Question & Answer

Neville Enterprises has a number of fully depreciated assets that are still being used in the main operations of the business. Because the assets are fully depreciated, the president of the company decides not to show them on the balance sheet or disclose this information in the notes. Evaluate this procedure.

Assume that Toni Braxton Company has recently fallen into financial difficulties. By reviewing all available evidence on December 31, 2014, one of Toni Braxton’s creditors, the National American Bank, determined that Toni Braxton would pay back only 65% of the principal at maturity. As a result, the bank decided that the loan was impaired. If the loss is estimated to be $225,000, what entry(ies) should National American Bank make to record this loss?

Novak Corporation is preparing its 2014 statement of cash flows, using the indirect method. Presented below is a list of items that may affect the statement. Using the code below, indicate how each item will affect Novak’s 2014 statement of cash flows. Code Letter Effect A Added to net income in the operating section D Deducted from net income in the operating section. R-I Cash receipt in investing section P-I Cash payment in investing section R-F Cash receipt in financing section P-F Cash payment in financing section N Noncash investing and financing activity Items ____ (a) Purchase of land and building. ____ (j) Increase in accounts payable. ____ (b) Decrease in accounts receivable. ____ (k) Decrease in accounts payable. ____ (c) Issuance of stock. ____ (l) Loan from bank by signing note. ____ (d) Depreciation expense. ____ (m) Purchase of equipment using a note. ____ (e) Sale of land at book value. ____ (n) Increase in inventory. ____ (f) Sale of land at a gain. ____ (o) Issuance of bonds. ____ (g) Payment of dividends. ____ (p) Redemption of bonds payable. ____ (h) Increase in accounts receivable. ____ (q) Sale of equipment at a loss. ____ (i) Purchase of available-for-sale investment. ____ (r) Purchase of treasury stock.

What is an orthogonal cutting operation?

‘We treat spoiled units as fully completed regardless of when the spoiled units are detected. This method makes unit costing much simpler.’ What is wrong with this approach?

What is meant by the concept of ‘learning by exporting’?

What is a carryover basis as it relates to property received by a corporation in a §351 transaction?  What is the purpose of attaching a carryover basis to property received in a §351 transaction?

A 2.0-in-long billet with diameter = 1.25 in is direct extruded to a diameter of 0.50 in. The extrusion die angle = 90°. For the work metal, K = 45,000 lb/in2 , and n = 0.20. In the Johnson extrusion strain equation, a = 0.8 and b = 1.5. Determine (a) extrusion ratio, (b) true strain (homogeneous deformation), (c) extrusion strain, and (d) ram pressure at L = 2.0, 1.5, 1.0, 0.5 and zero in. Use of a spreadsheet calculator is recommended for part (d).

What are some possible disadvantages to investors who invest in stocks listed on a private stock market? (LO5)

(Looking at the Maths) Given the following supply schedule: P 2 4 6 8 10 0 10 20 30 40 (a)  Draw the supply curve. (b)  Using the arc method calculate price elasticity of supply (i) between P = 2 and P = 4;                      (ii) between P = 8 and P = 10 (c)  Using the point method calculate price elasticity of supply at P = 6. (d)  Does the elasticity of the supply curve increase or decrease as P and Q increase? Why? (e)  What would be the answer to (d) if the supply curve had been a straight line but intersecting the horizontal axis to the right of the origin?

Rick Kleckner Corporation recorded a capital lease at $300,000 on January 1, 2014. The interest rate is 12%. Kleckner Corporation made the first lease payment of $53,920 on January 1, 2014. The lease requires eight annual payments. The equipment has a useful life of 8 years with no salvage value. Prepare Kleckner Corporation’s December 31, 2014, adjusting entries.

Allocation rates – update question (business name) DataShow’s IT support department budgets its costs at $40 000 per month plus $12 per hour. For November the following were the estimated and actual hours provided by the IT support department to three operating departments.   Required (a)          What is the support department’s allocation rate if estimated activity is the allocation base? (b)          What is the support department’s allocation rate if actual activity is the allocation base? (c)           List one advantage and one disadvantage for each type of allocation rate.

1.    Do you think it is realistic that BOP business practices can have a positive effect on poverty and other social problems in developing countries? Discuss how those effects might occur.

What are the three basic components of an automated system?

Campbell’s tax return was audited because they failed to report on their tax return interest they earned.  What IRS audit selection method identified their tax return?

Graber Corporation runs a long-haul trucking business. Graber incurs the following expenses: replacement tires, oil changes, and a transmission overhaul. Which of these expenditures may be deducted currently and which must be capitalized? Explain.

Which types of investments are valued at amortized cost? Explain the rationale for this accounting.

Identify which basic principle of accounting is best described in each item below. (a) Norfolk Southern Corporation reports revenue in its income statement when the performance obligation is satisfied instead of when the cash is collected. (b) Yahoo! recognizes depreciation expense for a machine over the 2-year period during which that machine helps the company earn revenue. (c) Oracle Corporation reports information about pending lawsuits in the notes to its financial statements. (d) Eastman Kodak Company reports land on its balance sheet at the amount paid to acquire it, even though the estimated fair value is greater.

Using Figure 1.5 as an example, develop an internal value chain for an airline such as Virgin Australia.

On December 31, 2014, Faital Company acquired a computer from Plato Corporation by issuing a $600,000 zero-interest-bearing note, payable in full on December 31, 2018. Faital Company’s credit rating permits it to borrow funds from its several lines of credit at 10%. The computer is expected to have a 5-year life and a $70,000 salvage value. Instructions (Round answers to the nearest cent.) (a) Prepare the journal entry for the purchase on December 31, 2014. (b) Prepare any necessary adjusting entries relative to depreciation (use straight-line) and amortization (use effective-interest method) on December 31, 2015. (c) Prepare any necessary adjusting entries relative to depreciation and amortization on December 31, 2016.

Presented below are three different transactions related to materiality. Explain whether you would  classify these transactions as material. (a) Blair Co. has reported a positive trend in earnings over the last 3 years. In the current year, it reduces its bad debt allowance to ensure another positive earnings year. The impact of this adjustment is equal to 3% of net income. (b) Hindi Co. has an extraordinary gain of $3.1 million on the sale of plant assets and a $3.3 million loss on the sale of investments. It decides to net the gain and loss because the net effect is considered immaterial. Hindi Co.’s income for the current year was $10 million. (c) Damon Co. expenses all capital equipment under $25,000 on the basis that it is immaterial. The company has followed this practice for a number of years.

Why do costs tend to increase when better surface finish is required on a machined part?

Identify the two forces that can be measured in the orthogonal metal cutting model.

The accounts listed below appeared in the December 31 trial balance of the Savard Theater.   Instructions (a) From the account balances listed above and the information given below, prepare the annual adjusting entries necessary on December 31. (Omit explanations.) (1) The equipment has an estimated life of 16 years and a salvage value of $24,000 at the end of that time. (Use straight-line method.) (2) The note payable is a 90-day note given to the bank October 20 and bearing interest at 8%. (Use 360 days for denominator.) (3) In December, 2,000 coupon admission books were sold at $30 each. They could be used for admission any time after January 1. (4) Advertising expense paid in advance and included in Advertising Expense $1,100. (5) Salaries and wages accrued but unpaid $4,700. (b) What amounts should be shown for each of the following on the income statement for the year? (1) Interest expense. (3) Advertising expense. (2) Admissions revenue. (4) Salaries and wages expense.

What is an adjustable-rate mortgage (ARM)? Discuss the potential advantages that such mortgages offer a savings institution. (LO4)