[3] http://www.irs.gov/businesses/small/article/0,,id=146335,00.html It is important to determine if the taxpayer martially participates because this classifies the income as active or passive. Passive activity losses are non-deductable from active and portfolio income. This is why it is important to determine if the taxpayer martially participates in the business activity. PROBLEMS: 7-46) The $30,000 loss is considered a passive loss and can only be deducted against passive income, it is therefore suspended and carried forward to future years to offset potential passive income in those years. Mary has no martially participation in the rental activity, therefore the loss is considered
David’s first attempt was when he called his father from the Kenai dealership asking him to cosign on a used vehicle. David’s father refused to cosign. The next day David returned to buy a car, but this time he was able to finance a new car without the need of a cosigner, only a down payment. The dealership was able to give David credit for trading his 94 Pontiac. He financed a new Dodge Neon with a $2000 rebate, for $12,851.77 @ 11.99 APR for 5 years.
7-20 47. An NOL carryforward is used in determining the current year’s NOL. ANS: F An NOL carryforward is not used in determining the current year’s NOL. PTS: 1 REF: p. 7-21 48. The excess of nonbusiness capital losses over nonbusiness capital gains must be added to taxable income to compute the net operating loss of an individual.
On March 9th, 1954 the first Mustang rolled off the assembly line. To keep production costs down many parts from the Mustang were borrowed from the Falcon. On April 16th, 1964, the day before its release, Ford had commercials on ABC, NBC, and CBS at 9:30 p.m. On April 17th, 1964 people stormed in the Ford showrooms. Ford sold over 22,000 Mustangs the first day. At the end of the year they had sold 418,812 Mustangs.
This stands in sharp contrast to the early view of Miller and Modigliani (1958), who argued that in a well-functioning efficient market without taxes, informational asymmetries, and default costs no financial synergy can be found because the market value of company does not depend on its capital structure. However, a firm’s capital structure decision can matter if these assumptions are not true. The theory has two important caveats concerning its applicability; first, one of the merging firms must be experiencing financial distress. The theory is most directly applicable to marginally profitable start-up companies and existing companies that are financially distressed. Second, theory only applies when severe agency problems exist between the manager and the claim holders of the distressed firm.
(b) Indicate the three ways that Allan attempted to conceal the theft and the dollar amount involved in each method. (c) What principles of internal control were violated in this case? SOLUTION: (a) FETTER COMPANY Bank Reconciliation October 31, 2012 Balance per bank statement $18,380.00 Plus: Undeposited receipts 3,795.51 22,175.51 Less: Outstanding checks |No. | |Amount | |No. | |Amount | | | | | | | | | | |
In other words, the cost of raising fund is the firm’s cost of capital. Estimate a firm’s cost of capital is important because can help conclude required return for capital budgeting projects. Usually, the investor only picks up the project which provides higher return and lower risk on investments. Since the cost of capital is the minimum return required by investors, manager should invest only in projects that generate returns in excess of the cost of capital. Cost of capital can help define the acceptability of investment opportunities.
Financial Decision Making Essay Explain the theoretical rationale for the NPV approach to investment appraisal and compare the strengths and weaknesses of the NPV approach to two other commonly used approaches. Introduction Net Present Value (NPV) is defined as the different between an investment's market value and its cost. NPV rules states that we will accept the project if it creates a positive NPV, and will reject the project if the NPV < 0. In other words, NPV is a measure of how much value being created today by undertaking investment. Managers need to make investment decisions and calculating NPV can help them to see the likelihood of investment being profitable.
The Act was ruled unconstitutional because it requires federal estate tax to be paid by folks in same-sex marriages. Currently if the spouse in an opposite-sex marriage dies, no federal estate tax needs to be paid. The court also stated that the Act discriminates based on sexual orientation and violates equal protection under the Constitution. Republicans are contesting a ruling by the United States Court of Appeals for the Ninth Circuit, which ruled the Defense of Marriage Act discriminates based on the denial of health benefits to same-sex spouses. In defense of the Defense of Marriage Act, Republicans claim the goals are to “maintain consistency in allocating federal benefits and encourage relationships “that most frequently result in the begetting and raising of children.”” NYTIMES.
2.0 Fair Value Accounting and its Objectives In it pure form, Fair Value Accounting (FVA) involves reporting assets and liabilities on the balance sheet at fair value and recognizing changes in fair value as gains and losses in the income statement. It is also called mark-to-market accounting (Laux & Leuz, 2010) The key objective is to give a monetary value to an asset or liability, without necessarily initiating a transaction. In essence then, FVA focuses on providing an objective valuation of an asset or liability without undue influence from the concerned parties, without considering historical costs and basing the value of an asset on mark-to-market accounting (Landsman, 2006). 3.0 FVA: Criticisms Despite the main intention to make financial statements easier to compare and balance sheet more reflective of real values, FVA has been criticized by many - generally financial institutions. Some criticisms includes: , subjectivity which leads to unreliable information, pro-cyclability and causes volatility.