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Boyce and Bonnie have owned their home, now worth $300,000, for 15 years, and they are proud of the fact that they just recently paid off the original 15-year mortgage. Bonnie was a stay-at-home mom,

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1.    Boyce and Bonnie have owned their home, now worth $300,000, for 15 years,

and they are proud of the fact that they just recently paid off the original 15-year mortgage. Bonnie was a stay-at-home mom, but Boyce lost his job two years ago and is still looking for a new job. Bonnie found a part-time job to supplement Boyce’s unemployment insurance payments, but Bonnie’s job does not provide health insurance coverage for the family. While he and Bonnie were able to stay on the health insurance policy of Boyce’s old employer for the first year and a half after his layoff, they were uninsured when their 16-year-old daughter Bridget was diagnosed with a devastating kidney disease earlier this year. The doctors gave Boyce and Bonnie little hope that Bridget would survive without a kidney transplant. Fortunately, a donor kidney became available, Bridget underwent the transplant and follow-up care, and she is doing well. The bad news is that the hospital and other bills for her care—even after being very substantially reduced by the hospital after many months of negotiation and providing documentation of their financial situation—totaled $200,000, and Boyce and Bonnie pay these bills by taking out a new mortgage on their home in June, secured by the home. They pay $5,000 in interest on the mortgage for the last 6 months of this year. How much of the this $5,000 can they deduct under § 163(h)(3)?

 
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Scott and Sally own a boat, which they purchased several years ago for $60,000 and use for recreational purposes. They had it appraised earlier this year for insurance purposes at $40,000,

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Scott and Sally own a boat, which they purchased several years ago for

$60,000 and use for recreational purposes. They had it appraised earlier this year for insurance purposes at $40,000, but they had not yet obtained the insurance coverage when a severe storm damaged the boat. After the storm, Scott and Sally had the boat appraised at $30,000. They pay $7,000 to repair the storm damage. Without regard to any possible casualty loss deduction, Scott’s and Sally’s AGI for this year is $70,000.

a. How much, if any, can Scott and Sally deduct under §§ 165(c)(3) and (h)?

b. How would your answer change if they also receive an insurance check in the same year for $8,000 to compensate them for the documented theft of Sally’s insured diamond engagement ring, which Scott had purchased years ago for $6,000? Scott and Sally decide not to purchase another diamond ring with the insurance payment but rather to use the money for a romantic trip to Paris.

 
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1. List in summary form the FASBs 5-Step Revenue Recognition Model prescribed in ASC606.

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1.  List in summary form the FASBs 5-Step Revenue Recognition Model prescribed in ASC606.
2.  Given the following scenarios, can/should a firm recognize revenues?  Yes or No, and why or why not?  And discuss any journal entries required in each case.
Refer, when possible, to the FASBs 5-Step Revenue Recognition Model from Question 1.
a.  The Craig Corporation delivers on consignment 100 new state-of-the-art J-Phones to a consignee; the consignee has the right to return any unsold J-Phones to Craig after 90 days.
Craig Corporation invoices the consignee $100 for each J-Phone upon delivery and the consignee immediately pays Craig Corporation upon delivery of the 100 J-Phones.
The consignee takes title to the J-Phones immediately upon delivery from Craig Corporation; the consignee maintains and pays for insurance on the J-Phones while they are in the consignee’s possession.
b.  The Craig Corporation signs a contract with the Williams Corporation to provide them with various consulting services on an ad-hoc basis over the next 12 months.
Craig Corporation invoices Williams Corporation in advance $100,000 for these consulting services which are estimated at 500 hours at $200 per hour.
Williams Corporation pays Craig Corporation for this invoice within 30 days of invoicing.  At the end of the 12 month period, both parties reconcile the consulting services
provided by Craig to Williams, and any overpayment is refunded at that time by Craig to Williams, or Craig invoices Williams for any services provided in excess of the original advance.
c.  The Craig Corporation signs a contract with the Roberts Corporation and delivers to Roberts and invoices Roberts for 500 J-Phones at the price of $100 per J-Phone on December 31, 2016.
Craig Corporation also provides Roberts Corporation with a 90-day warranty for any defects any customers of Robert’s has with the J-Phones from the date of their purchase of the J-Phone
from Roberts.
d.    Paul Jones, CPA, prepares the corporate income tax returns of a local furniture manufacturer for which Paul would normally have charged a client $5,000 to prepare.
The local furniture manufacturer pays Paul Jones by supplying his office with furniture with a normal retail selling of $6,000.  The delivery of the tax returns by Paul and Paul’s
receipt of the furniture both take place on April 1, 2017. 
How will Paul Jones record providing the tax return services and the receipt of the office furniture on April 1, 2017 on his books?
If the value of the furniture was not known (for example, it was discontinued furniture sitting in manufacturer’s warehouse from years ago), how would Paul record this transaction?
 
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3. The following information is available for the Pension Plan of Robinson Company for the 2016 Calendar Year: Actual and expected return on plan assets for 2016 $12,000

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3.  The following information is available for the Pension Plan of Robinson Company for the 2016 Calendar Year:
Actual and expected return on plan assets for 2016$12,000
Benefits paid to retirees$40,000
Contributions to the fund made by the Company$90,000
Prior service cost amortization$10,000
Projected benefit obligation, January 1, 2016#######
Interest/discount rate10%
Service cost$60,000
Calculate the pension expense for 2016 for the Robinson Company.   Show your calculation in a tabular format below.
 Record the journal entry to record the pension expense for 2016 based upon the information you are provided above.
 
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