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vesna_86 [32]
3 years ago
10

For 2014, Taxpayer (TP) wants to recognize a deduction. The deduction involves a statute that has not changed since enacted in 1

920. TP is relying on a case called JONES, which is a case decided by the United States Tax Court in 1965 which held in favor of the taxpayer. The JONES case was decided by a United States Tax Court that lies in the 5th Circuit Court of Appeals. At the time the JONES case was decided, its holding was contrary to precedent set by the 5th Circuit Court of Appeals. Which of the following is correct:a. None of the other choices are correct.b. The Golsen rule is inapplicable here and is of no concern for TP.c. The Golsen rule applies here and weakens the legal justification for the deduction.d. The Golsen rule applies here and strengthens the legal justification for the deduction.
Business
1 answer:
Vesna [10]3 years ago
4 0

Answer:

Option c. is correct

Explanation:

Under the Golsen rule, the Tax Court must follows the Court of Appeals such that the court of appeals has direct jurisdiction over the taxpayer. The Court is said to reach a decision without calculating the tax when a Tax Court decision is said to be entered under Rule 155.

In this question, The Golsen rule applies here and weakens the legal justification for the deduction

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The auditors of Dunbar Electronics want to limit the risk of material misstatement in the valuation of inventories to 8 percent.
Ksivusya [100]

Answer:

a. Briefly discuss what is meant by audit risk, inherent risk and control risk.

Audit risk is the risk that the auditor expresses an inappropriate audit opinion when the financial statements are materially misstated.

Audit Risk = Inherent Risk x Control Risk x Detection Risk

Auditors will want their overall audit risk to be at an acceptable level. Inappropriate opinion will result in damages / costs  

Inherent risk is the susceptibility of an assertion to a misstatement that could be material individually or when aggregated with other misstatements, assuming there were no related internal controls.

Control risk is the risk that a material misstatement, that could occur in an assertion and that could be material will not be prevented or detected and corrected on a timely basis by the entity's internal control.

b. What level of detection risk is implicit in this problem?

Detection risk is the risk that the procedures performed by the auditor to reduce audit risk to an acceptably low level will not detect a misstatement

In this case the detection risk given is 0.41.

4 0
3 years ago
Internal rate of return method The internal rate of return method is used by Testerman Construction Co. in analyzing a capital e
Eddi Din [679]

Answer:

Testerman Construction Co.

Internal rate of return method in analyzing capital expenditure:

Present value of expenditure = $149,630

Present of cash inflows annuity = $149,630 (using 20% discount rate and present value annuity factor of 3.3251 x $45,000)

NPV = $0 (PV of cash outflow - PV of cash inflow)

Therefore, the IRR = 20%

Explanation:

a) Data and Calculations:

Investment cost = $149,630

Annual net cash flows = $45,000

Investment period = 6 years

Annuity of future cash flows = 3.3251

b) Testerman’s IRR (Internal Rate of Return) is a capital budgeting and analysis tool which determines the discount rate that makes the present value of future inflows equal to the present value of outflows from a project.  This IRR helps the managers to determine the projects that add value and are worth undertaking.  IRR is based on assumptions.  Similar projects with the same IRR will differ in returns due to the differences in timing and the size of the cash, the amount of debts and equity used  to generate the returns, and the assumption of a constant reinvestment may which IRR makes.

7 0
3 years ago
The Karaoke Channel Online streams professional-grade karaoke for $9.95 a month. Suppose Karaoke Channel Online has a constant m
Alenkinab [10]
The total profit is 10000
8 0
3 years ago
Gossip occurs when Jen and Kathy talk about _______.
Assoli18 [71]
Gossip occurs when Jen and Kathy talk about their coworker Ted.
6 0
3 years ago
Read 2 more answers
A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year
lina2011 [118]

Answer:

15%

Explanation:

The computation of the internal rate of return is shown below:

Given that

Year       Cash Flow

0             -$27,100

1                $11,100

2               $14,100

3                $10,100

The formula to compute IRR is

= IRR()

After applying the above formula, the internal rate of return is 15%

4 0
3 years ago
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