In 2018, Bogart paid $20,000 of interest on a mortgage on his home (Bogart borrowed $600,000 in 2015 to buy this primary residence and it is currently worth $1,000,000). In 2018 Bogart also paid $12,000 of interest on a $150,000 home equity loan on his home, and $10,000 of interest on a mortgage on his vacation home (loan of $300,000; home purchased for $400,000 in 2016). How much interest expense can Bogart deduct as an itemized deduction in 2018?

Hello: Can someone explain the below? I am trying to understand the below.

How does net income and assets vary for each of the below?

1) furniture company sold an unused piece of land next door to their manufacturing facilities. land was purchased for $2M years back and sold for $4M. buyer paid in cash.

2) goodwill was over valued by $25M. Company recorded the entry to adjust goodwill to current value

3) company repurchased $5M of common stock and is holding them as treasury stock

4) company split its common stock 2 for 1 (one share split to 2 shares)

5) company employees exercised 2000 vested stock options with strike price of $100 each

6) company wrote off $2M of accounts receivable.

enus Chocolate Company processes chocolate into candy bars. The process begins by placing direct materials (raw chocolate, milk, and sugar) into the Blending Department. All materials are placed into production at the beginning of the blending process. After blending, the milk chocolate is then transferred to the Molding Department, where the milk chocolate is formed into candy bars. The following is a partial work in process account of the Blending Department at March 31, 2016:

Required:

1. Prepare a cost of production report, and identify the missing amounts for Work in Process—Blending Department. If an amount is zero, enter "0". When computing cost per equivalent units, round to two decimal places.

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1. Calculate equivalent units for materials and conversion costs. Calculate the cost per equivalent unit for materials and conversion costs. Calculate the costs assigned to the beginning inventory, the units started and completed, and the ending inventory.

Learning Objective 2, Learning Objective 4.

2. Assuming that the March 1 work in process inventory includes $16,740 of direct materials, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between February and March. If required, round your answers to the nearest cent.

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Target pretax income= $0

Investment= $2 million

Capacity=1 million units

1. Assume that the volume of dolls sold increases to 225,000 units, with no change in fixed or variable costs. What is the new pretax income? Does the number produced by your financial model appear to be reasonable? (Manually estimate the increase in pretax income if volume increases and fixed costs remain constant.)

2. Based on the original assumptions, what is the effect on pretax income if variable costs increase by 5% for each of the three product lines?Assume that nothing else changes.

3. Return to the original assumptions. Assume that a sales manager proposed a new advertising campaign to boost sales volume. The campaign would cost $30,000 and is estimated to increase the volume of each product as follows:

Baby doll sales increase by 20,000 units.

Teddy bear sales increase by 7,500 units.

Toy car sales increase by 30,000 units.

What would be the effect on pretax income if this plan were adopted?

4.Return to the original assumptions. Now assume that, due to competition, Toddler Toys must cut prices on each of its three products by 20%. In addition, a new advertising campaign costing $45,000 must be instituted to counteract bad publicity. Given these assumptions, what is the new breakeven point?

5.Return to the original assumptions. What would be the pretax income if Toddler Toys increased the price of all three products by 10% and the volume of each product line decreased by 5%?

6.Given the same assumptions as in Part 5, how many units must Toddler Toys sell to earn a target pretax income of $100,000? a target pretax income of $150,000? a pretax return on investment (ROI) of 10%?(Hint: To determine the target pretax income, multiply 10% by the amount invested.)

AccuBlade Castings Inc. casts blades for turbine engines. Within the Casting Department, alloy is first melted in a crucible, then poured into molds to produce the castings. On May 1, there were 360 pounds of alloy in process, which were 60% complete as to conversion. The Work in Process balance for these 360 pounds was $50,112, determined as follows:

During May, the Casting Department was charged $353,600 for 2,600 pounds of alloy and $22,651 for direct labor. Factory overhead is applied to the department at a rate of 150% of direct labor. The department transferred out 2,760 pounds of finished castings to the Machining Department. The May 31 inventory in process was 15% complete as to conversion.

Required:

Target pretax income= $0

Investment= $2 million

Capacity=1 million units

1.Return to the original assumptions. Now assume that, due to competition, Toddler Toys must cut prices on each of its three products by 20%. In addition, a new advertising campaign costing $45,000 must be instituted to counteract bad publicity. Given these assumptions, what is the new breakeven point?

income using accrual accounting decides a firm's ability to to meet long-term obligations. Is this different if a company uses cash based accounting instead? Why or why not?

Epps Corp., a public company, leased equipment from Anderson Inc. on January 2, 2018, for a period of three years. Lease payments of $100,000 are due to Anderson Inc. each year on December 31. The lease contains no purchase or renewal options and the equipment reverts back to Anderson Inc. on the expiration of the lease. The remaining useful life of the equipment is four years (the equipment is new at the time Epps leases it). The fair value of the equipment at lease inception is $270,000. Epps Corp. has guaranteed $20,000 as the residual value at the end of the lease term. The $20,000 represents the expected value of the leased equipment to the lessee at the end of the lease term. The salvage value of the equipment is expected to be $2,000 after the end of its economic life. Epps’ incremental borrowing rate is 9 percent. Anderson’s implicit rate is 10 percent and is known by Epps.

The assistant controller  and controller of Epps Corp. analyzed the lease and made their recommendations for the appropriate accounting.. As the CFO, you were given both analyses to determine the correct accounting treatment. Calculations and journal entries performed by the assistant controller and controller are below.

Assistant controller analysis:

Since the equipment reverts back to Anderson Inc., Epps should not record an asset or liability on the lease.

Entries to be posted in Years 1, 2, and 3:

Dr. Lease expense                           $100,000

Cr. Cash                                                        $100,000

Controller analysis:

The lease term is for three years. Since it is long-term, an asset and liability must be recorded. The amount of the asset and liability is based on the present value of the lease payments. The controller uses Epps’ incremental borrowing rate since it is the lower rate.

Present value of the lease payments = $100,000 × 2.53129 = $253,129

Since interest has to be charged on the straight-line method, the controller determines the following for the amortization of the lease liability.

                                                                                                Reduction in             Balance of

                                                                 Interest                     Lease                         Lease

  Year             Cash Payment             Expense                  Obligation               Obligation

    0                                                                                                                              $253,129

    1                  $100,000                        $15,624                $84,376                     $168,753

    2                  $100,000                        $15,624                $84,376                     $  84,377

   3                  $100,000                        $15,623                $84,377                     $           0

Journal entries in Year 1:

January 2

Leased Asset                                   253,129

            Lease Obligation                                                    253,129

December 31

Interest expense                             15,624

Lease obligation                             84,376

Cash                                                              100,000

Depreciation Expense                     84,376

             Accumulated Depreciation                          84,376        

Required:

1. Was the assistant controller’s analysis correct? Why or why not?

2. Was the controller’s analysis correct? Why or why not?

3. If neither answer is correct, show the correct analysis including all year one entry(ies).

Be sure to provide appropriate authoritative sources for positions taken.

Operating and Capital Leases - The CEO of Smith & Sons, Inc., was considering a lease for a new administrative headquarters building. The building was old, but was very well located near the company’s principal customers. The leasing agent estimated that the building’s remaining useful life was ten years, and at the end of its useful life, the building would probably be worth $100,000. The proposed lease term was eight years, and as an inducement to Smith & Sons’ CEO to sign the lease, the leasing agent indicated a willingness to include a statement in the lease agreement that would allow Smith & Sons to buy the building at the end of the least for only $75,000. As the CEO considered whether or not to sign the lease, she wondered whether the lease could be accounted for as an off-balance-sheet operating lease. What would you advise her?

Data: Use SEC EDGAR or another resource to obtain financial statements and notes for the following firms and fiscal year-ends. You can use their 10-K’s or annual reports.

2. How does Amgen account for research and development costs?
3. In 2015, Amgen acquired Dezima Pharma B.V. for total consideration of $410 million. What would Amgen’s goodwill balance have been on December 31, 2017 if the total consideration was only $330 million. Assume no other changes (e.g., same ‘Currency translation adjustments’ in Note 12
4. What identifiable intangible assets do Amgen and Dollar Tree report in the notes to their financial statements? List them.
   

Presented below are two independent situations related to future taxable and deductible amounts resulting from temporary differences existing at December 31, 2020. 1. Sunland Co. has developed the following schedule of future taxable and deductible amounts. 2021 2022 2023 2024 2025 Taxable amounts $200 $200 $200 $200 $200 Deductible amount — — — (1,400 ) 2. Coronado Co. has the following schedule of future taxable and deductible amounts. 2021 2022 2023 2024 Taxable amounts $200 $200 $200 $200 Deductible amount — — (2,500 ) — Both Sunland Co. and Coronado Co. have taxable income of $3,800 in 2020 and expect to have taxable income in all future years. The tax rates enacted as of the beginning of 2020 are 30% for 2020–2023 and 35% for years thereafter. All of the underlying temporary differences relate to noncurrent assets and liabilities.

1. Compute the net amount of deferred income taxes to be reported at the end of 2020, and indicate how it should be classified on the balance sheet for situation one.

2. Compute the net amount of deferred income taxes to be reported at the end of 2020, and indicate how it should be classified on the balance sheet for situation two.

Perez Cameras, Inc. manufactures two models of cameras. Model ZM has a zoom lens; Model DS has a fixed lens. Perez uses an activity-based costing system. The following are the relevant cost data for the previous month:

Perez’s facility has the capacity to operate 2,700 machine hours per month.

   
Required

1. Compute the cost per unit for each product.

2. The current market price for products comparable to Model ZM is $119 and for DS is $66. If Perez sold all of its products at the market prices, what was its profit or loss for the previous month?

3. A market expert believes that Perez can sell as many cameras as it can produce by pricing Model ZM at $114 and Model DS at $34. Perez would like to use those estimates as its target prices and have a profit margin of 30 percent of target prices. What is the target cost for each product?
   

Why is it important to properly state the issue in a judgment?

Match the definition to the proper term.

Group of answer choices

The sales level at which operating income is zero: Total revenues = Total expenses.

      [ Choose ]            unit contribution margin            contribution margin ratio            operating leverage            sensitivity analysis            net income            breakeven point            margin of safety            contribution margin income statement            gross margin            total contribution margin            cost-volume-profit (CVP) analysis      

Sales revenue minus variable expenses.

      [ Choose ]            unit contribution margin            contribution margin ratio            operating leverage            sensitivity analysis            net income            breakeven point            margin of safety            contribution margin income statement            gross margin            total contribution margin            cost-volume-profit (CVP) analysis      

An income statement that groups costs by behavior rather than function; it can be used only by internal management.

      [ Choose ]            unit contribution margin            contribution margin ratio            operating leverage            sensitivity analysis            net income            breakeven point            margin of safety            contribution margin income statement            gross margin            total contribution margin            cost-volume-profit (CVP) analysis      

Expresses the relationships among costs, volume, and profit or loss

      [ Choose ]            unit contribution margin            contribution margin ratio            operating leverage            sensitivity analysis            net income            breakeven point            margin of safety            contribution margin income statement            gross margin            total contribution margin            cost-volume-profit (CVP) analysis      

A “what-if” technique that asks what results will be if actual prices or costs change or if an underlying assumption changes.

      [ Choose ]            unit contribution margin            contribution margin ratio            operating leverage            sensitivity analysis            net income            breakeven point            margin of safety            contribution margin income statement            gross margin            total contribution margin            cost-volume-profit (CVP) analysis      

The excess of the unit sales price over the variable cost per unit

      [ Choose ]            unit contribution margin            contribution margin ratio            operating leverage            sensitivity analysis            net income            breakeven point            margin of safety            contribution margin income statement            gross margin            total contribution margin            cost-volume-profit (CVP) analysis      

Ratio of contribution margin to sales revenue.

      [ Choose ]            unit contribution margin            contribution margin ratio            operating leverage            sensitivity analysis            net income            breakeven point            margin of safety            contribution margin income statement            gross margin            total contribution margin            cost-volume-profit (CVP) analysis      

Excess of expected sales over breakeven sales