Good Citizen, Inc. incurred their first loss during this fiscal year on both their financial statements and tax returns. Suppose there are no differences between the calculation of book income and taxable income. The net loss this year was $1,000,000, prior year's income was $12,000,000 and the applicable tax rate was 40%. What would the entry be if the government(s) allowed the Company to carry a tax loss back to prior tax years for a full refund of prior taxes paid? a. DR Deferred tax asset $400K, CR Tax benefit (provision) $400K b. DR Current tax receivable $400K, CR Tax benefit (provision) $400K c. DR Tax expense (provision) $400K, CR Current taxes payable $400K d. DR Tax expense (provision) $400K, CR Deferred tax liability $400K e. DR Current tax expense $400K, CR Deferred tax expense $400K 4.
http://www.irs.gov/businesses/small/article/0,,id=146330,00.html.” Dividends, interest, annuities, and royalties not accumulated through the ordinary course of trade or business is Portfolio income, not passive income. The sales of stock and bonds are also portfolio income. 7-13) Martially participation is
$24,000 B. $75,000 C. $99,000 D. $51,000 E. $80,000 Difficulty: Easy 3. On January 1, 2008, Pacer Company paid $1,920,000 for 60,000 shares of Lennon Co.'s voting common stock which represents a 45% investment. No allocation to goodwill or other specific account was made. Significant influence over Lennon was achieved by this acquisition.
Values between 41% and 43% obtained and hence the average of 42% was used. 2. The risk free rate is taken from the Government 30 Year Treasury note rate. 3. The beta for Boston Beer Company cannot be calculated as it has not been listed before.
b. Shareholders are not taxed on corporate income until it is distributed to them. c. Shareholder-employees can participate in employee fringe benefits d. Corporate shareholders cannot deduct corporate losses from their income. Answer: d 2. Corporation AB had a net long-term capital loss is 2005 and net operating loss in 2004.
2) Friendly’s total liabilities could not exceed three times the book value of the company’s net worth. a. Based on sales projections for 1989 FCI’s liabilities to equity ratio exceeds this threshold by $2,626,000 (Tab1 – FCI Financials, Exhibit 2). An additional restriction was self-imposed by Ms. Beaumont for her planning scenarios that hold’s Friendly’s interest bearing debt to equity ratio to a maximum of 2:1, which is $2 dollars of debt for every $1 dollar of equity. Again, based on sales projects for 1989/1990 FCI’s this ratio exceeds the established threshold (Tab 1 - FCI financials, Exhibit 3).
Chapter 01 Intercorporate Acquisitions and Investments in Other Entities Multiple Choice Questions In order to reduce the risk associated with a new line of business, Conservative Corporation established Spin Company as a wholly owned subsidiary. It transferred assets and accounts payable to Spin in exchange for its common stock. Spin recorded the following entry when the transaction occurred: [pic] 1. Based on the preceding information, what number of shares of $7 par value stock did Spin issue to Conservative? A.
(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 | | | | | | | | | | |
Give three rules/tests for recognising revenue. Item 4. Identify what category each of the following items would most usually fall in by indicating the correct category with an ‘X’: Current asset NonCurrent liability Long-term liability Equity current asset Accrual Asset revaluation reserve Accumulated deprecation Prepaid rent 5. An EU company listed on the London Stock Exchange should recognise its Brand name as intangible assets on its statement of financial position if …………………………….. 6. Set out the following balances in a published balance sheet, including all the titles and headings required.
(To ease the calculation, assume no income tax.) a. What is the operating income (EBIT) for both firms? Sales Revenue: 10,000 x $2.50= $25,000.00 Variable cost: 10,000 x $1= $10,000.00 Fixed Cost: $12,000.00 EBIT: $3,000.00 For BOTH FIRMS b. What are the earnings after interest?