Johann and Marta are a married couple, both age 33. Johann works as a contract employee for the Ministry of Agriculture in Ontario, earning $58,000 a year. He has no business expenses associated with the work that he performs with the Ministry. As a contract worker, Johann is not entitled to group benefits. Marta is self-employed, working as an interior design consultant. Marta grosses $60,000 a year from her business, but typically has about $15,000 in tax-deductible variable business expenses (expenses that are only incurred if Marta works) annually. In addition to their earned incomes, the couple shares a total of $20,000 annually in investment income, which they report equally for income tax purposes. As well, Marta receives $5,000 a year (for the next 12 years) in trust income from a testamentary trust set up by her grandmother. The couple has contacted you to discuss their mutual need for disability insurance protection. 11. What sources of income would the insurance company take into consideration in determining the maximum amount of disability insurance coverage that they would issue on Johann? (A) Johann's gross salary only. (B) Johann's after-tax salary only.

Johann and Marta are a married couple, both age 33. Johann works as a contract employee for the Ministry of Agriculture in Ontario, earning $58,000 a year. He has no business expenses associated with the work that he performs with the Ministry. As a contract worker, Johann is not entitled to group benefits. Marta is self-employed, working as an interior design consultant. Marta grosses $60,000 a year from her business, but typically has about $15,000 in tax-deductible variable business expenses (expenses that are only incurred if Marta works) annually. In addition to their earned incomes, the couple shares a total of $20,000 annually in investment income, which they report equally for income tax purposes. As well, Marta receives $5,000 a year (for the next 12 years) in trust income from a testamentary trust set up by her grandmother. The couple has contacted you to discuss their mutual need for disability insurance protection. 11. What sources of income would the insurance company take into consideration in determining the maximum amount of disability insurance coverage that they would issue on Johann? (A) Johann's gross salary only. (B) Johann's after-tax salary only.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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