Question & Answer

What restrictions might prevent a partner from selling their partnership interest to a third party?

Stephanie began her consulting business this year, and on April 1 Stephanie received a $9,000 payment for full payment on a three-year service contract (under the contract, Stephanie is obligated to provide advisory services for the next three years). Stephanie has elected to use the accrual method of accounting for her business.  a) What is the minimum amount of income should Stephanie recognize for tax purposes this year if she recognizes $2,250 of income from the for financial accounting purposes?  b) What is the minimum amount of income will Stephanie recognize next year for tax purposes?

Describe the effect of a “bargain-purchase option” on accounting for a capital lease transaction by a lessee.

What factors increase the benefits of accelerating deductions or deferring income?

Of what value is a common set of standards in financialaccounting and reporting?

What are the desirable properties of a metal that would provide good weldability for resistance welding?

Do all investment projects generate significant spillovers

Johnny Football Shop began operations on January 2, 2014. The following stock record card for footballs was taken from the records at the end of the year. Units Unit Invoice Gross Invoice Date Voucher Terms Received Cost Amount 1/15 10624 Net 30 50 $20 $1,000 3/15 11437 1/5, net 30 65 16 1,040 6/20 21332 1/10, net 30 90 15 1,350 9/12 27644 1/10, net 30 84 12 1,008 11/24 31269 1/10, net 30 76 11 836 Totals 365 $5,234 A physical inventory on December 31, 2014, reveals that 100 footballs were in stock. The bookkeeper informs you that all the discounts were taken. Assume that Johnny Football Shop uses the invoice price less discount for recording purchases. Instructions (a) Compute the December 31, 2014, inventory using the FIFO method. (b) Compute the 2014 cost of goods sold using the LIFO method. (c) What method would you recommend to the owner to minimize income taxes in 2014, using the inventory information for footballs as a guide?

What may be included under the heading of “cash”?

Why would a financial institution holding a stock consider buying a put option on that stock rather than simply selling it? (LO4)

Explain the amortization convention applicable to intangible assets.

Write a short essay on the future of finance company operations. Should finance companies be merged into the banking industry, or should they remain distinctly different from commercial banks?

How are FASB preliminary views and FASB exposuredrafts related to FASB “statements”?

What are some of the differences in elements in the IASB and FASB conceptual frameworks?

Is the number of working days lost through disputes a good indication of (a) union power; (b) union militancy?

When salaries and wages expense for the year is computed, why are beginning accrued salaries and wages subtracted from, and ending accrued salaries and wages added to, salaries and wages paid during the year?

Distinguish between FASB Accounting Standards Updatesand FASB Statements of Financial Accounting Concepts.

Tim is a plumber who joined a barter club. This year Tim exchanges plumbing services for a new roof. The roof is properly valued at $2,500, but Tim would have billed only $2,200 for the plumbing services. What amount of income should Tim recognize on the exchange of his services for a roof? Would your answer change if Tim would have normally billed $3,000 for his services?

What is viewed as a major criticism of GAAP as regards revenue recognition?

Some argue that having various organizations establish accounting principles iswasteful and inefficient. Rather than mandating accounting rules, each company could voluntarily disclosethe type of information it considered important. In addition, if an investor wants additional information, the investor could contact the company and pay to receive the additional information desired. Instructions Comment on the appropriateness of this viewpoint.

If you were given complete authority in the matter, howwould you propose that GAAP should be developed andenforced?

Bo Newman will invest $10,000 today in a fund that earns 5% annual interest. How many years will it take for the fund to grow to $17,100?

Credit default swaps were once viewed as a great innovation that could make mortgage markets more stable. However, these swaps have been criticized for making the credit crisis worse. Why? (LO7)

How are financial accountants challenged in their work tomake ethical decisions? Is technical mastery of GAAP not sufficient to the practice of financial accounting?

What kinds of questions about future cash flows do investors and creditors attempt to answer with information in the income statement?