For the following scenario, determine the dollar amount of the book-tax difference (if any) written as a positive number On January 1, 2015, Landmark Corporation offered its CFO 2,500 NQOs options to purchase the company's at the same price off public market on that day, $11/share, at any date in the future after the CFO vests. The CFO will vest 25% of its options in 2015. and vest the remaining portion in 2017. The CFO promptly exercised all of his options on December 31, 2017 when he was 100 urned around and sold all the shares for $15/share on the public market. Assume that on the grant date, Landmark Corporation alue of the options would be $4/share. The company uses a calendar year tax period. 1. The book-tax differenco in

For the following scenario, determine the dollar amount of the book-tax difference (if any) written as a positive number On January 1, 2015, Landmark Corporation offered its CFO 2,500 NQOs options to purchase the company's at the same price off public market on that day, $11/share, at any date in the future after the CFO vests. The CFO will vest 25% of its options in 2015. and vest the remaining portion in 2017. The CFO promptly exercised all of his options on December 31, 2017 when he was 100 urned around and sold all the shares for $15/share on the public market. Assume that on the grant date, Landmark Corporation alue of the options would be $4/share. The company uses a calendar year tax period. 1. The book-tax differenco in

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Question 6 On June 1, 2020, Ping Corp. purchased 10,000 of Pong’s 50,000 outstanding shares at a price of P6.00 per share. Pong had earnings of P3,000 per month during 2020 and paid dividends of P10,000 on March 1, 2020 and P12,500 on December 1, 2020. The fair value of Pong’s shares was P6.50 per share on December 31, 2020. Which statement is correct? Group of answer choices Assuming that the investment is FVTOCI, the total effect on Ping’s profit or loss for the year ended December 31, 2020 is P7,500. Assuming that the investment is an associate, the total effect on Ping’s profit or loss for the year ended December 31, 2020 is P3,600. After all closing entries for 2020 are completed, the effect of the increase in fair value on total shareholders' equity would be the same amount under the FVTOCI and FVTPL approaches. Assuming that the investment is FVTPL, the total effect on Ping’s profit or loss for the year ended December 31, 2020 is P2,500.
5. ABC Corporation invested in one of DEF's ordinary shares that has a par value of P500 and a market value of P625 on January 1, 2021. The 2020 dividend paid to each shareholder amounted to P120. The dividend rate is not expected to grow. what is the value if the required rate of return is 17%?
The Chief Financial Officer (CFO) of the Q14.05T Company is interested to identify the cost of capital and value of the company. Currently, the Q14.05T is an all-equity company. Earnings before interest and taxes (EBIT) for the company is expected to be $86,198 forever, and the cost of capital is currently 14.05 percent. The corporate tax rate applicable to this company is 32.0 percent. Requirement-A. Calculate the market value of Q14.05T. Requirement-B. Suppose Q14.05T floats a $34,579 debt issue and uses the proceeds to reduce share capital. The interest rate is 10.74 percent. Calculate the new value of the business. Requirement-C. Calculate the new value of equity. Requirement-D. Calculate the cost of equity of Q14.05T after the debt issue. Requirement-E. Calculate the weighted average cost of capital. Requirement-F. What are the implications for capital structure?
17.1. Firm Value Morrow Corp. has EBIT of $775,000 per year that is expected to continue in perpetuity. The unlevered cost of equity for the company is 12 percent and the corporate tax rate is 24 percent. The company also has a perpetual bond issue outstanding with a market value of $1.8 million. What is the value of the company? The CFO of the company informs the company president that the value of the company is $4.6 million. Is the CFO correct?
Knowledge Check 01 On January 1, Year 1, Sterling Corporation issued stock options for 260,000 shares to its CEO. The options have an estimated fair value of $6 each. To provide additional incentive, the options are not exercisable unless revenue increases by 4% in three years. Sterling initially estimates that it is probable the goal will be achieved. What is compensation expense for Year 1?
36 On June 1, 2020, Ping Corp. purchased 10,000 of Pong’s 50,000 outstanding shares at a price of P6.00 per share. Pong had earnings of P3,000 per month during 2020 and paid dividends of P10,000 on March 1, 2020 and P12,500 on December 1, 2020. The fair value of Pong’s shares was P6.50 per share on December 31, 2020. Which statement is correct? Group of answer choices Assuming that the investment is FVTPL, the total effect on Ping’s profit or loss for the year ended December 31, 2020 is P2,500 After all closing entries for 2020 are completed, the effect of the increase in fair value on total shareholders' equity would be the same amount under the FVTOCI and FVTPL approaches. Assuming that the investment is an associate, the total effect on Ping’s profit or loss for the year ended December 31, 2020 is P3,600. Assuming that the investment is FVTOCI, the total effect on Ping’s profit or loss for the year ended December 31, 2020 is P7,500.
Problem 4. Mr. X is an investor in ABC Corporation. In 2020, he has 1,000 share holdings acquired at P120 per share classified as capital asset. Mr. X uses FIFO in costing his investment holdings. Required: a.) What would be the net capital gain in March? b.) How much is the nondeductible loss in May? c.) Supposing that all the remaining shares were liquidated in December 2021 at 130 per share, what would be the capital gain(loss) to be recognized.
Austin Powers PLC has outstanding $660 of 8% debenture stock on which interest is paid / payable annually on 31st December. The stock is due for redemption on 1st January 2016. The market price of stock as at 28th December 2012 was $103 cum interest Explain what is meant by cum interest What is the percentage cost of debenture stock if the tax rate is 30% Recalculate the answer in (b) above assuming the debenture was irredeemable
Problem 4. Mr. X is an investor in ABC Corporation. In 2020, he has 1,000 shareholdings acquired at P120 per share classified as a capital asset. Mr. X uses FIFO in costing his investment holdings b. How much is the nondeductible loss in May? c. Supposing that all the remaining shares were liquidated in December 2021 at 130 per share, what would be the capital gain(loss) to be recognized.
#27 ABC Company started operations way back in the year 2000. The entity’s capital structure consistently consisted of 200,000 P 20 par ordinary shares until the end of 2020. Other relevant information follows: - Towards the end of 2020, the company issued stock options to purchase 10,000 ordinary shares at P 30 per share. At the time the options were issued, the market price per share was P 45. Average market price per share during 2021 was P 48. None of the options were exercised in 2021. - On February 1, 2021, ABC Company issued for cash 20,000 shares of P 100 par, 12% cumulative preference shares. Each preference share is convertible into two ordinary shares. - 10% bonds with face amount of P 2,000,000 are outstanding throughout the year 2021. Each 5,000 bond is convertible into 100 ordinary shares. - Profit for 2021 amounted to P 2,800,000 and income tax rate is 30%. For 2021 diluted earnings per share, what is the sequence of the potential ordinary shares starting from the least…
22. A company grants 100 Share appreciation rights (SAR), payable in cash, to an employee on 1/1/Y1. The predetermined amount for the SAR plan is P50 per right, and the market value of the stock is P55 on 12/31/Y1, P53 on 12/31/Y2, and P61 on 12/31/Y3. Liability on SAR at the end of year 2 is?
This problem is a variation of P 12–10 focusing on the fair value option.]On January 4, 2018, Runyan Bakery paid $324 million for 10 million shares of Lavery Labeling Companycommon stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the abilityto exercise significant influence over Lavery’s operations. Runyan chose the fair value option to account forthis investment. Runyan received dividends of $2.00 per share on December 15, 2018, and Lavery reported netincome of $160 million for the year ended December 31, 2018. The market value of Lavery’s common stock atDecember 31, 2018, was $31 per share. On the purchase date, the book value of Lavery’s net assets was $800million and:a. The fair value of Lavery’s depreciable assets, with an average remaining useful life of six years, exceededtheir book value by $80 million.b. The remainder of the excess of the cost of the investment over the book value of net assets purchased wasattributable to…