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QUESTION 1 (a) Michelle ran her own accountancy business. During the year she was persuaded to change premises which she ran her business from, and which she rented. A new building not far from where she ran her business had been completed. The owners of this new building agreed to give to Michelle $45,000 over 12 months if she agreed to move to their premises. Michelle accepted this offer. (b) Roger was a tax adviser. He had a very wealthy client who asked Roger for some advice on how best to structure a new business the client was starting up. As a result of the advice given the client paid 15% less tax than had been paid in the past. The client paid Roger the fee of $7,000 he had charged. Because he was very pleased with the advice he had been given he also gave Roger another $2,000 as well as the $7,000. (c) Bill & Ben Cookies had a number of agreements with overseas companies to produce selected biscuits from each overseas company's biscuit range in Australia. One of these companies, Wharfdale biscuits, wrote to Bill and Ben Cookies stating it wanted to withdraw the right of Bill and Ben Cookies to produce its biscuits. After much negotiation it was agreed Bill and Ben Cookies would cancel their agreement with Wharfdale and not produce any of Wharfdale's biscuits in Australia. Wharfdale paid Bill and Ben Cookies $70,000 on the 30th September for cancelling the agreement. Discuss whether the amounts referred to in each question are assessable income for Australian tax purposes. Fully explain your answer.. AND QUESTION 2 Joe runs his own small business. Unfortunately, one day whilst out visiting a client, he was severely injured in a car accident and left a paraplegic. As a result of the accident Joe has had to make the following modifications to enable him to continue his business. (i) $3,000 of changes to his car to enable him to drive to work; (ii) $5,000 for parking expenses immediately next to his office; (iii) $8,000 for expenses in modifying parts of his office to allow him to work more efficiently, such as ramps and rubber protective strips against the walls. (iv) New clothes to enable him to be better able to do his work. (v) Special adapted communications equipment for being able to answer the phone and to be able to talk to his computer to give commands and for it to take dictation (notes from spoken word. All medical evidence agrees that after his accident Joe could not physically get to work except by car, and by parking close by his work place. All other modifications made, including his special clothing, also make running his business far easier. Real estate experts however suggest the modifications made by Joe to his office have actually decreased the value of the premises, and may well impact on the ease of access for clients, thus perhaps having an adverse impact on the overall profitability of the business. Are the above expenditures deductible for Joe? Fully explain your answer.
Armando contributed some inventory from his sole proprietorship to a public charity for its use. On the date of the contribution, Armando's basis in the inventory $2,000 and the fair market value was $5,000.
On August 5, 2011, Tanner sold the house for $570,000. Tanner paid a sales commission of $30,000 and legal fees of $800 connected with the sale of the house. What is Tanner's recognized gain on the sale of the house?
Examine the concept of financial risk by answering the following questions: (a) How does the risk of a portfolio change as the number of assets in the portfolio increases?
Thrifty Co. reported net income of $465,000 for its fiscal year ended January 31, 2011. At the beginning of that fiscal year, 200,000 shares of common stock were outstanding.
Which of the following would probably not cause the stock price of a foreign target to decrease?
Which of the following statements is true? Once adopted, an accounting period normally cannot be changed without approval by the IRS.
The two main types of pension plans are defined benefit plans and defined contribution plans. Explain the difference between the two. How does the accounting for each differ?
Assume that the company produces and sells 45,000 units during the year at a selling price of $16 per unit. Prepare a contribution format Income Statement for the year.
On July 1, 2009, Cheryl pays the entire real estate tax of $5,475 for the year ending December 31, 2009. a. How much of the property taxes may Phil deduct?
Many corporations are emphasizing green technology in their operations. This often costs the company more money in terms of expenses. What are the legal and ethical implications of this?
On a multiple-step income statement, gain or losses on sale of equipment would be shown:
Although her records of the expenses incurred in the breeding activity are spotty, she can establish that in year 10 she spent $1,000 on transportation and lodging to attend cat shows, $400 on cat food, $700 on veterinary expenses, and $300 on gro..
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