If the amount of a corporate distribution is less than the amount of the corporate earnings and profits, the return of capital concept does not apply and the shareholders' adjusted basis for the stock remains unchanged
a. True
b. False
Indicate whether the statement is true or false
True
RATIONALE: The distribution to a shareholder in this situation is classified as dividend income. Therefore, there is no effect on the shareholder's stock basis.
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Because a larger number of investors are involved in factoring than in securitization, companies can factor much larger amounts of receivables
Indicate whether the statement is true or false
The Enhanced Products Division of Forrest Industries makes ceramic pots that are used to hold large decorative plants. During the current year, the division produced 10,000 pots and incurred the following costs:
*The equipment was purchased for $150,000 and has a current book value of $120,000, remaining useful life of four years, and a zero salvage value. If the company does not use the equipment, it can be leased for $8,000 per year.**Includes supervisors' salaries and rent for manufacturing plant. Required:The division is considering replacing the equipment used to manufacture its ceramic pots. Replacement equipment can be purchased at a price of
$200,000. The new equipment, which is expected to last 4 years and have a salvage value of $20,000, will reduce unit-level labor costs by 25 percent. Assuming the division desires to maintain its production and sales at 10,000 ceramic pots per year, prepare a schedule that shows the relevant cost of operating the existing equipment versus the cost of operating the new equipment. Should the existing equipment be replaced? Why or why not? What will be an ideal response?
The idea of value-based marketing requires firms to charge a price that
A. matches competitors' prices. B. prioritizes customer excellence above operational excellence. C. includes the value of the effort the firm put into the product or service. D. covers costs and generates a modest profit. E. captures the value customers perceive that they are receiving.
A distinctive characteristic of a healthy corporate culture is
A. a preoccupation with risk management and capitalizing on related market opportunities. B. ethical behavior that is driven by subcultures. C. the presence of counterproductive cultural traits that adversely impact the work climate and company performance. D. a decision-making effort that is subject to pressure from many different cliques. E. a strong fixation on attending to what customers are saying and how their needs and expectations are to be met.