Zola Inc. paid a $10,000 legal fee to the attorney who resolved a dispute over Zola's title to investment land. Zola's auditors required the corporation to expense the payment for financial statement purposes. The tax law required Zola to capitalize the payment to the basis of the land. This difference in accounting treatment results in a:
A. Deferred tax asset
B. Permanent favorable book/tax difference
C. Deferred tax liability
D. Permanent unfavorable book/tax difference
Answer: A
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Chad and his partner, John, have decided to update their computer network, although they have no expertise in this area. During a meeting with John, Chad commented that "Our decision is limited by numerous constraints, such as our understanding of the complexity of technology, time and money, imperfect information, and our conflicting goals." These limitations are hindrances to
A. satisficing. B. rational decision making. C. intuitive decision making. D. MBO. E. nonrational decisions
You can deemphasize bad news by minimizing the space or time devoted to it
Indicate whether the statement is true or false.
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On January 1, 2017, Mehan, Incorporated purchased 15,000 shares of Cook Company for $150,000 giving Mehan a 15% ownership of Cook. The fair value of the 15% investment was the same as the carrying value of the investment when , on January 1, 2018, Mehan purchased an additional 25,000 shares (25%) of Cook for $300,000. This last purchase gave Mehan the ability to apply significant influence over Cook. The book value of Cook on January 1, 2017 was $1,000,000. The book value of Cook on January 1, 2018, was $1,100,000. Any excess of cost over book value for this second transaction is assigned to a database and amortized over four years.Cook reports net income and dividends as follows. These amounts are assumed to have occurred evenly throughout the years: Net
Income Dividends2017$200,000 $50,000 2018 225,000 50,000 2019 250,000 60,000 ??On April 1, 2019, just after its first dividend receipt, Mehan sells 10,000 shares of its investment.?How much of Cook's net income did Mehan report for the year 2019? A. $59,250. B. $81,250. C. $75,000. D. $72,500. E. $61,750.