Question & Answer

: Explain how factors such as creating an open communication climate, the choice of communication channels, candor, questions, and nonverbal communications influence the quality of communication.

Presented below are three models for setting GAAP. 1. The purely political approach, where national legislative action decrees GAAP. 2. The private, professional approach, where GAAP is set and enforced by private professional actions only. 3. The public/private mixed approach, where GAAP is basically set by private-sector bodies that behave as though they were public agencies and whose standards to a great extent are enforced through governmental agencies. Instructions (a) Which of these three models best describes standard-setting in the United States? Comment on your answer. (b) Why do companies, financial analysts, labor unions, industry trade associations, and others take such an active interest in standard-setting? (c) Cite an example of a group other than the FASB that attempts to establish accounting standards. Speculate as to why another group might wish to set its own standards.

In what situation will the unrealized holding gain or loss on an available-for-sale security be reported in income?

An automated transfer line has 20 stations and operates with an ideal cycle time of 1.50 min. Probability of a station failure = 0.008 and average downtime when a breakdown occurs is 10.0 minutes. Determine (a) the average production rate and (b) the line efficiency.

Indicate whether the following statements about the conceptual framework are true or false. If false, provide a brief explanation supporting your position. (a) The fundamental qualitative characteristics that make accounting information useful are relevance and verifiability. (b) Relevant information only has predictive value, confirmatory value, or both. (c) Information that is a faithful representation is characterized as having predictive or confirmatory value. (d) Comparability pertains only to the reporting of information in a similar manner for different companies. (e) Verifiability is solely an enhancing characteristic for faithful representation. (f) In preparing financial reports, it is assumed that users of the reports have reasonable knowledge of business and economic activities.

Last year, Wyeth Company recorded an impairment on an asset held for use. Recent appraisals indicate that the asset has increased in value. Should Wyeth record this recovery in value?

Linear, stepwise linear, and piecewise linear cost functions (a)          Total fixed costs are $10 000 per week and the variable cost per unit is $8. Write the algebraic expression for the cost function and graph it. What are the assumptions of the cost function? (b)          Total fixed costs are $25 000 per week up to 2000 units a week and then jump up to $35 000 per week. The variable cost per unit is $8. Write the algebraic expression for the cost function and graph it. (c)           The average cost to produce 10,000 units is $45 and the average cost to produce 12 000 units is $44. Estimate the average cost to produce 15 000 units. (d)          The total cost function for Hot Dog Days, a hot dog cart business in Centennial Park, is TC = $5000 + 45% ´ total revenues. Estimate the total cost for a month when total revenues are $10 000.

Grady received $8,200 of Social Security benefits this year. Grady also reported salary and interest income this year. What amount of the benefits must Grady include in his gross income under the following two independent situations?

Parent Co. invested $1,000,000 in Sub Co. for 25% of its outstanding stock. Sub Co. pays out 40% of net income in dividends each year. Instructions Use the information in the following T-account for the investment in Sub to answer the following questions. Investment in Sub Co. 1,000,000 110,000 44,000 (a) How much was Parent Co.’s share of Sub Co.’s net income for the year? (b) How much was Parent Co.’s share of Sub Co.’s dividends for the year? (c) What was Sub Co.’s total net income for the year? (d) What was Sub Co.’s total dividends for the year?

SCC corporation (a calendar-year C corporation) has a net operating loss (NOL) carryover to 2024 in the amount of $30,000.  How much tax will SCC pay for 2024 if it reports taxable income from operations of $20,000 before considering loss carryovers under the following assumptions?   a. The NOL originated in 2017.

As a newly enrolled accounting major, you are anxious to better understand accounting institutions and sources of accounting literature. As a first step, you decide to explore the IASB’s Framework for the Preparation and Presentation of Financial Statements. Instructions Access the IASB Framework at the IASB website (http://eifrs.iasb.org/ ). (Click on the IFRS tab and then register for free eIFRS access if necessary.) When you have accessed the documents, you can use the search tool in your Internet browser to respond to the following items. (Provide paragraph citations.) (a) What is the objective of financial reporting? (b) What other means are there of communicating information, besides financial statements? (c) Indicate some of the users and the information they are most directly concerned with in economic decision-making.

Show how Eq. (21.4) is derived from Figure 21.6.

Explain the similarities and differences among absorption and variable costing.

Marlon and Latoya recently started building a house.  They had to pay $300 to the county government for a building permit.  Is the $300 payment a tax?  Why or why not?

Midwest Enterprises made the following entry on December 31, 2014. Interest Expense 10,000 Interest Payable 10,000 (To record interest expense due on loan from Anaheim National Bank) What entry would Anaheim National Bank make regarding its outstanding loan to Midwest Enterprises? Explain why this must be the case.

Describe the installment-sales method of accounting.

What are the general rules for measuring and recognizing gain or loss by both the debtor and the creditor in an impairment?

Compare and contrast financial accounting rules with the tax rules under UNICAP (§263A). Explain whether the UNICAP rules tend to accelerate or defer income relative to the financial accounting rules.

: Explain the difference between intrinsic and extrinsic rewards.

Based on results of a tensile test, the flow curve strain-hardening exponent = 0.40 and strength coefficient = 551.6 MPa. Based on this information, calculate the (engineering) tensile strength for the metal.

Why may the newer members of the Union have possibly the most to gain from the single market, but also the most to lose?

1.15     Relevant information Suppose you are responsible for ordering a replacement for your office photocopy machine. Part of your job is to decide whether to buy it or lease it.   Required (a)          Describe something that could be considered relevant information in this decision and explain why it is relevant. (b)          Describe something that could be considered irrelevant information in this decision and explain why it is irrelevant. (c)           Explain why it was important to distinguish between relevant and irrelevant information in this problem.

Direct and indirect costs; and cost driver selection         LO2,3 Venture Buses operates throughout the south-eastern suburbs of Melbourne, with its depot located in Cheltenham. Every day, fuel is delivered and stored in tanks located in the depot. This fuel is used by all the buses and administration vehicles. The accountant has been requested to develop a system to assign the cost to the different vehicles in the depot. He has asked your assistance in coming up with a way to identify the fuel costs. Required (a) From the perspective of the depot, is the cost of fuel a direct or indirect cost? (b) From the perspective of the vehicles attached to the depot, can the cost be classified as either direct or indirect?  Briefly explain. (c) What system would be required to have the cost classified as direct?  (d) If the accountant decided to go with an indirect cost classification, how could the cost be allocated? (e) Identify some factors that would determine which method would be the best for the assignment of fuel costs to the vehicles.

In what ways was it felt that the pronouncements issuedby the Financial Accounting Standards Board would carrygreater weight than the opinions issued by the AccountingPrinciples Board?

Presented below is the balance sheet of Sargent Corporation for the current year, 2014.   The following information is presented. 1. The current assets section includes cash $150,000, accounts receivable $170,000 less $10,000 for allowance for doubtful accounts, inventories $180,000, and unearned rent revenue $5,000. Inventoy is stated on the lower-of-FIFO-cost-or-market. 2. The investments section includes the cash surrender value of a life insurance contract $40,000; investments in common stock, short-term (trading) $80,000 and long-term (available-for-sale) $270,000; and bond sinking fund $250,000. The cost and fair value of investments in common stock are the same. 3. Property, plant, and equipment includes buildings $1,040,000 less accumulated depreciation $360,000; equipment $450,000 less accumulated depreciation $180,000; land $500,000; and land held for future use $270,000. 4. Intangible assets include a franchise $165,000; goodwill $100,000; and discount on bonds payable $40,000. 5. Current liabilities include accounts payable $140,000; notes payable—short-term $80,000 and longterm $120,000; and income taxes payable $40,000. 6. Long-term liabilities are composed solely of 7% bonds payable due 2022. 7. Stockholders’ equity has preferred stock, no par value, authorized 200,000 shares, issued 70,000 shares for $450,000; and common stock, $1.00 par value, authorized 400,000 shares, issued 100,000 shares at an average price of $10. In addition, the corporation has retained earnings of $320,000. Instructions Prepare a balance sheet in good form, adjusting the amounts in each balance sheet classification as affected by the information given above.