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.
only the portion of the loss attributable to inventory sold during the period is recorded in the financial statements. B. the market value figure for ending inventory is substituted for cost and the loss is buried in cost of goods sold C. a loss is recorded directly in the inventory account by crediting inventory and debiting loss on inventory decline. D. there is a direct reduction in the selling price of the product that results in a loss being recorded on the income statement prior to the sale. 15) Designated market value A. may sometimes exceed net realizable value. B. should always be equal to net realizable value less a normal profit margin.
Moreover, Small Fries Inc. should not report the repairs and maintenance in their balance sheet as aggregate cost but instead designated the expense to each facility as each expense is incurred. According to 210-10-S99 SEC materials, Accumulated depreciation, depletion, and amortization of property, plant and equipment. The amount is to be set forth separately in the balance sheet or in a note thereto. It should be recorded in the year when it is happening and make notes to the financial statement to that
[3] http://www.irs.gov/businesses/small/article/0,,id=146335,00.html It is important to determine if the taxpayer martially participates because this classifies the income as active or passive. Passive activity losses are non-deductable from active and portfolio income. This is why it is important to determine if the taxpayer martially participates in the business activity. PROBLEMS: 7-46) The $30,000 loss is considered a passive loss and can only be deducted against passive income, it is therefore suspended and carried forward to future years to offset potential passive income in those years. Mary has no martially participation in the rental activity, therefore the loss is considered
By following the matching principle all of the costs associated with a particular product, not just its wholesale price, is expensed when the item is sold. Requirement 2 - A Generally, the lower of cost or market method is used to value inventory in order to “avoid reporting inventory at an amount greater than the benefits it can provide” (Spiceland, Sepe, & Nelson, 2013, p. 476). According to Spiceland, Sepe, and Nelson (2013) the “change in replacement cost usually is a good indicator of the direction of change in selling price” (p. 477). When the change in replacement cost is negative the LCM method allows companies to apply the conservatism principle. The conservatism principle involves “recognizing expenses and liabilities as soon as possible when there is uncertainty about the outcome, but to only recognize revenues and assets when they are assured of being received” (The conservatism principle).
Cui xin yuan Case 11 -1 Polluter Corp Objectives: the appropriate classification in the statement of cash flows for the company’s purchase and sale of Emission allowances Accounting pronouncement: ASC 230 -10 statement of cash flow ASC 350 -30 -25 -3 General Intangibles Other than Goodwill Question 1: What is the appropriate classification in the statement of cash flows for the company’s purchase of Emission Allowances? The recognition of intangibles is defined under ASC 350 -30 -25 -3[Costs of internally developing, maintaining, or restoring intangible assets that are not specifically identifiable, that have indeterminate lives, or that are inherent in a continuing business or nonprofit activity and related to an entity as a whole, shall be recognized as an expense when incurred According to case, Upon receipt of the EAs, the Company recorded the EAs as intangible assets with a cost basis of zero, in accordance with The Federal Energy Regulatory Commission (“FERC”) accounting guidance for EAs. And To meet its need for additional EAs in fiscal years 2010–2014, on April 2, 2010, the Company spent $3 million to purchase EAs with a vintage year of 2012 from Clean Air Corp Acquiring of emission allowances means that Polluter Corp. had to buy allowances from another company. The emission allowances re regarded as tangible assets with zero cost basis. because the Emission and the cost of emission allowances have indetermination lives and inherent in a continuing business , the emission allowance is recognized as expense when incurred.
Week 3 Questions: 7: Active income is derived from the main course of business or trade; the taxpayer’s full time job or main means of generating income. Passive income is income derived from passive activities, activities that the taxpayer does not devote sufficient time for to be considered as part of main trade and business activities. Portfolio income comes from dividends, annuities, and other investments not part of the main course of business activities. 13. Material participation is a concept used by the law to determine what qualifies as a passive activity.
The income statements of service business normally have separate sections for operating revenues, operating expenses, and other income (expenses). In contrast, those of retailers, wholesalers, and manufacturers disclose sales revenue, followed immediately by cost of goods sold and gross margin. Operating expenses are listed next followed by other income (expenses). 4. The basic difference falls in the area of inventory.
EGT1 - Economics Subdomain: 309.1 - Task 1 A. Profit Maximization a1. The total revenue (TR) to total cost (TC) approach relies on the fact that profit equals revenue minus that cost and focuses on maximizing the greatest difference between TR and TC. Total Revenue (TR): Is the income derived from the sales of a given product. (McConnell., 2011) This total does not take include the cost of producing the product.
A C Corporation is considered an entirely separate entity and those that make up the company such as officers, directors, managers, and shareholders are not personally liable for the acts of the company. This is the main advantage of a C Corporation. A disadvantage is that profits of the corporation are taxed at two different levels. One at the corporate level and then another on the dividends of the shareholders. · Liability-A C Corporation has limited liability in that it is seen as a separate entity from the owners, which in turn protects their personal assets from being taken to pay for the company’s debt or liability losses.