Question & Answer

How is the rubber industry organized?

Gramps purchased a joint survivor annuity that pays $500 monthly over his remaining life and that of his wife, Gram. Gramps is 70 years old and Gram is 65 years old. Gramps paid $97,020 for the contract. How much income will Gramps recognize on the first payment?

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 follow: 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 above except that Hamilton uses the completed-contract method of accounting, what portion of the total contract price would be recognized as revenue in 2015? (c) Prepare a complete set of journal entries for 2014 (using the percentage-of-completion method).

An automatic turning process is set up to produce parts with a mean diameter = 6.255 cm. The process is in statistical control and the output is normally distributed with a standard deviation = 0.004 cm. Determine the process capability.

What will cause people to expect higher rates of inflation? How will expectations of inflation affect the actual rate of inflation?

Franco converted a building from personal to business use in May 2021 when the fair market value was $55,000. He purchased the building in July 2018 for $80,000. On December 15 of this year, Franco sells the building for $40,000. On the date of the sale, the accumulated depreciation on the building is $5,565. What is Franco’s recognized gain or loss on the sale?

How are the tax issues associated with home offices and vacation homes used as rentals similar? How are the tax issues or requirements dissimilar?

Would the demand for securities be low if their price was high, but was expected to go on rising?

Assume that commuters regard bus journeys as an inferior good and car journeys as a normal good. Using indifference curves, show how (a) a rise in incomes and (b) a fall in bus fares will affect the use of these two modes of transport. How could people’s tastes be altered so that bus journeys were no longer regarded as an inferior good? If tastes were altered in this way, what effect would it have on the indifference curves?

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, accompanying notes, and management’s discussion and analysis to answer the following questions. (a) What types of leases are used by P&G? (b) What amount of capital leases was reported by P&G in total and for less than one year? (c) What minimum annual rental commitments under all noncancelable leases at June 30, 2011, did P&G disclose?

What are likely reasons for weak bank performance? (LO3)

The UK government introduced the Soft Drinks Industry Levy in April 2018. Explain how this tax works and discuss its impact on both soft drinks companies and consumer behaviour.

What are the parameters of a machining operation that are included within the scope of cutting conditions?

Give some examples of how correcting problems in one part of the economy will create problems elsewhere.

Schooling is free in state schools in most countries. If parents are given a choice of schools for their children, there will be a shortage of places at popular schools (the analysis will be the same as in Figure 3.8, with the number of places in a given school measured on the horizontal axis). What methods could be used for dealing with this shortage? What are their relative merits?

Lois Kenseth, president of Sycamore Corporation, is concerned about several large stockholders who have been very vocal lately in their criticisms of her leadership. She thinks they might mount a campaign to have her removed as the corporation’s CEO. She decides that buying them out by purchasing their shares could eliminate them as opponents, and she is confident they would accept a “good” offer. Kenseth knows the corporation’s cash position is decent, so it has the cash to complete the transaction. She also knows the purchase of these shares will increase earnings per share, which should make other investors quite happy. (Earnings per share is calculated by dividing net income available for the common shareholders by the weighted-average number of shares outstanding. Therefore, if the number of shares outstanding is decreased by purchasing treasury shares, earnings per share increases.) Instructions Answer the following questions. (a) Who are the stakeholders in this situation? (b) What are the ethical issues involved? (c) Should Kenseth authorize the transaction?

A silicon boule is grown by the Czochralski process to a diameter of 5.25 in and a length of 5 ft. The seed and tang ends are cut off, reducing the effective length to 48.00 in. Assume that the seed and tang portions are conical in shape. The diameter is ground to 4.921 in (125 mm). A primary flat of width 1.625 in is ground on the surface the entire length of the ingot. The ingot is then sliced into wafers 0.025 in thick, using an abrasive saw blade whose thickness = 0.0128 in. Determine (a) the original volume of the boule, in3; (b) how many wafers are cut from it, assuming the entire 4 ft length can be sliced, and (c) what is the volumetric proportion of silicon in the starting boule that is wasted during processing?

The first IBM personal computer was based on the Intel 8088 CPU, which was released in 1979. The 8088 had 29,000 transistors and 40 I/O pins. The final version of the Pentium III (1 GHz) was released in 2000. It contained 28,000,000 transistors and had 370 I/O pins. (a) Determine the Rent’s rule coefficient values m and C assuming that a transistor can be considered a circuit. (b) Use the value of m and C to predict the number of I/O pins required for the first Pentium 4 assuming that it is manufactured with 42,000,000 transistors. (c) The first Pentium 4, released in 2001, used 423 I/O pins. Comment on the accuracy of your prediction.

Billups, a physician and cash-method taxpayer, is new to the concept of tax planning and recently learned of the timing strategy. To implement the timing strategy, Billups plans to establish a new policy that allows all his clients to wait two years to pay their co-pays. Assume that Billups does not expect his marginal tax rates to change. What is wrong with his strategy?

The flow rate of liquid metal into the downsprue of a mold = 1 liter/sec. The cross-sectional area at the top of the sprue = 800 mm2 , and its length = 175 mm. What area should be used at the base of the sprue to avoid aspiration of the molten metal?

Stacy Corporation had income before income taxes for 2014 of $6,300,000. In addition, it suffered an unusual and infrequent pretax loss of $770,000 from a volcano eruption. The corporation’s tax rate is 30%. Prepare a partial income statement for Stacy beginning with income before income taxes. The corporation had 5,000,000 shares of common stock outstanding during 2014.

In each of the following independent situations, determine the taxpayer’s filing status and the number of dependents the taxpayer is allowed to claim.

Identify the lease classifications for lessors and the criteria that must be met for each classification.

Diana and Ryan Workman were married on January 1 of last year. Ryan has an eight-year-old son, Jorge, from his previous marriage. Diana works as a computer programmer at Datafile Inc. (DI) earning a base salary of $94,000. Ryan is self-employed and runs a day care center. The Workmans reported the following financial information pertaining to their activities during the current year.

Assume the same information as E14-6. Instructions Set up a schedule of interest expense and discount amortization under the effective-interest method. (Hint: The effective-interest rate must be computed.)