Which statement defines the consideration in a contract?

A company switched from the cash basis to the accrual basis for recognizing warranty expense. The unrecorded liability for warra

Ostrovityanka [42]

Answer:

Report a prior period adjustment decreasing retained earnings by $1,040,000

Explanation:

Report a prior period adjustment decreasing retained earnings by $1,040,000

Dr Retained earnings $1,040,000

Dr Deferred tax liability $560,000

(35%×$1,600,000)

Cr Estimated warranty liability $1,600,000

Therefore As a result of this change, the firm would Report a prior period adjustment decreasing retained earnings by $1,040,000

6 0

3 years ago

American Gas Products manufactures a device called a Can-Emitor that empties the contents of old aerosol cans in 2 to 3 seconds.

kakasveta [241]

Answer:

$157,986.11

Explanation:

Given that

Amount = $75,000

Number of years = 3

Interest rate = 20%

The computation of the present value is shown below:-

Here we will use the P/A factor which is here

Present value = Amount × (1 + Interest rate)^number of years - 1 ÷ (Interest rate × (1 + Interest rate)^Number of years

= $75,000 × ((1 + 20%)^3 - 1) ÷ (0.20 × (1 + 0.20)^3)

= $75,000 × (0.728 ÷ 0.3456)

= $75,000 × 2.106481481

= $157,986.1111

or

= $157,986.11

Therefore for computing the present value we simply applied the above formula.

5 0

3 years ago

Stone Foods produces the majority of its cheese products in its U.S. based dairy division at a total outlay cost of $6.00 per un

lubasha [3.4K]

Answer:

Stone Foods produces the majority of its cheese products in its U.S. based dairy division at a total outlay cost of $6.00 per unit. A large portion of the finished product is sold to Division B where it is packaged and sold overseas under a different label. The tax rate in Division B's country is higher than the U.S. tax rate. Assume the company desires to minimize the overall tax impact of the transfer (i) what type of relative pre-tax income should each division desire to achieve as a result of the transfer and (ii) what type of transfer price would accomplish your answer to (i).

Dairy Division Income Division B Income Transfer Price .

Option "D" is the correct answer - High Low High.

Explanation:

Since in Division B, the tax rate is higher than the tax rate in US-based dairy division. Therefore to minimize the impact of the overall tax, transfer price from dairy division should be high to Division B so that the dairy division income would be higher. and the income of Division B would be lower.

Hence option "D" is the correct answer.

3 0

3 years ago

In the current year, Plum, Inc., a closely held C corporation, has $410,000 of net active income, $20,000 of portfolio income, a

fenix001 [56]

Answer:

(a) $430,000

(b) $355,000

Explanation:

To answer the question, it is important to understand the meaning of passive income or loss and how it applies to personal service corporation (PSC) and C corporation.

Passive income refers to income received from investment without active participation in the running of the business. Example of passive income is dividend.

For personal service corporation (PSC), when there is a passive loss, in can only be deducted from any other available passive income from other investments. If there is no other passive income, the passive loss is not deductible from active income.

For C corporation, passive loss is allowed to be deducted against net active income. However, it can not be deducted against portfolio income .

The questions are then answered as follows:

a) If Plum is a personal service corporation (PSC)

Since Plum is PSC, it cannot deduct passive activity loss of $75,000 from the net active income nor portfolio income.

Therefore, it taxable income is the addition of net active income and portfolio income as follows:

Taxable income = $410,000 + $410,000 = $430,000

b) Plum is not a personal service corporation

Here, Plum is considered as a C coporartion. Therefore, it can deduct the passive loss from the active income but not from portfolio income. Its Taxable income is therefore as follows:

Taxable income = ($410,000 - $75,000) + $20,000 = $355,000

5 0

3 years ago

Which of the following statements is true? (A) A test with a high cost may also be high value. (B) A test with a low cost is alw

Nata [24]

Answer:

A) A test with a high cost may also be of high value.

Explanation:

A test's cost add up to the time spent in preparing that test. S much time might have really been spent on it like researching, sitting, time spent, revaluation of the test, as well as other contributions made for the execution of that test. The value of the test can be evaluated to the resources spent for the test. When a test has a high cost, it may also have a high value depending on some variables relating to both the cost of the test as well as its value. Also, every individual's primary objective is usually cost minimization and profit maximization in every thing he does irrespective of type or structure.

3 0

3 years ago