The combined taxes are lower under part b because the majority of the corporation's earnings are only subject to one level of tax (the individual tax on the salary). In part a the taxable income after salary is $200,000 but in part b it is $50,000 since the deduction of $150,000 is taken and this leads to only $50,000 that is taxed twice in part b. 66. [LO 3] In its first year of existence (year 1), Willow Corp. (a C corporation) reported a loss for tax purposes of $30,000. In year 2 it reports a $40,000 loss.
SciTronics had $ 75,000 of owners’ equity and earned $ 14,000 after taxes in 2008. Its return on equity was 18.67% an improvement from the 8.2% earned in 2005. Activity Ratios: How well does the company employ its assets? 1. Total asset turnover for SciTronics in 2008 can be calculated by dividing $ 244,000 into $ 159,000.
The beta of the stock is 1.05, and there were 200 million shares outstanding (trading at $60 per share), with a book value of $5 billion. Union Pacific paid 40% of its earnings as dividends and working capital requirements are negligible. (The treasury bond rate is 7%.) The market risk premium is 5.5%. a.
The sum of the market or appraised values of identifiable assets acquired less the fair value of liabilities assumed exceeded the cost to Easton. After revaluing noncurrent assets to zero, there was still some “negative goodwill.” Proper accounting treatment by Easton is to report the amount as A. part of current income in the year of combination. B. a deferred credit and amortize it. C. an extraordinary gain. D. paid-in capital.
2. (TCO A) Garrett Manufacturing owns 10% of the common stock of Timberline Corporation and used the fair-value method to account for this investment. Timberline reported a net income of $110,000 for 20X2 and paid dividends of $50,000 on October 1, 20X2. How much income should Garrett recognize on this investment in 20X2? (Points : 5) | $50,000 $16,500 $25,500 $7,500 $5,000 | Question 3.
When a net operating loss is carried back to a non-loss year, the net operating loss is a miscellaneous itemized deduction. ANS: F An NOL is a business loss. Therefore, the deduction is a deduction for AGI. PTS: 1 REF: p. 7-23 MULTIPLE CHOICE 1. Mable is in the business of factoring accounts receivable.
Again, 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. If Dana’s state tax rate increases to 10%, corporate bonds are still superior to Treasury bonds. 50. [LO 1] At the beginning of his current tax year David invests $12,000 in original issue U.S. Treasury bonds with a $10,000 face value that mature in exactly 10 years. David receives $700 in interest ($350 every six months) from the Treasury bonds during the current
During 2011, Z-Mart made installments sales of $300,000 and received payments of $135,000 on those sales. Z-Mart's gross profit on sales is 30%. Required: Prepare the necessary journal entries for 2011. 10 Solutions Multiple Choice Question Number Answer 1 a 2 c 3 b 4 c 5 d 6 c 7 a
What are earnings if the owners invest (use their own money) for the $800 needed to start? b. If the firm borrows $400 of the $800 at an interest rate of 10%, what are the firm's net earnings? c. What is the return on the owners' investment in each case? Why do the returns differ?