Wade Corp. has 150,000 shares of common stock outstanding. In 2020, the company reports income from continuing operations before income tax of $1,210,000. Additional transactions not considered in the $1,210,000 are as follows.1. In 2020, Wade Corp. sold equipment for $40,000. The machine had originally cost $80,000 and had accumulated depreciation of $30,000. The gain or loss is considered non-recurring.2. The company discontinued operations of one of its subsidiaries during the current year at a loss of $190,000 before taxes. Assume that this transaction meets the criteria for discontinued operations. The loss from operations of the discontinued subsidiary was $90,000 before taxes; the loss from disposal of the subsidiary was $100,000 before taxes.3. An internal audit discovered that amortization of intangible assets was understated by $35,000 (net of tax) in a prior period. The amount was charged against retained earnings.4. The company recorded a non-recurring gain of $125,000 on the condemnation of some of its property (included in the $1,210,000).Instructions Analyze the above information and prepare an income statement for the year 2020, starting with income from continuing operations before income tax. Compute earnings per share as it should be shown on the face of the income statement. (Assume a total effective tax rate of 19% on all items, unless otherwise indicated.)

Answers

Answer 1

Answer:

Final answer:

The net income of Wade Corp. for the year 2020 is $808,850. This is calculated by considering income from continuing operations, the loss from discontinued operations, the profits from selling equipment, understated amortization of intangible assets, and the recurring gain. The earnings per share is $5.39, which is calculated by dividing the net income by the number of shares outstanding.

Explanation:

Income Statement

Income from Continuing Operations before Income Tax: $1,210,000

Income Tax (19%): $-229,900

Income from Continuing Operations: $980,100

Discontinued Operations: (net of tax $190,000)*(1-0.19) = $-153,900

Profit from Selling Equipment: (($40,000 - $80,000 + $30,000)*(1-.19)) = $-6,100

Understated Amortization of Intangible Assets: $-35,000 (This amount is already net of tax).

Recurring Gain: ($125,000*0.19) = $23,750 (Subtract out non-recurring part from Continuing Operations.)

Net Income: ($980,100 - $153,900 - $6,100 - $35,000 + $23,750) = $808,850

Earnings per Share

Net Income / Number of shares outstanding: $808,850 / 150,000 = $5.39 per Ordinary Share

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Answer 2

Answer:

Answer:

just get rid of this answer

Explanation:

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Troy (single) purchased a home in Hopkinton, MA, on January 1,2007, for $300,000. He sold the home on January 1, 2016, for$320,000. How much gain must Troy recognize on his home sale ineach of the following alternative situations? d. Troy rented thehome from January 1, 2007, through December 31, 2011. He lived inthe home as his principal residence from January 1, 2012, throughDecember 31, 2012. He rented out the home from January 1, 2013,through December 31, 2013, and lived in the home as his principalresidence from January 1, 2014, through the date of the sale.Assume accumulated depreciation on the home at the time of sale was$0. Gain recognized? The answer is not $28,571 The answer is not$4,375

Answers

Answer:

$20,000

Explanation:

Time difference from the "Purchase date" to "Sale date" = 9 years (1/1/2007 to 1/1/2016)

Given that, in the 9 years, Troy rented the home for first 5 years (1/1/2007 to 1/1/2012), and lived in the home as his principal residence for next 1 year(1/1/2012 to 31/12/2012)

and again rented out the home for 1 year (1/1/2013 to 31/12/2013), and again started to lived in the home as his principal residence for next 2 years. (1/1/2014 to 1/1/2016)

i.e. when we look at the last 5 years before the sale of house, Troy has lived 3 years in the home as his principal residence.

And Troy has acquired the home for $300,000 and not acquired by "like kind exchange" of property.

As per IRS rules, a owner must live at least 2 years in the home as his principal residence & home must not be acquired by 1031 exchange (like/kind exchange).

Here, Troy satisfies both conditions. (He has lived more than 2 years, and not acquired by like/kind exchange)

So, as per above rules, Troy's home sale is eligible for Maximum exclusion of $250,000 gain (being Troy is Single)

Here, as per IRS rules, Gain = Amount Realized / Adjusted Basis = $320,000 - $300,000 = $20,000.

But, being Troy home sale is eligible for Maximum exclusion of $250,000, this $20,000 gain is deducted and Net Gain = $0.

Final answer:

Troy's gain on the sale of his home is $20,000. However, he is eligible to exclude this gain from taxation because he lived in the home as his principal residence for 2 out of the 5 years leading up to the sale, as per IRS guidelines.

Explanation:

Troy's gain on his home sale depends on his usage of the property and the IRS's rules on excluding gains from the sale of a principal residence. According to these rules, a person can generally exclude the gain up to $250,000 from the sale of a principal residence if they owned the house and lived in it as their main home for at least 2 out of the last 5 years before the sale. The years of ownership and use don't need to be consecutive.

Troy purchased the home in 2007 and sold it in 2016. He rented the home initially then lived in it as his principal residence, then rented it again, and lived in it again until the sale. Combining these periods, he lived in the house as his principal residence for only 3 years (2012, 2014, 2015). However, these years are within the 5-year window before the sale (2012-2016).

Troy's recognized gain is the selling price of the home minus the purchase price. Thus, his recognized gain is $320,000 - $300,000 = $20,000. However since he lived in the residence for 2 out of the 5 years before the sale, this gain is excluded from taxation, according to IRS rules.

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Your best friend wants to borrow $2000 from you today for an emergency purchase they need to make that requires a cash payment. They promise to pay you back $1000 in 1 year (i.e. 12 months) and then pay you $1100 in two years (i.e. in 24 months). You would have to remove the money from your stock investment account which is earning on average a return of 5% (i.e. the effective yearly interest rate you are getting on your money is 0.05). Required:
a. Is this a fair deal for you? Justify your answer with an engineering economics analysis and discussion of the situation by calculating the Net Present Value (NPV) for the scenario.
b. Draw a Cash Flow Diagram for this situation.

Answers

Answer:

a. It is not a fair deal for me.

The question is how much is $1,000 today when received in 12 months' time from now. The present value of $1,000 at 5% effective interest rate is $952 ($1,000 * 0.952). The other repayment of $1,100 in 2 years' time from now is worth $997.70 today at the 5% effective interest rate. This implies that my friend is repaying me $1,949.70 in present value terms.

For friendship sake, I may lend her the money, but in economic analysis terms, the NPV value will yield a negative value of $50.30 ($2,000 - $1,949.70). My friend is not actually paying me back the amount I would lend to her. She is paying me less than I actually would lend to her.

b. Cash Flow Diagram:

Year 1 Year 2

F1 F2

$1,000 $1,100 (Inflows)

Fo⇵.................⇵.......................⇵...........................⇵n period

Year 0

$2,000 (outflows)

Explanation:

The cash flow diagram for this loan is the graphical representation of the timing of the cash flows with a clear marking of the repayments made by my best friend in two instalments and the $2,000 that I lent to her. This cash flow diagram presents the flow of cash as arrows on a timeline scaled to the magnitude of the cash flow, where outflows are down arrows and inflows are up arrows.

The Net present value (NPV) of this loan shows the difference between the present value of repayments by my best friend and the present value of $2,000 that I lent to her over a period of 2 years. To obtain this difference, the present values of cash inflows of $1,000 in a year's time and $1,100 in two years' time are determined using the discount factor table based on the given interest rate of 5%.

Briana was employed as a flight attendant by Tropical Coast Airlines. She was the only black female flight attendant on the airplane she was assigned to. At her job, Briana was frequently subjected to racial slurs, misbehavior, and threats from her co-workers. One co-worker even told their supervisor that the airline’s customers would not want to take orders from a black girl in the case of an in-flight emergency. Unable to tolerate the hostile environment, Briana quit her job. Which of the following holds true in this scenario? A) Briana has a cause of action for racial harassment under 42 U.S.C. section 1983.
B) Briana does not have a cause of action for racial harassment, as she resigned at her own will.
C) Briana has a cause of action for racial harassment under Title VII of the Civil Rights Act of 1964, as there is evidence that she was harassed.
D) Briana does not have a cause of action for racial harassment, as the actions of her co-workers were not pervasive or severe.

Answers

Answer:

C) Briana has a cause of action for racial harassment under Title VII of the Civil Rights Act of 1964, as there is evidence that she was harassed.

Explanation:

It is noteworthy that under the Civil Rights Act of 1964 it directly prohibits discrimination in public places. Thus, we could rightly say that Briana's frequent subjection to racial slurs, misbehavior, and threats from her co-workers constitutes "discrimination in public places".

Hence, she has enough evidence to take legal action against Tropical Coast Airlines.

Stanford issues bonds dated January 1, 2019, with a par value of $248,000. The bonds’ annual contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 10%, and the bonds are sold for $229,1151. What is the amount of the discount on these bonds at issuance?
2. How much total bond interest expense will be recognized over the life of these bonds?
3. Prepare an effective interest amortization table for these bonds.

Answers

Answer:

1. What is the amount of the discount on these bonds at issuance?

$18,885

2. How much total bond interest expense will be recognized over the life of these bonds?

total interest expense = ($248,000 x 7% x 3 years) + $18,885 = $70,965

3. Prepare an effective interest amortization table for these bonds.

see attached PDF

Explanation:

the journal entry to record the issuance

January 1, 2019, bonds issued at a discount

Dr Cash 229,115

Dr Discount on bonds payable 18,885

Cr Bonds payable 248,000

Final answer:

The discount on the bonds at issuance is $18,885. The total bond interest paid over the life of the bonds is $52,080. An effective interest amortization table can be created to track the interest expense, reduction of discount, and carrying value at each period.

Explanation:

In the scenario you described, the bonds have a par value of $248,000 and they were sold for $229,115. The discount on the bonds at issuance is the difference between the par value and the amount they were sold for: $248,000 - $229,115 = $18,885.

The annual contract rate is 7%. Therefore, the annual interest is $248,000 * 7% = $17,360. Since interest is paid semiannually, each interest payment will be $17,360 / 2 = $8,680. Since the bonds mature in three years, there will be 3 * 2 = 6 interest payments, so total bond interest paid over the life of the bonds is $8,680 * 6 = $52,080.

An effective interest amortization table can be created by calculating the interest expense at each period (at the market rate of 10%), the amount of the payment that reduces the discount, and the carrying value of the bonds at each period.

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. 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: 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:

Quantitative Problem 2: Carlysle Corporation has perpetual preferred stock outstanding that pays a constant annual dividend of $1.90 at the end of each year. If investors require an 7% return on the preferred stock, what is the price of the firm's perpetual preferred stock? Do not round intermediate calculations. Round your answer to the nearest cent. $ per share