Reference no: EM13929309
Rust Company is a real estate construction company with average annual gross receipts of $4 million. Rust uses the completed contract method, and the contracts require 18 months to complete.
a. Which of the following costs would be allocated to construction in progress by Rust?
1. The payroll taxes on direct labor.
2. The current services pension costs for employees whose wages are included in direct labor.
3. Accelerated depreciation on equipment used on contract.
4. Freight charges on materials assigned to contracts.
5. The past service costs for employees whose wages are included in direct labor.
6. Bidding expenses for contracts awarded.
b. Assume that Rust generally builds commercial buildings under contracts with the owners and reports the income using the completed contract method. The company is considering building a series of similar stores for a retail chain. The gross profit margin would be a low percentage, but the company's gross receipts would triple. Write a letter to your client, Rust Company, explaining the tax accounting implications of entering in to these contracts. Rust's mailing address is P.O Box 1000, Harrisonburg, VA 22807.
|
What will be the company''s interest tax shield
: A company has net income of $20,000 and a tax rate of 35 percent. Its total debt is $25,000, with principal payments of $5,000 due at the end of each year and an annual interest rate of 8%. What will be the company's interest tax shield in the upcomi..
|
|
Strongly disagree and 5
: To what extent do you agree or disagree with the following statement on a scale of 1 to 5 where 1 = strongly disagree and 5 = strongly agree. Please explain your answer and support it by citing your references to support your conclusions.
|
|
Capital structure influence the returns
: Q1. How can capital structure influence the returns that a company earns for its shareholders?Q2. Explain the cash conversion cycle (CCC) and net working capital. Why is this important to the contemporary executive? How do executive decisions regar..
|
|
Swallow company is a large real estate construction
: Swallow Company is a large real estate construction company that has made a Subchapter S election. The company reports its income using the percentage of completion method. In 2015, the company completed a contract at a total cos of $4.8 million. Th..
|
|
Rust company is a real estate construction company
: Rust Company is a real estate construction company with average annual gross receipts of $4 million. Rust uses the completed contract method, and the contracts require 18 months to complete.a. Which of the following costs would be allocated to constr..
|
|
Derive the prandtl-batchelor theorem
: Derive the Prandtl-Batchelor theorem for axisymmetric flow with negligible viscous forces where the ratio ω?/σ is constant along a streamline.
|
|
What costs would a business incur if it maintained
: What costs would a business incur if it maintained its own accounts receivable? What cost does a business incur by accepting credit cards?
|
|
Identify market structure in which this organization compete
: How might the company you selected find itself working with organizations in the same industry that are an oligopoly, perfect competition, monopoly, or monopolistic market structure.
|
|
An expected annual return of 18 percent
: An investment advisor has recommended a $50,000 portfolio containing assets R, J, and K; $25,000 will be invested in asset R, with an expected annual return of 12 percent; $10,000 will be invested in asset J, with an expected annual return of 18 perc..
|