Question & Answer

1.       : What do you think is your dominant decision style? Is your style compatible with group techniques such as brainstorming and engaging in rigorous debate? Discuss.

Recently, a government official in Europe stated that the European Central Bank needs to weaken the euro so as to improve the European economy. Write a short essay that explains the logic behind this recommendation, and state whether you believe the strategy would be successful.

In the extractive industries, businesses may pay dividends in excess of net income. What is the maximum permissible? How can this practice be justified?

What are the problems of relying on automatic fiscal stabilisers to ensure a stable economy at full employment?

Provide an example of an expense associated with the production of tax-exempt income and explain what might happen if Congress repealed the prohibition against deducting expenses incurred to produce tax-exempt income.

One financial accounting issue encountered when a company constructs its own plant is whether the interest cost on funds borrowed to finance construction should be capitalized and then amortized over the life of the assets constructed. What is the justification for capitalizing such interest?

1.              Give Owens a month’s notice and terminate him. He’s known as a good consultant, so he probably won’t have any trouble finding a new job, and you’ll avoid any further problems associated with his emotional difficulties and his possible alcohol problem.

Garner Inc. provides the following information related to its postretirement benefits for the year 2014. Accumulated postretirement benefi t obligation at January 1, 2014 $710,000 Actual and expected return on plan assets 34,000 Prior service cost amortization 21,000 Discount rate 10% Service cost 83,000 Instructions Compute postretirement benefit expense for 2014.

The barrel and screw of an extruder are generally divided into three sections; identify the sections.

Relative to arm’s-length transactions, why do related-person transactions receive more IRS scrutiny?

The use of RPE systems for the evaluation of individual managers has been abandoned by many organisations.  Microsoft is one example.  Given this can be conclude that RPE is no good?

What are the advantages of snap fitting?

Explain the use of call provisions on bonds. How can a call provision affect the price of a bond? (LO2)

Oregon Co. had purchased 200 shares of Washington Co. for $40 each this year and classified the investment as a trading security. Oregon Co. sold 100 shares of the stock for $45 each. At year-end, the price per share of the Washington Co. stock had dropped to $35. Instructions Prepare the journal entries for these transactions and any year-end adjustments.

On January 1, 2014, Ellen Greene Company makes the two following acquisitions. 1. Purchases land having a fair value of $200,000 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of $337,012. 2. Purchases equipment by issuing a 6%, 8-year promissory note having a maturity value of $250,000 (interest payable annually). The company has to pay 11% interest for funds from its bank. Instructions (Round answers to the nearest cent.) (a) Record the two journal entries that should be recorded by Ellen Greene Company for the two purchases on January 1, 2014. (b) Record the interest at the end of the first year on both notes using the effective-interest method.

Helen Keller Company began operations on January 1, 2013, adopting the conventional retail inventory system. None of the company’s merchandise was marked down in 2013 and, because there was no beginning inventory, its ending inventory for 2013 of $38,100 would have been the same under either the conventional retail system or the LIFO retail system. On December 31, 2014, the store management considers adopting the LIFO retail system and desires to know how the December 31, 2014, inventory would appear under both systems. All pertinent data regarding purchases, sales, markups, and markdowns are shown below. There has been no change in the price level. Cost Retail Inventory, Jan. 1, 2014 $ 38,100 $ 60,000 Markdowns (net) 13,000 Markups (net) 22,000 Purchases (net) 130,900 178,000 Sales (net) 167,000 Instructions Determine the cost of the 2014 ending inventory under both (a) the conventional retail method and (b) the LIFO retail method.

Some countries do not have well-established markets for debt securities or equity securities. Why do you think this can limit the development of the country, business expansion, and growth in national income in these countries? (LO3)

Assume the yield curve experiences a sudden shift such that the new yield curve is higher and more steeply sloped today than it was yesterday. If a firm issues new bonds today, would its bonds sell for higher or lower prices than if it had issued the bonds yesterday? Explain. (LO2)

Are satisficing firms more likely to suffer from X inefficiency (see Box 7.5) than firms which seek to maximise profit or sales revenue?

Charles has AGI of $50,000 and has made the following payments related to (1) land he inherited from his deceased aunt and (2) a personal vacation taken last year. Calculate the amount of taxes Charles may include in his itemized deductions for the year under the following circumstances:

Kimmel Company uses the net method of accounting for sales discounts. Kimmel also offers trade discounts to various groups of buyers. On August 1, 2014, Kimmel sold some accounts receivable on a without recourse basis. Kimmel incurred a finance charge. Kimmel also has some notes receivable bearing an appropriate rate of interest. The principal and total interest are due at maturity. The notes were received on October 1, 2014, and mature on September 30, 2016. Kimmel’s operating cycle is less than one year. Instructions (a) (1) Using the net method, how should Kimmel account for the sales discounts at the date of sale? What is the rationale for the amount recorded as sales under the net method? (2) Using the net method, what is the effect on Kimmel’s sales revenues and net income when customers do not take the sales discounts? (b) What is the effect of trade discounts on sales revenues and accounts receivable? Why? (c) How should Kimmel account for the accounts receivable factored on August 1, 2014? Why? (d) How should Kimmel account for the note receivable and the related interest on December 31, 2014? Why?

Job costing, over- and underapplied overhead, journal entries Shane’s Shovels produces small, custom earth-moving equipment for landscaping companies. Manufacturing overhead is allocated to work in process using an estimated overhead rate. During April, transactions for Shane’s Shovels included the following:       Beginning and ending work in process were both zero.   Required (a)     What was the cost of jobs completed in April? (b)     Was manufacturing overhead underapplied or overapplied? By how much? (c)      Write out the journal entries for these transactions, including the adjustment.

Describe the origination process for corporations that are about to issue new stock. (LO1)

What are the factors that affect weldability

Name the commonly used coating materials deposited by PVD onto cutting tools?