Question & Answer

What is stretch forming?

Question: Where can authoritative IFRS guidance related to stockholders’ equity be found?

When we calculate average and effective tax rates, do we consider implicit taxes?  What effect does this have on taxpayers’ perception of equity?

Why is PM technology so well suited to the production of gears and bearings?

1.      Order the following primary value chain activities in the correct sequence. a.       Marketing and sales activities b.      Service activities c.       Operations d.      Outbound logistics   e.       Inbound logistics

What tax issue arises when a shareholder receives a nontaxable stock distribution?

How do different cost structures affect the breakeven point and operating leverage?

What implications would a vertical short-run aggregate supply curve have for the effects of demand management policy?

When the UK joined the ERM in 1990, it was hoped that this would make speculation pointless. As it turned out, speculation forced the UK to leave the ERM in 1992. Can you reconcile this with the argument that fixed rates discourage speculation?

Where can authoritative IFRS related to the accounting for leases be found?

Why are bank regulators more concerned about a large bank failure than a small bank failure? (LO6)

What is a copolymer?

Assume that the government cuts its expenditure and thereby runs a public-sector surplus. (a)  What will this do initially to equilibrium national income? (b)  What will it do to the demand for money and initially to interest rates? (c)  Under what circumstances will it lead to (i) a decrease in money supply; (ii) no change in money supply? (d)  What effect will (i) and (ii) have on the rate of interest compared with its original level?

What is dressing, in reference to grinding wheels?

List the factors that affect the hold down pressure in a drawing operation according to the video on sheet-metal stamping dies and processes.

Another example of anchoring is partial computation. Assume two different groups of people are given 5 seconds to find the product of eight numbers. The calculation is presented to the first group in ascending order (1 ´ 2 ´ 3 ´ 4 ´ 5 ´ 6 ´ 7 ´ 8) and to the second group in descending order (8 ´ 7 ´ 6 ´ 5 ´ 4 ´ 3 ´ 2 ´ 1). Which group do you think will give the most accurate answers? Explain your reasoning.

Explain how gains or losses on impaired assets should be reported in income.

In a complete model where there were three injections (I, G and X), and three withdrawals (S, T and M), what else would determine the shape of the ‘JW’ curve?

If Ollie were to consume more and more crisps, would his total utility ever (a) fall to zero; (b) become negative? Explain.

If the central bank targets real national income rather than inflation, what will be the shape of the MP curve?

In some instances, accounting principles require a departure from valuing inventories at cost alone. Determine the proper unit inventory price in the following cases. Cases 1 2 3 4 5 Cost $15.90 $16.10 $15.90 $15.90 $15.90 Net realizable value 14.50 19.20 15.20 10.40 16.40 Net realizable value less normal profi t 12.80 17.60 13.75 8.80 14.80 Market (replacement cost) 14.80 17.20 12.80 9.70 16.80

Would this uncertainty have a similar or a different effect on exporting companies and companies using imported inputs?

What are the two forms of sandwich structure among laminar composite structures? Briefly describe each

Jack, a geologist, had been debating for years whether or not to venture out on his own and operate his own business. He had developed a lot of solid relationships with clients, and he believed that many of them would follow him if he were to leave his current employer. As part of a New Year’s resolution, Jack decided he would finally do it. Jack put his business plan together, and on January 1 of this year, Jack opened his doors for business as a C corporation called Geo-Jack (GJ). Jack is the sole shareholder. Jack reported the following financial information for the year (assume GJ reports on a calendar year, uses the accrual method of accounting, and elects to account for inventory).  a) In January, GJ rented a small business office about 12 miles from Jack’s home. GJ paid $10,000, which represented a damage deposit of $4,000 and rent for two years ($3,000 annually). b) GJ earned and collected $290,000 performing geological-related services and selling its specialized digging tool [see part (i)]. c) GJ received $50 interest from municipal bonds and $2,100 interest from other investments. d) GJ purchased some new equipment in February for $42,500. It claimed depreciation on these assets during the year in the amount of $6,540. e) GJ paid $7,000 to buy luxury season tickets for Jack’s parents for State University football games. f) GJ paid Jack’s father $10,000 for services that would have cost no more than $6,000 if Jack had hired any other local business to perform the services. While Jack’s dad was competent, he does not command such a premium from his other clients. g) In an attempt to get his name and new business recognized, GJ paid $7,000 for a one-page ad in the Geologic Survey. It also paid $15,000 in radio ads to be run through the end of December. h) GJ leased additional office space in a building downtown. GJ paid rent of $27,000 for the year. i) In November, Jack’s office was broken into, and equipment valued at $5,000 was stolen. The tax basis of the equipment was $5,500. Jack received $2,000 of insurance proceeds from the theft. j) GJ incurred a $4,000 fine from the state government for digging in an unauthorized digging zone. k) GJ contributed $3,000 to lobbyists for their help in persuading the state government to authorize certain unauthorized digging zones. l) On July 1, GJ paid $1,800 for an 18-month insurance policy for its business equipment. The policy covers the period July 1 of this year through December 31 of next year. m) GJ borrowed $20,000 to help with the company’s initial funding needs. GJ used $2,000 of the funds to invest in municipal bonds. At the end of the year, GJ paid the $1,200 of interest expense that accrued on the loan during the year. n) Jack lives 12 miles from the office. He carefully tracked his mileage and drove his truck 6,280 miles between the office and his home. He also drove an additional 7,200 miles between the office and traveling to client sites. Jack did not use the truck for any other purposes. He did not keep track of the specific expenses associated with the truck. However, while traveling to a client site, Jack received a $150 speeding ticket. GJ reimbursed Jack for business mileage and for the speeding ticket. o) GJ purchased two season tickets (20 games) to attend State University baseball games for a total of $1,100. Jack took existing and prospective clients to the games to maintain contact and find further work. This was very successful for Jack as GJ gained many new projects through substantial discussions with the clients following the games. p) GJ paid $3,500 for meals when sales employees met with prospective clients. q) GJ had a client who needed Jack to perform work in Florida. Because Jack had never been to Florida before, he booked an extra day and night for sightseeing. Jack spent $400 for airfare and booked a hotel for 3 nights ($120/night). (Jack stayed two days for business purposes and one day for personal purposes.) He also rented a car for $45 per day. The client provided Jack’s meals while Jack was doing business, but GJ paid all expenses. r) GJ paid a total of $10,000 of wages to employees during the year, and cost of goods sold was $15,000.  Required: a) What is GJ’s net business income for tax purposes for the year? b) As a C corporation, does GJ have a required tax year? If so, what would it be? c) If GJ were a sole proprietorship, would it have a required tax year-end? If so, what would it be? d) If GJ were an S corporation, would it have a required tax year-end? If so, what would it be?

What are the major uses of the gross profit method?