Answer:
B) False: since it is still a closely held C corporation, it cannot reduce its ordinary income through passive losses. If it hadn't been a closely held C corporation then it could have made the deductions.
Explanation:
Passive losses are losses resulting from financial activities, i.e. investments in other corporations where the investor doesn't participate in.
Passive losses cannot offset ordinary income, they must be matched against passive gains only. If passive losses exceed passive gains, they can be carried forward without limitation.
The only exception applies to C corporations that are not;
- closely held corporations or
- personal service corporations.
Qualifying C corporations can actually deduct passive losses from certain ordinary income.
Closely held C Corporations are corporations where during the last 6 months, 50% or more of its stock is owned by 5 or fewer investors.
Answer:
Margin of safety=55.6%
Explanation:
The formula for the operating income is as folows;
operating income=Sales revenue-total cost
where;
operating income=$ 15,000
Sales revenue=S
total cost=variable cost+fixed cost
variable cost=70% of S=(70/100)×S=0.7 S
fixed cost=$12,000
replacing;
15,000=S-(0.7 S+12,000)
15,000+12,000=0.3 S
27,000=0.3 S
S=27,000/0.3
S=Answer:
Explanation:
The formula for the operating income is as follows;
operating income=Sales revenue-total cost
where;
operating income=$ 15,000
Sales revenue=S
total cost=variable cost+fixed cost
variable cost=70% of S=(70/100)×S=0.7 S
fixed cost=$12,000
replacing;
15,000=S-(0.7 S+12,000)
15,000+12,000=0.3 S
27,000=0.3 S
S=27,000/0.3
S=$90,000
Current sales=$90,000
The formula for margin of safety is as follows;
Margin of safety=(Current sales level-break even point sales level)/current sales levels
At break even,
Operating income=0
0=S-(0.7 S+12,000)
0=S-0.7 S-12,000
0.3 S=12,000
S=12,000/0.3
S=40,000
Break even sales=$40,000
replacing;
Margin of safety=((90,000-40,000)/90,000}×100
Margin of safety=55.6%
They are part of Persuasive measures <span>used in posttesting of broadcast commercials.
Persuasive measures refers to the factors that is used to influence some people in doing a desired actions. Broadcast commercials use this in order to give a certain motive for potential customers to choose their products over other competitors'</span>
Answer:
$632,000
Explanation:
The computation of the amount of balance in the right of use asset after two years is shown below:
Balance in right of use asset after 2 years is
= Recorded value - ((Recorded value × rate of interest) × number of years)
= $790,000 - (($790,000 × 10%) × 2)
= $790,000 - ($79,000 × 2)
= $790,000 - $158,000
= $632,000
hence, the balance is $632,000
Answer: 0 years
Explanation:
The payback period calculates the amount of time taken to recoup the initial investment made in a project or in the purchase of a machine or building. It calculates how long the cumulative cash flow generated from a project equals the cost of the project.
The payback period for both machines are zero years because the cumulative cash flow is less than the cost of the machine.
For machine A - cumulative cash flow- $-47,000 is less than -$71,000
For machine B - cumulative cash flow, -$7,000 is less than -$52,000
Explanations on how the figures were derived is found in the attached tables.
