Question & Answer

New machinery, which replaced a number of employees, was installed and put in operation in the last month of the fiscal year. The employees had been dismissed after payment of an extra month’s wages, and this amount was added to the cost of the machinery. Discuss the propriety of the charge. If it was improper, describe the proper treatment.

Explain the following terms. (a) LIFO layer. (b) LIFO reserve. (c) LIFO effect.

Buhl Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2014, the following balances relate to this plan. Plan assets $480,000 Defi ned benefi t obligation 600,000 Pension asset/liability 120,000 As a result of the operation of the plan during 2014, the following additional data are provided by the actuary. Service cost for 2014 $90,000 Discount rate, 6% Actual return on plan assets in 2014 55,000 Unexpected loss from change in defi ned benefi t obligation, due to change in actuarial predictions 76,000 Contributions in 2014 99,000 Benefi ts paid retirees in 2014 85,000 Instructions (a) Using the data above, compute pension expense for Buhl Corp. for the year 2014 by preparing a pension worksheet. (b) Prepare the journal entry for pension expense for 2014.

Compare and contrast the similarities and differences between organizational expenditures and start-up costs for tax purposes.

How do partners who purchase a partnership interest determine the tax basis and holding period of their partnership interests?

Candice Willis will invest $30,000 today. She needs $150,000 in 21 years. What annual interest rate must she earn?

What is the fundamental feature that distinguishes fusion welding from solid-state welding?

How has the opening up of trade and investment between eastern and western Europe likely to have affected the location of industries within Europe that have (a) substantial economies of scale; (b) little or no economies of scale?

Braxton Inc. is considering the write-off of a limited-life intangible because of its lack of profitability. Explain to the management of Braxton how to determine whether a write-off is permitted.

What is a photoresist in chemical machining?

Cooke Company has a fiscal year ending on September 30. Selected data from the September 30 worksheet are presented below.   Instructions (a) Prepare a complete worksheet. (b) Prepare a classified balance sheet. (Note: $10,000 of the mortgage payable is due for payment in the next fiscal year.) (c) Journalize the adjusting entries using the worksheet as a basis. (d) Journalize the closing entries using the worksheet as a basis. (e) Prepare a post-closing trial balance.

What are the three types of tax credits? Explain why it is important to distinguish between the different types of tax credits.

Using the facts in problem 37, if Campbell earns an additional $15,000 of taxable income, what is her marginal tax rate on this income?  What is her marginal rate if, instead, she had $15,000 of additional deductions?

Compare and contrast the three trial-level courts.

How does accounting help the capital allocation process?

To illustrate these figures, draw the demand curve corresponding to the following table.  P (£) TE (£) 2.50 5.00 10.00 20.00 40.00 400 200 100 50 25 1000 1000 1000 1000 1000                            If the curve had an elasticity of –1 throughout its length, what would be the quantity demanded (a) at a price of £1; (b) at a price of 10p; (c) if the good were free?

How is isostatic pressing distinguished from conventional pressing and sintering in PM?

'A firm will always prefer to make more profit rather than less.’ Do you agree with this statement? Is it compatible with alternatives to the profit-maximising theory of the firm?

The following financial statement was prepared by employees of Walters Corporation.   Note 1: New styles and rapidly changing consumer preferences resulted in a $71,500 loss on the disposal of discontinued styles and related accessories. Note 2: The corporation sold an investment in marketable securities at a loss of $39,050. The corporation normally sells securities of this nature. Note 3: The corporation sold one of its warehouses at an $86,350 loss. Instructions Identify and discuss the weaknesses in classification and disclosure in the single-step income statement above. You should explain why these treatments are weaknesses and what the proper presentation of the items would be in accordance with GAAP.

Side Kicks has year-end account balances of Sales Revenue $808,900; Interest Revenue $13,500; Cost of Goods Sold $556,200; Administrative Expenses $189,000; Income Tax Expense $35,100; and Dividends $18,900. Prepare the year-end closing entries.

When the accounts of Daniel Barenboim Inc. are examined, the adjusting data listed below are uncovered on December 31, the end of an annual fiscal period. 1. The prepaid insurance account shows a debit of $5,280, representing the cost of a 2-year fire insurance policy dated August 1 of the current year. 2. On November 1, Rent Revenue was credited for $1,800, representing revenue from a subrental for a 3-month period beginning on that date. 3. Purchase of advertising materials for $800 during the year was recorded in the Advertising Expense account. On December 31, advertising materials of $290 are on hand. 4. Interest of $770 has accrued on notes payable. Instructions Prepare the following in general journal form. (a) The adjusting entry for each item. (b) The reversing entry for each item where appropriate.

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) Were there changes in accounting principles reported by P&G during the three years covered by its income statements (2009–2011)? If so, describe the nature of the change and the year of change. (b) What types of estimates did P&G discuss in 2011?

1.       : Aaron Alexis, the former Navy reservist who went on a shooting rampage and killed 12 people at the Washington Navy Yard in Washington D.C., had a history of mental instability, but he was carrying a valid security clearance. How would you suggest managers make decisions for issuing or revoking security clearances to prevent this kind of catastrophe?

Agua Linda Inc. is a calendar-year corporation. What is the original due date for the corporate tax return? What happens if the original due date falls on a Saturday?

As part of the year-end accounting process and review of operating policies, Cullen Co. is considering a change in the accounting for its equipment from the straight-line method to an accelerated method. Your supervisor wonders how the company will report this change in accounting. It has been a few years since he took intermediate accounting, and he cannot remember whether this change would be treated in a retrospective or prospective manner. Your supervisor wants you to research the authoritative guidance on a change in accounting policy related to depreciation methods. Instructions Access the IFRS authoritative literature 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 respond to the following questions. (Provide paragraph citations.) (a) What are the accounting and reporting guidelines for a change in accounting policy related to depreciation methods? (b) What are the conditions that justify a change in depreciation method, as contemplated by Cullen Co.?