Question & Answer

How might the FOMC statement (issued following the committee’s meeting) stabilize financial markets more than if no statement were provided? (LO2)

Explain the assignment of income doctrine. In what situations would this doctrine potentially apply?

Presented below is an excerpt from the financial statements of H. J. Heinz Company. Segment and Geographic Data The company is engaged principally in one line of business—processed food products—which represents over 90% of consolidated sales. Information about the business of the company by geographic area is presented in the table below. There were no material amounts of sales or transfers between geographic areas or between affi liates, and no material amounts of United States export sales. Foreign (in thousands of United Western U.S. dollars) Domestic Kingdom Canada Europe Other Total Worldwide Sales $2,381,054 $547,527 $216,726 $383,784 $209,354 $1,357,391 $3,738,445 Operating income 246,780 61,282 34,146 29,146 25,111 149,685 396,465 Identifi able assets 1,362,152 265,218 112,620 294,732 143,971 816,541 2,178,693 Capital expenditures 72,712 12,262 13,790 8,253 4,368 38,673 111,385 Depreciation expense 42,279 8,364 3,592 6,355 3,606 21,917 64,196 Instructions (a) Why does H. J. Heinz not prepare segment information on its products or services? (b) What are export sales, and when should they be disclosed? (c) Why are sales by geographical area important to disclose?

Rocco operates a beauty salon as a sole proprietorship. Rocco also owns and rents an apartment building. In 2024, Rocco had the following income and expenses. Determine Rocco’s AGI and complete page 1 (through line 11) and Schedule 1 of Form 1040 for Rocco. You may assume that Rocco will owe $2,502 in self-employment tax on his salon income, with $1,251 representing the employer portion of the self-employment tax. You may also assume that his divorce from Svetlana was finalized in 2016.

What would the process of adjustment to the unanticipated size of the increase in aggregate demand look like if people had adjusted their inflationary expectation upwards from zero but to a rate less than p1?

Daniel Hardware Co. is considering alternative financing arrangements for equipment used in its warehouses. Besides purchasing the equipment outright, Daniel is also considering a lease. Accounting for the outright purchase is fairly straightforward, but because Daniel has not used equipment leases in the past, the accounting staff is less informed about the specific accounting rules for leases. The staff is aware of some lease rules related to a “90 percent of fair value,” “75 percent of useful life,” and “residual value deficiencies,” but they are unsure about the meanings of these terms in lease accounting. Daniel has asked you to conduct some research on these items related to lease capitalization criteria. Instructions If your school has a subscription to the FASB Codification, go to http://aaahq.org/ascLogin.cfm to log in and prepare responses to the following. Provide Codification references for your responses. (a) What is the objective of lease classification criteria? (b) An important element of evaluating leases is determining whether substantially all of the risks and rewards of ownership are transferred in the lease. How is “substantially all” defined in the authoritative literature? (c) Besides the noncancelable term of the lease, name at least three other considerations in determining the “lease term.” (d) A common issue in the accounting for leases concerns lease requirements that the lessee make up a residual value deficiency that is attributable to damage, extraordinary wear and tear, or excessive usage (e.g., excessive mileage on a leased vehicle). Do these features constitute a lessee guarantee of the residual value such that the estimated residual value of the leased property at the end of the lease term should be included in minimum lease payments? Explain.

What are some forms of off-balance-sheet financing?

Rocky and Bullwinkle Partnership sold a parcel of land during the current year and realized a gain of $250,000. Rocky and Bullwinkle did not recognize gain related to the sale of the land on its tax return. Is this possible? Explain how a taxpayer could realize a gain but not recognize it.

How will advertising affect the cartel’s MC and AR curves? How will this affect the profit-maximising output? Is there any problem here for the cartel in fixing the price?

Rondo and his business associate, Larry, are considering forming a business entity called R&L, but they are unsure about whether to form it as a C corporation, an S corporation, or an LLC taxed as a partnership for tax purposes. Rondo and Larry would each invest $50,000 in the business. Thus, each owner would take an initial basis in his ownership interest of $50,000 no matter which entity type is formed. Shortly after the formation of the entity, the business borrowed $30,000 from the bank. If applicable, this debt will be shared equally between the two owners. a. After taking the loan into account, what is Rondo’s tax basis in his R&L stock if R&L is formed as a C corporation? b. After taking the loan into account, what is Rondo’s tax basis in his R&L stock if R&L is formed as an S corporation? c. After taking the loan into account, what is Rondo’s tax basis in his R&L ownership interest if R&L is formed as an LLC and taxed as a partnership?

A turning operation uses a 2/64 in nose radius cutting tool on a free machining steel with a feed rate = 0.010 in/rev and a cutting speed = 300 ft/min. Determine the surface roughness for this cut.

You run into Greg Norman at a party and begin discussing financial statements. Greg says, “I prefer the single-step income statement because the multiple-step format generally overstates income.” How should you respond to Greg?

If the part illustrated in Figure P20.32 were made by shear spinning, determine (a) the wall thickness along the cone-shaped portion, and (b) the spinning reduction r.

Define what a printed circuit board (PCB) is

Under what conditions is it appropriate for a business to use the composite method of depreciation for its plant assets? What are the advantages and disadvantages of this method?

Briefly describe the two fundamental qualities of useful accounting information

Lacy is divorced and the custodial parent of a three-year-old girl named Bailey. Lacy and Bailey live with Lacy’s parents, who pay all the costs of maintaining the household (such as mortgage, property taxes, and food). Lacy pays for Bailey’s clothing, entertainment, and health insurance costs. These costs comprised only a small part of the total costs of maintaining the household. Lacy does not qualify as her parents’ dependent.

{Planning} Jackie has a corporate client that has recently received a 30-day notice from the IRS with a $100,000 tax assessment.  Her client is considering requesting an appeals conference to contest the assessment.  What factors should Jackie advise her client to consider before requesting an appeals conference?

What do you understand by the policy ineffectiveness proposition? On what assumptions is the proposition based?

According to the blow molding video, what materials are used in blow molding? Name three.

Which would you expect to fluctuate more: the money multiplier (DM4/Dcash), or the simple ratio, M4/cash, illustrated in Figure 18.4?

In a certain pressing operation, the metallic powder fed into the open die has a packing factor of 0.5. The pressing operation reduces the powders to 2/3 of their starting volume. In the subsequent sintering operation, shrinkage amounts to 10% on a volume basis. Given that these are the only factors that affect the structure of the finished part, determine its final porosity.

What is the difference between open pores and closed pores in a metallic powders?

Winsor Inc. recently purchased Holiday Corp., a large midwestern home painting corporation. One of the terms of the merger was that if Holiday’s income for 2014 was $110,000 or more, 10,000 additional shares would be issued to Holiday’s stockholders in 2015. Holiday’s income for 2013 was $120,000. Instructions (a) Would the contingent shares have to be considered in Winsor’s 2013 earnings per share computations? (b) Assume the same facts, except that the 10,000 shares are contingent on Holiday’s achieving a net income of $130,000 in 2014. Would the contingent shares have to be considered in Winsor’s earnings per share computations for 2013?

A steel test specimen (modulus of elasticity = 30 x 106 lb/in2 ) in a compression test has a starting height = 2.0 in and diameter = 1.5 in. The metal yields (0.2% offset) at a load = 140,000 lb. At a load of 260,000 lb, the height has been reduced to 1.6 in. Determine (a) yield strength and (b) flow curve parameters (strength coefficient and strain-hardening exponent). Assume that the cross-sectional area increases uniformly during the test.