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IceJOKER [234]
3 years ago
6

Jane and Walt form Yellow Corporation. Jane transfers equipment worth $950,000 (basis of $200,000) and cash of $50,000 to Yellow

Corporation for 50% of its stock. Walt transfers a building and land worth $1,050,000 (basis of $400,000) for 50% of Yellow's stock and $50,000 in cash.a.Jane recognizes no gain; Walt recognizes a gain of $50,000.b.Jane recognizes a gain of $50,000; Walt recognizes no gain.c.Neither Jane nor Walt recognizes gain.d.Jane recognizes a gain of $750,000; Walt recognizes a gain of $650,000.e.None of the above.
Business
1 answer:
Naddika [18.5K]3 years ago
4 0

Answer:

A) Jane recognizes no gain; Walt recognizes a gain of $50,000.

Explanation:

§ 351 allows individuals or businesses tax free transfers to controlled corporations. In other words, Jane and Walt can transfer assets to form Yellow Corporation without recognizing any gain or loss.

Since Walt received some money from this transaction, that must be considered a gain since it is not included under § 351.

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The ability to read, understand, and analyze accounting reports and financial statements is critical in understanding ______.
Pie

Answer:

business operations

Explanation:

7 0
2 years ago
Swan Finance Company, an accrual method taxpayer, requires all of its customers to carry credit life insurance. If a customer di
posledela

Answer:

Recognize an income/loan repayment of $1,300, and cancel the debt of $200 from the earlier recognition of income

Explanation:

Swan would only recognize an income/loan repayment of $1,300 having already recognized an initial income of $200 of the $1,500 owed before the death of the customer.

Accounting entries would be as follows.

Debit Bank account: $1,500

Credit income/loan repayment account: :1,300

Credit receivables: $200.

The credit of $200 in receivables would be treated as shown above due to the income of $200 already recognised and which would have been treated as follows when it was recognized,

Dr: receivables $200

Cr. interest earned $200,

7 0
3 years ago
(a) What amount should be deposited in a fund at the end of each quarter at 7% compounded quarterly so that there will be enough
gizmo_the_mogwai [7]

Answer:

(a) The deposit should be <u>$168.06 </u>quarterly.

(a) The deposit should be <u>$145.32 </u>quarterly.

Explanation:

Note: This question is not complete. The complete question is therefore provided before answering the question as follows:

An investor needs $11,000 in 19 years.

(a) What amount should be deposited in a fund at the end of each quarter at 7% compounded quarterly so that there will be enough money in the fund?

(b) Find the investors quarterly deposit if the money is deposited at 9.4% compounded quarterly.

The explanations to the answers are now given as follows:

(a) What amount should be deposited in a fund at the end of each quarter at 7% compounded quarterly so that there will be enough money in the fund?

Since the amount should be deposited in a fund at the end of each quarter, the formula for calculating the Future Value (FV) of an Ordinary Annuity is used as follows:

FV = M * {[(1 + r)^n - 1] / r} ................................. (1)

Where,

FV = Future value of the amount needed in 19 years = $11,000

M = Quarterly deposit = ?

r = Quarterly interest rate = 7% / 4 = 0.07 / 4 = 0.0175

n = number of quarters the deposits will be made = 11 * 4 = 44

Substituting the values into equation (1) and solve for M, we have:

11,000 = M * {[(1 + 0.0175)^44 - 1] / 0.0175}

11,000 = M * 65.4531536741798

M = 11,000 / 65.4531536741798

M = $168.06

(b) Find the investors quarterly deposit if the money is deposited at 9.4% compounded quarterly.

We make use of equation (1) in part (a) as follows:

Where,

FV = Future value of the amount needed in 19 years = $11,000

M = Quarterly deposit = ?

r = Quarterly interest rate = 9.4% / 4 = 0.094 / 4 = 0.0235

n = number of quarters the deposits will be made = 11 * 4 = 44

Substituting the values into equation (1) and solve for M, we have:

11,000 = M * {[(1 + 0.0235)^44 - 1] / 0.0235}

11,000 = M * 75.6957891651599

M = 11,000 / 75.6957891651599

M = $145.32

7 0
3 years ago
Clear Colors Corporation uses a predetermined overhead rate based on direct labor costs to apply manufacturing overhead to jobs.
belka [17]

Answer:

b. $ 2,000 overapplied

Explanation:

Firstly, we need to determine the predetermined overhead rate based on direct labor costs.

Estimated total manufacturing Overhead                        $ 350,000

Estimated direct labour costs                                            $ 200,000

Predetermined overhead rate $ 350,000 / $ 200,000   $ 1.75 per $ of direct labour costs.

The total manufacturing overhead <u>applied</u> on direct labor costs of $ 208,000, is:

$ 208,000 * $ 1.75                                                              <u> </u>$ 364,000

Actual overhead costs incurred                                          <u>$ 362,000</u>

Manufacturing overhead over applied                              <u> $      2,000</u>

7 0
3 years ago
The Pet Company has recently discovered a type of rock which, when crushed, is extremely absorbent. It is expected that the firm
vladimir2022 [97]

Answer:

$70.26

Explanation:

Dividend payout ratio = Dividend per share / Earning per share

r = cost of equity = 10%, or 0.10

Discounting factor = 1 /(1 + r)^n

n = year

a. For during the rapid growth period

Dividend payout ratio = 20%, or 0.20

Growth rate = 20%, or 0.20

Earnings per share in year 1 =  Last year's earnings per share * (1 + Growth rate) = $2 * (1 + 0.20) = $2.40 per share

Dividend per share in year 1 = Dividend payout ratio * Earning per share in year 1 = 0.20 * $2.40 = $0.48 per share

PV of year 1 dividend per share = $0.48 * (1/1.10^1) = $0.436363636363636

Earnings per share in year 2 =  Earnings per share in year 1 * (1 + Growth rate) = $2.40 * (1 + 0.20) = $2.88 per share

Dividend per share in year 2 = Dividend payout ratio * Earning per share in year 2 = 0.20 * $2.88 = $0.5760 per share

PV of year 2 dividend per share = $0.5760 * (1/1.10^2) = $ 0.47603305785124

Earnings per share in year 3 =  Earnings per share in year 2 * (1 + Growth rate) = $2.88 * (1 + 0.20) = $3.4560 per share

Dividend per share in year 3 = Dividend payout ratio * Earning per share in year 3 = 0.20 * $3.4560 = $0.6912 per share

PV of year 3 dividend per share = $0.6912 * (1/1.10^3) = $0.51930879038317

b. For during the slow growth period

Dividend payout ratio = 50%, or 0.50

Growth rate = 8%, or 0.08

Earnings per share in year 4 =  Earnings per share in year 3 * (1 + Growth rate during slow growth) = $3.4560 * (1 + 0.08) = $3.73248

Dividend per share in year 4 = Dividend payout ratio * Earning per share in year 4 = 0.50 * $3.73248 = $1.86624 per share

Dividend per share in year 5 = Dividend per share in year 4 * (1 + Growth rate during slow growth) = $1.86624 * (1 + 0.08) = $2.0155392

Stock price in year 4 = Dividend per share in year 5 / (r - Growth rate during slow growth) = $2.0155392 / (0.10 - 0.08) = $100.77696

PV of stock price in year 4 = $100.77696 * (1/1.10^4) = 68.8320196707875

c. Calculation of the current price of the common stock

Current price of the common stock = PV of year 1 dividend per share + PV of year 2 dividend per share + PV of year 3 dividend per share + PV of stock price in year 4 = $0.436363636363636 + $0.47603305785124 + $0.51930879038317 + $68.8320196707875 = $70.26

Therefore, the current price of the common stock is $70.26.

4 0
3 years ago
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