Isabel, Age 51 and Single, Is an Electrical Engineer Employed

question 109

Essay

Isabel, age 51 and single, is an electrical engineer employed by Regis Corporation. Isabel's annual salary is $80,000. Regis Corporation's qualified pension plan matches employee's contributions to the plan up to 5% of the employee's annual salary. During the current year, Isabel contributes the $4,000 maximum to the plan, which is matched by Regis. Due to high cost of medical insurance, the corporation does not provide any medical insurance to its employees. Instead, it offers a flexible benefits plan that employees can use to pay for medical insurance, unreimbursed medical costs, and childcare costs. Isabel elects to have $2,500 paid into the plan. Isabel uses the plan to purchase medical insurance costing $2,200. Isabel spends an additional $150 from the plan on eyeglasses and dental costs. Regis Corporation also provides group-term life insurance at twice the employee's annual gross salary. The cost of Isabel's insurance was $600. Regis also provides engineers in Isabel's department with free parking in the company's parking garage. Non-employees pay $3,180 per year to park in the garage. Isabel's $250 dues to the Electrical Engineer's Association and her $1,560 health club membership are also paid by Regis. Compute Isabel's taxable compensation from Regis Corporation.

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Definitions:

Executory Costs

Refers to the costs related to executing a lease that are neither initially capitalized nor recognized in the income statement immediately, typically involving future operating expenses under a lease agreement.

Minimum Lease Payments

The lowest amount that a lessee is obligated to pay over the lease term, excluding costs for services such as insurance and maintenance.

Operating Lease

An operating lease is an agreement allowing someone to use an asset without ownership, typically for shorter periods, and expenses are recorded as operating expenses.

Implicit Interest Rate

The interest rate that can be inferred from the terms of a lease or loan, reflecting the true cost of borrowing when the interest rate is not explicitly stated.