Nelson Whiting (single) purchased a home in Denver, Colorado, for $300,000. He moved into the home on July 1 of year 1. He lived in the home as his primary residence until December 1, year 2, when he sold the home for $450,000. Nelson sold the home because he needed to move to change jobs and his new job was located several hundred miles away. What amount of gain must Nelson recognize on the home sale in year 2?
What will be an ideal response?
$0 gain recognized.
$150,000 gain realized minus $150,000 exclusion. Nelson is single and the full exclusion for single taxpayers is $250,000. Because he is selling the home due to hardship circumstances, he is allowed to exclude a maximum of $250,000 × 17/24 = $177,083. Because his gain is less than the maximum exclusion, he does not recognize gain.
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Consider the Japanese market for jetliners as depicted in Figure 6.4. Suppose the lone producer of jetliners in the world is Boeing, which faces a constant marginal cost of $20 million per jetliner. How much consumer surplus will the Japanese airlines who purchase the jetliners earn from their transactions with Boeing?
a. 0 b. $115 million c. $230 million d. $250 million
Relative to most other countries, the U.S. has very strict product liability standards.
Answer the following statement true (T) or false (F)
On July 1, Year 1, Maitland Corporation issued bonds with a face value of $200,000, a stated rate of interest of 8% bonds, and a 5-year term to maturity. Interest is payable in cash semiannually on June 30 and December 31 of each year. (Hint: There are 20 interest payments.) Maitland uses the straight-line method to amortize bond discounts and premiums. Maitland made the following entry relating to the first interest payment made on December 31, Year 1:Interest expense7,760?Premium on bonds payable240? Cash?8,000Required:Determine the amount of cash that Maitland received for the issuance of the bonds.
What will be an ideal response?
The Robinson-Patman Act prohibits a manufacturer from making any price discrimination among its customers
a. True b. False Indicate whether the statement is true or false