BUSINESS LAW (LOOSE)-W/ACCESS >CUSTOM<
16th Edition
ISBN: 9781305768697
Author: Mann
Publisher: Cengage Learning
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Chapter 2, Problem 6Q
Summary Introduction
To discuss: Whether it would be ethical for Company to turn down person G’s proposal by keeping the plant indefinitely for preserving their employees.
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Omega, Inc., a publicly held corporation, has assets of $100 million and annual earnings in the range of $13 to $15 million. Omega owns three aluminum plants, which are profitable, and one plastics plant, which is losing $4 million a year. The plastics plant shows no sign of ever becoming profitable because of its very high operating costs, and there is no evidence that the plant and the underlying real estate will increase in value. Omega decides to sell the plastics plant. The only bidder for the plant is Gold, who intends to use the plant for a new purpose, to introduce automation, and to replace all current employees. Would it be ethical for Omega to turn down Gold’s bid and keep the plastics plant operating indefinitely for the purpose of preserving the employees’ jobs? Explain.
These facts will be used for questions 1 - 10. A, an individual, transfers land with an
adjusted basis of 40 and fair market value of 100, to Newco in exchange for 50
Newco shares, fair market value of 100. B, an individual, transfers equipment with
an adjusted basis of 70 and fair market value of 110 to Newco in exchange for 50
Newco shares, fair market value 100, plus GM (General Motors) stock with a fair
market value of 10.
1. What is A's realized gain or loss?
a loss
10
30
O 60
none of the above
What is A's recognized gain or loss?
Oa loss
10
30
O 60
none of the above
What is B's realized gain or loss?
a loss
10
O 30
60
none of the above
On March 2, 2020, Zoe Moreau, Karen Krneta, and Veronica Visentin start a partnership to operate a personal coaching and lifestyle consulting
practice for professional women. Zoe will focus on work-life balance issues, Karen on matters of style, and Veronica on health and fitness. They
sign a partnership agreement to split profits in a 3:23 ratio for Zoe, Karen, and Veronica, respectively. The following are the transactions for CARLA
VISTA Personal Coaching:
2020Mar. 2
The partners contribute assets to the partnership at the following agreed amounts:
Z. Moreau K. Krneta V. VisentinCash S14,900 $10,500 $19,900Furniture 17,400 Equipment
19,600
14,600Total $34,500 $27,900 $34,500 They also agree that the partnership will assume responsibility for Karen's note payable of S4,900.
Dec. 20
Zoe, Karen, and Veronica each withdraw $29,900 cash as a "year-end bonus." No other withdrawals were made during the year.
31
Total profit for 2020 was $109,000.
2021Jan. 5
Zoe and Veronica approve Karen's…
Chapter 2 Solutions
BUSINESS LAW (LOOSE)-W/ACCESS >CUSTOM<
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