Question & Answer

Norton Co. had the following amounts related to its pension plan in 2014. Actuarial liability loss for 2014 $28,000 Unexpected asset gain for 2014 18,000 Accumulated other comprehensive income (G/L) (beginning balance) 7,000 Cr. Determine for 2014: (a) Norton’s other comprehensive income (loss), and (b)N comprehensive income. Net income for 2014 is $26,000; no amortization of gain or loss is necessary in 2014.

Identify three ways taxpayers can pay their income taxes to the government.

Imagine that you won millions of pounds on the National Lottery. Would your ‘economic problem’ be solved?

The financial statements of Marks and Spencer plc (M&S) are available at the book’s companion website or can be accessed at http://annualreport.marksandspencer.com/_assets/downloads/ Marks-and-Spencer-Annual-report-and-financial-statements-2012.pdf. Instructions Refer to M&S’s financial statements and the accompanying notes to answer the following questions. (a) What was M&S’s 2012 short-term debt and related weighted-average interest rate on this debt? (b) What was M&S’s 2012 working capital, acid-test ratio, and current ratio? Comment on M&S’s liquidity. (c) What types of commitments and contingencies has M&S reported in its financial statements?

Hart, an individual, bought an asset for $500,000 and has claimed $100,000 of depreciation deductions against the asset. Hart has a marginal tax rate of 32 percent. Answer the questions presented in the following alternative scenarios (assume Hart had no property transactions other than those described in the problem): a. What are the amount and character of Hart’s recognized gain or loss if the asset is tangible personal property sold for $450,000?  What effect does the sale have on Hart’s tax liability for the year?  b. What are the amount and character of Hart’s recognized gain or loss if the asset is tangible personal property sold for $550,000?  What effect does the sale have on Hart’s tax liability for the year?  c. What are the amount and character of Hart’s recognized gain or loss if the asset is tangible personal property sold for $350,000?  What effect does the sale have on Hart’s tax liability for the year?  d. What are the amount and character of Hart’s recognized gain or loss if the asset is a nonresidential building sold for $450,000?  What effect does the sale have on Hart’s tax liability for the year?  e. Now assume that Hart is a C corporation. What are the amount and character of its recognized gain or loss if the asset is a nonresidential building sold for $450,000?  What effect does the sale have on Hart’s tax liability for the year (assume a 21 percent tax rate)?  f. Assuming that the asset is real property, which entity type should be used to minimize the taxes paid on real estate gains?

Each of the following gross profit percentages is expressed in terms of cost. 1. 20%. 3. 331/3%. 2. 25%. 4. 50%. Instructions Indicate the gross profit percentage in terms of sales for each of the above.

Compare the recognition lag and the implementation lag. (LO2)

Explain why Fannie Mae and Freddie Mac experienced mortgage problems during the credit crisis. (LO5)

Yong’s tax return was audited because he calculated his tax liability incorrectly.  What IRS audit procedure identified his tax return for audit?

List several ways that variances can be used to improve future operations.

Explain the moral hazard problem as it relates to deposit insurance. (LO2)

What is sheet molding compound (SMC)?

Define an organizational ecosystem and show how the general and task environments affect an organization’s ability to thrive.

Identify which itemized deductions are subject to floor limitations, ceiling limitations, or some combination of these limits.

Hiatt Toothpaste Company initiates a defined benefit pension plan for its 50 employees on January 1, 2014. The insurance company which administers the pension plan provided the following selected information for the years 2014, 2015, and 2016. For Year Ended December 31, 2014 2015 2016 Plan assets (fair value) $50,000 $ 85,000 $180,000 Accumulated benefi t obligation 45,000 165,000 292,000 Projected benefi t obligation 60,000 200,000 324,000 Net (gain) loss (for purposes of corridor calculation) –0– 78,400 86,121 Employer’s funding contribution (made at end of year) 50,000 60,000 105,000 There were no balances as of January 1, 2014, when the plan was initiated. The actual and expected return on plan assets was 10% over the 3-year period, but the settlement rate used to discount the company’s pension obligation was 13% in 2014, 11% in 2015, and 8% in 2016. The service cost component of net periodic pension expense amounted to the following: 2014, $60,000; 2015, $85,000; and 2016, $119,000. The average remaining service life per employee is 12 years. No benefits were paid in 2014, $30,000 of benefits were paid in 2015, and $18,500 of benefits were paid in 2016 (all benefits paid at end of year). Instructions (Round to the nearest dollar.) (a) Calculate the amount of net periodic pension expense that the company would recognize in 2014, 2015, and 2016. (b) Prepare the journal entries to record net periodic pension expense, employer’s funding contribution, and related pension amounts for the years 2014, 2015, and 2016.

Why would a company restrict when a senior executive can exercise their         share options?             (LO2, 3 and 5)

On January 1, 2014, Burke Corporation signed a 5-year noncancelable lease for a machine. The terms of the lease called for Burke to make annual payments of $8,668 at the beginning of each year, starting January 1, 2014. The machine has an estimated useful life of 6 years and a $5,000 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Burke uses the straight-line method of depreciation for all of its plant assets. Burke’s incremental borrowing rate is 10%, and the Lessor’s implicit rate is unknown. Instructions (a) What type of lease is this? Explain. (b) Compute the present value of the minimum lease payments. (c) Prepare all necessary journal entries for Burke for this lease through January 1, 2015.

Tawana owns and operates a sole proprietorship and has a 40 percent marginal tax rate.  She provides her son, Jonathon, $8,000 a year for college expenses.  Jonathon works as a pizza delivery person every fall and has a marginal tax rate of 15 percent.  a. What could Tawana do to reduce her family tax burden?  b.How much pretax income does it currently take Tawana to generate the $8,000 after-taxes given to Jonathon?  c. If Jonathon worked for his mother’s sole proprietorship, what salary would she have to pay him to generate $8,000 after taxes (ignoring any Social Security, Medicare, or self-employment tax issues)?  d.How much money would this strategy save?

Using the facts in problem 38, if Jorge and Anita earn an additional $100,000 of taxable income, what is their marginal tax rate on this income?  What is their marginal rate if, instead, they reported an additional $100,000 in deductions?

1.       : What opportunities and potential problems are posed by the formation of more than one coalition within an organization, each one advocating a different direction or alternative? What steps can you take as a manager to make sure that dueling coalitions result in constructive discussion rather than dissension?

Describe cross-wire welding.

Explain how the amount of cash payments to suppliers is computed under the direct method.

Explain the difference between horizontal and vertical die-casting machines. Which is more popular?

In January 2014, installation costs of $6,000 on new machinery were charged to Maintenance and Repairs Expense. Other costs of this machinery of $30,000 were correctly recorded and have been depreciated using thestraight-line method with an estimated life of 10 years and no salvage value. At December 31, 2015, it is decided that the machinery has a remaining useful life of 20 years, starting with January 1, 2015. What entry(ies) should be made in 2015 to correctly record transactions related to machinery, assuming the machinery has no salvage value? The books have not been closed for 2015 and depreciation aexpense has not yet been recorded for 2015.

Where can authoritative IFRS be found related to the various disclosure issues discussed in the chapter?