On January 1, 2018, Allied Industries leased a high-performance conveyer to Karrier Company for a four-year period ending December 31, 2021, at which time possession of the leased asset will revert back to Allied. The equipment cost Allied $956,000 and has an expected useful life of five years. Allied expects the residual value at December 31, 2022, will be $300,000. Negotiations led to the lessee guaranteeing a $340,000 residual value.

Equal payments under the finance/sales-type lease are $200,000 and are due on December 31 of each year with the first payment being made on December 31, 2018. Karrier is aware that Allied used a 5% interest rate when calculating lease payments.

Required:

1. Prepare the appropriate entries for both Karrier and Allied on January 1, 2018, to record the lease.

2. Prepare all appropriate entries for both Karrier and Allied on December 31, 2018, related to the lease.

Use multiple regression with dummies, since the data is seasonal for the regression model.

On January 1, 2017, Doone Corporation acquired 70 percent of the outstanding voting stock of Rockne Company for $546,000 consideration. At the acquisition date, the fair value of the 30 percent noncontrolling interest was $234,000 and Rockne's assets and liabilities had a collective net fair value of $780,000. Doone uses the equity method in its internal records to account for its investment in Rockne. Rockne reports net income of $280,000 in 2018. Since being acquired, Rockne has regularly supplied inventory to Doone at 25 percent more than cost. Sales to Doone amounted to $340,000 in 2017 and $440,000 in 2018. Approximately 40 percent of the inventory purchased during any one year is not used until the following year.

1. What is the noncontrolling interest's share of Rockne's 2018 income?
2. Prepare Doone's 2018 consolidation entries required by the intra-entity inventory transfers.

b.

Prepare entry *G

Prepare entry Tl

Prepare entry G

On June 15, 2018, Chang purchases $2,537,000 of equipment (7-year property) for use in her business. It is her only purchase of business property in 2018. Chang has taxable income from her business of $2,500,000 before any cost recovery.

Click here to access depreciation Table 8-2.

a.  Assuming Chang does not elect Section 179 and elects out of bonus depreciation, what is her total 2018 cost recovery?
$

b.  Assuming Chang elects the maximum Section 179 deduction allowable and elects out of bonus depreciation, what is her total 2018 cost recovery?
$

c.  Assuming Chang elects the maximum Section 179 deduction allowable and does not elect out of bonus depreciation, what is her total cost recovery?
$

d.  Assuming Chang does not elect Section 179 deduction allowable and does not elect out of bonus depreciation, what is her total cost recovery?
$

For calendar year 2018, Stuart and Pamela Gibson file a joint return reflecting AGI of $350,000. Their itemized deductions are as follows: Note: All expenses are before any applicable limitations, unless otherwise noted.

Round your intermediate computations to nearest whole dollar.

The amount of itemized deductions the Gibsons may claim for the year is $____________.

*The AGI limit for medical expenses is 7.5% now for 2018. It was 10% in previous years.*
*Also in 2018, taxpayers can't claim unreimbursed employee expenses because it is now considered personal exp in 2018-2025 due to new tax rules.*

Fuzzy Monkey Technologies, Inc., purchased as a short-term investment $250 million of 8% bonds, dated January 1, on January 1, 2018. Management intends to include the investment in a short-term, active trading portfolio. For bonds of similar risk and maturity the market yield was 10%. The price paid for the bonds was $228 million. Interest is received semiannually on June 30 and December 31. Due to changing market conditions, the fair value of the bonds at December 31, 2018, was $240 million.

Required:
1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate).
4-a. At what amount will Fuzzy Monkey report its investment in the December 31, 2018, balance sheet?
4-b. Prepare any entry necessary to achieve this reporting objective.
5. How would Fuzzy Monkey's 2018 statement of cash flows be affected by this investment?

Suppose the simple island economy of Macroland only produces three goods, coconuts, pineapples and lobsters. The price and output data for selected years is shown below. The CPI for 2018 is equal to

Select one:

a. 147

b. 105.7

c. 94.6

d. 874

e. none of the above

Suppose the simple island economy of Macroland only produces three goods, coconuts, pineapples and lobsters. The price and output data for selected years is shown below. The CPI for 2018 is equal to

Select one:

a. 147

b. 105.7

c. 94.6

d. 874

e. none of the above

Select the taxpayer who is an eligible educator for the educator expenses deduction.

Kris is a teacher's aide at John F. Kennedy Elementary School. She worked 671 hours in 2018. Kris spent $127 on supplies she used in the classroom. She was not reimbursed for her expenses.

Frieda is a kindergarten teacher at Lakeview Elementary School. She worked 1,080 hours in 2018. Frieda spent $427 on supplies for her classroom. She was not reimbursed for her expenses.

Cami homeschooled her five children, Summer, Renna, Jaquin, Julie, and Benji. She taught her children for 1,187 hours in 2018. Cami spent $753 on curriculum for her children. She was not reimbursed for her expenses.

Heidi is the principal at New Haven Elementary School. She worked 855 hours in 2018. Heidi spent $427 on books and supplies for two classrooms with new teachers. She was not reimbursed for her expenses.

Mark for follow up

Fuzzy Monkey Technologies, Inc., purchased as a short-term investment $160 million of 8% bonds, dated January 1, on January 1, 2018. Management intends to include the investment in a short-term, active trading portfolio. For bonds of similar risk and maturity the market yield was 10%. The price paid for the bonds was $142 million. Interest is received semiannually on June 30 and December 31. Due to changing market conditions, the fair value of the bonds at December 31, 2018, was $150 million.

Required:
1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate).
4-a. At what amount will Fuzzy Monkey report its investment in the December 31, 2018, balance sheet?
4-b. Prepare any entry necessary to achieve this reporting objective.
5. How would Fuzzy Monkey's 2018 statement of cash flows be affected by this investment?