Question & Answer

1.       : A report published by Hay Group found that some managers have personalities suited to horizontal relationships, such as project management, and achieve results with little formal authority. Other managers are more suited to operating roles with much formal authority in a vertical structure. In what type of structure—functional, matrix, team, or virtual network—do you believe your personality would best fit? Which structure would be the most challenging for you? Give your reasons.

On December 31, 2014, Grando Company sells production equipment to Fargo Inc. for $50,000. Grando includes a 1-year warranty service with the sale of all its equipment. The customer receives and pays for the equipment on December 31, 2014. Grando estimates the prices to be $48,800 for the equipment and $1,200 for the warranty. Instructions (a) Prepare the journal entry to record this transaction on December 31, 2014. (b) Indicate how much (if any) revenue should be recognized on January 31, 2015, and for the year 2015.

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.

A building that was purchased on December 31, 2000, for $2,500,000 was originally estimated to have a life of 50 years with no salvage value at the end of that time. Depreciation has been recorded through 2014. During 2015, an examination of the building by an engineering firm discloses that its estimated useful life is 15 years after 2014. What should be the amount of depreciation for 2015?

Is it reasonable to assume that people seek to equate the marginal utility/price ratios of the goods that they purchase, if (a) they have never heard of ‘utility’, let alone ‘marginal utility’; (b) marginal utility cannot be measured in any absolute way?

When is revenue recognized in the following situations:(a) Revenue from selling products? (b) Revenue from services performed? (c) Revenue from permitting others to use enterprise assets? (d) Revenue from disposing of assets other than products?

What factors influence the dividend policy of a company?

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.

Do behavioural theories of the firm allow us to make any predictions about firms’ prices and output?

What is unique about the polymer cellulose?

What role does the ASX Corporate Governance Council’s Corporate    government principles and recommendations, and the    Corporations Act have in executive remuneration?             (LO5)

Compare and contrast the three types of tax law sources and give examples of each.

What is the difference between earned and unearned income?

How are asymmetric shocks dealt with within a country? To what extent can this process be mirrored within the eurozone?

Does a rise in potential real income result in a fall in the natural rate of unemployment?

Presented below is the current liabilities section and related note of Mohican Company.   Instructions Answer the following questions. (a) What is the difference between the cash basis and the accrual basis of accounting for warranty costs? (b) Under what circumstance, if any, would it be appropriate for Mohican Company to recognize deferred revenue on warranty contracts? (c) If Mohican Company recognized deferred revenue on warranty contracts, how would it recognize this revenue in subsequent periods?

1.       : This chapter suggested that structure should be designed to fit strategy. Some theorists argue that strategy should be designed to fit the organization’s structure. With which theory do you agree? Explain.

The directors of Merchant Corporation are considering the issuance of a stock dividend. They have asked you to discuss the proposed action by answering the following questions. Instructions (a) What is a stock dividend? How is a stock dividend distinguished from a stock split (1) from a legal standpoint, and (2) from an accounting standpoint? (b) For what reasons does a corporation usually declare a stock dividend? A stock split? (c) Discuss the amount, if any, of retained earnings to be capitalized in connection with a stock dividend.

Explain why mortgage originators have been criticized for their behavior during the credit crisis. Should other participants in the mortgage securitization process have recognized that lack of complete disclosure in mortgages? (LO5)

Veldre Company provides the following information about its defined benefit pension plan for the year 2014. Service cost $ 90,000 Contribution to the plan 105,000 Prior service cost amortization 10,000 Actual and expected return on plan assets 64,000 Benefi ts paid 40,000 Plan assets at January 1, 2014 640,000 Projected benefi t obligation at January 1, 2014 700,000 Accumulated OCI (PSC) at January 1, 2014 150,000 Interest/discount (settlement) rate 10% Instructions Compute the pension expense for the year 2014.

When incorporating Spotfree, a cleaning company, Jayne transferred accounts receivable (fair market value $20,000 and $0 tax basis) and $12,000 of accounts payable from her cash-method sole proprietorship to Spotfree in exchange for Spotfree stock valued at $8,000. Assume the transfer qualifies under §351.   a. What are the amount and character of the gain Jayne must recognize on the exchange?  b. What is Jayne's basis in the Spotfree stock she received in the exchange?

Describe the procedures involved in segregating various deferred tax amounts into current and noncurrent categories.

Wood-Mode Company is involved in the design, manufacture, and installation of various types of wood products for large construction projects. Wood-Mode recently completed a large contract for Stadium Inc., which consisted of building 35 different types of concession counters for a new soccer arena under construction. The terms of the contract are that upon completion of the counters, Stadium would pay $2,000,000. Unfortunately, due to the depressed economy, the completion of the new soccer arena is now delayed. Stadium has therefore asked Wood-Mode to hold the counters at its manufacturing plant until the arena is completed. Stadium acknowledges in writing that it ordered the counters and that they now have ownership. The time that Wood-Mode Company must hold the counters is totally dependent on when the arena is completed. Because Wood-Mode has not received additional progress payments for the arena due to the delay, Stadium has provided a deposit of $300,000. Instructions (a) Explain this type of revenue recognition transaction. (b) What factors should be considered in determining when to recognize revenue in this transaction? (c) Prepare the journal entry(ies) that Wood-Mode should make, assuming it signed a valid sales contract to sell the counters and received at the time of sale the $300,000 payment.

Solve Problem 33.1 except that the layer thickness = 0.40 mm.

Burbank Corporation (calendar-year-end) acquired the following property this year: Asset Placed in Service Basis Used copier November 12 $7,800 New computer equipment June 6 14,000 Furniture July 15 32,000 New delivery truck October 28 19,000 Luxury auto January 31 70,000   Total $142,800 Burbank acquired the copier in a tax-deferred transaction when the shareholder contributed the copier to the business in exchange for stock. a) Assuming no bonus or §179 expense, what is Burbank’s maximum cost recovery deduction for this year? b) Assuming Burbank would like to maximize its cost recovery deductions by electing bonus and §179 expense, which assets should Burbank immediately expense?  c) What is Burbank’s maximum cost recovery deduction this year assuming it elects §179 expense and claims bonus depreciation?