Why do corporations distribute constructive dividends? What are the motives behind distributing other form of payments to shareholders other than distributing regular dividends? “Tax savings” is the answer to the above questions. Dividends are subject to “double taxation” where the distributions are taxed at both the corporate and individual taxpayer (shareholder) level. By
Case 3-5 International versus U.S. Standards Discuss the qualitative concept of comparability. In your opinion, would the financial statements of companies operating in one of the foreign countries listed above be comparable to a U.S. company’s financial statements? Explain. The qualitative characteristics attribute to the usefulness of the information provided for users in the financial statements. Comparability is a qualitative characteristic that allows for comparison of accounting information between or among different entities.
b. How is the $25,000 treated for purposes of federal tax income? The $25,000 will have to be treated as an expense. c. What is your determination regarding reducing the taxable amount of income for both (a) and (b) above? I have determined that you have to account for all qualified business expenses and only net income will be taxable.
MEMORANDUM TO: Outside Certified Public Accountants FROM: CPA DATE: April 8, 2013 Re: CPA Report In response to the examination of the subsidiary that has been set up as a corporation, the explanations to the deferred tax methods, procedures for accounting changes and corrections, and the reasoning for setting up the corporation as a subsidiary will be addressed. Deferred Tax Methodology Financial and tax reporting creates temporary differences between the amounts reported for income taxes and on the financial statements because an accrual basis is used for financial reporting and a modified cash basis is used for tax reporting. Deferred taxes reported contain a temporary difference between the tax basis of a liability or
INTERMEDIATE ACCOUNTING II/ Intermediate Accounting, Spiceland/Sepe/Nelson Re: Judgment Case 18-5 Requirement 1. The two alternatives Alcoa has for accounting for the repurchase of it’s shares are: 1) The shares can be formally retired. 2) The shares can be named treasury stock Either way, total shareholders’ equity remains the same. Cash is used to repurchase common stock so the effect is to reduce both cash and shareholders’ equity. This choice does, however, affect how individual shareholders’ accounts are reported in the balance sheet.
Question : (TCO 4) Which of the following groups is not among the external users for whom financial statements are prepared? Customers Suppliers Employees All of the above are external users of financial statements. (TCO 5) Misty Company reported the following before-tax items during the current year: Misty’s effective tax rate is 40% and there were 1,000 shares of common stock outstanding. What would be Misty’s income before extraordinary item(s)? Question 2.
Lesson 2 (3.0 points) 1. What is pass-through taxation? (0.5 points) Pass-through taxation is when Taxes on the company's income are paid on the personal tax forms of the company's owners. 2. What is an advantage of a sole proprietorship?
The taxable gain is computed by deducting the acquisition costs (adjusted for inflation) and transfer costs from the selling price. Long-term capital gains are currently taxed at 15%. Short-term capital gains or gains realized within twelve months are taxed at ordinary income tax rates. CORPORATE TAXATION INCOME TAX Local corporations can be fully owned by foreign individuals. A minimum of three incorporators are needed to set up a local company, and at least one incorporator should be a Guam resident.
Financial accounting information is used for a.|investment decisions.| b.|regulatory measures.| c.|stewardship evaluation.| d.|all of these.| ANS: D PTS: 1 DIF: Easy OBJ: 1-1 NAT: AACSB Communication 6. Which of the following is NOT part of the financial accounting information system? a.|filing reports with the SEC| b.|reporting a large contingent liability to current and potential shareholders| c.|determining the future cashflows of a proposed flexible manufacturing system| d.|preparing GAAP financial statements| ANS: C PTS: 1 DIF: Meduim OBJ: 1-1 NAT: AACSB Reflective 7. Which of the following does NOT describe cost management system? a.|evaluation of segments or products within the firm| b.|emphasis on the future| c.|externally focused| d.|focus on effective use of
Here for each division, NI = DIBT – share of corporate administrative expenses – share of income tax expenses. However, according to the controllability idea, ”the performance measure excludes revenues or expenses which are out of the span of