Question & Answer

Explain how the amount of cash payments to suppliers is computed under the direct method.

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 kind of pension plan does P&G provide its employees in the United States? (b) What was P&G’s pension expense for 2011, 2010, and 2009 for the United States? (c) What is the impact of P&G’s pension plans for 2011 on its financial statements? (d) What information does P&G provide on the target allocation of its pension assets? (Compare the asset allocation for “Pensions and Other Retiree Benefits.”) How do the allocations relate to the expected returns on these assets?

The controller for Lafayette Inc. recently commented, “If I have to disclose our segments individually, the only people who will gain are our competitors and the only people that will lose are our present stockholders.” Evaluate this comment.

What is service cost, and what is the basis of its measurement?

Besides the starting material, what other feature distinguishes the rapid prototyping technologies?

What are some of the most common civil penalties imposed on taxpayers?

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.

SCC corporation (a calendar-year C corporation) has a net operating loss (NOL) carryover to 2024 in the amount of $30,000.  How much tax will SCC pay for 2024 if it reports taxable income from operations of $20,000 before considering loss carryovers under the following assumptions?   a. The NOL originated in 2017.

Earnhart Corporation has outstanding 3,000,000 shares of common stock of a par value of $10 each. The balance in its Retained Earnings account at January 1, 2014, was $24,000,000, and it then had Paid-in Capital in Excess of Par—Common Stock of $5,000,000. During 2014, the company’s net income was $4,700,000. A cash dividend of $0.60 a share was declared on May 5, 2014, and was paid June 30, 2014, and a 6% stock dividend was declared on November 30, 2014, and distributed to stockholders of record at the close of business on December 31, 2014. You have been asked to advise on the proper accounting treatment of the stock dividend. The existing stock of the company is quoted on a national stock exchange. The market price of the stock has been as follows. October 31, 2014 $31 November 30, 2014 $34 December 31, 2014 $38 Instructions (a) Prepare the journal entry to record the declaration and payment of the cash dividend. (b) Prepare the journal entry to record the declaration and distribution of the stock dividend. (c) Prepare the stockholders’ equity section (including schedules of retained earnings and additionalpaid-in capital) of the balance sheet of Earnhart Corporation for the year 2014 on the basis of the foregoing information. Draft a note to the financial statements setting forth the basis of the accounting for the stock dividend, and add separately appropriate comments or explanations regarding the basis chosen.

Write a short essay on the integration of bond markets. Explain why adverse conditions within one bond market (such as a particular country) commonly spread to other bond markets.

What date or event does the profession believe should be used in determining the value of a stock option? What arguments support this position?

Which limitations might restrict a corporation’s deduction for a cash charitable contribution?  Explain how to determine the amount of the limitation.

Under what circumstances would you expect the after-tax return from an investment in a capital asset to approach that of tax-exempt assets (assuming equal before-tax rates of return)?

Explain a principal-agent relationship and its significance to revenue recognition.

Describe the two criteria for determining the valuation of financial assets.

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/   -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 kind of pension plan does M&S provide its employees? (b) What was M&S’s pension expense for 2012 and 2011? (c) What is the impact of M&S’s pension plans for 2012 on its financial statements? (d) What information does M&S provide on the target allocation of its pension assets? How do the allocations relate to the expected returns on these assets?

Are there other points in the supply chain/production process where firms could make use of a better understanding of behavioural economics?

Using the appropriate interest table, answer each of the following questions. (Each case is independent of the others.) (a) What is the future value of $7,000 at the end of 5 periods at 8% compounded interest? (b) What is the present value of $7,000 due 8 periods hence, discounted at 11%? (c) What is the future value of 15 periodic payments of $7,000 each made at the end of each period and compounded at 10%? (d) What is the present value of $7,000 to be received at the end of each of 20 periods, discounted at 5% compound interest?

A surfacing weld is to be applied to a rectangular low carbon steel plate that is 200 mm by 350 mm. The filler metal to be added is a harder (alloy) grade of steel, whose melting point is assumed to be the same. A thickness of 2.0 mm will be added to the plate, but with penetration into the base metal, the total thickness melted during welding = 6.0 mm, on average. The surface will be applied by making a series of parallel, overlapped welding beads running lengthwise on the plate. The operation will be carried out automatically with the beads laid down in one long continuous operation at a travel speed = 7.0 mm/s, using welding passes separated by 5 mm. Assume the welding bead is rectangular in cross section: 5 mm by 6 mm. Ignore the minor complications of the turnarounds at the ends of the plate. Assuming the heat transfer factor = 0.8 and the melting factor = 0.6, determine (a) the rate of heat that must be generated at the welding source, and (b) how long will it take to complete the surfacing operation.

What is draft in a rolling operation?

Will speculators buy or sell Treasury bond futures contracts if they expect interest rates to increase? Explain. (LO2)

A face milling operation is not yielding the required surface finish on the work. The cutter is a four-tooth insert type face milling cutter. The machine shop foreman thinks the problem is that the work material is too ductile for the job, but this property tests well within the ductility range for the material specified by the designer. Without knowing any more about the job, what changes in (a) cutting conditions and (b) tooling would you suggest to improve the surface finish?

Based on the video about micrometers, explain the primary factor that makes an English micrometer different from a metric micrometer.

1.      : Do you think the complaints of lower-paid sales associates are legitimate? Why or why not? How do you suggest that Lauren respond to these complaints, such as the gripe that the system offers few opportunities for large commissions in some departments?

Explain why savings institutions may benefit when interest rates fall. (LO4)