In your post please discuss the following:

1. If a taxpayer sells or exchanges property, what are items that could be included in the calculation of the "amount realized"?

2. In your own words, explain "adjusted basis", what affects adjusted basis, and the reason adjusted basis is important for determining one's tax liability?

3. What is meant by "realized gain" versus "recognized gain"

4. Briefly discuss how the tax status (e.g., capital, ordinary, Section 1231 business use) of an asset affect the tax treatment of a realized gain or realized loss.

The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $51 million and having a four-year expected life, after which the assets can be salvaged for $10.2 million. In addition, the division has $51 million in assets that are not depreciable. After four years, the division will have $51 million available from these nondepreciable assets. This means that the division has invested $102 million in assets with a salvage value of $61.2 million. Annual depreciation is $10.2 million. Annual operating cash flows are $25 million. Depreciation is computed on a straight-line basis, recognizing the salvage values noted. Ignore taxes. Assume that the division uses beginning-of-year asset values in the denominator for computing ROI.

Required:

a. & b. Compute ROI, using net book value and gross book value. (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).)

Statement of Cash Flows (Direct Method) The Sweet Company’s income statement and comparative balance sheets as of December 31 of 2016 and 2015 are presented below:

During the year, Sweet Company sold equipment for $27,000 cash that originally cost $57,000 and had $46,000 accumulated depreciation. New equipment was purchased for cash. Bonds payable and common stock were issued for cash. Cash dividends of $30,000 were declared and paid. At the end of the year, shares of treasury stock were purchased for cash. Accounts payable relate to merchandise purchases.

Required
a. Compute the change in cash that occurred during 2016.
b. Prepare a statement of cash flows using the direct method.

a. Change in Cash during 2016 $Answer Answer Increase Decrease

b. Use a negative sign with cash outflow answers.

Jack and Jane are married and file a joint return for 2020. They have wage income of $150,000; net long-term capital gains of $20,000; net short-term capital gains of $5,000; corporate bond interest of $3,000; share of S corporation income of $8,000; cash distributions from the S corporation of $3,000; ordinary cash dividends of $6,000; qualifying cash dividends of $5,000; inheritance received from deceased aunt’s estate of $18,000; deductions for AGI (Adjusted Gross Income) of $11,000; itemized deductions of $26,000; tax credits of $2,000; and estimated tax payments and withholding of $22,000. Their applicable standard deduction is $24,800. Using the appropriate tax schedule, compute their tax due or refund. [Note – you must show and label all calculations, including the AGI, Taxable Income, and Tax Liability amounts.]

Julia bought a brand new puppy for $400. She purchased the puppy from Mary, a person who regularly sells puppies and has done so for a number of years. Julia took her new friend home but realized that he was not in the best of health. Already attached to him she did not return the puppy to Mary, but instead took him to the vet. Costing $2,400 in vet bills, the puppy was medically mended Julia then sued Mary for her $400 purchase price and $2,400 in vet bills, alleging breach of implied warranty of merchantability.

(1) Is this transaction governed under UCC article 2?

(2) Is barnes a merchant?

(3) if so, does an implied warranty of merchantability attach to this sale?

(4) What damages are available if this is a breach of the implied warranty of merchantability?

Please Explain

what is the exposure to risk associated with a firm commitment to sell inventory that a fair value hedge is intended to reduce?

Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely determined by his division’s return on investment (ROI), which has been above 22% each of the last three years. Casey is considering a capital budgeting project that would require a $3,800,000 investment in equipment with a useful life of five years and no salvage value. Pigeon Company’s discount rate is 18%. The project would provide net operating income each year for five years as follows:

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.

Required:

1. What is the project’s net present value?

2. What is the project’s internal rate of return to the nearest whole percent?

3. What is the project’s simple rate of return?

4-a. Would the company want Casey to pursue this investment opportunity?

4-b. Would Casey be inclined to pursue this investment opportunity?

The following information is available for ABC Corporation. All differences between book income and taxable income are related to depreciation ( a timing difference )

The tax rate is 20%

BOOK TAX

DEC.31 2017 100,000 70,000

DEC.31 2018 100,000 100,000

DEC.31 2019 100,000 130,000

Record the journal entries for taxes for each of the three years

Peter runs his own bricklaying business and is considering hiring a full time worker. He will pay his employee a gross wage of $48,500 p.a. His employee is also entitled to 4 weeks paid annual leave and 10 public holidays (2 weeks total). He knows that he has to pay PAYG withholding tax out of the gross wage figure (calculation not required), and has been advised that he has to pay 1.85% in WorkSafe insurance.

a. If this will be Peter’s only employee, does he have to pay payroll tax?

b. Are there any other costs Peter needs to factor in? List and briefly explain.

c. Calculate (showing workings) the full cost to Peter of hiring the above worker.

d. If Peter gives his worker the work vehicle and allows him to use it for personal travel, does this get taxed as well? If so, who pays the tax? (2.5 marks)

Steven's Battery Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $320,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $80,000 are allocated based on the number of employees. The costs of operating departments A and B are $160,000 and $240,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows:

Required

1-Allocate the costs of the service departments to the production departments using the direct method

2-Allocate the costs of the service departments to the production departments using the step-down method, if the service department with the highest percentage of interdepartmental support service is allocated first. (Round up)

Ida Sidha Karya Company is a family-owned company located in the village of Gianyar on the island of Bali in Indonesia. The company produces a handcrafted Balinese musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $853. Selected data for the company’s operations last year follow:

Required:

1. Assume that the company uses absorption costing. Compute the unit product cost for one gamelan.(Round your intermediate calculations and final answer to nearest whole dollars.)

Unit Product Cost =

2. Assume that the company uses variable costing. Compute the unit product cost for one gamelan.

Unit Product Cost =

One of the variable production costs is the cost of steel. The standards for steel purchase prices and usage as set at the beginning of 2016 were:

Standard price of steel $25.00 per pound

Standard quantity of steel per car 100 pounds per car

Data on actual steel purchases for 2016 were:

Actual cost of steel purchased and used $28,700,000

Actual pounds of steel purchased and used 1,210,000 pounds

Recall that budgeted production for the year was 10,000 cars, while actual production was 11,000.

1. At the end of the year a cash bonus of 5% of performance above expectations is split among the members of the relevant departments. Performance above expectations is defined in terms of impact on total profits. What was the impact of the production department’s production activities on the company’s overall profits? What was the impact of the purchasing department’s activities on the company’s overall profits? Which department if any will receive a bonus? What size will that bonus pool be?

2. Are there any caveats in the performance evaluation mechanism used in question 1?

Scan House, a large campground in southern Florida, adjusts its accounts monthly. Most guests of the campground pay at the time they check out, and the amounts collected are credited to Camper Revenue. The following information is available as a source for preparing the adjusting entries at December 31:

1. Scan House invests some of its excess cash in certificates of deposit (CDs) with its local bank. Accrued interest revenue on its CDs at December 31 is $1,400. None of the interest has yet been received.

2. A six-month bank loan in the amount of $120,000 had been obtained on September 1. Interest is to be computed at an annual rate of 8 percent and is payable when the loan becomes due.

3. Depreciation on buildings owned by the campground is based on a 20-year life. The original cost of the buildings was $800,000. The Accumulated Depreciation: Buildings account has a credit balance of $300,000 at December 31, prior to the adjusting entry process. The straight-line method of depreciation is used.

4. Management signed an agreement to let 4H Troop 840 of Traverse City, Michigan, use the campground in June of next year. The agreement specifies that the 4H Troop will pay a daily rate of $50 per campsite, with a clause providing a minimum total charge of $3,500.

5. Salaries earned by campground employees that have not yet been paid amount to $2,800.

6. As of December 31, Scan House has earned $4,000 of revenue from current campers who will not be billed until they check out.

7. Several lakefront campsites are currently being leased on a long-term basis by a group of senior citizens. Nine months' rent of $54,000 was collected in advance and credited to Unearned Camper Revenue on October 1 of the current year.

8. A bus to carry campers to and from town and the airport had been rented the first week of December at a daily rate of $300. At December 31, no rental payment has been made, although the campground has had use of the bus for 25 days.

9. Unrecorded Income Taxes Expense accrued in December amounts to $15,000. This amount will not be paid until January 15.

Required: (prepare using an excel spreadsheet, include proper heading with your name, course name and number, and problem number – Chapter 2 Excel HW (1 of 2)

1. For each of the above numbered paragraphs, prepare the necessary adjusting entry (including an explanation). If no adjusting entry is required, explain why.

2. Indicate the effects that each of the adjustments in part a will have on the following sixtotal amounts in the campground's financial statements for the month of December. Organize your answer in tabular form, using the column headings shown below. Use the

letters I for increase, D for decrease, and NE for no effect. Adjusting entry 1 is provided as an example.

c. What is the amount of interest expense recognized for the entire current year on the $120,000 bank loan obtained September 1?

d. Compute the book value of the campground's buildings to be reported in the current year's December 31 balance sheet. (Refer to paragraph 3.)