Tim and Janet Were Divorced

question 61

Multiple Choice

Tim and Janet were divorced. Their only marital property was a personal residence with a value of $120,000 and cost of $50,000. Under the terms of the divorce agreement, Janet would receive the house and Janet would pay Tim $15,000 each year for 5 years, or until Tim's death, whichever should occur first. Tim and Janet lived apart when the payments were made to Tim. The divorce agreement did not contain the word "alimony."

• A)Tim must recognize a $35,000 [$60,000 - 1/2($50,000)] gain on the sale of his interest in the house.
• B)Tim does not recognize any income from the above transactions.
• C)Janet is not allowed any alimony deductions.
• D)Janet is allowed to deduct $15,000 each year for alimony paid.
• E)None of these.

Recompute standard times with adjusted allowances to understand the impact of changing allowance values.

Understand the relationship between observed times, performance ratings, and allowances in determining standard times.

Analyze changes to time measurements based on modifications to activity descriptions or conditions.

Apply statistics to ensure confidence in standard time calculations based on observed times and standard deviations.

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Definitions:

Interest Expense

Interest expense is the cost incurred by an entity for borrowed funds.

Total Assets Ratio

Total assets ratio refers to financial metrics that measure the efficiency and profitability of a company relative to its total assets.

Financing

The process of providing or obtaining the funds necessary for business activities, purchases, or investments.

Operations

The day-to-day activities involved in running a business, such as production, purchasing, and distribution, aimed at generating profits.