3) A company changes from straight-line to an accelerated method of calculating depreciation, which will be similar to the method used for tax purposes. The entry to record this change should include a A. credit to Accumulated Depreciation 4) Presenting consolidated financial statements this year when statements of individual companies were presented last year is an accounting change that should be reported by restating the financial statements of all prior periods presented. 13) If a short-term obligation is excluded from current liabilities because of refinancing, the footnote to the financial statements describing this event should include all of the following information EXCEPT: the number of financing institutions that refused to refinance the debt, if any 14) Stock dividends distributable should be classified on the balance sheet as an item of stockholders' equity. 15) Which of the following items is a current liability? A long-term debt maturing currently, which is to be paid with cash in a sinking fund b.
Memo To: John & Jane Smith From: Date: 12/2/2014 Re: Summary of various tax issues Your first question is how is the $300,000 treated for purposes of federal tax income? In Code 61(a), income derived from services is one of the listed forms of taxable income. This includes fees, commissions, fringe benefits and similar items. Since the compensation was earned this year, even though you worked on the case for two years, you will include it as ordinary income this year. You can reduce your tax liability by deducting necessary business expenses that were paid in the same
We got a cost of equity of 20%. Free cash flows are calculated using the formula EBIT x (1-TAX) + Depreciation – Capex – Change in NWC. The results are presented below: The NPV of the first generation phone project, ignoring both the possibility of investing in the second-generation project and the possibility of selling the equipment after two years is ($3,154). Since the NPV is negative, this would not be a good investment. 2.
Use the cost information Jennifer has assembled to construct a forecast of cost of goods sold and operating expenses for 2004 through 2009. Assume first that the Bernoulli will be introduced, with its new cost structure, one year from now, and then calculate a cost forecast assuming that the $18 million is not provided for development of the new product. 3. Using the information developed for Questions 1 and 2, develop a discounted cash flow analysis for the Bernoulli division for 2004 through 2009. Working's board has asked for net present value and internal rate of the return when making decisions in the past.
Which of the following accounts is NOT used with the GROSS method of recording sales? a. Sales Discounts b. Sales c. Accounts Receivable d. Sales Discounts Lost PAGE 2 For the following set of questions, use the information below from the Perry Co. 1995 income statement: Purchases $85,000 Transportation-In 1,200 Inventory, January 1, 1995 16,500 Inventory, December 31, 1995 18,800 Purchase Returns & Allowances 1,400 4. The amount that Perry would report as Cost of Goods Purchased in its 1995 income statement is: a.
Week Three Discussion Questions • Can the probability be more than 1 or less than 0? Explain why or why not. According to the Statistics for Business and Economics book, probabilities have to follow two basic rules and one of them is that the number has to be between 0 and 1. Therefore, the probability cannot be more than 1 and less than 0. • Based on the data collected on a typical day, what is the probability that oil change will take 15 minutes or less time?
Spouse’s Virginia withholding (filing status 2 only) ...........................................................18b 19. Estimated Tax Paid for tax year 2010 (from Form 760ES) ...........................................................19 (include overpayment credited from tax year 2009) 20. Extension Payments (from Form 760IP) ......................................................................................20 21. Tax Credit for Low Income Individuals or Earned Income Credit from attached Sch. ADJ, Line 17.....21 22. Credit for Tax Paid to Another State from attached Sch.
Applicable Law & Analysis: “Gross income does not include income attributable to the recovery during the taxable year of any amount deducted in any prior taxable year to the extent such amount did not reduce the amount of tax imposed by this chapter.“ (IRC Sec. 111 (a)) Conclusion: The tax issue at play here is how to handle the additional $25,000 received by John Smith from expenses he paid up front. If John previously expensed the $25,000 then the recovery of the $25,000 will be considered as income in the current year. If he didn’t then he may use the $25,000 to offset the deferred expenses and it will have no impact on his taxable income. Issue c) What is your determination regarding reducing the taxable amount of income for both (a) and (b) above?
Utilization of Budgets and Pro-Forma Statements, Ensuring Adequacy of Funds As stated in Rollins a pro forma financial statement is defined as "a financial statement prepared on the basis of some assumed events and transactions that have not yet occurred” (2012). In essence businesses will complete a financial statement utilizing forecasts and historical data to determine how their financial position would look at the end of a fixed period of time. Pro-forma statements can be useful for a number of different aspects of financial planning, but primarily for balance sheets and income statements. When preparing a pro-forma statement, the basis or beginning balances are derived current financials, while projections may be derived from; historical performance or expenditures, market analysis, known capital investments, or other inbound/outbound revenue or costs that can be reasonably provided. While historical statements or actual statements are hard data sets based upon actual numbers, pro forma statements, while the same in appearance allow management the opportunity to make
Week 3 – Assignment 1 – Problem 5-24 Determining account balances: percent of revenue allowance method of accounting for uncollectible accounts. A. Compute the following amounts. 1. Using the allowance method, the amount of uncollectible accounts expense for 2012. The estimate of bad debts expense was .5% (which equals .005) of sales on account.