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# Accounting

### Depreciation Deductions: Gross Profit Under Percentage

In 2007, Tiger Corporation, a calendar-year taxpayer, purchases and places into service machinery with a 7-year life that cost \$268,000. The mid-quarter convention does not apply. Tiger elects to depreciate the maximum under Sec. 179. Tiger's taxable income for the year before the Sec. 179 deduction is \$150,000. What is Tiger's

### Calculate tax liability

Your corporation had the following cash flows last year: Operating income \$2,500,000 Interest received 100,000 Interest paid 450,000 Dividends received 200,000 Dividends paid 500,000 Your firms pays taxes at a rate of 40% (federal and state combined) and was profitable last year. Calculate the firm's corpor

### EBIT sensitivity

Stewart Industries sells its finished product for \$9 per unit. Its fixed operating costs are \$20,000, and the variable operating cost per unit is \$5. a. Calculate the firm's earnings before interest and taxes (EBIT) for sales of 10,000 units. b. Calculate the firm's EBIT for sales of 8,000 and 12,000 units, respectively. c.

### Cost Concepts and Application

Osgood, Inc. makes a gourmet dark chocolate syrup that is sells to coffee shops for use in making gourmet coffee drinks. Fixed costs for this product are estimated to be \$180,000. The syrup is sold in cases of 12 bottles for \$30. Variable costs are estimated at \$1.00 per bottle. Required: In a memo to management, provide

### Temporary timing difference; deferred tax liability

A temporary difference arises when a revenue item is reported for tax purposes in a period After it is reported Before it is reported in financial income in financial income a. Yes Yes b. Yes No c. No

### Smiley Corporation: Compute deferred tax liability for machine depreciation

1. Smiley Corporation purchased a machine on January 2, 2006, for \$2,000,000. The machine has an estimated 5-year life with no salvage value. The straight-line method of depreciation is being used for financial statement purposes and the following MACRS amounts will be deducted for tax purposes: 2006 \$400,000 2009

### Liberty International Investment Properties

Companies following international accounting standards are permitted to revalue fixed assets above the assets' historical costs. Such revaluations are allowed under various countries' standards and the standards issued by the International Accounting Standards Board (IASB). Liberty International, a real estate company, headquart

### Cole, Inc. owes Henry Co: compute gain or loss on settlement

Cole, Inc., which owes Henry Co. \$600,000 in notes payable with accrued interest of \$54,000, is in financial difficulty. To settle the debt, Henry agrees to accept from Cole equipment with a fair value of \$570,000, an original cost of \$840,000, and accumulated depreciation of \$195,000. Instructions (a) Compute the gain

### Intermediate Accounting II: Howe Company & Vertex Company

1. In March 2007, an explosion occurred at Howe Co.'s plant, causing damage to area properties. By May 2007, no claims had yet been asserted against Howe. However, Howe's management and legal counsel concluded that it was reasonably possible that Howe would be held responsible for negligence, and that \$4,000,000 would be a reaso

### Intermediate Accounting II: Tripez Corporation

Tripez Corporation, a manufacturer of household paints, is preparing annual financial statements at December 31, 2007. Because of a recently proven health hazard in one of its paints, the government has clearly indicated its intention of having Tripez recall all cans of this paint sold in the last six months. The management of T

### Equilibrium price and quantity, elastic demand, inelastic supply

1. Suppose the demand is Q = 10 - P and the supply is Q = P + 4. Please verify that the following table gives the quantity demanded and supplied at each given prices. What is the equilibrium price and quantity sold under perfect competition? Price Quantity Quantity Supplied Demanded 1 5 9 1.5 5.5 8.5 2 6 8 2.5 6.5 7.5

### BUGusa: Has Walter committed any torts against Steve?

Walter, a security guard for BUGusa, learns that Steve really works for WIRETIME. Walter takes Steve to a small soundproof room where he keeps him for six hours. During this time, Walter continues to ask Steve what he is doing at BUGusa and what information he has given WIRETIME. Walter tells Steve that he will hurt him if he do

### Cost Accounting for Product Grades

Exhibit 1 Selected product grades with production and financial data Product (Grade) Caliper Coated/Uncoated Slit Average Reels per Batch Material Cost per Reel Selling Price per Reel A 0.013 Coated Yes 50 \$4,800 \$12,600 B 0.014 Uncoated No 2

### Cadence and Cross: budgeting process, behavioral implication

1. 8-8 How does the budgeting process Cadence and Cross used at ATC differ from recommended practice? What are the behavioral implications of the way Cadence and Cross went about preparing the master budget?

### Thoughts on how uncertainty could affect taxpayers

Do anyone have any thoughts on how uncertainty could affect some taxpayers?

### S Corporation Individual Tax Return

Peter Sam owns 60% of a calendar year S corporation during 2007. His stock basis on December 31, 2006 is \$17,000, and his debt basis is \$2,000. If the S corporation incurs a \$48,000 loss for 2007, what amount may Peter Sam deduct on his individual tax return?

### Change in accounting principle: two conditions for a change.

A change in accounting principle occurs when the principle used in the current year is different from the one used in the preceding year. Name the two conditions that need to be met for a change to be permitted?

### Ocean Sailboats: Overhead rate per machine using ABC, Traditional Costing

The controller for Ocean Sailboats Inc., a company which uses an automated process to make sailboats, established the following overhead cost pools and cost drivers: Budgeted Estimated Overhead Cost Pool Overhead Cost Driver

### Calculate the direct materials price and usage variances

Balt Company used 5,000 pounds of Material H to produce 800 units of Product C8 last period. The company has established the standard of using 7 pounds of Material H per unit of C8, at a price of \$7.50 per pound. During the period the inventory for Material H decreased by 2,000 pounds. The firm spent \$25,000 during the period t

### Favorable or Unfavorable Variances

James has the following information pertaining to its usage of direct labor in a recent period: Total direct labor hours spent 30,000 Total units manufactured 8,000 Actual wage rate per hour \$16 Standard cost data Wage rate per hour \$18 Standard hours per unit 4 Required: Calculate the fo

### Bike Pedals-Determine the following Variances

Bike Pedals manufactures bicycle seats. The firm budgeted to manufacture 25,000 seats in April with 0.05 standard machine hours per seat. The total variable factory overhead was budgeted at \$30,000 for the operation. The firm manufactured 30,000 seats using 1,600 machine-hours and incurred \$34,000 total variable factory o

### Gether Corporation: Allocation Method

Gether Corporation manufactures appliances. It has four division: Refrigerator, Stove, Dishwasher, and Microwave oven. Each division is located in a different city and the headquarters is located in Oakland, California. Headquarters incurs a total of \$14,255,000 in costs, none of which are direct costs of any o the divisions.

### ABC Corporation: Cost Evaluation and Performance Measurement

ABC Corporation has sales of \$1,000,000, gross profit of \$550,000, net income of \$150,000, average total operating assets of \$1,500,000 and fixed assets of \$450,000. What is ABC's return on investment (ROI)? (Points: 1) 15% 10% 55% 45% Holding all other factors equal, if net income incr

### What is a triangular acquisitive reorganization?

What is a triangular acquisitive reorganization?

### Buying Price for the Business

Benjamin O'Henry has owned and operated O'Henry's Data Services since its beginning ten years ago. From all appearances, the business has prospered. In the past few years, you have become friends with O'Henry and his wife. Recently, O'Henry mentioned that he has lost his zest for the business and would consider selling it for th

### Wildcat Company

16 The Wildcat Company has provided the following information: Units of Output 30,000 Units 42,000 Units Direct materials \$ 180,000 \$ 252,000 Variable Workers' wages 1,080,000 1,512,000 Variable Supervisors' salaries 312,00

### Absorption and Variable costing

Bruster Company sells its products for \$66 each. The current production level is 25,000 units, although only 20,000 units are anticipated to be sold. Unit manufacturing costs are: Direct materials \$12.00 Direct manufacturing labor \$18.00 Variable manufacturing costs \$9.00 Total fixed manufac

### Eligibility requirements for S corporation

Which one of the following statements concerning the eligibility requirements for S corporations is NOT correct? -An S corporation is permitted to own 75% of the stock of another S corporation -An S corporaation is permitted to be a partner in a partnership -An S corporation is permitted to own 100% of the stcok of a C corpor

### Basis of accounting

Basis of accounting questions need the following help with the questions listed.

### Young Marrieds' Life Insurance: what type of policy and how much?

Jeff and Ann are both 28 years old. They have been married for three years, and they have a son who is almost two. They expect their second child in a few months. Jeff is the head teller in a local bank. He has just received a \$30-a-week raise. His income is \$480 a week, which after taxes, leaves him with \$1,648 a month. His