Question & Answer

Why do the world’s top footballers earn millions of pounds per year, while the top lacrosse players are paid less than the equivalent of £30 000?

Eisler Corporation issued 2,000 $1,000 bonds at 101. Each bond was issued with one detachable stock warrant. After issuance, the bonds were selling in the market at 98, and the warrants had a market price of $40. Use the proportional method to record the issuance of the bonds and warrants

1.              : Let Owens know that you care about what he’s going through, but insist that he take a short paid leave and get counseling to deal with his emotional difficulties and evaluate the seriousness of his problems with alcohol. If the alcohol abuse continues, require him to attend a treatment program or find another job.

How would the political business cycle be affected if governments were able to choose when to hold elections?

Does this mean, therefore, that there were no positive incentive effects from the 1979–97 Conservative government’s tax measures?

Amigos Burrito Inc. sells franchises to independent operators throughout the northwestern part of the United States. The contract with the franchisee includes the following provisions. 1. The franchisee is charged an initial fee of $120,000. Of this amount, $20,000 is payable when the agreement is signed, and a $20,000 non-interest-bearing note is payable at the end of each of the 5 subsequent years. 2  All of the initial franchise fee collected by Amigos is to be refunded and the remaining obligation canceled if, for any reason, the franchisee fails to open his or her franchise. 3. In return for the initial franchise fee, Amigos agrees to (a) assist the franchisee in selecting the location for the business, (b) negotiate the lease for the land, (c) obtain financing and assist with building design, (d) supervise construction, (e) establish accounting and tax records, and (f) provide expert advice over a 5-year period relating to such matters as employee and management training, quality control, and promotion. 4. In addition to the initial franchise fee, the franchisee is required to pay to Amigos a monthly fee of 2% of sales for menu planning, receipt innovations, and the privilege of purchasing ingredients from Amigos at or below prevailing market prices. Management of Amigos Burrito estimates that the value of the services rendered to the franchisee at the time the contract is signed amounts to at least $20,000. All franchisees to date have opened their locations at the scheduled time, and none have defaulted on any of the notes receivable. The credit ratings of all franchisees would entitle them to borrow at the current interest rate of 10%. The present value of an ordinary annuity of five annual receipts of $20,000 each discounted at 10% is $75,816. Instructions (a) Discuss the alternatives that Amigos Burrito Inc. might use to account for the initial franchise fees, evaluate each by applying generally accepted accounting principles, and give illustrative entries for each alternative. (b) Given the nature of Amigos Burrito’s agreement with its franchisees, when should revenue be recognized? Discuss the question of revenue recognition for both the initial franchise fee and the additional monthly fee of 2% of sales, and give illustrative entries for both types of revenue. (c) Assume that Amigos Burrito sells some franchises for $100,000, which includes a charge of $20,000 for the rental of equipment for its useful life of 10 years; that $50,000 of the fee is payable immediately and the balance on non-interest-bearing notes at $10,000 per year; that no portion of the $20,000 rental payment is refundable in case the franchisee goes out of business; and that title to the equipment remains with the franchisor. Under those assumptions, what would be the preferable method of accounting for the rental portion of the initial franchise fee? Explain.

1.      : Recommend a meeting with the sales representatives entitled to a bonus and tell them that the company’s deteriorating financial situation triggers one of the contingency clauses in their contract so the company won’t be issuing their bonus checks. Tacoma will just have to deal with the negative impact on sales rep motivation.

Why will exporters probably welcome a ‘deterioration’ in the terms of trade?

Tom was just hired by Acme Corporation and has decided to purchase disability insurance.  This insurance promises to pay him weekly benefits to replace his salary should he be unable to work because of disability.  Disability insurance is also available through Acme as part of its compensation plan.  Acme pays these premiums as a nontaxable fringe benefit, but the plan promises to pay about 10 percent less in benefits.  If Tom elects to have Acme pay the premiums, then his compensation will be reduced by an equivalent amount.  Should tax considerations play a role in Tom’s choice to buy disability insurance through Acme or on his own?  Explain.

What is a “wash sale”? What is the purpose of the wash sale tax rules?

Describe each of the two types of sheet-metal-bending operations: V-bending and edge bending

Look through the costs and benefits that we identified from the completion of the internal market. Do the same costs and benefits arise from the enlarged EU of 27 members?

What is the difference between a tax deduction and a tax credit? Is one more beneficial than the other? Explain.

The following are selected transactions that may affect stockholders’ equity. 1. Recorded accrued interest earned on a note receivable. 2. Declared a cash dividend. 3. Declared and distributed a stock split. 4. Approved a retained earnings restriction. 5. Recorded the expiration of insurance coverage that was previously recorded as prepaid insurance. 6. Paid the cash dividend declared in item 2 above. 7. Recorded accrued interest expense on a note payable. 8. Declared a stock dividend. 9. Distributed the stock dividend declared in item 8. Instructions In the following table, indicate the effect each of the nine transactions has on the financial statement elements listed. Use the following code: I 5 Increase, D 5 Decrease, NE 5 No effect.

The following letter was sent to the SEC and the FASB by leaders of the business community. Dear Sirs: The FASB has been struggling with accounting for derivatives and hedging for many years. The FASB has now developed, over the last few weeks, a new approach that it proposes to adopt as a final standard. We understand that the Board intends to adopt this new approach as a final standard without exposing it for public comment and debate, despite the evident complexity of the new approach, the speed with which it has been developed and the significant changes to the exposure draft since it was released more than one year ago. Instead, the Board plans to allow only a brief review by selected parties, limited to issues of operationality and clarity, and would exclude questions as to the merits of the proposed approach. As the FASB itself has said throughout this process, its mission does not permit it to consider matters that go beyond accounting and reporting considerations. Accordingly, the FASB may not have adequately considered the wide range of concerns that have been expressed about the derivatives and hedging proposal, including concerns related to the potential impact on the capital markets, the weakening of companies’ ability to manage risk, and the adverse control implications of implementing costly and complex new rules imposed at the same time as other major initiatives, including the Year 2000 issues and a single European currency. We believe that these crucial issues must be considered, if not by the FASB, then by the Securities and Exchange Commission, other regulatory agencies, or Congress. We believe it is essential that the FASB solicit all comments in order to identify and address all material issues that may exist before issuing a final standard. We understand the desire to bring this process to a prompt conclusion, but the underlying issues are so important to this nation’s businesses, the customers they serve and the economy as a whole that expediency cannot be the dominant consideration. As a result, we urge the FASB to expose its new proposal for public comment, following the established due process procedures that are essential to acceptance of its standards, and providing sufficient time to affected parties to understand and assess the new approach. We also urge the SEC to study the comments received in order to assess the impact that these proposed rules may have on the capital markets, on companies’ risk management practices, and on management and financial controls. These vital public policy matters deserve consideration as part of the Commission’s oversight responsibilities. We believe that these steps are essential if the FASB is to produce the best possible accounting standard while minimizing adverse economic effects and maintaining the competitiveness of U.S. businesses in nthe international marketplace. Very truly yours, (This letter was signed by the chairs of 22 of the largest U.S. companies.) Instructions Answer the following questions. (a) Explain the “due process” procedures followed by the FASB in developing a financial reporting standard. (b) What is meant by the term “economic consequences” in accounting standard-setting? (c) What economic consequences arguments are used in this letter? (d) What do you believe is the main point of the letter? (e) Why do you believe a copy of this letter was sent by the business community to influential members of the U.S. Congress?

Identify the four forces that act upon the chip in the orthogonal metal cutting model but cannot be measured directly in an operation.

At December 31, 2014, Besler Corporation had a projected benefit obligation of $560,000, plan assets of $322,000, and prior service cost of $127,000 in accumulated other comprehensive income. Determine the pension asset/liability at December 31, 2014.

Chandra was the sole shareholder of Pet Emporium, which was originally formed as an S corporation.  When Pet Emporium terminated its S election on August 31, 2023, Chandra had a stock basis and an at-risk amount of $0.  Chandra also had a suspended loss from Pet Emporium of $9,000. What amount of the suspended loss is Chandra allowed to deduct, and what is her basis in her Pet Emporium stock at the end of the post-termination transition period under the following alternative scenarios (assume Pet Emporium files for an extension to file its tax returns)?   a. Chandra makes capital contributions of $7,000 on August 30, 2024, and $4,000 on September 14, 2024.

Compare and contrast the cost and percentage depletion methods for recovering the costs of natural resources. What are the similarities and differences between the two methods?

Supply Explain how the ample reserves framework that the Fed currently uses has a different impact on the money supply than the open market operations that the Fed used prior to the credit crisis. (LO2)

Wynn Company offers a set of building blocks to customers who send in 3 UPC codes from Wynn cereal, along with 50¢. The block sets cost Wynn $1.10 each to purchase and 60¢ each to mail to customers. During 2014, Wynn sold 1,200,000 boxes of cereal. The company expects 30% of the UPC codes to be sent in. During 2014, 120,000 UPC codes were redeemed. Prepare Wynn’s December 31, 2014, adjusting entry.

1.              : How would you suggest that Baker modify his leadership style if he wants to succeed Davidson in two years? Be specific.

Solve previous Problem 24.8 except that the part is made of cast iron instead of aluminum and the cutting speed is reduced to 100 m/min

What were some of the more obvious reasons for the savings institution crisis of the late 1980s? (LO6)

Besides high carbon content, what other alloying element is characteristic of the cast irons?