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Introduction to financial reporting analysis - McClure B.B.

McClure B.B. Introduction to financial reporting analysis - wiley publishing , 2009. - 596 p.
Download (direct link): introductiontofinancialrepor2009.pdf
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What is the estimated current value of these options?
d. Carl Jones has a whole-life insurance policy with the face amount of $100,000, cash value of $50,000, and a loan outstanding against the policy of $20,000. Susan Jones is the beneficiary.
What is the estimated current value of the insurance policy?
e. Larry Solomon paid $60,000 for a home ten years ago. The unpaid mortgage on the home is $30,000. Larry estimates the current value of the home to be $90,000. This estimate is partially based on the selling price of homes recently sold in the neighborhood. Larry’s home is assessed for tax purposes at $50,000. Assessments in the area average one-half of market value. The house has not been inspected for assessment during the past two years. Larry would sell through a broker, who would charge 5% of the selling price.
What is the estimated current value of the home?
Personal Financial Statements and Accounting for Governments and Not-for-Profit Organizatio 583
P 13-3.
P 13-4.
For Bob and Carl, the assets and liabilities and the effective income tax rates at December
31, 2001, follow:
Excess of
Estimated Effec-
Current tive Amount of
Estimated Values Income Estimated
Current over Tax Tax Income
Accounts Tax Bases Value Bases Rates Taxes
Cash $ 20,000 $ 20,000 - -
Marketable securities 45,000 50,000 5,000 28%
Life insurance 50,000 50,000 --- -
Residence 100,000 125,000 25,000 28%
Furnishings 40,000 25,000 (15,000) -
Jewelry 20,000 20,000 - -
Autos 20,000 12,000 (8,000) -
Mortgage payable (90,000) (90,000) - -
Note payable (30,000) (30,000) - -
Credit cards (10,000) (10,000) - -
Required a. Compute the estimated tax liability on the differences between the
estimated current value of the assets and liabilities and their tax bases.
b. Present a statement of financial condition for Bob and Carl at
December 31, 2001.
c. Comment on the statement of financial condition.
For Mary Lou and Ernie, the assets and liabilities and the effective income tax rates at
December 31, 2001, follow:
Excess of
Estimated Effec-
Current tive Amount of
Estimated Values Income Estimated
Current over Tax Tax Income
Accounts Tax Bases Value Bases Rates Taxes
Cash $ 20,000 $ 20,000 - -
Marketable securities 80,000 100,000 20,000 28%
Options -0- 30,000 30,000 28%
Residence 100,000 150,000 50,000 28%
Royalties -0- 20,000 20,000 28%
Furnishings 40,000 20,000 (20,000) -
Auto 20,000 15,000 (5,000) -
Mortgage (70,000) (70,000) - -
Auto loan (10,000) (10,000) - -
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