Question 1
Q1 Unicom International is interested in purchasing a machine producing widgets. Assume that the machine the company is interested in costs ?20,000,000, and that it is estimated to generate a cash inflow of ?22,000,000 at the end of the next year. The effective discount rate for the machine is equal to 8% per annum. . i) Use the internal rate of return (IRR) rule to determine whether or not Unicom International should purchase the widget machine. ?(10 marks) . ii) Show that, in this case, the company?s decision would have been identical if it had used the net present value (NPV) rule. (5 marks) . iii) Now assume that the company incurs costs of ?1,000,000 to dispose of the widget machine at the end of the second year. Discuss why in this case the internal rate of return (IRR) rule can no longer be used (no calculations required). How should the company in this case evaluate whether or not to invest into the widget machine? (10 marks) . b) Assume that, in addition to the machine discussed in question 11a), there is also a ?premium? alternative. The cost of the premium widget machine is equal to ?36,000,000, but the premium machine generates cash inflows of ?22,000,000 over the next two years (with the cash inflows again occurring at the end of each year). The effective discount rate is again equal to 8%. ?Use the incremental internal rate of return (IRR) rule to determine which of the two machines the company should invest in. (10 marks)
Question 2
Problem 4-1A Prepare journal entries to record the following merchandising transactions of Flora Company, which applies the perpetual inventory system. (Hint: It will help to identify each receivable and payable; for example, record the purchase on July 1 in Accounts Payable ? Arch.) July 1 Purchased merchandise from Arch Company for $6,400 under credit terms 1/15, n/30, FOB shipping point, invoice dated July 1. 2 Sold merchandise to Driver Co. for $900 under credit terms 1/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $533. 3 Paid $130 cash for freight charges on the purchase of July 1. 8 Sold merchandise that had cost $1,700 for $2,100 cash. 9 Purchased merchandise from Kew Co. for $2,200 under credit terms of 1/15, n/60, FOB destination, invoice dated July 9. 11 Received a $200 credit memorandum from Kew Co. for the return of part of the merchandise purchased on July 9. 12 Received the balance due from Driver Co. for the invoice dated July 2, net of the discount. 16 Paid the balance due to Arch Company within the discount period. 19 Sold merchandise that cost $800 to Surtis Co. for $1,200 under credit terms of 1/15, n/60, FOB shipping point, invoice dated July 19. 21 Issued a $200 credit memorandum to Surtis Co. for the allowance on goods sold on July 19. 24 Paid Kew Co. the balance due after deducing the discount. 30 Received the balance due from Surtis Co. for the invoice dated July 19, net of discount. 31 Sold merchandise that cost $5,200 to Driver Co. for $6,900 under credit terms of 1/10, n/60, FOB shipping point, invoice dated July 31.
Question 3
Objective:Apply selected accounting standards to a practical problem The financial statements of Sunset Ltd and its subsidiary Moonrise Ltd, at 30 June 2012, contained the following information: Sunset Ltd Moonrise Ltd Profit before tax $ 64 000 $ 36 000 Income tax expense 26 000 4 800 Profit for the year 38 000 31 200 Retained earnings (1/7/11) 30 000 42 000 68 000 73 200 Dividend paid 10 000 0 Retained earnings (30/6/12) 58 000 73 200 Share capital 500 000 200 000 General reserve 160 000 30 000 Liabilities 120 000 66 000 $ 838 000 $ 369 200 Land $ 172 000 $ 102 000 Plant 240 000 160 000 Accumulated depreciation (100 000) (20 000) Financial assets 60 000 40 000 Inventory 60 000 80 000 Cash 6 000 7 200 Shares in Moonrise Ltd 400 000 0 $ 838 000 $ 369 200 Sunset Ltd had acquired all the share capital of Moonrise Ltd on 1 July 2010 for $400 000 when the equity of Moonrise Ltd consisted of: share capital-10,000 shares $200,000 General reserve $ 40,000 Retained earning $ 30,000 At the acquisition date by Sunset Ltd, Moonrise Ltd?s non-monetary assets consisted of: Carrying amount Fair value Land $80 000 $120 000 Plant (cost $120 000) 110 000 130 000 Inventory 60 000 80 000 The plant had a further 5 year life. All the inventory was sold by 30 June 2011. All valuation adjustments to non-current assets are made on consolidation. The tax rate is 30%. In September 2010, Moonrise Ltd transferred $10 000 from its general reserve, earned before 1 July 2010, to retained earnings. Required: Prepare the consolidated journal entries, the consolidated worksheet and the consolidated financial statements for the year ended 30 June 2012.
Question 4
1. (Points: 1.25) Which of the following items will be an addition to AMTI in arriving at ACE? 1. None of the above. 2. Excess charitable contributions. 3. Federal income tax. 4. Excess capital loss. 5. Tax-exempt income Save Answer 2. (Points: 1.25) Tanver Corporation, a calendar year corporation, has alternative minimum taxable income of $7 million in 2010 (before adjustment for adjusted current earnings). If Tanver?s adjusted current earnings is $16 million, its tentative minimum tax for 2010 is: 1. $7,000,000. 2. $2,750,000. 3. Some other amount. 4. $6,750,000. 5. $310,000. Save Answer 3. (Points: 1.25) Which entity is subject to the ACE provisions? 1. None of the above. 2. S corporation. 3. Regulated investment companies. 4. Real estate investment trust (REITs). 5. Real estate mortgage investment conduits. Save Answer 4. (Points: 1.25) Which statement is false? 1. The starting point for computing AMTI is taxable income. 2. None of the above. 3. The starting point for computing ACE is taxable income. 4. A tax preference is added to taxable income. 5. The ACE adjustment can be a negative amount. Save Answer 5. (Points: 1.25) Lemon, Inc., has taxable income of $13 million in 2010. What is the maximum DPAD tax savings for this C corporation? 1. $132,600. 2. $273,000. 3. $265,200. 4. None of the above. 5. $409,500. Save Answer 6. (Points: 1.25) Which statement is false? 1. None of the above is false. 2. Members of an EAG are treated as a single taxpayer for purposes of the DPAD. 3. For an EAG, the DPAD is allocated among the members in proportion to each member?s respective amount of QPAI. 4. The DPAD of a consolidated group must be allocated to the group?s members in proportion to each member?s QPAI. 5. The stock ownership requirement for the EAG rules is 50%. Save Answer 7. (Points: 1.25) O?Neal, Inc., an S corporation, has taxable income of $14 million in 2010. Assume there are two shareholders, each in the top individual tax bracket. What is the maximum DPAD tax savings for this S corporation? 1. None. 2. $1,260,000. 3. None of the above. 4. $441,000. 5. $294,000. Save Answer 8. (Points: 1.25) Which statement, if any, is false? 1. An S corporation is subject to the corporate AMT. 2. The AMT is a separate tax system from the ? 11 tax system. 3. Many of the adjustments that apply to individuals also apply to corporations. 4. A high level of investment in assets (e.g., equipment or structures) is a reason a company may be subject to the AMT. 5. None of the above. Save Answer 9. (Points: 1.25) Gem Corporation, a calendar year taxpayer, has AMTI (before adjustment for adjusted current earnings) of $6 million for 2010. If Gem Corporation?s ACE is $15 million, its tentative minimum tax for 2010 is: 1. $4.2 million. 2. $2.55 million. 3. $2.02 million. 4. None of the above. 5. $3.45 million. Save Answer 10. (Points: 1.25) Which of the following is always personal holding company income? 1. Gas royalties. 2. Rent income. 3. All of the above. 4. Interest. 5. Personal service contract income. Save Answer 11. (Points: 1.25) The penalty tax in 2010 for AET and PHC situations is the highest rate applicable to individual taxpayers. 1. False 2. True Save Answer 12. (Points: 1.25) A business with taxable income less than $1 million cannot be subject to the AMT. 1. False 2. True Save Answer 13. (Points: 1.25) As taxable income is reduced by an NOL carryback, there is a corresponding increase in the DPAD. 1. True 2. False Save Answer 14. (Points: 1.25) DPGR cannot include the cost of an embedded service that is part of in the sale of a manufactured product. 1. False 2. True Save Answer 15. (Points: 1.25) The regular foreign tax credit is available to reduce AMT liability. 1. True 2. False Save Answer 16. (Points: 1.25) In the case of an individual, modified AGI is substituted for taxable income in the DPAD formula. 1. True 2. False Save Answer 17. (Points: 1.25) The AMT rate for corporations is lower than the rates for individuals. 1. False 2. True Save Answer 18. (Points: 1.25) Reasonable needs for purposes of the accumulated earnings tax include loans to shareholders. 1. False 2. True Save Answer 19. (Points: 1.25) In connection with the construction of a housing project, a contractor pays an architect to design the homes being built. The architect?s fee is an embedded service that does not qualify as DPGR. 1. True 2. False Save Answer 20. (Points: 1.25) DPAD for 2010 is 9% of the greater of QPAI or TI, but not to exceed the W-2 wages limitation. 1. False 2. True Save Answer
Question 5
I do not want professor riyer to work on this assignment. Thank you! DUE DATE: February 8, 2013 AT 7:00 AM BUS 499: Business Administration Capstone Please do not take too long to confirm, I will appreciate it. Assignment (Attached): 6 to 8 page paper. DO NOT SELECT Wal-Mart Stores, Inc./or Eastman Kodak Please READ ALL INSTRUCTIONS very careful, since unfortunately a few professors do not read it carefully, then ask what is already explained. Note: I just attached 1 scan right here, the remaining attachments (scans) will be attached one by one in a bit later, because I cannot attach more than one on this posting. PLAGIARISM is NOT accepted, please DOUBLE check for plagiarism. The last assignment did by professor riyer was entirely plagiarized, and I had a hard time, it was a big headache! This is NOT ACCEPTABLE. Please see below a pretty good website for plagiarism, or check on any plagiarism checker you might have. http://www.grammarly.com/?q=plagiarism&gclid=CJXvn8jzzrMCFQeDnQoduBEAPw Please use SHORT "in text citations" to support your own words/answer. And enclosed with " ". This way I can know where the "in text citations" START and where it END. Also, please include page # (pg. 2) or paragraph # (para. 4), Volume #, etc. if applicable. Example of "in text citation" "The evidence is a basic as the terra preta do indio, or India Black Earth" (Glick, 2007, para. 4) NOTE: Make sure to use SHORT "in tent citations" to support your own words/answers. Some professors use long citations and few of own words, this is not acceptable, since is not providing a quality work, so please when explaining in your own words the short citation, please do around 300 words not less than that or a page, please explain clear, precise, concise, and detailed, using double space, times roman 12. Please include a Reference page, all info need to be included: For example: page #, paragraph #, volume #, etc. if applicable. Example of Reference: Glick, D. (2007, February 10). Bio-char sequestration in terrestrial ecosystems?A review [Electronic mailing list message]. retrieved from http://bioenergylists.org/nwesgroup-archive/terrapeta_bioenergylists.org/2007-February/00023.html
