Question & Answer

Why did the U.S. government rescue AIG during the credit crisis in 2008? (LO5)

Compare and contrast the tests for accruing income and those for accruing deductions for tax purposes.

Compare and contrast the aggregate and entity concepts for taxing partnerships and their partners.

The meaning of the term “fund” depends on the context in which it is used. Explain its meaning when used as a noun. Explain its meaning when it is used as a verb.

What is the difference between absolute positioning and incremental positioning?

Explain the role of the Emerging Issues Task Force inestablishing generally accepted accounting principles.

A Six Sigma program uses three measures of defects per million (DPM) to assess the performance of a given process. Name the three measures of DPM.

It is desired to etch out a region of a silicon dioxide film on the surface of a silicon wafer. The SiO2 film is 100 nm thick. The width of the etched-out area is specified to be 650 nm. (a) If the degree of anisotropy for the etchant in the process is known to be 1.25, what should be the size of the opening in the mask through which the etchant will operate? (b) If plasma etching is used instead of wet etching, and the degree of anisotropy for plasma etching is infinity, what should be the size of the mask opening?

(Looking at the Maths) Assuming that the pre-tax equations were:       QD = 120 – 10P and QS = 10 + 5P What is (a) the consumer share of the tax and (b) the producer share?

A sheet-metal part 3.0 mm thick and 20.0 mm long is bent to an included angle = 60° and a bend radius = 7.5 mm in a V-die. The metal has a yield strength = 220 MPa and a tensile strength = 340 MPa. Compute the required force to bend the part, given that the die opening dimension = 15 mm.

A turning operation is performed on an engine lathe using a tool with zero rake angle in the direction of chip flow. The work material is an alloy steel with hardness = 325 Brinell hardness. The feed is 0.015 in/rev, depth of cut is 0.125 in and cutting speed is 300 ft/min. After the cut, the chip thickness ratio is measured to be 0.45. (a) Using the appropriate value of specific energy from Table 21.2, compute the horsepower at the drive motor, if the lathe has an efficiency = 85%. (b) Based on horsepower, compute your best estimate of the cutting force for this turning operation. Use the orthogonal cutting model as an approximation of the turning process.

Briefly describe some of the similarities and differences between GAAP and IFRS with respect to the accounting for dilutive securities, stock-based compensation, and earnings per share.

The 2014 income statement of Wasmeier Corporation showed net income of $480,000 and an extraordinary loss of $120,000. Wasmeier had 100,000 shares of common stock outstanding all year. Prepare Wasmeier’s income statement presentation of earnings per share.

What are the primary factors to consider when deciding whether a worker should be considered an employee or a self-employed taxpayer for tax purposes?

Distinguish between the following values relative to bonds payable: (a) Maturity value. (c) Market (fair) value. (b) Face value. (d) Par value.

A production line with four automatic workstations (the other stations are manual) produces a certain product whose total assembly work content time = 55.0 min of direct manual labor. The production rate on the line is 45 units/hr. Because of the automated stations, uptime efficiency = 89%. The manual stations each have one worker. It is known that 10% of the cycle time is lost due to repositioning. If the balancing efficiency = 0.92 on the manual stations, find (a) cycle time, (b) number of workers and (c) workstations on the line. (d) What is the average manning level on the line, where the average includes the automatic stations?

Which of the following unions find themselves in a weak bargaining position for the above reasons? (a)  The shopworkers’ union (USDAW). (b)  The tube and train drivers’ union (ASLEF). (c)  The farm workers’ union (part of Unite).

Explain how residual income is calculated, and define required rate of return in your own words.

Taveras Co. decides at the beginning of 2014 to adopt the FIFO method of inventory valuation. Taveras had used the LIFO method for financial reporting since its inception on January 1, 2012, and had maintained records adequate to apply the FIFO method retrospectively. Taveras concluded that FIFO is the preferable inventory method because it reflects the current cost of inventory on the balance sheet. The following table presents the effects of the change in accounting principles on inventory and cost of goods sold. Inventory Determined by Cost of Goods Sold Determined by Date LIFO Method FIFO Method LIFO Method FIFO Method January 1, 2012 $ 0 $ 0 $ 0 $ 0 December 31, 2012 100 80 800 820 December 31, 2013 200 240 1,000 940 December 31, 2014 320 390 1,130 1,100 Other information: 1. For each year presented, sales are $3,000 and operating expenses are $1,000. 2. Taveras provides two years of financial statements. Earnings per share information is not required. Instructions (a) Prepare income statements under LIFO and FIFO for 2012, 2013, and 2014. (b) Prepare income statements reflecting the retrospective application of the accounting change from the LIFO method to the FIFO method for 2014 and 2013. (c) Prepare the note to the financial statements describing the change in method of inventory valuation. In the note, indicate the income statement line items for 2014 and 2013 that were affected by the change in accounting principle. (d) Prepare comparative retained earnings statements for 2013 and 2014 under FIFO. Retained earnings reported under LIFO are as follows:

You have just started work for Warren Co. as part of the controller’s group involved in current financial reporting problems. Jane Henshaw, controller for Warren, is interested in your accounting background because the company has experienced a series of financial reporting surprises over the last few years. Recently, the controller has learned from the company’s auditors that there is authoritative literature that may apply to its investment in securities. She assumes that you are familiar with this pronouncement and asks how the following situations should be reported in the financial statements. Situation 1: Trading securities in the current assets section have a fair value that is $4,200 lower than cost. Situation 2: A trading security whose fair value is currently less than cost is transferred to the availablefor- sale category. Situation 3: An available-for-sale security whose fair value is currently less than cost is classified as noncurrent but is to be reclassified as current. Situation 4: A company’s portfolio of available-for-sale securities consists of the common stock of one company. At the end of the prior year, the fair value of the security was 50% of original cost, and this reduction in fair value was reported as an other than temporary impairment. However, at the end of the current year, the fair value of the security had appreciated to twice the original cost. Situation 5: The company has purchased some convertible debentures that it plans to hold for less than a year. The fair value of the convertible debentures is $7,700 below its cost. Instructions What is the effect upon carrying value and earnings for each of the situations above? Assume that these situations are unrelated.

Identify some of the details and decisions that are included within the scope of process planning.

Tall Tree LLC was recently formed with the following members: Name Tax Year-End Capital/Profits % Eddie Robinson December 31 40% Pitcher Lenders LLC June 30 25% Perry Homes Inc. October 31 35% What is the required taxable year-end for Tall Tree LLC?

A pin made of alloy steel is press-fitted into a hole machined in the base of a large machine. The hole has a diameter of 2.497 in. The pin has a diameter of 2.500 in. The base of the machine is 4 ft x 8 ft. The base and pin have a modulus of elasticity of 30 x 106 lb/in2, a yield strength of 85,000 lb/in2, and a tensile strength of 120,000 lb/in2. Determine (a) the radial pressure between the pin and the base and (b) the maximum effective stress in the interface

1. Fill in the missing figures (without referring to Table 6.8 or 6.9). 2. Why are the figures for MR and MC entered in the spaces between the lines in Table 6.10?

Comiskey Savings provides fixed-rate mortgages of various maturities, depending on what customers want. It obtains most of its funds from issuing certificates of deposit with maturities ranging from one month to five years. Comiskey has decided to engage in a fixed-for-floating swap to hedge its interest rate risk. Is Comiskey exposed to basis risk? (LO3)