Michael (aged 50) is considering selling his mechanical workshop. Michael has a purchaser who is interested in the business and he has advised them that his asking price is $1,120,000. Michael has calculated this asking price as follows; 

Goodwill $200,000 

Fittings and Fixtures $125,000 

Trading Stock $295,000 

Building Premises $500 000  

 $1,120,000 

 Notes: 

1. All values stated above are market values. 2. Michael has advised that Fittings and Fixtures have an adjusted value (written down value) for tax purposes of $120,000 and an original cost of $180,000. 3. Trading stock is valued at a cost of $150,000 in the financial accounts. 4. The building premises were purchased on 1 July 2010 for $375,000 and has a current market value of $500,000. Taking into account building allowance the current tax cost base for the building is $350,000. 5. Michael started the business himself on 1 July 2005 from leased premises. 

Michael is concerned about the tax consequences on the sale of his business and has asked for your advice. 

Required: 

You are required to provide comments regarding the likely tax consequences on the sale of each of his business assets should the sale go ahead as stated above. You should also note any small business concessions Michael should consider. You should comment on any further information you would require to provide more detailed advice. 

 

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Michael Bruno is a senior level manager for Company XYZ. He has been with this organization for 25 years. Michael is in charge of recruiting a new CEO for Company XYZ because the previous CEO, who had a “golden parachute,” was terminated for tolerating low performers, mismanaging change, and ignoring customers. After posting the position on LinkedIn, he received a number of inquiries from potential candidates. After spending months interviewing both internal and external candidates, Michael has two potential candidates (i.e., Doug Wilson and John Smithson) for the CEO position. After having the final round of interviews and spending the day with each candidate, the hiring committee selects John Smithson for the CEO position.

Michael decides to have a meeting with his team to discuss the CEO’s salary before sending John’s employment contract. Michael believes that the CEO of a company should make at least 10 times more than the highest paid employee. Several of his colleagues reject his idea and argue that the CEO should make significantly less. One person yells out, “What about the employees—the employees of the organization should all receive a raise that is well overdue.” Michael is perplexed and decides to have a follow-up meeting with his group first thing in the morning.

Case Assignment

Once you have finished reading about this topic and reviewing the background materials, please write a 2- to 3-page paper (either in essay format or Q & A format) addressing the following questions:

1. Should a CEO of a large organization earn at least 10 times more than the highest paid employee? Justify your response.
2. Should Michael Bruno try to low-ball John Smithson so he can also provide a small raise to all of the employees of Company XYZ? Justify your response.
3. What resources can Michael Bruno use to learn more about CEO salaries?
4. Should Company XYZ have a salary cap for CEOs? What are the pros and cons to having a salary cap?
5. Should CEOs have a golden parachute?
6. Based upon your research and beliefs, discuss a fair policy for a CEO’s salary so there is no confusion among the employees.

Be sure to support your arguments with references to the background readings and your research.

Please no Plagiarism!

 

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Michael Enterprises leased a machine on June 1, 2012, under a 10-year lease. The economic life of the machine is estimated to be 12 years. Title to the machine passes to Michael Enterprises at the expiration of the lease, and thus, the lease is a capital lease. The lease payments are $100,000 per year, including executory costs of $4,000 per year, all payable in advance annually. The incremental borrowing rate of the company is 10%, and the lessor’s implicit interest rate is unknown. Michael Enterprises uses the straight-line method of amortization and the calendar year for reporting purposes. 

Instructions: 

A. Give all entries on the books of the lessee relating to the lease for 2012. 

 

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Michael,Hello how how are. It was a quiz and all I know is got wrong. However, the book does not go with this class. This is how she gave it us. No one in the class understands her either. Beckham Corporation has 3,000 shares of $100 par value, 7 percent cumulative preferred stock, and 10,000 shares of $10 par value common stock outstanding during its first five years of operation. Beckham Corporation paid cash dividends as follows: 20×4, $25,000; 20×5, $0; 20×6, $65,000; 20×7, $30,000; 20×8, $15,000. The amount of dividends received by the common stockholders during 20×7 was??? ($10,000)The amount of dividends received by the common stockholders during 20×7 was??? ($4,000)

Beckham Corporation has 3,000 shares of $100 par value, 7 percent cumulative preferredstock, and 10,000 shares of $10 par value common stock outstanding during its first fiveyears of operation….

 

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