Question & Answer

Your aunt recently received the annual report for a company in which she has invested. The report notes that the statements have been prepared in accordance with IFRS. She has also heard that certain terms have special meanings in accounting relative to everyday use. She would like you to explain the meaning of terms she has come across related to accounting. Instructions Access the IASB Framework 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 prepare responses to the following items. (Provide paragraph citations.) (a) How is “materiality” defined in the framework? (b) Briefly discuss how materiality relates to (1) the relevance of financial information, and (2) completeness. (c) Your aunt observes that under IFRS, the financial statements are prepared on the accrual basis. According to the framework, what does “accrual basis” mean?

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) Using the notes to the consolidated financial statements, determine M&S’s revenue recognition policies. (b) Give two examples of where historical cost information is reported in M&S’s financial statements and related notes. Give two examples of the use of fair value information reported in either the financial statements or related notes. (c) How can we determine that the accounting principles used by M&S are prepared on a basis consistent with those of last year? (d) What is M&S’s accounting policy related to refunds and loyalty schemes? Why does M&S include the accounting for refunds and loyalty schemes in its critical accounting estimates and judgments?

A milling operation is performed on an NC machining center. Total travel distance = 300 mm in a direction parallel to one of the axes of the worktable. Cutting speed = 1.25 m/s and chip load = 0.05 mm. The end milling cutter has four teeth and its diameter = 20.0 mm. The axis uses a DC servomotor whose output shaft is coupled to a leadscrew with pitch = 6.0 mm. The feedback sensing device connected to the leadscrew is an optical encoder that emits 250 pulses per revolution. Determine (a) feed rate and time to complete the cut, and (b) rotational speed of the motor and the pulse rate of the encoder at the feed rate indicated.

Bill Novak is working on an audit of an IFRS client. In his review of the client’s interim reports, he notes that the reports are prepared on a discrete basis. That is, each interim report is viewed as a distinct period. Is this acceptable under IFRS? If so, explain how that treatment could affect comparisons to a GAAP company.

Why is austenitic stainless steel called by that name?

How could a bank generate higher income before tax (as a percentage of assets) when its net interest margin has decreased? (LO2)

Explain the role of the SEC, FINRA, and the stock exchanges in regulating the securities industry. (LO2)

A blanking die is to be designed to blank the part outline shown in Figure P20.4. The material is 4 mm thick stainless steel (half hard). Determine the dimensions of the blanking punch and the die opening.

Define and sketch a fillet weld.

Connie recently provided legal services to the Winterhaven LLC and received a 5 percent interest in the LLC as compensation. Winterhaven currently has $50,000 of accounts payable and no other liabilities. The current fair market value of Winterhaven’s capital is $200,000. a. If Connie receives a 5 percent capital interest only, how much income must she report, and what is her tax basis in the LLC interest? b. If Connie receives a 5 percent profits interest only, how much income must she report, and what is her tax basis in the LLC interest? c. If Connie receives a 5 percent capital and profits interest, how much income must she report, and what is her tax basis in the LLC interest?

1. What is the opportunity cost of the seventh million units of clothing? 2. If the country moves upward along the curve and produces more food, does this also involve increasing opportunity costs?

Give some examples of stochastic shocks.

(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?

Describe a wheel ring test.

What is the due date for the corporation tax return Form 1120?  Is it possible to extend the due date?  Explain.

Latoya Company provides the following selected information related to its defined benefit pension plan for 2014. Pension asset/liability (January 1) $ 25,000 Cr. Accumulated benefi t obligation (December 31) 400,000 Actual and expected return on plan assets 10,000 Contributions (funding) in 2014 150,000 Fair value of plan assets (December 31) 800,000 Settlement rate 10% Projected benefi t obligation (January 1) 700,000 Service cost 80,000 Instructions (a) Compute pension expense and prepare the journal entry to record pension expense and the employer’s contribution to the pension plan in 2014. Preparation of a pension worksheet is not required. Benefits paid in 2014 were $35,000. (b) Indicate the pension-related amounts that would be reported in the company’s income statement and balance sheet for 2014.

Suppose the net income generated by a bank is equal to 1.5 percent of its assets. Based on past experience, would the bank experience a loss or a gain? Explain. (LO2)

Explain how venture capital (VC) funds finance private businesses as well as how they exit from their participation in a firm. (LO1)

List several ways that variances can be used to improve future operations.

George and Weezy received $30,200 of Social Security benefits this year ($12,000 for George; $18,200 for Weezy).  They also received $5,000 of interest from jointly owned City of Ranburne Bonds and dividend income. What amount of the Social Security benefits must George and Weezy include in their gross income under the following independent situations? a.       George and Weezy file married joint and receive $8,000 of dividend income from stocks owned by George. b.       George and Weezy file married separate and receive $8,000 of dividend income from stocks owned by George. c.       George and Weezy file married joint and receive $30,000 of dividend income from stocks owned by George. d.     George and Weezy file married joint and receive $15,000 of dividend income from stocks owned by George

Solve Problem 22.17 except that the workpiece is 5.0 in wide and the cutter is offset to one side so that the swath cut by the cutter = 1.0 in wide. This is called partial face milling, Figure 22.20(b).

ELS, an S corporation, reported a business loss of $1,000,000. Ethan, ELS’s sole shareholder, is involved in ELS’s daily business activities, and he reports $1,200,000 of taxable income from sources other than ELS. What must you know in order to determine how much, if any, of the $1,000,000 loss Ethan may deduct in the current year? Explain.

Everly Corporation acquires a coal mine at a cost of $400,000. Intangible development costs total $100,000. After extraction has occurred, Everly must restore the property (estimated fair value of the obligation is $80,000), after which it can be sold for $160,000. Everly estimates that 4,000 tons of coal can be extracted. If 700 tons are extracted the first year, prepare the journal entry to record depletion.

What are the three methods of performing the masking step in chemical machining?

1.      Georgio owns a 20 percent profits and capital interest in Rain Tree LLC. For the current year, Rain Tree had the following revenues, expenses, gains, and losses: Sales revenue $70,000 Gain on sale of land (§1231) $11,000 Cost of goods sold ($26,000) Depreciation - MACRS ($3,000) §179 deduction* ($10,000) Employee wages ($11,000) Nondeductible fines and penalties ($3,000) Municipal bond interest $6,000 Short-term capital gains $4,000 Guaranteed payment to Sandra ($3,000)