Question & Answer

How does a corporation determine the percentage for its dividends-received deduction?  Explain.

Tell Darius Hayes that the employee volunteer program is just that: a volunteer program. Even though the company sees volunteerism as an important piece of its campaign to repair its tarnished image, employees must be free to choose whether to volunteer. Hayes should not ask for the help of his direct employees with the after-school program.

Describe the reporting of pension plans for a company with multiple plans, some of which are underfunded and some of which are overfunded.

Comiskey Savings provides fixed-rate mortgages of various maturities, depending on what customers want. It obtains most of its funds from issuing certificates of deposit with maturities ranging from one month to five years. Comiskey has decided to engage in a fixed-for-floating swap to hedge its interest rate risk. Is Comiskey exposed to basis risk? (LO3)

Pueblo Co. acquires machinery by paying $10,000 cash and signing a $5,000, 2-year, zero-interest-bearing note payable. The note has a present value of $4,208, and Pueblo purchased a similar machine last month for $13,500. At what cost should the new equipment be recorded?

1. Fill in the missing figures (without referring to Table 6.8 or 6.9). 2. Why are the figures for MR and MC entered in the spaces between the lines in Table 6.10?

How can financial institutions with stock portfolios use stock options when they expect stock prices to rise substantially but do not yet have sufficient funds to purchase more stock? (LO3)

Are taxpayers allowed to claim depreciation on assets they use for both business and personal purposes? What are the tax consequences if the business use drops from above 50 percent in one year to below 50 percent in the next?

Laura Li, a U.S. resident, works for three months this summer in China.  What type of tax authority may be especially useful in determining the tax consequences of her foreign income?

If a bank is very uncertain about future interest rates, how might it insulate its future performance from future interest rate movements? (LO3)

1. Which of the above theories overlap and in what way? 2. Why, do you think, is it difficult to find adequate empirical support for any of them?

L. A. and Paula file as married taxpayers. In August of this year, they received a $5,200 refund of state income taxes that they paid last year. How much of the refund, if any, must L. A. and Paula include in gross income under the following independent scenarios? Assume the standard deduction last year was $27,700.

The following information relates to Starbucks for the year ended October 2, 2011: net income 1,245.7 million; unrealized holding loss of $10.9 million related to available-for-sale securities during the year; accumulated other comprehensive income of $57.2 million on October 3, 2010. Assuming no other changes in accumulated other comprehensive income, determine (a) other comprehensive income for 2011, (b) comprehensive income for 2011, and (c) accumulated other comprehensive income at October 2, 2011.

Are taxpayers allowed to deduct net capital losses (capital losses in excess of capital gains)? Explain.

Winans Company uses the lower-of-cost-or-market method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2013, included product X. Relevant per-unit data for product X appear below. 2 Estimated selling price $45 Cost 40 Replacement cost 35 Estimated selling expense 14 Normal profi t 9 There were 1,000 units of product X on hand at December 31, 2013. Product X was incorrectly valued at $35 per unit for reporting purposes. All 1,000 units were sold in 2014. Instructions Compute the effect of this error on net income for 2013 and the effect on net income for 2014, and indicate the direction of the misstatement for each year.

Compare and contrast the relationship test requirements for a qualifying child with the relationship requirements for a qualifying relative.

Listed below are selected transactions of Schultz Department Store for the current year ending December 31. 1. On December 5, the store received $500 from the Selig Players as a deposit to be returned after certain furniture to be used in stage production was returned on January 15. 2. During December, cash sales totaled $798,000, which includes the 5% sales tax that must be remitted to the state by the fifteenth day of the following month. 3. On December 10, the store purchased for cash three delivery trucks for $120,000. The trucks were purchased in a state that applies a 5% sales tax. 4. The store determined it will cost $100,000 to restore the area (considered a land improvement) surrounding one of its store parking lots, when the store is closed in 2 years. Schultz estimates the fair value of the obligation at December 31 is $84,000. Instructions Prepare all the journal entries necessary to record the transactions noted above as they occurred and any adjusting journal entries relative to the transactions that would be required to present fair financial statements at December 31. Date each entry. For simplicity, assume that adjusting entries are recorded only once a year on December 31.

An NC machine tool table is powered by a servomotor, leadscrew, and optical encoder. The leadscrew has a pitch = 5.0 mm and is connected to the motor shaft with a gear ratio of 16:1 (16 turns of the motor for each turn of the leadscrew). The optical encoder is connected directly to the leadscrew and generates 200 pulses/rev of the leadscrew. The table must move a distance = 100 mm at a feed rate = 500 mm/min. Determine (a) the pulse count received by the control system to verify that the table has moved exactly 100 mm; and (b) the pulse rate and (c) motor speed that correspond to the feed rate of 500 mm/min.

Briefly discuss the IASB and FASB efforts to converge their accounting guidelines for leases.

(a) 6.71008. (c) .46319. (b) 2.15892. (d) 14.48656. Jose Oliva is considering two investment options for a $1,500 gift he received for graduation. Both investments have 8% annual interest rates. One offers quarterly compounding; the other compounds on a semiannual basis. Which investment should he choose? Why?

What is a bank’s gap, and what does it attempt to determine? Interpret a negative gap. What are some limitations of measuring a bank’s gap? (LO3)

Karen Weller, D.D.S., opened a dental practice on January 1, 2014. During the first month of operations, the following transactions occurred. 1. Performed services for patients who had dental plan insurance. At January 31, $750 of such services was performed but not yet billed to the insurance companies. 2. Utility expenses incurred but not paid prior to January 31 totaled $520. 3. Purchased dental equipment on January 1 for $80,000, paying $20,000 in cash and signing a $60,000, 3-year note payable. The equipment depreciates $400 per month. Interest is $500 per month. 4. Purchased a one-year malpractice insurance policy on January 1 for $12,000. 5. Purchased $1,600 of dental supplies. On January 31, determined that $500 of supplies were on hand. Instructions Prepare the adjusting entries on January 31. (Omit explanations.) Account titles are Accumulated Depreciation—Equipment, Depreciation Expense, Service Revenue, Accounts Receivable, Insurance Expense, Interest Expense, Interest Payable, Prepaid Insurance, Supplies, Supplies Expense, Utilities Expense, and Accounts Payable.

Camille Sikorski was divorced last year.She currently owns and provides a home for her 15-year-old daughter, Kaly, and 18-year-old son, Parker.Both children lived in Camille’s home for the entire year and Camille paid for all the costs of maintaining the home.She received a salary of $105,000 and contributed $6,000 of it to a qualified retirement account (a for AGI deduction).She also received $10,000 of alimony from her former husband.Finally, Camille paid $5,000 of expenditures that qualified as itemized deductions. a.       What is Camille’s taxable income?

Under what circumstances is a closed-loop positioning system preferable to an open-loop system?

Describe submerged arc welding (SAW).