. LG plans to structure a transaction as a legal sale of property, even though the economic substance of the transaction is a lease of the property. In her current position, the tax consequences of a sale are much more favorable than those of a lease. Ms. LG believes that if her position unexpectedly changes so that she would prefer a lease to a sale, she can ignore the legal formalities and report the transaction as a lease.

Answers

Answer 1

Answer:

Answer: LG needs to be aware of the implications around leasing her property or to selling off out rightly.

whether A sale or lease happens between her and the company /individual who wants to buy over or make use of the property. So she cannot ignore the legal formalities and report the transaction as a lease.

Explanation:

Related Questions

The S&P 500 index delivered a return of 10%, 15%, 15%, and -30% over four successive years. What is the arithmetic average annual return for four years? A) 3.00% B) 3.50% C) 2.25% D) 2.50%
Alpha Communications, Inc., which produces telecommunications equipment in the United States, has a very strong local market for its circuit board. The variable production cost is $130, and the company can sell its entire supply domestically for $170. The U.S. tax rate is 40 percent. Alternatively, Alpha can ship the circuit board to its division in Germany, to be used in a product that the German division will distribute throughout Europe. Information about the German product and the division’s operating environment follows.Selling price of final product: $360Shipping fees to import circuit board: $20Labor, overhead, and additional material costs of final product: $115Import duties levied on circuit board (to be paid by the German division): 10% of transfer price German tax rate: 60%Assume that U.S. and German tax authorities allow a transfer price for the circuit board set at either U.S. variable manufacturing cost or the U.S. market price. Alpha’s management is in the process of exploring which transfer price is better for the firm as a whole.Required:1. Compute overall company profitability per unit if all units are transferred and U.S. variable manufacturing cost is used as the transfer price. Show separate calculations for the U.S. operation and the German division.2. Repeat requirement (1). assuming the use of the U.S. market price as the transfer price. Which of the two transfer prices is better for the firm?3. Assume that the German division can obtain the circuit board in Germany for $155.a. If you were the head of the German division, would you rather do business with your U.S. division or buy the circuit board locally? Why?b. Rather than proceed with the transfer, is it in the best interest of Alpha to sell its goods domestically and allow the German division to acquire the circuit board in Germany? Why? Show computations to support your answer.
Vilas Company is considering a capital investment of $183,600 in additional productive facilities. The new machinery is expected to have a useful life of 5 years with no salvage value. Depreciation is by the straight-line method. During the life of the investment, annual net income and net annual cash flows are expected to be $10,557 and $51,000, respectively. Vilas has a 12% cost of capital rate, which is the required rate of return on the investment.Required:a. Compute the cash payback period. (Round answer to 1 decimal place, e.g. 10.5.)b. Compute the annual rate of return on the proposed capital expenditure. (Round answer to 2 decimal places, e.g. 10.52%)c. Using the discounted cash flow technique, compute the net present value.
Next Generation's predetermined overhead rate is $16 per direct labor-hour and its direct labor wage rate is $11 per hour. Job #1987 used $1,202 of direct materials and $5,500 of direct labor. Question: If Job #1987 consists of 100 units, what is the average cost assigned to each unit included in the job?
Girls between the ages of 8 and 15 are one of the growing markets for high-end shoe manufacturers, and podiatrists say the trend is leading to many stylish young girls with grown-up foot problems. To many parents and podiatrists, shoe manufacturers who develop and market adult-styled shoes to this group are not operating at a(n) _____ responsibility level.

New York Times Co. (NYT) recently earned a profit of $1.21 per share and has a P/E ratio of 19.59. The dividend has been growing at a 7.25 percent rate over the past six years. If this growth rate continues, what would be the stock price in five years if the P/E ratio remained unchanged

Answers

Answer:

If the growth rate continues, the stock in 5years if the P/E ratio remains unchanged will be $33.64.

Explanation:

Given

Profit/share (Eo) = $1.21

Percentage growth (g) =7.25%

Number of years = 5 years

To find stock price, we use the formula:

$P_n = [P/E] * E_0 * [1 + g]^n$ ;

So, we have

$P_5 = 19.59 * $1.21 * [1 + 0.0725]^5$

= $33.64

Therefore, If the growth rate continues, the stock in 5years if the P/E ratio remains unchanged will be $33.64.

Most voluntary changes in accounting principles are reported retrospectively. This means for each year reported in the comparative statements, we make those statements appear as if the newly adopted accounting method had been applied all along. A journal entry is created to adjust all account balances affected as of the date of the change. In the first set of financial statements after the change, a disclosure note describes the change and justifies the new method as preferable. It also describes the effects of the change on all items affected, including the fact that the retained earnings balance was revised in the statement of shareholders’ equity.Melas Company changed from the LIFO to the FIFO inventory costing method on January 1, Year 3. Inventory values at the end of each year since the inception of the company are as follows:

FIFO LIFO
Year 1 $195,000 $177,500
Year 2 $390,000 $355,000

Ignoring income tax considerations, prepare the appropriate journal entry, dated January 1, Year 3, to report this accounting change. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answers

Answer:

Explanation: times all the number together

Megan Brink is offered the possibility of investing $6,651 today at 6% interest per year in a desire to accumulate $10,000. How many years must Brink wait to accumulate $10,000

Answers

Answer:

Megan Brink

Brink must wait 6 years to accumulate $10,000 with a present value investment of $6,651.

Explanation:

a) Data and Calculations:

Present value of investment = $6,651

Future value of the investment = $10,000

Interest rate per year = 6%

b) Using an online calculator:

You will need to invest 6.028 periods to reach the future value of $10,000.00.

FV (Future Value) $9,999.99

PV (Present Value) $6,651.00

N (Number of Periods) 6.028

I/Y (Interest Rate) 7.000%

PMT (Periodic Payment) $0.00

Starting Investment $6,651.00

Total Principal $6,651.00

Total Interest $3,348.99

Scuba Diving. Marcy invented a new type of mask for scuba divers that was not subject to fogging. She agrees to allow Jenny to manufacture and sell the mask. She receives a sum of money for every mask that Jenny sells. Similarly, Marcy entered into an agreement with Frank to allow him to sell the masks, but only if he also purchased non-patented diving suits from Marcy. All parties proceeded to do very well with their sales. Which of the following describes the agreement between Marcy and Frank?1)It is a legal tying arrangement.
2)It is a legal cross-licensing agreement.
3)It is an illegal tying arrangement.
4)It is an illegal cross-licensing agreement.
5)It is both a legal tying and a legal cross-licensing agreement.

Answers

Answer:

3) It is an illegal tying arrangement.

Explanation:

Tying is said to be an illegal arrangement where, for one to buy a product, the consumer must purchase another product that exists in a separate market. There isn't any legal backing but things work out well for all parties involved.

Last year there was no change in either the raw materials or the work in process beginning and ending inventories. However, finished goods, which had a beginning balance of $25,000, increased by $15,000. If the manufacturing costs incurred totaled $600,000 during the year, the cost of goods available for sale must have been:_______.a. $585,000
b. $600,000
c. $610,000
d. $625,000

Answers

Answer:

d. $625,000

Explanation:

cost of goods available for sale = cost of goods manufactured during the current period + finished goods inventory at the beginning of the period

cost of goods manufactured during the current period = $600,000
finished goods inventory at the beginning of the period = $25,000

cost of goods available for sale = $600,000 + $25,000 = $625,000

cost of goods sold = cost of goods available for sale - ending inventory = $625,000 - $40,000 = $585,000

Final answer:

The Cost of Goods Available for Sale is calculated by adding the Beginning Inventory and the Manufacturing Costs together, resulting in a total of $625,000.

Explanation:

To compute the Cost of Goods Available for Sale, you would add your Beginning Inventory (the cost of the goods on hand at the start of the period) to the cost of the purchases made during the period - which, in this case, would be the manufacturing costs. Given that there were no changes in the raw materials or work in process inventory and since the manufacturing costs incurred totaled $600,000, we can outline the following:

Beginning Inventory of finished goods = $25,000

Manufacturing costs incurred = $600,000

Thus, to calculate the Cost of Goods Available for Sale:

Cost of Goods Available for Sale = Beginning Inventory + Manufacturing Costs=> $25,000 + $600,000 = $625,000

So, the Cost of Goods Available for Sale is $625,000.

Learn more about Inventory management here:

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Sunset Products manufactures skateboards. The following transactions occurred in March:1. Purchased $20,500 of materials on account.

2. Issued $1,050 of supplies from the materials inventory.

3. Purchased $25,100 of materials on account.

4. Paid for the materials purchased in the transaction (1) using cash.

5. Issued $30,100 in direct materials to the production department.

6. Incurred direct labor costs of $25,500, which were credited to Wages Payable.

7. Paid $21,600 cash for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing shop.

8. Applied overhead on the basis of 110 percent of direct labor costs.

9. Recognized depreciation on manufacturing property, plant, and equipment of $5,100.

The following balances appeared in the accounts of Sunset

Products for March:

Beginning Ending
Materials Inventory $9,150 _____
Work-in-Process Inventory $16,600 _____
Finished Goods Inventory $65,100 $36,600
cost of goods sold $73,100
Prepare T-Accounts to show the flow of costs during the period from materials inventory through the cost of goods sold.

Answers

Sunset products

Journal entry

1. Dr Material 20500

Cr Account payable 20500

(Material purchased on account)

2. Dr work in process 1050

Cr Material 1050

(material issued)

3. Dr Material 25100

Cr Accounts payable 25100

( Material purchased on account )

4. Dr Accounts payable 20500

Cr Cash 20500

(Paid for material purchased on account)

5. Dr Work in process 30100

Cr Material 30100

( Direct material issued to production department)

6. Dr Work in process 25500

Cr Wages payable 25500

( Direct labor cost incurred)

7. Dr Factory overhead 21600

Cr Cash 21600

( Paid cash for utilities)

8. Dr Work in process (25500*110%) 28050

Cr Applied overhead 28050

(Applied overhead)

9. Dr Factory overhead 5100

Cr Accumulated depreciation 5100

(To record depreciation)

T-account

Work in process Material

Dr___________Cr____ DR ___________CR

16600------ 9150 -----

1050 ----- 20500 ---- 1050

30100 ----- 25100--- 30100

25500---

28050---

Accounts payable Cash

Dr____________Cr_ DR ___________Cr

--- 20500 ---- 20500

----- 25100 ----21600

20500-----

Factory overhead Wages payable

Dr ____________Cr Dr _____________Cr

21600---

-----25500

5100---

Applied factory overhead Accumulated depreciation

Dr_____________Cr Dr ___________Cr_

----28050 ---5100

Cost of goods sold Finished goods

Dr_____________Cr Dr ______________Cr

( open) 65100 ---

101300 --- 36600 (end)

Dr Finished goods 101300

Cr Work in process 101300

(move work in process to finished goods)

Dr Cost of goods sold 129800

Finishd goods 129800

(move finished goods to cost of goods sold)

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