Question & Answer

Assume the same information as in IFRS11-11, except that Pujols intends to dispose of the equipment in the coming year. Instructions (a) Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2014. (b) Prepare the journal entry (if any) to record depreciation expense for 2015. (c) The asset was not sold by December 31, 2015. The fair value of the equipment on that date is $5,100,000. Prepare the journal entry (if any) necessary to record this increase. It is expected that the cost of disposal is $20,000.

Assume the following year 2 income statement for Johnstone Corporation, which was a C corporation in year 1 and elected to be taxed as an S corporation beginning in year 2.  Johnstone’s earnings and profits at the end of year 1 were $10,000.  Marcus is Johnstone’s sole shareholder, and he has a stock basis of $40,000 at the end of year 1.  What is Johnstone’s accumulated adjustments account at the end of year 2, and what amount of dividend income does Marcus recognize on the year 2 distribution in each of the following alternative scenarios?   Johnstone Corporation Income Statement December 31, Year 2 Year 2 (S corporation) Sales revenue $150,000 Cost of goods sold (35,000) Salary to owners (60,000) Employee wages (50,000) Depreciation expense (4,000) Miscellaneous expenses (4,000) Interest income 10,000   Overall net income $7,000

How does a money market deposit account differ from other sources of funds for banks? (LO2)

The management of Tritt Company has asked its accounting department to describe the effect upon the company’s financial position and its income statements of accounting for inventories on the LIFO rather than the FIFO basis during 2014 and 2015. The accounting department is to assume that the change to LIFO would have been effective on January 1, 2014, and that the initial LIFO base would have been the inventory value on December 31, 2013. Presented below are the company’s financial statements and other data for the years 2014 and 2015 when the FIFO method was employed. Financial Position as of 12/31/13 12/31/14 12/31/15 Cash $ 90,000 $130,000 $154,000 Accounts receivable 80,000 100,000 120,000 Inventory 120,000 140,000 176,000 Other assets 160,000 170,000 200,000 Total assets $450,000 $540,000 $650,000 Accounts payable $ 40,000 $ 60,000 $ 80,000 Other liabilities 70,000 80,000 110,000 Common stock 200,000 200,000 200,000 Retained earnings 140,000 200,000 260,000 Total liabilities and equity $450,000 $540,000 $650,000 Income for Years Ended 12/31/14 12/31/15 Sales revenue $900,000 $1,350,000 Less: Cost of goods sold 505,000 756,000 Other expenses 205,000 304,000 710,000 1,060,000 Income before income taxes 190,000 290,000 Income taxes (40%) 76,000 116,000 Net income $114,000 $ 174,000 Other data: 1. Inventory on hand at December 31, 2013, consisted of 40,000 units valued at $3.00 each. 2. Sales (all units sold at the same price in a given year): 2014—150,000 units @ $6.00 each 2015—180,000 units @ $7.50 each 3. Purchases (all units purchased at the same price in given year): 2014—150,000 units @ $3.50 each 2015—180,000 units @ $4.40 each 4. Income taxes at the effective rate of 40% are paid on December 31 each year. Instructions Name the account(s) presented in the financial statements that would have different amounts for 2015 if LIFO rather than FIFO had been used, and state the new amount for each account that is named. Show computations.

What does viscoelasticity mean, when applied to a polymer melt?

Give an example of how a business can reduce variable costs by increasing fixed costs.

Indicate whether each of the following items is a real or nominal account and whether it appears in the balance sheet or the income statement. (a) Prepaid Rent. (b) Salaries and Wages Payable. (c) Inventory. (d) Accumulated Depreciation—Equipment. (e) Equipment. (f) Service Revenue. (g) Salaries and Wages Expense. (h) Supplies.

How is shear strength S related to tensile strength TS, on average?

Explain how sellers of financial futures contracts can offset their position. How is their gain or loss determined? (LO1)

Using the facts from the previous problem, how would your answer change if, instead, Duff adopted the cash method of accounting to allow them to better control the timing of their cash receipts and disbursements?

Direct costs and overhead Job 87M had direct material costs of $400 and a total cost of $2100. Overhead is allocated at the rate of 75 per cent of prime cost (direct material and direct labour).   Required (a)     How much direct labour was used? (b)     How much overhead was allocated?

Consider the argument that whether an industry is in the public sector or private sector has far less bearing on its performance than the degree of competition it faces.

Why would a pension fund or insurance company consider selling stock index futures? (LO3)

] Manny hired his brother’s firm to provide accounting services to his business. During the current year, Manny paid his brother’s firm $82,000 for services even though other firms were willing to provide the same services for $40,000. How much of this expenditure, if any, is deductible as an ordinary and necessary business expenditure?

Assume Rita’s consulting business generated $13,000 in gross income for the current year. Further, assume Rita uses the actual expense method for computing her home office expense deduction.

1.       : Evaluate your own personal experiences with people from other cultural backgrounds. How well do you think those experiences have prepared you to understand the unique needs and dilemmas of a diverse workforce?

Who pays the first level of tax on a C corporation’s income? What is the tax rate applicable to the first level of tax?

Explain when an expenditure should be “capitalized” based upon accounting principles. From time to time, it is suggested that all business expenditures should be deducted when incurred for tax purposes. Do you agree with this proposition, and if so, why?

What is the difference between an open-loop positioning system and a closed-loop positioning system?

: Compare and contrast programmed and nonprogrammed decisions, including how they relate to the presence of certainty, uncertainty, and ambiguity.

Suppose in Problem 16.5 that the average particle diameter = 0.002 in; however, the sizes vary, forming a statistical distribution as follows: 25% of the particles by weight are 0.001 in, 50% are 0.002 in, and 25% are 0.003 in. Given this distribution, what is the total surface area of all the particles in the pile?

Where can authoritative IFRS be found related to investments?

Use the information provided in IFRS12-8. Assume that the recoverable amount of the division is estimated to be $750,000. Prepare Waters’ journal entry, if necessary, to record impairment of the goodwill.

Lexington Co. has the following available-for-sale securities outstanding on December 31, 2014 (its first year of operations). Cost Fair Value Greenspan Corp. Stock $20,000 $19,000 Summerset Company Stock 9,500 8,800 Tinkers Company Stock 20,000 20,600 $49,500 $48,400 During 2015, Summerset Company stock was sold for $9,200, the difference between the $9,200 and the “fair value” of $8,800 being recorded as a “Gain on Sale of Investments.” The market price of the stock on December 31, 2015, was Greenspan Corp. stock $19,900; Tinkers Company stock $20,500. Instructions (a) What justification is there for valuing available-for-sale securities at fair value and reporting the unrealized gain or loss as part of stockholders’ equity? (b) How should Lexington Company apply this rule on December 31, 2014? Explain. (c) Did Lexington Company properly account for the sale of the Summerset Company stock? Explain. (d) Are there any additional entries necessary for Lexington Company at December 31, 2015, to reflect the facts on the financial statements in accordance with generally accepted accounting principles? Explain.

What is the relationship between the mpc, the mpcd and the mpw?