1. The gross estate of Juanita, decedent, includes stock in Soap Corporation (E&P of $3,000,000) valued at $2,500,000. At the time of his death, Juanita owned 60% of the Soap stock outstanding, and she had an adjusted basis of $420,000 in the stock. The death taxes and funeral and administrative expenses related to Juanita’s estate amount to $1,000,000 and the adjusted gross estate is $7,000,000. The remainder of the Soap stock is owned by Merry, Juanita’s daughter and sole heir of her estate. What are the tax consequences to Juanita’s estate if Soap Corporation distributes $2,500,000 to the estate in redemption of all of its stock in the corporation?
In: Finance
Morgan, a widow, recently passed away. The value of her assets at the time of death was $9,693,000. The cost of her funeral was $6,772, while estate administrative costs totaled $39,989. As stipulated in her will, she left $999,580 to charities. Based on this information answer the following questions:
a. Determine the value of Morgan's gross estate.
b. Calculate the value of her taxable estate.
c. What is her gift-adjusted taxable estate value?
d. Assuming she died in 2014, how much of her estate would be subject to taxation?
e. Calculate the estate tax liability.
In: Accounting
Jetta production cost in 2002 and 2003 was 14,000 Euro per Jetta. Jetta sold in US at $15,000 in 2002 and 2003. Forward hedge exchange rate was 1 $/Euro in 2003. Rate without hedge (i.e. market exchange rate) was 1.25$/Euro in 2003. If 10,000 Jetta were sold in US, in 2003, by 70% forward hedge and 30% not hedged. What would be profits or loss from sales of 10,000 Jetta in US? (the answer is 1.0 million Euro, please show work on how to get this answer )
In: Finance
In: Accounting
In June 2002, it was discovered that Worldcom, a large US telecommunication company, committed one of the largest accounting frauds. Worldcom illegally capitalized $3.8 billion access fees during the year 2001 and the first quarter of 2002. The fees were paid to local network operators to connect calls from Worldcom services to telephones linked to local networks. This is a typical operating expense item for telecommunication companies. However, Worldcom capitalised these expenditures as assets and amortized them over future fiscal periods. Worldcom was persecuted and the penalties and corrections to the accounts eventually led it into bankruptcy.
The amount of capitalized access fees for each of the quarters are detailed as follows (in USD millions):
Quarter 1, 2001 $780
Quarter 2, 2001 $605
Quarter 3, 2001 $760
Quarter 4, 2001 $920
Quarter 1, 2002 $790
Required:
a) Describe how Worldcom’s accounting treatment of access fees affect the line items in the income statements, balance sheets and statements of cash flows.
b) Which accounting principle did Worldcom violate?
c) Assume that capitalized access fees were amortized over 5 years using the straight-line method. Compute the amount of misstatement for each quarter.
d) Without considering tax effects, prepare the journal entries for correcting the misstatements as of the reporting date of Quarter 1, 2002.
In: Accounting
Short-term solvency ratios
Asset turnover ratios
Long-term solvency ratios
Profitability ratios
Smolira Golf Corp
Balance Sheets as of December 31,2001 and 2002
|
2001 |
2002 |
2001 |
2002 |
|||
|
Assets |
Liabilities & Equity |
|||||
|
Current assets |
Current liabilities |
|||||
|
Cash |
$650 |
$710 |
Accounts payable |
$987 |
$1,215 |
|
|
Acc. receivable |
$2,382 |
$2,106 |
Notes payable |
$640 |
$718 |
|
|
Inventory |
$4,408 |
$4,982 |
Other |
$90 |
$230 |
|
|
Total |
$7,440 |
$7,798 |
Total |
$1,717 |
$2,163 |
|
|
Long-term debt |
$4,318 |
$4,190 |
||||
|
Fixed assets |
Owners' Equity |
|||||
|
Net Plant & equipment |
$13,992 |
$18,584 |
Common stock |
$10,000 |
$10,000 |
|
|
Retained earnings |
$5,397 |
$10,029 |
||||
|
Total |
$15,397 |
$20,029 |
||||
|
Total assets |
$21,432 |
$26,382 |
Total |
$21,432 |
$26,382 |
|
Smolira Golf Corp
2002 Income Statement
|
Sales |
$28,000 |
|
Cost of goods sold |
$11,600 |
|
Depreciation |
$2,140 |
|
Earnings before interest and taxes |
$14,260 |
|
Interest paid |
$980 |
|
Taxable income |
$13,280 |
|
Taxes (35%) |
$4,648 |
|
Net Income |
$8,632 |
|
Dividends |
$4,000 |
|
Addition to retained earnings |
$4,632 |
In: Finance
|
Use Worksheet 15.2. When Russell Hypes died unmarried in 2012, he left an estate valued at $6,200,000. His trust directed distribution as follows: $5,000 to the local hospital, $75,000 to his alma mater, and the remainder to his three adult children. Death-related costs and expenses were $10,900 for funeral expenses, $50,000 paid to attorneys, $7,000 paid to accountants, and $25,000 paid to the trustee of his living trust. In addition, there were debts of $125,000. Use Worksheet 15.2 and Exhibit 15.7 and Exhibit 15.8 to calculate the federal estate tax due on his estate. Round your answer to nearest whole dollar. |
|||||||||
| 1 | Gross estate | $ | 6,200,000.00 | ||||||
| 2 | Subtract sum of: | (a) | Funeral expenses | $ | 10,900.00 | ||||
| (b) | Administrative expenses | 82,000.00 | |||||||
| (c) | Debts | 125,000.00 | |||||||
| (d) | Other expenses | ||||||||
| Total | ( | 217,900.00 | ) | ||||||
| 3 | Result: | Adjusted gross estate | $ 5,982,100.00 | ||||||
| 4 | Subtract sum of: | (a) | Marital deduction | - | |||||
| (b) | Charitable deduction | 80,000.00 | |||||||
| Total | ( | 80,000.00 | ) | ||||||
| 5 | Result: | Taxable estate | $ 5,902,100.00 | ||||||
| 6 | Add: | Adjusted taxable gifts (post-1976) | $ | - | |||||
| 7 | Result: | Estate tax base | $ 5,902,100.00 | ||||||
| 8 | Compute: | Tentative tax on estate tax base | $ | ||||||
| 9 | Subtract sum of: | (a) | Gift tax payable on | $ | - | ||||
| post-1976 gifts | |||||||||
| (b) | Unified tax credit | ||||||||
| Total | ($ | - | ) | ||||||
| 10 | Result: | Total death taxes | $ 5,902,100.00 | ||||||
| 11 | Subtract: | State death-tax credit | ($ | ) | |||||
| 12 | Result: | Federal estate tax due | $ 5,902,100.00 | ||||||
In: Accounting
One of the hallmarks of adult learning is a critical self-reflection and transformational process that occurs. Drawing on rich life experiences, reflection allows you to take a moment and consider what you already know, think, or feel about something. Often times, the process of reflection will reveal changes or adjustments you may need to to your beliefs and assumptions, and transformation will occur.
In this discussion, consider the reflective process from a biblical perspective. How often in scripture are we told to examine ourselves, explore our hearts, and make changes in our lives if we need to? The reflective process is more than simply thinking about past experiences. It involves exploring experiences in your life, finding connections and meaning in those experiences, and then applying what you have learned in your life. Note that reflective writing is still academic in nature. You need to integrate sources and support the points that you make. Why do you believe what you do? In this case, your personal experience also becomes support you can use in your reflective process.
This discussion is asking you to reflect on the process of reflection. Do you make it a regular habit
In: Nursing
In: Accounting
You will receive $2,000 on January 1st 2004, on January 1st in 2005 and January 1st 2006. Which of the following expressions will calculate your value at time of January 1st 2004?
a
PV = $2,000[1.06]^-1 + $2,000[1.06]^-2 + $2,000[1.06]^-3
b
PV = $2,000[1.06]^1 + $2,000[1.06]^2 + $2,000[1.06]^3
c
PV = $2,000[1.06]^0 + $2,000[1.06]^1 + $2,000[1.06]^2
d
PV = $2,000 + $2,000[1.06]^-1 + $2,000[1.06]^-2
In: Finance