Question & Answer

Russell Corporation sold a parcel of land valued at $400,000. Its basis in the land was $275,000. For the land, Russell received $50,000 in cash in year 0 and a note providing that Russell will receive $175,000 in year 1 and $175,000 in year 2 from the buyer.    a. What is Russell’s realized gain on the transaction?   b. What is Russell’s recognized gain in year 0, year 1, and year 2?

Your client, Cascade Company, is planning to invest some of its excess cash in 5-year revenue bonds issued by the county and in the shares of one of its suppliers, Teton Co. Teton’s shares trade on the over-the-counter market. Cascade plans to classify these investments as trading. They would like you to conduct some research on the accounting for these investments. 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) Since the Teton shares do not trade on one of the large securities exchanges, Cascade argues that the fair value of this investment is not readily available. According to the authoritative literature, when is the fair value of a security “readily determinable”? (b) How is an impairment of a debt investment accounted for? (c) To avoid volatility in their financial statements due to fair value adjustments, Cascade debated whether the bond investment could be classified as held-for-collection; Cascade is pretty sure it will hold the bonds for 5 years. What criteria must be met for Cascade to classify it as held-for-collection?

A 1-8 UNC low carbon steel bolt (diameter = 1.0 in, 8 threads/in) is currently planned for a certain application. It is to be preloaded to 75% of its proof strength, which is 33,000 lb/in2 (Table 32.2). However, this bolt is too large for the size of the components involved, and a higher strength but smaller bolt would be preferable. Determine (a) the smallest nominal size of an alloy steel bolt (proof strength = 120,000 lb/in2) that could be used to achieve the same preload from the following standard UNC sizes used by the company: 1/4-20, 5/16-18, 3/8-16, 1/2-13, 5/8-11, or 3/4-10; and (b) compare the torque required to obtain the preload for the original 1-in bolt and the alloy steel bolt selected in part (a) if the torque coefficient in both cases = 0.20.

In a continuous processing situation (such as an oil refinery), the beginning and ending WIP inventories are frequently the same. How does this simplify determination of equivalent units completed?

What is the difference between a CPA’s unqualified opinion or “clean” opinion and a qualified one?

Carolyn Keene, Inc. decided to establish a petty cash fund to help ensure internal control over its small cash expenditures. The following information is available for the month of April. 1. On April 1, it established a petty cash fund in the amount of $200. 2. A summary of the petty cash expenditures made by the petty cash custodian as of April 10 is as follows. Delivery charges paid on merchandise purchased $60.00 Supplies purchased and used 25.00 Postage expense 33.00 I.O.U. from employees 17.00 Miscellaneous expense 36.00 The petty cash fund was replenished on April 10. The balance in the fund was $27. 3. The petty cash fund balance was increased $100 to $300 on April 20. Instructions Prepare the journal entries to record transactions related to petty cash for the month of April.

Washington Company has the following stockholders’ equity accounts at December 31, 2014. Common Stock ($100 par value, authorized 8,000 shares) $480,000 Retained Earnings 294,000 Instructions (a) Prepare entries in journal form to record the following transactions, which took place during 2015. (1) 280 shares of outstanding stock were purchased at $97 per share. (These are to be accounted for using the cost method.) (2) A $20 per share cash dividend was declared. (3) The dividend declared in (2) above was paid. (4) The treasury shares purchased in (1) above were resold at $102 per share. (5) 500 shares of outstanding stock were purchased at $105 per share. (6) 350 of the shares purchased in (5) above were resold at $96 per share. (b) Prepare the stockholders’ equity section of Washington Company’s balance sheet after giving effect to these transactions, assuming that the net income for 2015 was $94,000. State law requires restriction of retained earnings for the amount of treasury stock.

Where there is evidence that the utility of inventory goods, as part of their disposal in the ordinary course of business, will be less than cost, what is the proper accounting treatment?

What is a DIP?

What are the three steps in the LIGA process?

Explain why Congress allows self-employed taxpayers to deduct the cost of health insurance above the line (for AGI) when employees can only itemize this cost as a medical expense.  Would a self-employed taxpayer ever prefer to claim health insurance premiums as an itemized deductions rather than a deduction for AGI?  Explain.

Jack, who files married filing separately, has AGI of $45,000 and paid the following taxes this year. Calculate how much Jack can deduct for taxes as an itemized deduction this year.

What is a eutectic alloy?

Would it be desirable for all countries to stick to the same targets?

When the Fed lowers the federal funds rate target, will the cost of capital of U.S. companies be reduced? Explain how the segmented markets theory regarding the term structure of interest rates (as explained in Chapter 3) could influence the degree to which the Fed’s monetary policy affects long-term interest rates. (LO2)

Describe the business purpose, step-transaction, and substance-over-form doctrines. What types of tax planning strategies may these doctrines inhibit?

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

How is the shear modulus of elasticity G related to the tensile modulus of elasticity E, on average?

To what extent was the debt crisis of the early 1980s caused by inappropriate policies that had been pursued by the debtor countries?

From Table 29.1, C = 0.92 x 10-4 in3/A-min, cathode efficiency E = 15%. Plated volume V = EC∫Idt = EC∫(12 + 0.2t)dt = EC(12t + 0.1t2) over the range 0 to 20 min. V = 0.15(0.92 x 10-4)(12 x 20 + 0.1(20)2) = 0.00386 in3

A dial-indexing table has 6 stations. One station is used for loading and unloading, which is accomplished by a human worker. The other five perform processing operations. The longest process takes 25 sec and the indexing time = 5 sec. Each station has a frequency of failure = 0.015. When a failure occurs it takes an average of 3.0 min to make repairs and restart. Determine (a) hourly production rate and (b) line efficiency.

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.

68. Two years ago, Bethesda Corporation bought a delivery truck for $30,000 (not subject to the luxury auto depreciation limits). Bethesda used MACRS 200 percent declining balance and the half-year convention to recover the cost of the truck, but it did not elect §179 expensing and opted out of bonus depreciation. Answer the questions for the following alternative scenarios. a. Assuming Bethesda used the truck until it sold it in March of year 3, what depreciation expense can it claim on the truck for years 1 through 3?  b. Assume that Bethesda claimed $18,480 of depreciation expense on the truck before it sold it in year 3. What are the amount and character of the gain or loss if Bethesda sold the truck in year 3 for $17,000 and incurred $2,000 of selling expenses on the sale? c. Assume that Bethesda claimed $18,480 of depreciation expense on the truck before it sold it in year 3. What are the amount and character of the gain or loss if Bethesda sold the truck in year 3 for $35,000 and incurred $3,000 of selling expenses on the sale?

Why might the predictions of the rational choice model generally approximate human behaviour in many situations?

Stock market conditions serve as a leading economic indicator. Assuming the U.S. economy is in a recession, what are the implications of this indicator? Why might this indicator be inaccurate? (LO1)