Question & Answer

On September 30, 2013, Rolen Machinery Co. sold a machine and accepted the customer’s zero-interest-bearing note. Rolen normally makes sales on a cash basis. Since the machine was unique, its sales price was not determinable using Rolen’s normal pricing practices. After receiving the first of two equal annual installments on September 30, 2014, Rolen immediately sold the note with recourse. On October 9, 2015, Rolen received notice that the note was dishonored, and it paid all amounts due. At all times prior to default, the note was reasonably expected to be paid in full. Instructions (a) (1) How should Rolen determine the sales price of the machine? (2) How should Rolen report the effects of the zero-interest-bearing note on its income statement for the year ended December 31, 2013? Why is this accounting presentation appropriate? (b) What are the effects of the sale of the note receivable with recourse on Rolen’s income statement for the year ended December 31, 2014, and its balance sheet at December 31, 2014? (c) How should Rolen account for the effects of the note being dishonored?

Hincapie Co. manufactures specialty bike accessories. The company is most well known for its product quality, and it has offered one of the best warranties in the industry on its higher-priced products—a lifetime guarantee. The warranty on these products is included in the sales price. Hincapie has a contract with a service company, which performs all warranty work on Hincapie products. Under the contract, Hincapie guarantees the service company at least $200,000 of warranty work for each year of the 3-year contract. The recent economic recession has been hard on Hincapie’s business, and sales for its higher-end products have been especially adversely impacted. As a result, Hincapie is planning to restructure its high-quality lines by moving manufacturing for those products into one of its other factories, shutting down assembly lines, and terminating workers. In order to keep some workers on-board, Hincapie plans to bring all warranty work in-house. It can terminate the current warranty contract by making a one-time termination payment of $75,000. The restructuring plans have been discussed by management during November 2013; they plan to get approval from the board of directors at the December board meeting and execute the restructuring in early 2014. Given the company’s past success, the accounting for restructuring activities has never come up. Hincapie would like you to do some research on how it should account for this restructuring according to IFRS. Instructions Access the IFRS authoritative literature 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 questions. (Provide paragraph citations.) (a) Identify the accounting literature that addresses the accounting for the various costs that will be incurred in the restructuring. (b) Advise Hincapie on the restructuring costs. When should Hincapie recognize liabilities arising from the restructuring? What costs can be included? What costs are excluded? (c) Does Hincapie have a liability related to the service contract? Explain. If Hincapie has a liability, at what amount should it be recorded?

Below is the comparative balance sheet for Stevie Wonder Corporation. Dec. 31, Dec. 31, 2014 2013 Cash $ 16,500 $ 21,000 Short-term investments 25,000 19,000 Accounts receivable 43,000 45,000 Allowance for doubtful accounts (1,800) (2,000) Prepaid expenses 4,200 2,500 Inventory 81,500 65,000 Land 50,000 50,000 Buildings 125,000 73,500 Accumulated depreciation—buildings (30,000) (23,000) Equipment 53,000 46,000 Accumulated depreciation—equipment (19,000) (15,500) Delivery equipment 39,000 39,000 Accumulated depreciation—delivery equipment (22,000) (20,500) Patents 15,000 202 $379,400 $300,000 Dec. 31, Dec. 31, 2014 2013 Accounts payable $ 26,000 $ 16,000 Short-term notes payable (trade) 4,000 6,000 Accrued payables 3,000 4,600 Mortgage payable 73,000 53,400 Bonds payable 50,000 62,500 Capital stock 140,000 102,000 Paid-in capital in excess of par 10,000 4,000 Retained earnings 73,400 51,500 $379,400 $300,000 Dividends in the amount of $15,000 were declared and paid in 2014. Instructions From this information, prepare a worksheet for a statement of cash flows. Make reasonable assumptions as appropriate. The short-term investments are considered available-for-sale and no unrealized gains or losses have occurred on these securities.

What are some of the challenges to the FASB and IASB in developing a converged conceptual framework?

In what circumstances is the IRS method for allocating expenses between personal use and rental use for vacation homes more beneficial to a taxpayer than the Tax Court method?

What are the two basic categories of structural frames used in stamping presses?

Management accounting function Differentiate between the management accounting function and the management accountant.

XYZ is a calendar-year corporation that began business on January 1, 2024. For the year, it reported the following information in its current-year audited income statement. Notes with important tax information are provided below.     Required: Identify the book-to-tax adjustments for XYZ. a. Reconcile book income to taxable income and identify each book-tax difference as temporary or permanent. b. Compute XYZ’s income tax liability. c. Complete XYZ’s Schedule M-1. d. Complete XYZ’s Form 1120, page 1 (use the most current form available). Ignore estimated tax penalties when completing this form. e. Determine the quarters for which XYZ is subject to penalties for the underpayment of estimated taxes (see assumptions and estimated tax information below).   XYZ corp. Book to Tax

Tim Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $38,000. Purchases since January 1 were $72,000; freight-in, $3,400; purchase returns and allowances, $2,400. Sales are made at 331/3% above cost and totaled $100,000 to March 9. Goods costing $10,900 were left undamaged by the fire; remaining goods were destroyed. Instructions (a) Compute the cost of goods destroyed. (b) Compute the cost of goods destroyed, assuming that the gross profit is 331/3% of sales.

Shetland Inc. had pretax financial income of $154,000 in 2014. Included in the computation of that amount is insurance expense of $4,000 which is not deductible for tax purposes. In addition, depreciation for tax purposes exceeds accounting depreciation by $10,000. Prepare Shetland’s journal entry to record 2014 taxes, assuming a tax rate of 45%.

Name the three basic categories of composite materials

Moana is a single taxpayer who operates a sole proprietorship.  She expects her taxable income next year to be $250,000, of which $200,000 is attributed to her sole proprietorship.  Moana is contemplating incorporating her sole proprietorship.  Using the single individual tax brackets and the corporate tax brackets, find out how much current tax this strategy could save Moana (ignore any Social Security, Medicare, or self-employment tax issues).  How much income should be left in the corporation?

Schuss Corporation sold equipment to Potsdam Company for $20,000. The equipment is on Schuss’s books at a net amount of $13,000. Schuss collected $10,000 in 2014, $5,000 in 2015, and $5,000 in 2016. If Schuss uses the cost-recovery method, what amount of gross profit will be recognized in each year?

Sam and Devon agree to go into business together selling college-licensed clothing. According to the agreement, Sam will contribute inventory valued at $100,000 in return for 80 percent of the stock in the corporation. Sam’s tax basis in the inventory is $60,000. Devon will receive 20 percent of the stock in return for providing accounting services to the corporation (these qualified as organizational expenditures).  The accounting services are valued at $25,000.

1.    : How do you think planning in today’s organizations compares to planning 25 years ago? Do you think planning becomes more important or less important in a world where everything is changing quickly and crises are a regular part of organizational life? Why?

Brooklyn files as a head of household for 2024.  They claimed the standard deduction of $21,900 for regular tax purposes.  Their regular taxable income was $80,000.  What is Brooklyn’s AMTI?

Identify two key influences on the nature of a management accounting system.

Sunita is a one-third owner in Bikes-R-Us, an S corporation that experienced a $45,000 loss this year (year 1). If her stock basis is $10,000 at the beginning of the year, how much of this loss clears the hurdle for deductibility (assume at-risk limitation equals the tax-basis limitation)? If she cannot deduct the whole loss, what happens to the remainder?  Is she able to deduct the entire loss if she sells her stock at year-end?

Bourne Guitars, a corporation, reported a $157,000 net §1231 gain for year 6. a. Assuming Bourne reported $50,000 of nonrecaptured net §1231 losses during years 1–5, what amount of Bourne’s net §1231 gain for year 6, if any, is treated as ordinary income? b. Assuming Bourne’s nonrecaptured net §1231 losses from years 1–5 were $200,000, what amount of Bourne’s net §1231 gain for year 6, if any, is treated as ordinary income?

Your client took accounting a number of years ago and was unaware of comprehensive income reporting. He is not convinced that any accounting standards exist for comprehensive income. Instructions Go to http://aahq.org/asclogin.cfm to log in and prepare responses to the following. Provide Codification references for your responses. (a) What authoritative literature addresses comprehensive income? When was it issued? (b) Provide the definition of comprehensive income. (c) Define classifications within net income and give examples. (d) Define classifications within other comprehensive income and give examples. (e) What are reclassification adjustments?

Lahey Corp. has three defined benefit pension plans as follows. Pension Assets Projected Benefi t (at Fair Value) Obligation Plan X $600,000 $500,000 Plan Y 900,000 720,000 Plan Z 550,000 700,000 How will Lahey report these multiple plans in its financial statements?

Kobe strongly dislikes SUVs and is appalled that so many are on the road.  He proposes to eliminate the federal income tax and replace it with a $50,000 annual tax per SUV.  Based on the number of SUVs currently owned in the United States, he estimates the tax will generate exactly the amount of tax revenue currently collected from the income tax.  What is wrong with Kobe’s proposal?  What type of forecasting is Kobe likely using?

Define bulk density and true density for metallic powders.

What does the term advanced composites mean?

Paladin Inc. reported taxable income of $1,000,000 this year and paid federal