We think of dividends as being paid out in cash. After all, most dividends that people receive from investment in corporate stocks are traditionally paid in cash. However, do they have to be paid out in cash? If they are not, does the payment of these dividends in other property potentially cause different tax consequences to
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Teddy Bears Inc had $500,000 of retained earnings on Dec 31, 2010. The company paid common dividends of $20,000 and had retained earnings of $300,000 on Dec 31, 2009. How much did Teddy Bears Inc earn in 2010 and what would the earnings per share be if $40,000 shares of common stock were outstanding?
Zaccagnino Corporation makes a range of products. The company's predetermined overhead rate is $14 per direct labor-hour, which was calculated using the following budgeted data: Variable manufacturing overhead........$105,000 Fixed manufacturing overhead............$385,000 Direct labor-hours................................
Sadbury Corporation produces and sells a single product whose selling price is $210.00 per unit and whose variable expense is $73.50 per unit. The company's monthly fixed expense is $873,600. Required: a. Assume the company's monthly target profit is $27,300. Determine the unit sales to attain that target profit. Show your wor
If dividends are distributions that come out of a corporation's earnings and profits (E&P), what exactly is E&P? What is it attempting to measure? How is it calculated?
1. High-Low Points Method BEYONDBIKES.COM considers electricity a mixed cost. By using a scatter chart, George has determined that there is a relationship between electricity expense and the number of hours per month the store is open. During the past year, electricity expense totaled $7200 in the month that the store was o
Shenanigans book goes through seven "standard" techniques of misrepresentation for earnings and four for cash flow. Does Sarbanes-Oxley help prevent these situations? (i.e., why didn't Sarbanes-Oxley protect us from the financial sector melt-down?) Also, one can discuss "how did these occur" in terms of rule-based vs. princi
The cigarette industry is subject to litigation for health hazards posed by its products. The industry has been negotiating a settlement of these claims with state and federal governments. As the CFO for Philip Morris, one of the larger firms in the industry, what information would you report to investors in the annual report on
As the CFO of a company, what indicators would you look at to assess whether your firm's long-term assets were impaired? What approaches could be used, either by management or an independent valuation firm, to assess the dollar value of any asset impairment? As a financial analyst, what indicators would you look at to assess whe
Identify the three requirements under Section 351 that must be satisfied for the nonrecognition provisions to apply. Also identify the consequences of a Section 351 transfer including how the basis is determined by the shareholders and the corporation.
Let's look at P10-25 in chapter 10, page 445, (Critiquing a Report; Preparing a Performance Budget) of the e-book and discuss the first question. Exchange Corp. is a company that acts as a facilitator in tax-favored real estate swaps. Such swaps, known as 1031 exchanges, permit participants to avoid some or all of the capita
A tile manufacturer has supplied the following data: Boxes of tile produced and sold 625,000 Sales revenue $2,975,000 Variable manufacturing expense $1,720,000 Fixed manufacturing expense
See attached file for proper format. 1. What happens to a subsidiary's tax attributes (e.g., net operating loss, E & P, capital loss carryover) upon a 332 liquidation? 2. The stock of Magenta Corporation is owned by Fuchsia Corporation (90%) and Marta (10%). Magenta is liquidated on September 2, 2011, pursuant to a plan of
80. The Kona Rural Electric Co-op (KREC) is an accrual basis public entity. All new customers are required to pay a deposit equal to 3 times the customer's monthly bill or $100, whichever is greater. The purpose of the deposit is to ensure that timely payment is made on accounts. The funds so received are not segregated from oth
73. Omega Investments, Inc., was formed in 1991 by 10 unrelated individual investors. It operates a chain of electronic stores. The corporation suffered losses in its early years but has become profitable in recent years. The corporation elected S corporation status in 1991. Over the years, the original shareholders have gift
In each of the following problems, identify the tax issue(s) posed by the facts presented. Determine the possible tax consequences of each issue that you identify. 57. Lydia owns 75% of Flower Farms, a partnership. She also owns land that she leases to Flower Farms for $6,000 per month. 58. Micheal buys a piece of property
Use the following scenario to answer the next two questions: Barrel Corporation had service and interest costs of $50,000 related to its defined benefit pension plan for the year ending December 31, 2007. The company's unrecognized prior service cost was $200,000 at December 31, 2006 and the average remaining service life of
Kevin and Elizabeth are negotiating a divorce settlement. Kevin is in the 35 percent marginal tax bracket and Elizabeth is in the 15 percent marginal tax bracket. Kevin has offered to pay Elizabeth $15,000 each year for 10 years; payments would cease if Elizabeth dies before the end of the 10- year period. Elizabeth is willi
We are going to look at dependency exemptions in the US. What requirements must be met to qualify for the dependency exemption? Make sure you discuss the qualifying child and qualifying relative requirements.
Mathews Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide overhead rate based on direct labor costs. The president has heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and mach
Explain the tax treatment of an employee for one or more of the following: Payment of wages FICA and FUTA Payment of health care or other benefits Free use of the company car Payment of travel expenses Other employee business expenses that are not reimbursed.
Let's focus more on the tax aspects of being an employee. Explain the tax treatment of an employee for one or more of the following: Payment of wages FICA and FUTA Payment of health care or other benefits Free use of the company car Payment of travel expenses Other employee business expenses that are not reimbursed.
How would you go about determining the value of the assets of a business if you were unfamiliar with them?
At the age of 19, Kavya Viswanathan had made achievements beyond the reach of many. She was a sophomore in Harvard and her first novel, "How Opal Mehta Got Kissed, Got Wild and Got a Life," was part of a highly publicized two-book deal with publisher Little, Brown and Company. Viswanathanâ??s future seemed bright, until an arti
Identify at least two examples of family deductions. How do these deductions aid families? Please include some discussion on the pros and cons of allowing such deductions.
At the beginning of the year, Pear Corporation had total assets of $550,000 and total liabilities of $210,000. Answer the following questions viewing each situation as being independent of the others. (1) If total assets increased $200,000 during the year, and total liabilities decreased $75,000, what is the amount of owner's
Evaluating Performance Using Metrics Using the data from the Anthony's Orchards website, write a 1- to 2-page paper identifying the profit centers, cost centers, and investment centers of the company. What are the indicators that each responsible party uses to evaluate performance? How can a manager evaluate each unit's perform
What is the primary objective of consolidation procedures? What are the different methods of consolidation? In what circumstances would you choose each method?
Norman is considering the purchase of some investment land from his neighbor, Robin, a high school math teacher. Robin purchased the land 10 years ago for $6,000. They have agreed on the overall terms of payment of $800 every month for the next three years for a total of $28,800. They have not agreed on how much of each payment
Shawn Bates was working to establish a business enterprise with four of his wealthy friends. Each of the five individuals would receive a 20 percent ownership interest in the company. A primary goal of establishing the enterprise was to minimize the amount of income taxes paid. Assume that the five investors are taxed at the
Listed below are accounts that are found in financial statements. For each of the accounts, using any and all sources available to you, provide the following infor mation. a. Provide the official definition under Generally accepted accounting principles. b. Identify the type of account (asset, liability, equity, revenue, ex