Question & Answer

Treasure Land Corporation incurred the following costs in 2014. Cost of laboratory research aimed at discovery of new knowledge $120,000 Cost of testing in search for product alternatives 100,000 Cost of engineering activity required to advance the design of a product to the manufacturing stage 210,000 Prototype testing subsequent to meeting economic viability 75,000 $505,000 Prepare the necessary 2014 journal entry(ies) for Treasure Land.

What would be the classical economists’ criticisms of this argument?

Describe in words what the Merchant equation tells us

Waters Corporation purchased Johnson Company 3 years ago and at that time recorded goodwill of $400,000. The Johnson Division’s net assets, including the goodwill, have a carrying amount of $800,000. The recoverable amount of the division is estimated to be $1,000,000. Prepare Waters’ journal entry, if necessary, to record impairment of the goodwill.

Expenses, losses, and distributions to owners are all decreases in net assets. What are the distinctions among them?

Bradshaw Company experienced a loss that was deemed to be both unusual in nature and infrequent in occurrence. How should Bradshaw report this item in accordance with IFRS?

King Company is contemplating the purchase of a smaller company, which is a distributor of King’s products. Top management of King is convinced that the acquisition will result in significant synergies in its selling and distribution functions. The financial management group (of which you are a part) has been asked to analyze the effects of the acquisition on the combined company’s financial statements. This is the first acquisition for King, and some of the senior staff insist that based on their recollection of goodwill accounting, any goodwill recorded on the acquisition will result in a “drag” on future earnings for goodwill amortization. Other younger members on the staff argue that goodwill accounting has changed. Your supervisor asks you to research this issue. Instructions Access the IFRS authoritative literature at the IASB website (http://eifrs.iasb.org/). (Click on the IFRS tab and then register for free eIFRS access if necessary.) When you have accessed the documents, you can use the search tool in your Internet browser to respond to the following questions. (Provide paragraph citations.) (a) Identify the accounting literature that addresses goodwill and other intangible assets. (b) Define goodwill. (c) Is goodwill subject to amortization? Explain. (d) When goodwill is recognized by a subsidiary, should it be tested for impairment at the consolidated level or the subsidiary level? Discuss.

1. Why does this conclusion remain the same if the BP curve is steeper than the LM curve?   2. Trace through the effects of a fall in exports (thereby shifting the BP curve)   3. Show what will happen if there is (a) a rise in business confidence and a resulting increase in investment; (b) a rise in the demand for money balances (say for precautionary purposes).

Static and flexible budgets Plush pet toys are produced in a largely automated factory in standard lots of 100 toys each. A standard cost system is used to control costs and to assign cost to inventory.       Variable overhead, estimated at $5 per lot, consists of miscellaneous items such as thread, a variety of plastic squeakers, and paints that are applied to create features such as eyes and whiskers. Fixed overhead, estimated at $24 000 per month, consists largely of depreciation on the automated machinery and rent for the building. Variable overhead is allocated based on lots produced. The standard fixed overhead allocation rate is based on the estimated output of 1000 lots per month.             Required (a)        Prepare a production budget for the coming year based on planned production  12 000 lots. (b)       Compare the budget prepared in (a) with a flexible budget based on actual activity of 15 000 lots.

Tiffany and Carlos decided to liquidate their jointly owned corporation, Royal Oak Furniture (ROF).  After liquidating its remaining inventory and paying off its remaining liabilities, ROF had the following tax accounting balance sheet.     FMV         Tax BasisAppreciation (Depreciation) Cash$  200,000$     200,000 Building      50,000         10,000       40,000 Land    150,000       200,000      (50,000) Total$  400,000$     410,000$    (10,000)

Using a graph similar to Figure 20.7, trace through the effect of a reduction in aggregate demand.

Revenues, gains, and investments by owners are all increases in net assets. What are the distinctions among them?

How would a financial institution with a large bond portfolio be affected by falling interest rates? Would it be affected by a greater extent than a financial institution with a greater concentration of bonds (and fewer short-term securities)? Explain. (LO1)

One common argument for imposing so-called sin taxes is the social goal of reducing demand for such products.  Using cigarettes as an example, is there a segment of the population that might be sensitive to price and for whom high taxes might discourage purchases?

On December 31, 2014, Iva Majoli Company borrowed $62,092 from Paris Bank, signing a 5-year, $100,000 zero-interest-bearing note. The note was issued to yield 10% interest. Unfortunately, during 2016, Majoli began to experience financial difficulty. As a result, at December 31, 2016, Paris Bank determined that it was probable that it would receive back only $75,000 at maturity. The market rate of interest on loans of this nature is now 11%. Instructions (a) Prepare the entry to record the issuance of the loan by Paris Bank on December 31, 2014. (b) Prepare the entry, if any, to record the impairment of the loan on December 31, 2016, by Paris Bank.

In what ways may free trade have harmful cultural effects on developing countries?

Explain why some finance companies are associated with automobile manufacturers. Why do some of these finance companies offer below-market rates on loans? (LO2)

What type of atomic bonding characterizes the ceramics?

Assume a free-floating exchange rate. Draw a diagram like Figure 25.6, only this time show an initial equilibrium national income with a balance of payments surplus.          (a)  Mark the size of the surplus.          (b)  Show the resulting shifts in the (X–M) and the E curves.          (c)  Mark the eventual equilibrium.          (d)  Show the size of the income and substitution effects (of the change in the exchange rate).          (e)  Under what circumstances will the income effect be (i) ‘desirable’; (ii) ‘undesirable’?          (f)   Could the income effect of the change in the exchange rate ever be larger than the substitution effect?

Determine the amount of the late filing and late payment penalties that apply for the following taxpayers.

Suppose you asked your favorite AI query tool “How is a partnership interest received for services provided treated for income tax purposes?” and the AI tool responded as follows:

Production rate for a certain assembled product is 47.5 units per hour. The total assembly work content time = 32 minutes of direct manual labor. The line operates at 95% uptime. Ten workstations have two workers on opposite sides of the line so that both sides of the product can be worked on simultaneously. The remaining stations have one worker. Repositioning time lost by each worker is 0.2 min/cycle. It is known that the number of workers on the line is two more than the number required for perfect balance. Determine (a) number of workers, (b) number of workstations, (c) the balancing efficiency, and (d) average manning level.

Ann M. Martin Company makes the following errors during the current year. (Evaluate each case independently and assume ending inventory in the following year is correctly stated.) 1. Ending inventory is overstated, but purchases and related accounts payable are recorded correctly. 2. Both ending inventory and purchases and related accounts payable are understated. (Assume this purchase was recorded and paid for in the following year.) 3. Ending inventory is correct, but a purchase on account was not recorded. (Assume this purchase was recorded and paid for in the following year.) Instructions Indicate the effect of each of these errors on working capital, current ratio (assume that the current ratio is greater than 1), retained earnings, and net income for the current year and the subsequent year.

1. What other reasons can you think of why perfect competition is so rare? 2. Why does the market for fresh vegetables approximate to perfect competition, whereas that for aircraft does not?

1. Could isoquants ever cross? 2. Could they ever slope upward to the right? Explain your answers.