Question & Answer

A shareholder receives appreciated noncash property in a corporate distribution and assumes a liability attached to the property. How does the assumption affect the amount of dividend the shareholder reports in gross income (assuming adequate E&P)?

Explain how the credit crisis that began in 2008 affected the default rates of junk bonds and the risk premiums offered on newly issued junk bonds. (LO2)

John Fillmore’s lifelong dream is to own his own fishing boat to use in his retirement. John has recently come into an inheritance of $400,000. He estimates that the boat he wants will cost $300,000 when he retires in 5 years. How much of his inheritance must he invest at an annual rate of 12% (compounded annually) to buy the boat at retirement?

What are the most common legal entities used for operating a business? How are these entities treated similarly and differently for state law purposes?

Jerry Prior, Beeler Corporation’s controller, is concerned that net income may be lower this year. He is afraid upper-level management might recommend cost reductions by laying off accounting staff, including him. Prior knows that depreciation is a major expense for Beeler. The company currently uses the doubledeclining- balance method for both financial reporting and tax purposes, and he’s thinking of selling equipment that, given its age, is primarily used when there are periodic spikes in demand. The equipment has a carrying value of $2,000,000 and a fair value of $2,180,000. The gain on the sale would be reported in the income statement. He doesn’t want to highlight this method of increasing income. He thinks, “Why don’t I increase the estimated useful lives and the salvage values? That will decrease depreciation expense and require less extensive disclosure, since the changes are accounted for prospectively. I may be able to save my job and those of my staff.” Instructions Answer the following questions. (a) Who are the stakeholders in this situation? (b) What are the ethical issues involved? (c) What should Prior do?

State some of the more serious problems encountered in seeking to achieve the ideal measurement of periodic net income. Explain what accountants do as a practical alternative.

A DC servomotor drives the y-axis of a NC milling machine table. The motor is coupled to the table lead screw with a gear reduction of 2:1 (2 turns of the motor shaft for each single rotation of the lead screw). There are 2 threads per cm in the lead screw. An optical encoder is directly connected to the lead screw (1:1 gear ratio). The optical encoder emits 100 pulses per revolution. To execute a certain programmed instruction, the table must move from point (x = 25.0 mm, y = 28.0) to point (x = 155.0 mm, y = 275.0 mm) in a straight-line trajectory at a feed rate = 200 mm/min. For the y-axis only, determine: (a) the control resolution of the mechanical system, (b) rotational speed of the motor, and (c) frequency of the pulse train emitted by the optical encoder at the desired feed rate.

1.       : Lana Lowery, a regional manager for a 100-person inside-sales team, notices that the team’s best performer is struggling. Her sales are down 20 percent from a year ago, and she frequently arrives late for work, looking upset. Lowery needs to find out why her performance is suffering. What advice would you give Lowery for communicating with this employee? Which communication channel should she use? What would be the relative importance of candor, listening, and asking questions? Explain.

(a)       Pick two public companies, go to their websites and identify their      major strategies.           (b) Pick one of the companies from part (a) and go to the website of a      competitor in the same industry. (For example, if you chose Coles, you            might go to the website of Woolworths.) Now compare the strategies of      both companies and list any similarities and differences.

A cup-shaped part is to be drawn without a blankholder from sheet metal whose thickness = 0.25 in. The inside diameter of the cup = 2.5 in, its height = 1.5 in, and the corner radius at the base = 0.375 in. (a) What is the minimum starting blank diameter that can be used, according to Eq. (20.14)? (b) Does this blank diameter provide sufficient material to complete the cup?

Consider the prevailing conditions for inflation (including oil prices), the economy, the budget deficit, and the Fed’s monetary policy that could affect interest rates. Based on these conditions, do you think bond prices will increase or decrease during this semester? Offer some logic to support your answer. Which factor do you think will have the biggest impact on bond prices? (LO2)

Since advertising increases a firm’s costs, will prices necessarily be lower with sales revenue maximisation than with profit maximisation?

What is draft in a rolling operation?

Distinguish between cash-basis accounting and accrualbasis accounting. Why is accrual-basis accounting acceptable for most businesses and the cash-basis unacceptable in the preparation of an income statement and a balance sheet?

According to the video on forming, what is the primary factor that makes the mechanical performance of forged parts better than cast parts in many situations?

What price should be used when there is such a distortion?

Describe the LIFO double-extension method. Using the following information, compute the index at December 31, 2014, applying the double-extension method to a LIFO pool consisting of 25,500 units ofproduct A and 10,350 units of product B. The base-year cost of product A is $10.20 and of product B is $37.00. The price at December 31, 2014, for product A is $21.00 and for product B is $45.60. (Round to two decimal places.)

A product is started in department 1 and completed in department 2. Is department 1 a support department or an operating department? Explain.

Jimmy is a sole proprietor of a small dry-cleaning business. This month Jimmy paid for his groceries by writing checks from the checking account dedicated to the dry-cleaning business. Why do you suppose Jimmy is using his business checking account rather than his personal checking account to pay for personal expenditures?

Pat Delaney Company leases an automobile with a fair value of $8,725 from John Simon Motors, Inc., on the following terms: 1. Noncancelable term of 50 months. 2. Rental of $200 per month (at end of each month). (The present value at 1% per month is $7,840.) 3. Estimated residual value after 50 months is $1,180. (The present value at 1% per month is $715.) Delaney Company guarantees the residual value of $1,180. 4. Estimated economic life of the automobile is 60 months. 5. Delaney Company’s incremental borrowing rate is 12% a year (1% a month). Simon’s implicit rate is unknown. Instructions (a) What is the nature of this lease to Delaney Company? (b) What is the present value of the minimum lease payments? (c) Record the lease on Delaney Company’s books at the date of inception. (d) Record the first month’s depreciation on Delaney Company’s books (assume straight-line). (e) Record the first month’s lease payment.

Within the scope of surface texture, how is roughness distinguished from waviness?

] Santiago and Lauren are equal partners in the PJenn Partnership. The partners formed the partnership seven years ago by contributing cash. Prior to any distributions, the partners have the following bases in their partnership interests: Partner Outside Basis Santiago $ 22,000 Lauren 22,000 On December 31 of the current year, the partnership makes a pro rata operating distribution of: Partner Distribution Santiago Cash $ 25,000 Lauren Cash 18,000 Property    7,000 (FMV) ($2,000 basis to partnership) a. What are the amount and character of Santiago’s recognized gain or loss? b. What is Santiago’s remaining basis in his partnership interest? c. What are the amount and character of Lauren’s recognized gain or loss? d. What is Lauren’s basis in the distributed assets? e. What is Lauren’s remaining basis in her partnership interest?

How many tax brackets are there in the corporate tax rate schedule?

(Threshold Concept 7) 1. What market failures could be corrected by the use of welfare benefits? Does the payment of such benefits create any problems for society? (Threshold Concept 7) 2. Assume that the government sees litter as a market failure that requires government action. Give some examples of policies it could adopt to reduce litter.

: Describe the innovation strategies that managers implement for changing products and workflow technologies, such as a bottom-up approach and open innovation.