Question & Answer

In 2014, Ghostbusters Corp. spent $420,000 for “goodwill” visits by sales personnel to key customers. The purpose of these visits was to build a solid, friendly relationship for the future and to gain insight into the problems and needs of the companies served. How should this expenditure be reported?

What are some of the significant sources of contaminants in IC processing?

Some economists argue that recessions generate unemployment ‘scarring’ (i.e. various negative outcomes for the people unemployed and possibly broader society too). What might these scarring effects be and what is likely to be their longer-term impact?

Last Chance Mine (LCM) purchased a coal deposit for $750,000. It estimated it would extract 12,000 tons of coal from the deposit. LCM mined the coal and sold it, reporting gross receipts of $1 million, $3 million, and $2 million for years 1 through 3, respectively. During years 1 – 3, LCM reported net income (loss) from the coal deposit activity in the amount of ($20,000), $500,000, and $450,000, respectively. In years 1 – 3, LCM extracted 13,000 tons of coal as follows:   DepletionTons extracted per year (1)  Tons of Coal (2)  Basis (2)/(1) Rate Year 1 Year 2 Year 3 12,000 $750,000 $62.50 2,000 7,200 3,800 a. What is LCM’s cost depletion for years 1, 2, and 3? b. What is LCM’s percentage depletion for each year (the applicable percentage for coal is 10 percent)?  c. Using the cost and percentage depletion computations from parts (a) and (b), what is LCM’s actual depletion expense for each year?

A cylindrical billet that is 100 mm long and 50 mm in diameter is reduced by indirect (backward) extrusion to a 20 mm diameter. The die angle is 90°. The Johnson equation has a = 0.8 and b = 1.4, and the flow curve for the work metal has a strength coefficient of 800 MPa and strain hardening exponent of 0.13. Determine (a) extrusion ratio, (b) true strain (homogeneous deformation), (c) extrusion strain, (d) ram pressure, and (e) ram force.

Why does the required rate of return for a particular bond change over time? (LO2)

Why might efforts to address the issue of global warming be hampered by a lack of understanding of probability amongst the general public?

Why is the liabilities section of the balance sheet of primary significance to bankers?

The financial statements of P&G are presented in Appendix 5B. The company’s complete annual report, including the notes to the financial statements, can be accessed at the book’s companion website, www. wiley.com/college/kieso. Instructions Refer to P&G’s financial statements and the accompanying notes to answer the following questions. (a) What is the par or stated value of P&G’s preferred stock? (b) What is the par or stated value of P&G’s common stock? (c) What percentage of P&G’s authorized common stock was issued at June 30, 2011? (d) How many shares of common stock were outstanding at June 30, 2011, and June 30, 2010? (e) What was the dollar amount effect of the cash dividends on P&G’s stockholders’ equity? (f) What is P&G’s return on common stock equity for 2011 and 2010? (g) What is P&G’s payout ratio for 2011 and 2010? (h) What was the market price range (high/low) of P&G’s common stock during the quarter ended June 30, 2011?

The following facts pertain to a noncancelable lease agreement between Mooney Leasing Company and Rode Company, a lessee. Inception date: May 1, 2014 Annual lease payment due at the beginning of each year, beginning with May 1, 2014 $21,227.65 Bargain-purchase option price at end of lease term $ 4,000.00 Lease term 5 years Economic life of leased equipment 10 years Lessor’s cost $65,000.00 Fair value of asset at May 1, 2014 $91,000.00 Lessor’s implicit rate 10% Lessee’s incremental borrowing rate 10% The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor. The lessee assumes responsibility for all executor costs. Instructions (Round all numbers to the nearest cent.) (a) Discuss the nature of this lease to Rode Company. (b) Discuss the nature of this lease to Mooney Company. (c) Prepare a lease amortization schedule for Rode Company for the 5-year lease term. (d) Prepare the journal entries on the lessee’s books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2014 and

Carlos has located a regulation that appears to answer his tax research question.  He is concerned because the regulation is a temporary regulation.  Evaluate the authoritative weight of this type of regulation.  Should he feel more or less confident in his answer if the regulation is a proposed regulation?

Wasatch Corp. (WC) received a $200,000 dividend from Tager Corporation (TC).  WC owns 15 percent of the TC stock.  Compute WC’s deductible DRD in each of the following situations:

Which would you rather have: five restaurants to choose from, each with very different menus and each having spare tables so that you could always guarantee getting one; or just two restaurants, charging less but with less choice and where you have to book quite a long time in advance?

The basic issue in variable and absorption costing could be said to be one of timing rather than amount. Explain.

Differentiate between a defined contribution pension plan and a defined benefit pension plan. Explain how the employer’s obligation differs between the two types of plans.

Jeremy is a calendar-year taxpayer who sometimes leases his business equipment to local organizations. He recorded the following receipts this year. Indicate the extent to which these payments are taxable income to Jeremy this year if Jeremy is (1) a cash-method taxpayer and (2) an accrual-method taxpayer.

Identify some of the present and future products associated with nanotechnology.

How should a debt callable by the creditor be reported in the debtor’s financial statements?

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/Marksand- 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 is the par or stated value of M&S’s preference shares? (b) What is the par or stated value of M&S’s ordinary shares? (c) What percentage of M&S’s authorized ordinary shares was issued at 31 March 2012? (d) How many ordinary shares were outstanding at 31 March 2012, and 2 April 2011? (e) What was the pound amount effect of the cash dividends on M&S’s equity? (f) What is M&S’s return on ordinary share equity for 2012 and 2011? (g) What is M&S’s payout ratio for 2012 and 2011?

Don Juan, a single taxpayer, is the sole owner, of DJ’s Inc., an S corporation. In 2024, DJ’s Inc. incurred a massive $600,000 business loss, all of which is allocable to Don Juan as the sole shareholder. Assume that the $600,000 loss is not limited by the basis, at-risk, or passive loss rules and that Don Juan has no other business income or business losses. How much of the $600,000 loss will Don Juan be able to deduct this year? What happens to any loss not deducted this year?

Explain how income could fall even though the unit sales level rises.

Explain the rationale for the ceiling and floor in the lowerof- cost-or-market method of valuing inventories.

What impact does the financial accelerator have on the marginal propensity to consume domestically produced goods (mpcd)? How does this affect the IS curve?

Rubio recently invested $20,000 (tax basis) in purchasing a limited partnership interest. His at-risk amount is $15,000. In addition, Rubio’s share of the limited partnership loss for the year is $22,000, his share of income from a different limited partnership is $5,000, and he has $40,000 in wage income and $10,000 in long-term capital gains. a. How much of Rubio’s $22,000 loss is allowed considering only the tax basis loss limitations? b. How much of the loss from part (a) is allowed under the at-risk limitations? c. How much of Rubio’s $22,000 loss from the limited partnership can he deduct in the current year considering all limitations?

If the government is running a budget deficit, does this mean that national income will increase?