Ludlam Company and Kassandra Company both make school desks. They have the same production capacity, but Ludlam is more automated than Kassandra. At an output of 2,500 desks per year, the two companies have the following costs: Ludlam Kassandra Fixed costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BrainMass Solutions Available for Instant Download
I've been having a hard time with tax accounting and the following questions: 1. What are the major advantages of bona fide loans from shareholders and other debt instruments over stock? 2. What conditions need to be met to avoid IRS classification of loans from shareholders as equity (contributions to capital)? 3. What is
Creation of New Subsidiary Krantz Company and Dull Corporation decided to form a partnership. Krantz agreed to transfer the following assets and accounts payable to K&D Partnership in exchange for 60 percent ownership: Cost Book Value Cash $ 10,000 $ 10,000 Inventory 30,000 30,000 Land
Creation of New Subsidiary Eagle Corporation established a subsidiary to enter into a new line of business considered to be substantially more risky than Eagle's current business. Eagle transferred the following assets and accounts payable to Sand Corporation in exchange for 5,000 share of $10 par value stock of Sand:
Business Combinations A merger boom comparable to those of the 1960s and mid-1980s occurred in the 1900s and into the new century. The merger activity of the 1960s was associated with increasing stock prices and heavy use of pooling of interests accounting. The mid-1980s activity was associated with a number of leverage buyou
How can having more work-in-process (WIP) inventory improve the efficiency of a process? Conversely, how can it decrease the efficiency of a process?
Budgetary accounting for regular serial bond debt service funds differs somewhat from that for deferred serial bond or term bond debt service funds. Explain these differences. Note: Cite the sources
For items reported in the Restricted Assets section of an enterprise fund balance sheet, how are the related items reported in the liability and fund equity sections of the balance sheet? Note: Cite the sources
Sisk Company has owned 10 percent of Maust, Inc., for the past several years. This ownership did not allow Sisk to have significant influence over Maust. Recently, Sisk acquires an additional 30 percent of Maust and now has this ability. How will this change be reported by the investor? A. A cumulative effect of an accounting c
Practice the following: Assume the entity is using U.S. GAAP, accrual-basis accounting. For each of the following independent situations, determine the effect of that transaction on: net income; cash; total assets; total liabilities. Complete the primer exercise by filling in the chart, showing in each area either I (increas
The market price of a security is $40.00. Its expected rate of return is 13%. The risk free rate is 7%, and the market risk premium is 8%. What will the market price of the security be if its beta doubles (and all other variables remain unchanged)? Assuming the stock is expected to pay a constant dividend in perpetuity.
1) P19-9 (Five differences, Compute, taxable Income and Deferred Taxes, Draft Income Statement. King Company began operations at the beginning of 2007. The following information pertains to this company. 1- Pretax financial income for 2007 is $100,000. 2- 2- The tax rate enacted for 2007 and future years is 40%
A $120,000 write-down of equipment leased to others. A $55,000 adjustment of accruals on long-term contracts. An $80,000 write-off of obsolete inventory. Just checking, but I think don't think any of these are extroaordinay losses, am I correct?
Janson Co. purchased all of the common stock of BR Inc. on January 1, 2005, paying slightly more than the fair market value of BRs' net assets. At that time, BR had buildings with a twenty-year useful life, a book value of $600,000, and a fair market value of $696,000. On December 31, 2006, BR had buildings with a book value of $620,000 and a fair market value of $648,000. On that date, Janson had buildings with a book value of $2,000,000 and a fair market value of $2,160,000. What amount should be shown for buildings on the consolidated balance sheet dated December 31, 2006?
Janson Co. purchased all of the common stock of BR Inc. on January 1, 2005, paying slightly more than the fair market value of BRs' net assets. At that time, BR had buildings with a twenty-year useful life, a book value of $600,000, and a fair market value of $696,000. On December 31, 2006, BR had buildings with a book value o
14. Twelve years ago, the Archer Corporation Borrowed $6,000,000. Since then, cumulative inflation has been 80 percent (a compound rate of approximately 5 percent per year). a. When the firm repays the original $6,000,000 loan this year, what will be the effective purchasing power of the $6,000,000? (Hint: Divide the loan
Durango and Verde formed a partnership with capital contribution of $150,000 and $190,000, respectively. Their partnership agreement called for Durango to receive a $50,000 annual salary allowance. They also agreed to allow each partner a share of income equal to a 10% of their initial capital investments. The remaining income or loss is to be divided equally. If the net income for the current year is $120,000, what are Durango's and Verde's respective shares?
8. Durango and Verde formed a partnership with capital contribution of $150,000 and $190,000, respectively. Their partnership agreement called for Durango to receive a $50,000 annual salary allowance. They also agreed to allow each partner a share of income equal to a 10% of their initial capital investments. The remaining incom
A company has the following income statement. What is its net operating profit after taxes (NOPAT)? Sales $1,000 Costs 600 Depreciation 250 EBIT $ 150 Interest expense 50 EBT $ 100 Taxes (40%) 40 Net
My professor presented me with this study guide for an upcoming exam. I'd like to double check my answers against yours. Any help would be greatly appreciated! Thanks! 4. Increasing an asset is a a) debit b) credit 5. What are the four basic categories of financial ratios? 6. Assets = Owner's Eq
Alpha Corporation, a personal holding company, has the following results. Taxable income $200,000 Dividends-received deduction 30,000 Life insurance proceeds 10,000 Excess charitable contributions 10,000 Long-term capital gains 10,000 Federal income taxes 61
4. What restrictions are placed on an S corporation to be able to make a valid S election? 5. What is included in investment income? What is the limit on the deduction for investment interest?
1. Wriglee, Inc. went to court this year and successfully defended its patent from infringement by a competitor. The cost of this defense should be charged to patents and amortized over the legal life of the patent. legal fees and amortized over 5 years or less. expenses of the period. pat
3. Information concerning the debt of Emig Company is as follows: Short-term borrowings: Balance at December 31, 2007 $525,000 Proceeds from borrowings in 2008 325,000 Payments made in 2008 (450,000) Balance at December 31, 2008 $400,000 Current portion of long-term debt: Balance at December 31, 2007 $
What would you suggest are the most effective tax strategies available and why? I have heard of many different ways to approach taxation and realize that trust are one avenue a person((s) can take? But without proper advice, this can prove to be difficult at times. I also know that there are different types of trust available
Why should corporations not be taxed?
1. Burch Company has $12,000 cash at the beginning of June and anticipates $30,000 in cash receipts and $34,500 in cash disbursements. Burch Company maintains a cash balance of $10,000 at the end of each month. The firm has an agreement with its bank to borrow or repay funds necessary to maintain the required ending balance. As
The net accounts receivable for ABC Company were $150,000 at the beginning of the most recent year and $190,000 at the end of the year. If the accounts receivable turnover for the year was 8.5, and 15% of total sales were cash sales, then the total sales for the year were: A) $1,445,000. B) $1,700,000. C) $1,900,000.
Taxation: depreciation, non-taxable, business purpose, statute of limitations and innocent spouse relief
1. During the year, Garbin Corporation (a calendar-year corporation that manufactures furniture) purchased the following assets: Date Asset Cost February 15 Tools $40,000 March 3 Machines 50,000 October 6 Office Building 110,000 In computing depreciation of these assets, which of the following averaging conventions will
1. Stan and Billie have decided to divorce. As part of the divorce settlement, Billie received stock valued at $200,000 that had a basis of $120,000; Stan received their home that had a basis of $240,000 but a fair market value at the time of the divorce of $400,000. Two years after the divorce, Billie sells the stock for $300,0
Question One: Discuss the pros and cons of implementing ISO 9000. Question Two: Distinguish between predatory pricing and penetration pricing. How are they similar and/or different? Question Three: In your opinion, has Sarbanes-Oxley effectively accomplished what the lawmakers intended when they wrote the law? Support y
On July 1, the first day of their fiscal year, the City of Marshall sold bonds with a face value of $10,000,000 at 102 percent of par. The bonds bear annual interest at 6 percent; interest is payable semi annually. The bonds will mature in equal installments over 20 years. (Bond premium must be used for eventual bond redempti