Question & Answer

What are compensated absences?

What are the functions of securities firms? Many securities firms employ brokers and dealers. Distinguish between the functions of a broker and those of a dealer, and explain how each type of professional is compensated. (LO3)

What is a tax-basis capital account, and what type of tax-related information does it provide?

Rank the following three single taxpayers in order of the magnitude of taxable income (from lowest to highest) and explain your results. Assume none of the taxpayers contributed to charity this year.

Question: Frederic Chopin Corporation is preparing its December 31, 2014, balance sheet. The following items may be reported as either a current or long-term liability. 1. On December 15, 2014, Chopin declared a cash dividend of $2.50 per share to stockholders of record on December 31. The dividend is payable on January 15, 2015. Chopin has issued 1,000,000 shares of common stock, of which 50,000 shares are held in treasury. 2. At December 31, bonds payable of $100,000,000 are outstanding. The bonds pay 12% interest every September 30 and mature in installments of $25,000,000 every September 30, beginning September 30, 2015. 3. At December 31, 2013, customer advances were $12,000,000. During 2014, Chopin collected $30,000,000 of customer advances; advances of $25,000,000 should be recognized in income. Instructions For each item above, indicate the dollar amounts to be reported as a current liability and as a long-term liability, if any.

Recall the various strategies that rival oligopolists can adopt. What parallels there are in union and management strategies?

Jennifer Capriati Corp. has a deferred tax asset account with a balance of $150,000 at the end of 2013 due to a single cumulative temporary difference of $375,000. At the end of 2014, this same temporary difference has increased to a cumulative amount of $450,000. Taxable income for 2014 is $820,000. The tax rate is 40% for all years. No valuation account related to the deferred tax asset is in existence at the end of 2013. Instructions (a) Record income tax expense, deferred income taxes, and income taxes payable for 2014, assuming that it is more likely than not that the deferred tax asset will be realized. (b) Assuming that it is more likely than not that $30,000 of the deferred tax asset will not be realized, prepare the journal entry at the end of 2014 to record the valuation account.

Explain how ERISA affects employees who change employers. (LO3)

Venture capital firms commonly attempt to cash out as soon as possible following IPOs. Describe the likely effect that would have on the stock price at the time of lockup expiration. Would the effect be different for a firm that relied more heavily on VC firms than on other investors for its funds? (LO3)

Explain how the Covid-19 pandemic affected the credit risk premium and liquidity in the commercial paper market. (LO1)

Sprinkle Inc. has outstanding 10,000 shares of $10 par value common stock. On July 1, 2014, Sprinkle reacquired 100 shares at $87 per share. On September 1, Sprinkle reissued 60 shares at $90 per share. On November 1, Sprinkle reissued 40 shares at $83 per share. Prepare Sprinkle’s journal entries to record these transactions using the cost method.

Cordero Corporation has an employee share-purchase plan which permits all full-time employees to purchase 10 ordinary shares on the third anniversary of their employment and an additional 15 shares on each subsequent anniversary date. The purchase price is set at the market price on the date purchased less a 10% discount. How is this discount accounted for by Cordero?

A cylindrical riser with diameter-to-length ratio = 1.0 is to be designed for a sand casting mold. The casting geometry is illustrated in Figure P10.25, in which the units are inches. If the mold constant in Chvorinov's rule = 19.5 min/in2 , determine the dimensions of the riser so that the riser will take 0.5 min longer to freeze than the casting itself.

For the following investments identify whether they are: 1. Trading Securities 2. Available-for-Sale Securities 3. Held-to-Maturity Securities Each case is independent of the other. (a) A bond that will mature in 4 years was bought 1 month ago when the price dropped. As soon as the value increases, which is expected next month, it will be sold. (b) 10% of the outstanding stock of Farm-Co was purchased. The company is planning on eventually getting a total of 30% of its outstanding stock. (c) 10-year bonds were purchased this year. The bonds mature at the first of next year. (d) Bonds that will mature in 5 years are purchased. The company would like to hold them until they mature, but money has been tight recently and they may need to be sold. (e) Preferred stock was purchased for its constant dividend. The company is planning to hold the preferred stock for a long time. (f) A bond that matures in 10 years was purchased. The company is investing money set aside for an expansion project planned 10 years from now.

A leadscrew connected directly to a DC servomotor is the drive system for a positioning table. The leadscrew pitch = 4 mm. The optical encoder attached to the leadscrew emits 250 pulses/rev of the leadscrew. Determine (a) the control resolution of the system, expressed in linear travel distance of the table axis, (b) the frequency of the pulse train emitted by the optical encoder when the servomotor operates at 14 rev/s, and (c) the travel speed of the table at the operating speed of the motor.

Discuss the basic differences between annotated and topical tax services.  How are these services used in tax research?   Answer:

Justine would like to clarify her understanding of a code section recently enacted by Congress.  What tax law sources are available to assist Justine?

Toro Co. has equipment with a carrying amount of $700,000. The value-in-use of the equipment is $705,000, and its fair value less costs of disposal is $590,000. The equipment is expected to be used in operations in the future. What amount (if any) should Toro report as an impairment to its equipment?

Aykroyd Inc. has sponsored a noncontributory, defined benefit pension plan for its employees since 1991. Prior to 2014, cumulative net pension expense recognized equaled cumulative contributions to the plan. Other relevant information about the pension plan on January 1, 2014, is as follows. 1. The company has 200 employees. All these employees are expected to receive benefits under the plan. The average remaining service life per employee is 12 years. 2. The projected benefit obligation amounted to $5,000,000 and the fair value of pension plan assets was $3,000,000. The market-related asset value was also $3,000,000. Unrecognized prior service cost was $2,000,000. On December 31, 2014, the projected benefit obligation and the accumulated benefit obligation were $4,850,000 and $4,025,000, respectively. The fair value of the pension plan assets amounted to $4,100,000 at the end of the year. A 10% settlement rate and a 10% expected asset return rate were used in the actuarial present value computations in the pension plan. The present value of benefits attributed by the pension benefit formula to employee service in 2014 amounted to $200,000. The employer’s contribution to the plan assets amounted to $775,000 in 2014. This problem assumes no payment of pension benefits. Instructions (Round all amounts to the nearest dollar.) (a) Prepare a schedule, based on the average remaining life per employee, showing the prior service cost that would be amortized as a component of pension expense for 2014, 2015, and 2016. (b) Compute pension expense for the year 2014. (c) Prepare the journal entries required to report the accounting for the company’s pension plan for 2014. (d) Compute the amount of the 2014 increase/decrease in net gains or losses and the amount to be amortized in 2014 and 2015.

Did tax law changes effective in 2018 increase or decrease the amount of the double tax on C corporation income?  Explain.

A tensile test is performed to determine the strength constant C and strain-rate sensitivity exponent m in Eq. (18.4) for a certain metal. The temperature at which the test is performed = 500°C. At a strain rate = 12/s, the stress is measured at 160 MPa; and at a strain rate = 250/s, the stress = 300 MPa. (a) Determine C and m. (b) If the temperature were 600°C, what changes would you expect in the values of C and m?

The records for the Clothing Department of Sharapova’s Discount Store are summarized below for the month of January. Inventory, January 1: at retail $25,000; at cost $17,000 Purchases in January: at retail $137,000; at cost $82,500 Freight-in: $7,000 Purchase returns: at retail $3,000; at cost $2,300 Transfers in from suburban branch: at retail $13,000; at cost $9,200 Net markups: $8,000 Net markdowns: $4,000 Inventory losses due to normal breakage, etc.: at retail $400 Sales revenue at retail: $95,000 Sales returns: $2,400 Instructions (a) Compute the inventory for this department as of January 31, at retail prices. (b) Compute the ending inventory using lower-of-average-cost-or-market.

In year 2, Julio and Milania each received distributions of $25,000 from Falcons Corporation. a.  What amount of ordinary income and separately stated items are allocated to them for year 2 based on the information above? Assume that Falcons Corporation has $200,000 of qualified property (unadjusted basis).

If importers and exporters believe that the exchange rate has ‘bottomed out’, what will they do?

Acme Corporation has 1,000 shares outstanding. Joan and Bill are married, and they each own 20 shares of Acme. Joan and Bill’s daughter, Shirley, also owns 20 shares of Acme.  Joan is an equal partner with Jeri in the J&J partnership, and this partnership owns 60 shares of Acme. Jeri is not related to Joan or Bill. How many shares of Acme is Shirley deemed to own under the stock attribution rules?