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.
• ignore cash payouts to stockholders. • ignore the size, risk, and timing of cash flows. 5. The maximum rate at which a firm can grow while maintaining a constant debt-equity ratio is bestdefined by its: • rate of return on assets. • internal rate of growth.
Memo To: Chip & Charles Carroway, Carroway Clothing Limited (CCL) From: Date: Re: Current accounting issues, employment benefits and financing options. Thank you for the opportunity to address the current accounting issues, employment benefits and financing options facing Carroway Clothing Limited (CCL) 1. SR& ED and Development costs treatment: In reviewing the financial statements it appears that the development costs and SR&ED treatment may not have been recorded appropriately. The SR&ED are tax credits to be used towards taxable income and should not have been recorded as government grants. Since CCL may not have needed them in the initial years, it can use SR&ED tax credits against taxable income
If she were to move to another state where her marginal state rate would be 10 percent, would her choice be any different? Assume that Dana itemizes deductions. When the state rate is 5 percent, Dana would achieve the following returns from the Treasury bond or the corporate bond: The Treasury bond yields $1,125 or $30,000 x [.05 x (1-.25)] after tax. The corporate bond yields $1,282.50 or $30,000 x [.06 x (1 - .25 - .05(1-.25))] after tax. Note that the actual state rate is reduced by 25% to allow for the deductibility of state income taxes on the federal income tax return.
In a money market account you invest your money in low risk investments with predictable interest rates. What is a liquidation policy? (0.5 points) A liquidation policy tells you when and how you’re able to remove money from the account. What is simple interest? (0.5 points) Simple interest is gained only on the principal amount of an account.
$4,000 4) The interest paid for the loan for stocks, bonds, and securities is only deductable up to the Net Income amount of the Interest Income. If interest income was $7,000 and expenses were $500, then Net Interest Income is $6,500. Mike and Sally paid $15,000 of interest on the loan for the stocks, bonds, and securities so they are allowed to deduct $6,500 and the leftover expense, can be carried forward to the next year. THEREFORE: The total deductable interest is $13,000. (2,500+4,000+6,500=$13,000) 8-40) A) Charlie is allowed the tax deduction of the charitable contribution at the basis price of $600 because it is defined as ordinary income property.
What is the project’s net present value? When attempting to finance a project, it is important to know the financial health of the company. The net present value aids with analyzing the profitability of a project. It demonstrates the difference between the present value of the cash inflows and the cash outflows (Titman, Keown, & Martin, 2011). When a negative net present value is obtained, it is a sure indicator that the firm should not continue to invest in a project.
(TCO A) On March 1, 2010, Ruiz Corporation issued $800,000 of 8% nonconvertible bonds at 104, which are due on February 28, 2030. In addition, each $1,000 bond was issued with 25 detachable stock warrants, each of which entitled the bondholder to purchase for $50 one share of Ruiz common stock, par value $25. The bonds without the warrants would normally sell at 95. On March 1, 2010, the fair market value of Ruiz's common stock was $40 per share and the fair market value of the warrants was $2.00. What amount should Ruiz record on March 1, 2010 as paid-in capital from stock warrants?
Explain. [Bannister v. Bemis Co. , 556 F.3d 882 (8th Cir.2009)] Case brief: Bemis Co, breached the covenant not to compete, the breach was material. Bannister could not accept employment with a Bemis competitor, but Bemis was to pay Bannister his salary. There was no term for a partial release. Bemis “released” Bannister to seek employment with one exception—Mondi Packaging.
For purposes of external financial reporting, LIFO may not be used with the lower of cost or market approach. c. If LIFO is used for external financial reporting, then it cannot be used for tax purposes. d. None of these. 83. If inventory levels are stable or increasing, an argument which is not an advantage of the LIFO method as compared to FIFO is a. income taxes tend to be reduced in periods of rising prices.