A. $16,500 B. $9,000 C. $25,500 D. $7,500 E. $50,000 Difficulty: Easy 2. Yaro Company owns 30% of the common stock of Dew Co. and uses the equity method to account for the investment. During 2008, Dew reported income of $250,000 and paid dividends of $80,000.
At the time of the issuance the common stock was trading at $15 per share, and the preferred stock value is unknown. ABC pays no dividend in 2008 or 2009, and they decide to pay $90,000 in dividends in at the end of 2010. Prepare the necessary journal entries to record the issuance. Cash $2,000,000 Common Stock $100,000 APIC-C.S. $1,400,000 Preferred Stock $200,000 APIC-P.S.
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.
Answer: $235,000 6. Corporation P owns 85 percent of Corporation S1; Corporation S1 owns 60 percent of Corporation S2; Corporation S2 owns 90 percent of S3; Corporation S3 owns 60 percent of Corporation S4 and 15 percent of Corporation S2; Corporation S4 owns 100 percent of Corporation S5. Identify the consolidated group of corporations. Answer: P, S1, S2, S3, S4, S5 7. Corporation P files a consolidated return with Corporation S. In preparing a consolidated return, their accountant finds the following: Separate taxable income (loss) P= $500,000 S= ($200,000) Capital gain (loss)
No tenderness or pain was noted, No drainage, no perforation, no swelling or redness noted of the ear canal, Tympanic membrane is pearly gray, Shinny, translucent, non bulging or retracted. No impacted cerumen noted. Cranial Nerve 8 is intact with no auditory hearing loss. He was able to repeat words (Apple and Base ball). Good response to Rinne and Weber test, sound is symmetrical with no
J. Premium offers outstanding- Current Liability K. Discount notes payable- Current Liability L. Employee payroll deductions unremitted- Current Liability M. Current maturities of long-term debts to be paid from current assets- Current Liability N. Cash dividends declared but unpaid- Current Liability O. Dividends in arrears on preferred stock- Footnote disclosure P. Loans from officers- Current Liability 13-2. Accounts and Notes Payable * The following are selected 2012 transactions of Darby Corporation. Sept. 1 | Purchased inventory from Orion Company on account for $50,000.
Ignoring taxes, the correct opportunity cost for this machine in capital budgeting decisions is: A. $75,000 B. $25,000 C. $20,000 D. $5,000 4. What is the amount of the operating cash flow for a firm with $500,000 profit before tax, $100,000 depreciation expense, and a 35% marginal tax rate? A.
Assume that the bond is a zero coupon bond (i.e., the only payment is the one at maturity) and that company Z has no other debt outstanding. Other relevant parameters are as follows: • • • • • Company Z current asset value: €100 million Total bond issue face value: €80 million (i.e., leverage of 80%) Risk free interest rate: 2% Standard deviation of return on company Z assets: 30% Bond maturity date: one year from
PMT = (.1085/2)*1000=54.25 N = 60 R = 0.09/2=0.045 (or 4.5 for calculator purposes) FV = 1000 PV =? Answer: 1,190.90 b.What is the value of this bond 10 years after it was issued? PMT = (.1085/2)*1000=54.25 N = 40 R = 0.09/2=0.045 (or 4.5 for calculator purposes) FV = 1000 PV =? Answer: 1170.20 The price will decrease as approaching maturity since at maturity (just before expiration) it will be worth the par ($1,000) since this is a premium bond. 2.Suppose your company needs to raise $30 million and you want to issue 30-year bonds for this purpose.
Assuming the project is entirely equity-financed, using the unlevered cost of capital (rA) as the discount rate would be appropriate. As you can also see below, the calculation of the WACC equals rA in the absence of any debt since the D/V is zero. One thing worth mentioning is that we used rA (or WACC, with zero debt) to calculate the terminal value ($4,813K) of the 2007+ cash flows using the continuation method. 1. Value the project using the Adjusted Present Value (APV) approach, assuming the firm raises $750,000 of debt to fund the project and keeps the level of debt constant in perpetuity.