Question & Answer

The financial statements of Marks and Spencer plc (M&S) are available at the book’s companion website or can be accessed at http://corporate.marksandspencer.com/documents/publications/2012/ Annual_Report_2012. Instructions Refer to M&S’s financial statements and the accompanying notes to answer the following questions. (a) Does M&S report any intangible assets and goodwill in its financial statements and accompanying notes? Briefly explain. (b) How much selling and marketing expenses does M&S report in 2011 and 2012? Briefly discuss the significance of these expenses to M&S’s operating results.

Describe how purchased goodwill leads to temporary book-tax differences.

What are some aspects of business that require knowledge of taxation?  What are some aspects of personal finance that require knowledge of taxation?

What should be the pattern of amortization for a limitedlife intangible?

What are the two depreciation conventions that apply to tangible personal property under MACRS? Explain why Congress provides two methods.

Birch Corp., a calendar-year corporation, was formed three years ago by its sole shareholder, James, who has operated it as an S corporation since its inception.  Last year, James made a direct loan to Birch Corp. in the amount of $5,000.  Birch Corp. has paid the interest on the loan but has not yet paid any principal.  (Assume the loan qualifies as debt for tax purposes.)  For the year, Birch experienced a $25,000 business loss.  What amount of the loss clears the tax-basis limitation, and what is James’s basis in his Birch Corp. stock and Birch Corp. debt in each of the following alternative scenarios?

In what circumstances could a calendar-year C corporation make an election on February 1, year 1, to be taxed as an S corporation in year 1 but not have the election effective until year 2?

The pretax financial income (or loss) figures for Jenny Spangler Company are as follows. 2009 $160,000 2010 250,000 2011 80,000 2012 (160,000) 2013 (380,000) 2014 120,000 2015 100,000 Pretax financial income (or loss) and taxable income (loss) were the same for all years involved. Assume a 45% tax rate for 2009 and 2010 and a 40% tax rate for the remaining years. Instructions Prepare the journal entries for the years 2011 to 2015 to record income tax expense and the effects of the net operating loss carrybacks and carryforwards assuming Jenny Spangler Company uses the carryback provision. All income and losses relate to normal operations. (In recording the benefits of a loss carryforward, assume that no valuation account is deemed necessary.)

What is reaction injection molding?

In what way may the use of percentage depletion violate sound accounting theory?

Using the facts in problem 39, if Jorge and Anita earn an additional $100,000 of taxable income, what is their marginal tax rate on this income?  What is their marginal rate if, instead, they reported an additional $100,000 in deductions?

Solve Problem 21.27 but with the following changes: cutting speed = 1.3 m/s, feed = 0.75 mm/rev, and depth = 4.0 mm. Note that although the power used in this operation is only about 10% greater than in the previous problem, the metal removal rate is about 40% greater.

Elroy, who is single, has taken over the care of his mother Irene in her old age. Elroy pays the bills relating to Irene’s home.He also buys all her groceries and provides the rest of her support.Irene has no gross income.What is Elroy’s filing status?

Lowell Corporation has used the accrual basis of accounting for several years. A review of the records, however, indicates that some expenses and revenues have been handled on a cash basis because of errors made by an inexperienced bookkeeper. Income statements prepared by the bookkeeper reported $29,000 net income for 2013 and $37,000 net income for 2014. Further examination of the records reveals that the following items were handled improperly. 1. Rent was received from a tenant in December 2013. The amount, $1,000, was recorded as revenue at that time even though the rental pertained to 2014. 2. Salaries and wages payable on December 31 have been consistently omitted from the records of that date and have been entered as expenses when paid in the following year. The amounts of the accruals recorded in this manner were: December 31, 2012 $1,100 December 31, 2013 1,200 December 31, 2014 940 3. Invoices for supplies purchased have been charged to expense accounts when received. Inventories of supplies on hand at the end of each year have been ignored, and no entry has been made for them. December 31, 2012 $1,300 December 31, 2013 940 December 31, 2014 1,420 Instructions Prepare a schedule that will show the corrected net income for the years 2013 and 2014. All items listed should be labeled clearly. (Ignore income tax considerations.)

In a surface grinding operation performed on hardened plain carbon steel, the grinding wheel has a diameter = 200 mm and width = 25 mm. The wheel rotates at 2400 rev/min, with a depth of cut (infeed) = 0.05 mm/pass and a crossfeed = 3.50 mm. The reciprocating speed of the work is 6 m/min, and the operation is performed dry. Determine (a) length of contact between the wheel and the work and (b) volume rate of metal removed. (c) If there are 64 active grits/cm2 of wheel surface, estimate the number of chips formed per unit time. (d) What is the average volume per chip? (e) If the tangential cutting force on the work = 25 N, compute the specific energy in this operation?

The amount of income taxes due to the government for a period of time is rarely the amount reported on the income statement for that period as income tax expense. Instructions (a) Explain the objectives of accounting for income taxes in general-purpose financial statements. (b) Explain the basic principles that are applied in accounting for income taxes at the date of the financial statements to meet the objectives discussed in (a). (c) List the steps in the annual computation of deferred tax liabilities and assets.

What are some of the benefits usually cited for NC compared to using manual alternative methods?

What would be the marginal cost equation if the total cost equation were:                      C = 15 + 20Q – 5Q² + Q³ What would be the marginal cost at an output of 8?

The diameter of an extruder barrel is 65 mm and its length = 1.75 m. The screw rotates at 55 rev/min. The screw channel depth = 5.0 mm, and the flight angle = 18°. The head pressure at the die end of the barrel is 5.0 x 106 Pa. The viscosity of the polymer melt is given as 100 Pa-s. Find the volume flow rate of the plastic in the barrel.

Lemke Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the years 2014 and 2015. 2014 2015 Projected benefi t obligation, January 1 $600,000 Plan assets (fair value and market-related value), January 1 410,000 Pension asset/liability, January 1 190,000 Cr. Prior service cost, January 1 160,000 Service cost 40,000 $ 59,000 Settlement rate 10% 10% Expected rate of return 10% 10% Actual return on plan assets 36,000 61,000 Amortization of prior service cost 70,000 50,000 Annual contributions 97,000 81,000 Benefi ts paid retirees 31,500 54,000 Increase in projected benefi t obligation due to changes in actuarial assumptions 87,000 –0– Accumulated benefi t obligation at December 31 721,800 789,000 Average service life of all employees 20 years Vested benefi t obligation at December 31 464,000 Instructions (a) Prepare a pension worksheet presenting both years 2014 and 2015 and accompanying computations and amortization of the loss (2015) using the corridor approach. (b) Prepare the journal entries (from the worksheet) to reflect all pension plan transactions and events at December 31 of each year. (c) For 2015, indicate the pension amounts reported in the financial statements.

Assume you asked your favorite AI learning tool “Would a taxpayer classify a car used for business as a capital asset for tax purposes?” and the AI tool responded as follows:

The state of Georgia recently increased its tax on a pack of cigarettes by $2.00.  What type of tax is this?  Why might Georgia choose this type of tax?

Describe the effect of a “bargain-purchase option” on accounting for a capital lease transaction by a lessee.

When a shareholder receives a noncash distribution of property that is encumbered by a liability (the shareholder assumes the liability on the distribution), how does the shareholder determine the amount of the distribution?

Would it be desirable to have total equality in an economy, so that everyone receives the same share of resources?