the journal entries for (a) the wool harvested in the first six months of 2014, and (b) the wool harvested that is sold for $10,500 in July 2014.