(1)
Pension plan: This is the plan devised by corporations to pay the employees an income after their retirement, in the form of pension.
Defined contribution pension plans: In such plans, employers contribute fixed amounts annually, to the pension fund. The benefit amounts are based on size of pension fund available at the time of retirement. There is no commitment on the part of the employers to pay fixed retirement benefits.
Facts of the case: In an audit survey by an auditor, it is observed that the employee contributions towards the defined contribution pension plans are not reported on the mutual funds statement until the completion of two months, after which the deductions are made. But $500,000 of contributions are deducted from the employee pay checks every month. When the plan was initially begun, contributions were reported immediately invested.
To discuss: The motivation behind the change in reporting the timing of investments
(2)
To discuss: The ethical dilemma for change in in reporting the timing of investments
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Intermediate Accounting
- Problem 9-39 (LO. 6) For thProblem 9-36 (LO. 6) Amber's employer, Lavender, Inc., has a § 401(k) plan that permits salary deferral elections by its employees. Amber's salary is $99,000, and her marginal tax rate is 24% and she is 42 years old. a. What is the maximum amount Amber can elect for salary deferral treatment for2019?e following scenarios, compute the maximum total deductible contribution to a traditional IRA for 2019.arrow_forwardProblem 10-25 (LO. 2) For calendar year 2020, Jean was a self-employed consultant with no employees. She had $80,000 of net profit from consulting and paid $7,000 in medical insurance premiums on her policy covering 2020. How much of these premiums may Jean deduct as a deduction for AGI? As an itemized deduction? If an amount is zero, enter "0". Self-employed persons can deduct fill in the blank 1 % of their medical insurance premiums as a deduction for AGI in 2020. Thus, Jean may deduct $fill in the blank 2 as a deduction AGI and she may deduct $fill in the blank 4 as an itemized deduction (subject to the AGI floor).arrow_forwardExercise 13-37 (LO. 7) On June 5, 2020, Brown, Inc., a calendar year taxpayer, receives cash of $750,000 from the county upon condemnation of its warehouse building (adjusted basis of $500,000 and fair market value of $750,000). Complete the statements below regarding what must Brown do to qualify for § 1033 postponement if the adjusted basis was instead $795,000. Because Brown has a realized loss on the condemnation of business property, it is automatically recognized . In this case, §1033 does not modify the normal rules of recognition. Therefore, Brown has a realized loss of $fill in the blank of which $fill in the blank is recognized. Feedbackarrow_forward
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