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Haig simmons operates an anthracite coal home heating and delivery service in Baltimore and Anne Arundel counties. She must have a supply of anthracite coal on hand so that customers may get the coal they need to heat their homes. As a convenience to her customers (and to prevent high bills over the winter and low bills in the summer), she allows them to buy coal in advance at set prices and to pay for the coal ratably over a calendar year. To ensure herself a steady, reliable, and affordable supply of coal and to protect against price fluctuations, Haig Simmons enters into certain futures contracts to buy coal at a future date and at a set price. Haig Simmons clearly indicates before hand that the futures contract in which she enters to buy coal is simply to secure a supply of coal and to protect her from losses on her futures contracts with her customers to sell coal, and that she does not intend to profit from the contract itself. Assume that Haig Simmons realizes a loss on the futures contract in which she entered to buy coal. That is, the price per her contract to buy coal is higher than the actual spot market price of coal the day she acquires a new supply of coal. How should Haig Simmons classify the loss--as ordinary or as capital? Be sure to demonstrate the research skills you have learned. You must cite the relevant code section(s) (including section 1221), and at least two (2) Supreme Court cases (the two key cases are dated 1955 and 1988). You must also address the general principle of classifying assets--as capital or as operating--and the exceptions thereto. The format for ALL tax briefings is as follows (for this class, don't forget your name and the date): Subject (one line here) Facts (Taxpayer xxx. Xxx. Xxxx.)
Issue (May taxpayer deduct xxxxxxx?) Conclusion (In this situation, xxxxxx.)
A corporation issues $2,000 Shares of common stock for $32,000. The stock has a stated value of $10 per share. The journal entry to record the stock issuance would include a credit to Common Stock for
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Which of the following entries would correctly record the charging of direct labor costs to Work in Process given an unfavorable labor efficiency variance and a favorable labor rate variance?
soon after beginning the year-end audit work on march 10 at engone company the auditor has the following conversation
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What would be the impact on the balance of accounts receivable if the firm initiates a more aggressive collection policy and is able to reduce the average payment period to 60 days for those customers not taking the cash discount?
The steps involved in the purchases cycle and the importance of each
An auditor determines that management integrity if high, the risk of account misstatements is low, and the client's internal controls are effective. Which of the following conclusions can be reached regarding the need to perform direct tests of ac..
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The vehicle cost $23,000 and its estimated salvage value is $1,500. After 4 years of straight-line depreciation, the asset's total estimated useful life was revised from 8 years to 6 years and there was no change in the estimated salvage value. Th..
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