Expense Essays

Suspended Loss

1. In your “own” words, please describe what a “Suspended Loss” is, how it is generated and when it is becomes deductible. (5 pts) A suspended loss is a capital loss that is suspended until future years because it exceeds passive income limitations for the current year. They are generated if a loss occurs for an activity one year, the loss exceeds passive income limitations and cannot be claimed in that year, the taxpayer continues the activity the following year(s)….

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United Health Group

1.Describe clearly the accounting changes Harnischfeger made in 1984 as stated in Note 2 of its financial statements a.Harnischfeger registered as a net sale the final sales amount of products bought from Kobe instead of only the gross margin received per unit. It has also taken in consideration the financial statements of some subsidiaries (but not all of them) to increase net sales. 2.What is the effect of the depreciation accounting method change on the reported income in 1984? How…

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You Are an Entrepreneur

1. Describe the type of business you have created including: a. The product or service, and general staffing plan. Provide a rationale for your plan. The business will be a daycare center that provides service to children 6 weeks old to 5 years old. The center will start off with twenty children and expand to 30 in the next year. All permits, licensing, certificates, safety inspections, and criminal background checks will be in compliance before opening the business. The general…

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Prestige Telephone Company

1.Identify the costs that are relevant to the analysis to discontinue Prestige Data Services: Relevant costs in the analysis by Prestige Telephone Company decision to discontinue Prestige Data Services include: fixed costs which must be absorbed by the parent company (Prestige Telephone) upon shutdown; outstanding Prestige Data Services debts; costs of retraining retained employees; costs associated with outsourcing data services previously provided by Prestige Data Services; opportunity cost of using space rented to Prestige Data Services; marketing costs attributed to…

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Cafes Monte Bianco Case

CafĂ© Monte Bianco (CMB) has the hard decision of determining their next strategy. They are faced with a decision to either continue with their current mix of private and premium coffees or switch to a lower cost all private brand coffee. Giacomo is concerned about the perception of the company if they were to switch to all private brands, however, if it is in the best interest of the company to do so he is willing to explore that route….

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Cases in Financial Management

Case Synopsis Founded in 1984 Laurentian Bakeries Inc. operates in the industry of manufacturing a vast variety of frozen baked products within their three operating plants in Montreal, Winnipeg and Toronto. The operating plants produce items such as frozen pizza in Winnipeg, MB, pies in Montreal, QC and Cakes in Toronto, ON- with each representing 30%, 30% and 40% of the total revenue stream respectively. The buyers for this company include large institutional clients such domino’s pizza, etc. which have…

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Greek Cosmobob

Cosmo Panetta, a 74 year old immigrant from Greece, living in Niagara Falls, Ontario, Canada with his wife and two sons. After working odd jobs for ten years, Mr. Panetta used personal savings and a loan from a family member to purchase a variety store. He always dreamed of starting a family business. Panetta eventually sold the variety store and purchased, renovated, and renamed a drive-thru restaurant. A second location was added shortly thereafter. Both sons skipped college to help…

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Craddock Cup Case

In order to decide whether or not to keep the Craddock Cup, we needed to classify the expenses as either fixed and sunk or variable, fixed and sunk costs are not relevant so they are not included in the revised statement. Exhibit A shows an income statement that is revised in this manner (under the revised column). The first expense we found not relevant is the city field rental. We found that this expense is fixed, where $1,200 is allocated…

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Herman Miller, Inc._ the Reinvention and Renewal of an Iconic Manufacturer of Office Furniture

Herman Miller, Inc. is primarily concentrated in the business and institutional market. Herman Miller is one of the leading players in the US office furniture industry with a 12% market share. Over the last several years, the entire industry has experienced significant declines in sales due to poor macroeconomic conditions. However, Herman Miller has managed to outperform most of its competitors in terms of profitability, illustrated through strong operating margins and return on sales. Herman Miller has a strong reputation…

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