Question & Answer

Some individuals have indicated that the FASB must becognizant of the economic consequences of its pronouncements.What is meant by “economic consequences”?What dangers exist if politics play too much of a role inthe development of GAAP?

Using the facts in problem 44, what interest rate does Surething Inc. need to offer to make Hugh indifferent between investing in the two bonds?

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

What is the difference between absolute positioning and incremental positioning?

Rank the following three single taxpayers in order of the magnitude of taxable income (from lowest to highest) and explain your results. Ahmed           Baker                    Chin Gross Income                 $ 80,000               $ 80,000               $ 80,000Deductions For AGI            8,000                    4,000                           0Itemized Deductions                   0                    4,000                    8,000

What are the limitations of scanning tunneling microscope in nanofabrication that inhibit its commercial application?

Determine the minimum tonnage press to perform the blanking and punching operation in Problem 20.3. The aluminum sheet metal has a tensile strength = 310 MPa, a strength coefficient of 350 MPa, and a strain-hardening exponent of 0.12. (a) Assume that blanking and punching occur simultaneously. (b) Assume the punches are staggered so that punching occurs first, then blanking

A lease agreement between Mooney Leasing Company and Rode Company is described in E21-8. Instructions (Round all numbers to the nearest cent.) Refer to the data in E21-8 and do the following for the lessor. (a) Compute the amount of the lease receivable at the inception of the lease. (b) Prepare a lease amortization schedule for Mooney Leasing Company for the 5-year lease term. (c) Prepare the journal entries to reflect the signing of the lease agreement and to record the receipts and income related to this lease for the years 2014, 2015, and 2016. The lessor’s accounting period ends on December 31. Reversing entries are not used by Mooney.

What is a carbon nanotube?

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

Based on the analysis in Figure 21.15 what would the impulse response functions look like for output, unemployment, inflation and real and nominal interest rates?

Swarten Corporation issued 600 shares of no-par common stock for $8,200. Prepare Swarten’s journal entry if (a) the stock has no stated value, and (b) the stock has a stated value of $2 per share.

A part is produced using six conventional machine tools consisting of three milling machines and three drill presses. The machine cycle times on these machines are 4.7 min, 2.3 min, 0.8 min, 0.9 min, 3.4 min, and 0.5 min. The average load/unload time for each of these operations is 1.25 min. The corresponding setup times for the six machines are 1.55 hr, 2.82 hr, 57 min, 45 min, 3.15 hr, and 36 min, respectively. The total material handling time to carry one part between the machines is 20 min (consisting of five moves between six machines). A CNC machining center has been installed, and all six operations will be performed on it to produce the part. The setup time for the machining center for this job is 1.0 hr. In addition, the machine must be programmed for this part (called “part programming”), which takes 3.0 hr. The machine cycle time is the sum of the machine cycle times for the six machines. Load/unload time is 1.25 min. (a) What is the total time to produce one of these parts using the six conventional machines if the total consists of all setups, machine cycle times, load/unload times, and part transfer times between machines? (b) What is the total time to produce one of these parts using the CNC machining center if the total consists of the setup time, programming time, machine cycle time, and load/unload time, and what are the percent savings in total time compared to your answer in (a)? (c) If the same part is produced in a batch of 20 pieces, what is the total time to produce them under the same conditions as in (a) except that the total material handling time to carry the 20 parts in one unit load between the machines is 40 min? (d) If the part is produced in a batch of 20 pieces on the CNC machining center, what is the total time to produce them under the same conditions as in part (b), and what are the percent savings in total time compared to your answer in (c)? (e) In future orders of 20 pieces of the same part, the programming time will not be included in the total time because the part program has already been prepared and saved. In this case, how long does it take to produce the 20 parts using the machining center, and what are the percent savings in total time compared to your answer in (c)?

Castleman Holdings, Inc. had the following availablefor- sale investment portfolio at January 1, 2014. Evers Company 1,000 shares @ $15 each $15,000 Rogers Company 900 shares @ $20 each 18,000 Chance Company 500 shares @ $9 each 4,500 Equity investments (available-for-sale) @ cost 37,500 Fair value adjustment (available-for-sale) (7,500) Equity investments (available-for-sale) @ fair value $30,000 During 2014, the following transactions took place. 1. On March 1, Rogers Company paid a $2 per share dividend. 2. On April 30, Castleman Holdings, Inc. sold 300 shares of Chance Company for $11 per share. 3. On May 15, Castleman Holdings, Inc. purchased 100 more shares of Evers Co. stock at $16 per share. 4. At December 31, 2014, the stocks had the following price per share values: Evers $17, Rogers $19, and Chance $8. During 2015, the following transactions took place. 5. On February 1, Castleman Holdings, Inc. sold the remaining Chance shares for $8 per share. 6. On March 1, Rogers Company paid a $2 per share dividend. 7. On December 21, Evers Company declared a cash dividend of $3 per share to be paid in the next month. 8. At December 31, 2015, the stocks had the following price per share values: Evers $19 and Rogers $21. Instructions (a) Prepare journal entries for each of the above transactions. (b) Prepare a partial balance sheet showing the investment-related amounts to be reported at December 31, 2014 and 2015.

Many traditional shops have closed in recent years as more people have shopped online – a trend hastened by the forced closure of non-essential shops in the lockdowns during the COVID-19 pandemic. How is this likely to have affected the balance of employment and unemployment of women and men?

Foley Corporation has seven industry segments with total revenues as follows. Penley $600 Cheng $225 Konami 650 Takuhi 200 KSC 250 Molina 700 Red Moon 275 Based only on the revenues test, which industry segments are reportable?

An 8-in diameter grinding wheel, 1.0 in wide, is used in a surface grinding job performed on a flat piece of heat-treated 4340 steel. The wheel rotates to achieve a surface speed of 5000 ft/min, with a depth of cut (infeed) = 0.002 in per pass and a crossfeed = 0.15 in. The reciprocating speed of the work is 20 ft/min, and the operation is performed dry. (a) What is the length of contact between the wheel and the work? (b) What is the volume rate of metal removed? (c) If there are 300 active grits/in2 of wheel surface, estimate the number of chips formed per unit time. (d) What is the average volume per chip? (e) If the tangential cutting force on the workpiece = 7.3 lbs, what is the specific energy calculated for this job?

Should all investment be subject to a social cost–benefit appraisal?

Glaus Leasing Company agrees to lease machinery to Jensen Corporation on January 1, 2014. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2. The cost of the machinery is $525,000, and the fair value of the asset on January 1, 2014, is $700,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $100,000. Jensen depreciates all of its equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2014. 5. The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the amount of costs yet to be incurred by the lessor. 6. Glaus desires a 10% rate of return on its investments. Jensen’s incremental borrowing rate is 11%, and the lessor’s implicit rate is unknown. Instructions (Assume the accounting period ends on December 31.) (a) Discuss the nature of this lease for both the lessee and the lessor. (b) Calculate the amount of the annual rental payment required. (c) Compute the present value of the minimum lease payments. (d) Prepare the journal entries Jensen would make in 2014 and 2015 related to the lease arrangement. (e) Prepare the journal entries Glaus would make in 2014 and 2015.

Indicate how unrealized holding gains and losses should be reported for investments securities classified as trading, available-for-sale, and held-to-maturity.

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:

Many business organizations have been concerned with providing for the retirement of employees since the late 1800s. During recent decades, a marked increase in this concern has resulted in the establishment of private pension plans in most large companies and in many medium- and small-sized ones. The substantial growth of these plans, both in numbers of employees covered and in amounts of retirement benefits, has increased the significance of pension costs in relation to the financial position, results of operations, and cash flows of many companies. In examining the costs of pension plans, a CPA encounters certain terms. The components of pension costs that the terms represent must be dealt with appropriately if generally accepted accounting principles are to be reflected in the financial statements of entities with pension plans. Instructions (a) Define a private pension plan. How does a contributory pension plan differ from a noncontributory plan? (b) Differentiate between “accounting for the employer” and “accounting for the pension fund.” (c) Explain the terms “funded” and “pension liability” as they relate to: (1) The pension fund. (2) The employer. (d) (1) Discuss the theoretical justification for accrual recognition of pension costs. (2) Discuss the relative objectivity of the measurement process of accrual versus cash (pay-as-you-go) accounting for annual pension costs. (e) Distinguish among the following as they relate to pension plans. (1) Service cost. (2) Prior service costs. (3) Vested benefits.

1.       : If you wanted to add a group of food scientists to a large organization such as PepsiCo, would you centralize the scientists in a central pool at headquarters or decentralize them to separate divisions? Discuss your reasons.

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?

Describe the circumstances in which it would be more favorable for a taxpayer to contribute to a traditional IRA rather than a Roth IRA, and vice-versa.