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ki77a [65]
3 years ago
10

Comet Company is owned equally by Pat and his sister Pam, each of whom hold 100 shares in the company. Comet redeems 50 of Pam's

shares on December 31, year 1, for $1,000 per share in a transaction that Pam treats as an exchange for tax purposes. Comet has total E&P of $250,000 on December 31, year 1. What are the tax consequences to Comet as a result of the stock redemption? A) No reduction in E&P as a result of the exchange. B) A reduction of $62,500 in E&P as a result of the exchange. C) A reduction of $50,000 in E&P as a result of the exchange. D) A reduction of $125,000 in E&P as a result of the exchange.
Business
1 answer:
lesantik [10]3 years ago
7 0

Answer:

Total E&P = $ 160000

Total voting Right Sold = 50/ (100+100) = 25%

Reduction of E& P due to exchange = Total E&P*Total voting Right Sold

Reduction of E& P due to exchange = 160000*25%

Reduction of E& P due to exchange = 40000

Reduction of E& P Lower of Total E&P*Total voting Right Sold or Amount realised

Reduction of E& P Lower of 40000 or (50*1000)

Reduction of E& P Lower of 40000 or 50000

Answer

A reduction of $40,000 in E&P because of the exchange.

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The ultimate market constraint (limit) on the amount of pricing power that can be exercised by a monopoly firm is the _______
guapka [62]

Answer:

Number of units it can sell and the number of customers it can serve

Explanation:

The ultimate market constraint (limit) on the amount of pricing power that can be exercised by a monopoly firm is the <u>number of units it can sell and the number of customers it can serve.</u>

<u>Generally</u>.

The price-setting ability of a monopolist faces two kinds of constraints:

1. Number of Units: The monopolist's price setting ability is limited by capacity as cannot sell more than a given quantity of its products

2. Number of Customers: The monopolist is additionally unable to serve more than a given number of consumers.

These 2 factors constrains the pricing power of the monopolist

8 0
3 years ago
What is the safest way to dispose of old bank account statements?
zheka24 [161]
Soaking the documents in water after tearing them up words well, burning them is less safe, but is the safest for your records, always tear or shred them no matter what
7 0
3 years ago
Kendall Company has sales of 1,000 units at $60 a unit. Variable expenses are 30% of the selling price. If total fixed expenses
Lelu [443]

Answer:

There are several ways to compute the degree of operating leverage (DOL). A fairly intuitive approach is expressed below.

DOL = (sales - variable costs) / (sales - variable costs - fixed costs)

For Kendall, the DOL is computed as follows:

DOL = (1,000 * $60 - 1,000 * $60 * .30) / (1,000 * $60 - 1,000 * $60 * .30 - $30,000) = 3.5

<em>hope this helps</em>

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8 0
3 years ago
Boxer Company owned 16,000 shares of King Company that were purchased in 2016 for $440,000. On May 1, 2018, Boxer declared a pro
Serjik [45]

Answer:

By 110,000 the retained earnings reduced by the property dividend.

Explanation:

Retained Earnings: The retained earnings is that earnings which is left after all payments relating to the business expenses, shareholder dividend. The earnings which is to be retained so that it can come in use in near future.

For retained earning calculation, the stock market value is recorded when the date is declared not on distribution date.

So, the calculation is computed below:

As the 50,000 shares is given for every 10 shares. So, first we have to compute for 1 share which comes by dividing shares to number of shares i.e.  50,000 shares ÷ 10 shares = 5,000 for 1 share.

Now, multiply by market value which comes = 5,000 × $22 = $110,000.

So, by 110,000 the retained earnings reduced by the property dividend.

4 0
3 years ago
ABC reports dividends per share of $1.40 and net income for the year of $140,000. The current stock price is $14.00. What is ABC
Virty [35]

The ABC's dividend yield when the ABC reports dividends per share of $1.40 and net income for the year of $140,000. The current stock price is $14.00 is 10%.

<h3>What is yield?</h3>

The yield on a security is defined as the measurement of the ex-ante instrument to a safety holder in financing.

It is a cardinal part of the return on an investment, with some other being the change in the security's market price.

The formula of calculating the yield is:

\text{Dividend Yield} =\dfrac{ \text{Dividend Per Share}}{\text{Current Stock Price}} \times 100

According to the given information,

Dividend Per Share= $1.40,

Net Income= $1,40,000

Current Price= $14

Now, apply the formula in the given formula,

\text{Dividend Yield} =\dfrac{ \text{Dividend Per Share}}{\text{Current Stock Price}} \times 100\\\\\text{Dividend Yield} =\dfrac{1.40}{\$14}\times 100\\\\\text{Dividend Yield} =10\%

Therefore,  ABC's dividend yield is 10%.

Learn more about yield, refer to:

brainly.com/question/2506978

#SPJ1

5 0
2 years ago
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