Question & Answer

Will students in receipt of a loan, grant or an allowance who receive the money once per term have a high or a low transactions demand for money relative to their income?

Toro Co. has equipment with a carrying amount of $700,000. The value-in-use of the equipment is $705,000, and its fair value less costs of disposal is $590,000. The equipment is expected to be used in operations in the future. What amount (if any) should Toro report as an impairment to its equipment?

The part shown in Figure P16.13 is to be pressed of iron powders using a compaction pressure of 75,000 lb/in2 . Dimensions are inches. Determine (a) the most appropriate pressing direction, (b) the required press tonnage to perform this operation, and (c) the final weight of the part if the porosity is 10%. Assume shrinkage during sintering can be neglected.

When is revenue recognized under the cost-recovery method?

Turner, Inc. began work on a $7,000,000 contract in 2014 to construct an office building. During 2014, Turner, Inc. incurred costs of $1,700,000, billed its customers for $1,200,000, and collected $960,000. At December 31, 2014, the estimated future costs to complete the project total $3,300,000. Prepare Turner’s 2014 journal entries using the percentage-of-completion method.

A stepping motor has 200 step angles. Its output shaft is directly coupled to leadscrew with pitch = 0.250 in. A worktable is driven by the leadscrew. The table must move a distance of 5.00 in from its present position at a travel speed of 20.0 in/min. Determine (a) the number of pulses required to move the table the specified distance and (b) the required motor speed and pulse rate to achieve the specified table speed.

Hamilton Construction Company uses the percentage-of-completion method of accounting. In 2014, Hamilton began work under contract #E2-D2, which provided for a contract price of $2,200,000. Other details are as follows. 2014 2015 Costs incurred during the year $640,000 $1,425,000 Estimated costs to complete, as of December 31 960,000 –0– Billings during the year 420,000 1,680,000 Collections during the year 350,000 1,500,000 Instructions (a) What portion of the total contract price would be recognized as revenue in 2014? In 2015? (b) Assuming the same facts as those shown above except that Hamilton uses the cost-recovery method of accounting, what portion of the total contract price would be recognized as revenue in 2015?

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/Marks-and- 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 were M&S’s sales for 2012? (b) What was the percentage of increase or decrease in M&S’s sales from 2011 to 2012? From 2010 to 2011? From 2010 to 2012? (c) In its notes to the financial statements, what criteria does M&S use to recognize revenue? (d) How does M&S account for discounts and loyalty schemes? Does the accounting conform to accrual-accounting concepts? Explain.

Instructions Go to the book’s companion website and use information found there to answer the following questions related to The Coca-Cola Company and PepsiCo, Inc. (a) What were Coca-Cola’s and PepsiCo’s net revenues (sales) for the year 2011? Which company increased its revenues more (dollars and percentage) from 2010 to 2011? (b) Are the revenue recognition policies of Coca-Cola and PepsiCo similar? Explain. (c) In which foreign countries (geographic areas) did Coca-Cola and PepsiCo experience significant revenues in 2011? Compare the amounts of foreign revenues to U.S. revenues for both Coca-Cola and PepsiCo.

Determine the shape factor for each of the extrusion die orifice shapes in Figure P19.32.

Explain how the failure of a large commercial bank could cause a worldwide swap credit crisis. (LO1, LO7)

The following stress and strain values were measured in the plastic region during a tensile test carried out on a new experimental metal: (1) true stress = 43,608 lb/in2 and true strain = 0.27 in/in, and (2) true stress = 52,048 lb/in2 and true strain = 0.85 in/in. Based on these data points, determine the strength coefficient and strain-hardening exponent.

What are interim reports? Why is a complete set of financial statements often not provided with interim data? What are the accounting problems related to the presentation of interim data?

Prepare a memorandum containing responses to the following items. (a) Describe the cost flow assumptions used in average-cost, FIFO, and LIFO methods of inventory valuation. (b) Distinguish between weighted-average-cost and moving-average-cost for inventory costing purposes. (c) Identify the effects on both the balance sheet and the income statement of using the LIFO method instead of the FIFO method for inventory costing purposes over a substantial time period when purchase prices of inventoriable items are rising. State why these effects take place.

Chaz Corporation has taxable income in 2024 of $1,312,000 for purposes of computing the §179 expense and acquired the following assets during the year:

How would you set about measuring the external costs of road transport?

reported the following data in its annual report. Feb. 27, Feb. 26, Feb. 25, 2010 2011 2012 Total revenues $40,597 $37,534 $36,100 Cost of sales (using LIFO) 31,444 29,124 28,010 Year-end inventories using FIFO 2,606 2,552 2,492 Year-end inventories using LIFO 2,342 2,270 2,150 (a) Compute SUPERVALU’s inventory turnovers for 2011 and 2012, using: (1) Cost of sales and LIFO inventory. (2) Cost of sales and FIFO inventory. (b) Some firms calculate inventory turnover using sales rather than cost of goods sold in the numerator. Calculate SUPERVALU’s 2011 and 2012 turnover, using: (1) Sales and LIFO inventory. (2) Sales and FIFO inventory. (c) Describe the method that SUPERVALU’s appears to use. (d) State which method you would choose to evaluate SUPERVALU’s performance. Justify your choice.

A direct extrusion operation produces the cross section shown in Figure P19.32(a) from a brass billet whose diameter = 125 mm and length = 350 mm. The flow curve parameters of the brass are K = 700 MPa and n = 0.35. In the Johnson strain equation, a = 0.7 and b = 1.4. Determine (a) the extrusion ratio, (b) the shape factor, (c) the force required to drive the ram forward during extrusion at the point in the process when the billet length remaining in the container = 300 mm, and (d) the length of the extruded section at the end of the operation if the volume of the butt left in the container is 600,000 mm3 .

Several years ago, your client, Brooks Robinson, started an office-cleaning service. His business was very successful, owing much to his legacy as the greatest defensive third baseman in major league history and his nickname, “The Human Vacuum Cleaner.”  Brooks operated his business as a sole proprietorship and used the cash-basis method of accounting. Brooks was advised by his attorney that it is too risky to operate his business as a sole proprietorship and that he should incorporate to limit his liability. Brooks has come to you for advice on the tax implications of incorporation. His balance sheet is presented below. Under the terms of the incorporation, Brooks would transfer the assets to the corporation in return for 100 percent of the company’s common stock. The corporation would also assume the company’s liabilities (payables and mortgage).

Presented below is the trial balance of the Crestwood Golf Club, Inc. as of December 31. The books are closed annually on December 31.   Instructions (a) Enter the balances in ledger accounts. Allow five lines for each account. (b) From the trial balance and the information given below, prepare annual adjusting entries and post to the ledger accounts. (Omit explanations.) (1) The buildings have an estimated life of 30 years with no salvage value (straight-line method). (2) The equipment is depreciated at 10% per year. (3) Insurance expired during the year $3,500. (4) The rent revenue represents the amount received for 11 months for dining facilities. The December rent has not yet been received. (5) It is estimated that 12% of the accounts receivable will be uncollectible. (6) Salaries and wages earned but not paid by December 31, $3,600. (7) Dues received in advance from members $8,900. (c) Prepare an adjusted trial balance. (d) Prepare closing entries and post.

Crowe Company purchased a heavy-duty truck on July 1, 2011, for $30,000. It was estimated that it would have a useful life of 10 years and then would have a trade-in value of $6,000. The company uses the straight-line method. It was traded on August 1, 2015, for a similar truck costing $42,000; $16,000 was allowed as trade-in value (also fair value) on the old truck and $26,000 was paid in cash. A comparison of expected cash flows for the trucks indicates the exchange lacks commercial substance. What is the entry to record the trade-in?

Recently, a group of university students decided to incorporate for the purposes of selling a process to recycle the waste product from manufacturing cheese. Some of the initial costs involved were legal fees and office expenses incurred in starting the business, state incorporation fees, and stamp taxes. One student wishes to charge these costs against revenue in the current period. Another wishes to defer these costs and amortize them in the future. Which student is correct?

Based on results of a tensile test, the flow curve strain-hardening exponent = 0.40 and strength coefficient = 551.6 MPa. Based on this information, calculate the (engineering) tensile strength for the metal.

Forda Lumber Company owns a 7,000-acre tract of timber purchased in 2000 at a cost of $1,300 per acre. At the time of purchase, the land was estimated to have a value of $300 per acre without the timber. Forda Lumber Company has not logged this tract since it was purchased. In 2014, Forda had the timber cruised. The cruise (appraiser) estimated that each acre contained 8,000 board feet of timber. In 2014, Forda built 10 miles of roads at a cost of $7,840 per mile. After the roads were completed, Forda logged and sold 3,500 trees containing 850,000 board feet. Instructions (a) Determine the cost of timber sold related to depletion for 2014. (b) If Forda depreciates the logging roads on the basis of timber cut, determine the depreciation expense for 2014. (c) If Forda plants five seedlings at a cost of $4 per seedling for each tree cut, how should Forda treat the reforestation?

What is the difference between industrial stitching and stapling?