Question & Answer

What is the name of the process most commonly used to grow single crystal ingots of silicon for semiconductor processing?

In 2013, Grishell Trucking Company negotiated and closed a long-term lease contract for newly constructed truck terminals and freight storage facilities. The buildings were erected to the company’s specifications on land owned by the company. On January 1, 2014, Grishell Trucking Company took possession of the lease properties. On January 1, 2014 and 2015, the company made cash payments of $948,000 that were recorded as rental expenses. Although the terminals have a composite useful life of 40 years, the noncancelable lease runs for 20 years from January 1, 2014, with a bargain-purchase option available upon expiration of the lease. The 20-year lease is effective for the period January 1, 2014, through December 31, 2033. Advance rental payments of $800,000 are payable to the lessor on January 1 of each of the first 10 years of the lease term. Advance rental payments of $320,000 are due on January 1 for each of the last 10 years of the lease. The company has an option to purchase all of these leased facilities for $1 on December 31, 2033. It also must make annual payments to the lessor of $125,000 for property taxes and $23,000 for insurance. The lease was negotiated to assure the lessor a 6% rate of return. Instructions (a) Prepare a schedule to compute for Grishell Trucking Company the present value of the terminal facilities and related obligation at January 1, 2014. (b) Assuming that the present value of terminal facilities and related obligation at January 1, 2014, was $7,600,000, prepare journal entries for Grishell Trucking Company to record the: (1) Cash payment to the lessor on January 1, 2016. (2) Amortization of the cost of the leased properties for 2016 using the straight-line method and assuming a zero salvage value. (3) Accrual of interest expense at December 31, 2016. Selected present value factors are as follows. For an Ordinary Periods Annuity of $1 at 6% For $1 at 6% 1 .943396 .943396 2 1.833393 .889996 8 6.209794 .627412 9 6.801692 .591898 10 7.360087 .558395 19 11.158117 .330513 20 11.469921 .311805

The controller for Clint Eastwood Co. is attempting to determine the amount of cash to be reported on its December 31, 2014, balance sheet. The following information is provided. 1. Commercial savings account of $600,000 and a commercial checking account balance of $900,000 are held at First National Bank of Yojimbo. 2. Money market fund account held at Volonte Co. (a mutual fund organization) permits Eastwood to write checks on this balance, $5,000,000. 3. Travel advances of $180,000 for executive travel for the first quarter of next year (employee to reimburse through salary reduction). 4. A separate cash fund in the amount of $1,500,000 is restricted for the retirement of long-term debt. 5. Petty cash fund of $1,000. 6. An I.O.U. from Marianne Koch, a company customer, in the amount of $190,000. 7. A bank overdraft of $110,000 has occurred at one of the banks the company uses to deposit its cash receipts. At the present time, the company has no deposits at this bank. 8. The company has two certificates of deposit, each totaling $500,000. These CDs have a maturity of 120 days. 9. Eastwood has received a check that is dated January 12, 2015, in the amount of $125,000. 10. Eastwood has agreed to maintain a cash balance of $500,000 at all times at First National Bank of Yojimbo to ensure future credit availability. 11. Eastwood has purchased $2,100,000 of commercial paper of Sergio Leone Co. which is due in 60 days. 12. Currency and coin on hand amounted to $7,700. Instructions (a) Compute the amount of cash to be reported on Eastwood Co.’s balance sheet at December 31, 2014. (b) Indicate the proper reporting for items that are not reported as cash on the December 31, 2014, balance sheet.

Why would a financial institution holding a stock consider buying a put option on that stock rather than simply selling it? (LO4)

ROI, EVA, residual income Senior management at Harriot Industries, an Italian-based fashion house and cosmetics company, have been engaged in a debate around the best key financial measure relevant to evaluate the performance of senior executives and divisional managers. Currently, the performance of senior managers and divisional managers is based on return on investment (ROI), which forms the basis of the bonus payments, provided ROI increases are achieved each year.   The main source of tension seems to be that some of the accounting staff are pushing for the use of economic value added (EVA) or, at the very least, residual income (RI) to be used at both the senior executive and divisional levels.   You have been asked to contribute some views. On a recent visit to the head office of Harriot Industries you were able to access details on a printout from a digital whiteboard that represented a discussion about performance measures and a potential investment project in the Logistics Division. Some of this material is provided below.                                                   Required Using the information provided in the table, demonstrate (perhaps including calculations) the key arguments that might be put forward to support the view that the sole use of return on investment (ROI) may be inappropriate, particularly at the divisional level.

1.       : Discuss some of the potential positive and negative aspects of sending digital nudges to managers via e-mail or text messages. What do you see as the most important ways for managers to use this technology?

There are 19 correct answers in the following multiple-choice questions (some questions have multiple answers that are correct). To attain a perfect score on the quiz, all correct answers must be given. Each correct answer is worth 1 point. Each omitted answer or wrong answer reduces the score by 1 point, and each additional answer beyond the correct number of answers reduces the score by 1 point. Percentage score on the quiz is based on the total number of correct answers. 9.1 Anisotropic means which one of the following: (a) composite materials with composition consisting of more than two materials, (b) properties are the same in every direction, (c) properties vary depending on the direction in which they are measured, or (d) strength and other properties are a function of curing temperature? 9.2 The reinforcing phase is the matrix within which the secondary phase is imbedded: (a) true or (b) false? 9.3 Which one of the following reinforcing geometries offers the greatest potential for strength and stiffness improvement in the resulting composite material: (a) fibers, (b) flakes, (c) particles, or (d) infiltrated phase? 9.4 Wood is which one of the following composite types: (a) CMC, (b) MMC, or (c) PMC? 9.5 Which of the following materials are used as fibers in fiber-reinforced plastics (four best answers): (a) aluminum oxide, (b) boron, (c) cast iron, (d) E-glass, (e) epoxy, (f) Kevlar 49, (g) polyester, and (h) silicon? 9.6 Which of the following metals are used as the matrix material in fiber-reinforced MMCs (two best answers): (a) aluminum, (b) copper, (c) iron, (d) magnesium, and (e) zinc? 9.7 Which of the following metals are used as the matrix metals in nearly all WC cemented carbides and TiC cermets (two correct answers): (a) aluminum, (b) chromium, (c) cobalt, (d) lead, (e) nickel, (f) tungsten, and (g) tungsten carbide? 9.8 Ceramic matrix composites are designed to overcome which of the following weaknesses of ceramics (two best answers): (a) compressive strength, (b) hardness, (c) hot hardness, (d) modulus of elasticity, (e) tensile strength, and (f) toughness? 9.9 Which one of the following polymer types are most commonly used in polymer matrix composites: (a) elastomers, (b) thermoplastics, or (c) thermosets? 9.10 Which of the following materials are not composites (two correct answers): (a) cemented carbide, (b) phenolic molding compound, (c) plywood, (d) Portland cement, (e) rubber in automobile tires, (f) wood, and (g) 1020 steel?

The book basis of depreciable assets for Erwin Co. is $900,000, and the tax basis is $700,000 at the end of 2015. The enacted tax rate is 34% for all periods. Determine the amount of deferred taxes to be reported on the balance sheet at the end of 2015.

Explain why boards of directors will often employ independent             remuneration consultants to assist in developing and assessing      compensation plans.             (LO5)

On January 1, 2014, Acker Inc. had the following balance sheet. ACKER INC. BALANCE SHEET AS OF JANUARY 1, 2014 Assets Equity Cash $ 50,000 Common stock $260,000 Equity investments (available-for-sale) 240,000 Accumulated other comprehensive income 30,000 Total $290,000 Total $290,000 The accumulated other comprehensive income related to unrealized holding gains on available-for-sale securities. The fair value of Acker Inc.’s available-for-sale securities at December 31, 2014, was $190,000; its cost was $140,000. No securities were purchased during the year. Acker Inc.’s income statement for 2014 was as follows. (Ignore income taxes.) ACKER INC. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2014 Dividend revenue $ 5,000 Gain on sale of investments 30,000 Net income $35,000 Instructions (Assume all transactions during the year were for cash.) (a) Prepare the journal entry to record the sale of the available-for-sale securities in 2014. (b) Prepare a statement of comprehensive income for 2014. (c) Prepare a balance sheet as of December 31, 2014.

1.      : Do you think Vinson’s desire for changes in culture are related to changes in the external environment? Explain.

When units are transferred from one department to another, how are normal spoilage costs recorded?

Explain how the financial sector could amplify the effects of shocks to the economy, such as those from the COVID-19 pandemic.

‘Executives should only be compensated based upon the achievement of           targets.  They should not receive a fixed salary component’. Discuss.             (LO4 and 5)

Sustainability and job costing in a service sector Green and Greener Co., a law firm specialising in environmental litigation, had the following costs last year:       The following costs were included in overhead:         The entity recently improved its ability to document and trace costs to individual cases. Revised bookkeeping procedures now allow it to trace fringe benefit costs for direct professional labour, paralegal costs, telephone charges, computer time, and photocopying costs to each case individually. The managing partner needs to decide whether more costs than just direct professional labour should be traced directly to jobs to allow the entity to better justify billings to clients. During the last year, more costs were traced to client engagements. Two of the case records showed the following:         Three methods are being considered for allocating overhead this year: ·           Method 1: Allocate overhead based on direct professional labour cost. Calculate the allocation rate using last year’s direct professional labour costs of $15 million and overhead costs of $21 million. ·           Method 2: Allocate overhead based on direct professional labour cost. Calculate the allocation rate using last year’s direct professional labour costs of $15 million and overhead costs of $10 million ($21 million less $11 million in direct costs that are traced this year). ·           Method 3: Allocate the $10 million overhead based on total direct costs. Calculate the allocation rate using last year’s direct costs (professional labour of $15 million plus other direct costs of $11 million).   Required (a)     Calculate the overhead allocation rate for method 1. (b)     Calculate the overhead allocation rate for method 2. (c)     Calculate the overhead allocation rate for method 3. (d)     Using each of the three rates calculated in parts (a), (b) and (c), calculate the total costs of cases 875 and 876. (e)     Explain why the total costs allocated to cases 875 and 876 are not the same under the three methods. (f)      Explain why method 1 would be inappropriate. (g)     Would method 2 or method 3 be better? Explain. (h)     Explain how professional service firms, like law firms might engage in sustainability practices. (LO1 and 4)

Warren Co. purchased a put option on Echo common shares on January 7, 2014, for $360. The put option is for 400 shares, and the strike price is $85 (which equals the price of an Echo share on the purchase date). The option expires on July 31, 2014. The following data are available with respect to the put option. Date Market Price of Echo Shares Time Value of Put Option March 31, 2014 $80 per share $200 June 30, 2014 82 per share 90 July 6, 2014 77 per share 25 Instructions Prepare the journal entries for Warren Co. for the following dates. (a) January 7, 2014—Investment in put option on Echo shares. (b) March 31, 2014—Warren prepares financial statements. (c) June 30, 2014—Warren prepares financial statements. (d) July 6, 2014—Warren settles the put option on the Echo shares.

There are 15 correct answers in the following multiple choice questions (some questions have multiple answers that are correct). To attain a perfect score on the quiz, all correct answers must be given. Each correct answer is worth 1 point. Each omitted answer or wrong answer reduces the score by 1 point, and each additional answer beyond the correct number of answers reduces the score by 1 point. Percentage score on the quiz is based on the total number of correct answers. 10.1 Sand casting is which of the following types: (a) expendable mold or (b) permanent mold? 10.2 The upper half of a sand-casting mold is called which of the following: (a) cope or (b) drag? 10.3 In casting, a flask is which one of the following: (a) beverage bottle for foundrymen, (b) box which holds the cope and drag, (c) container for holding liquid metal, or (d) metal which extrudes between the mold halves? 10.4 In foundry work, a runner is which one of the following: (a) channel in the mold leading from the downsprue to the main mold cavity, (b) foundryman who moves the molten metal to the mold, or (c) vertical channel into which molten metal is poured into the mold? 10.5 Turbulence during pouring of the molten metal is undesirable for which of the following reasons (two best answers): (a) it causes discoloration of the mold surfaces, (b) it dissolves the binder used to hold together the sand mold, (c) it increases erosion of the mold surfaces, (d) it increases the formation of metallic oxides that can become entrapped during solidification, (e) it increases the mold filling time, and (f) it increases total solidification time? 10.6 Total solidification time is defined as which one of the following: (a) time between pouring and complete solidification, (b) time between pouring and cooling to room temperature, (c) time between solidification and cooling to room temperature, or (d) time to give up the heat of fusion? 10.7 During solidification of an alloy when a mixture of solid and liquid metals is present, the solid-liquid mixture is referred to as which one of the following: (a) eutectic composition, (b) ingot segregation, (c) liquidus, (d) mushy zone, or (e) solidus?   10.8 Chvorinov's rule states that total solidification time is proportional to which one of the following quantities: (a) (A/V) n , (b) Hf, (c) Tm, (d) V, (e) V/A, or (f) (V/A) 2 ; where A = surface area of casting, Hf = heat of fusion, Tm = melting temperature, and V = volume of casting? 10.9 A riser in casting is described by which of the following (three correct answers): (a) an insert in the casting that inhibits buoyancy of the core, (b) gating system in which the sprue feeds directly into the cavity, (c) metal that is not part of the casting, (d) source of molten metal to feed the casting and compensate for shrinkage during solidification, and (e) waste metal that is usually recycled? 10.10 In a sand-casting mold, the V/A ratio of the riser should be (a) equal to, (b) greater than, or (c) smaller than the V/A ratio of the casting itself? 10.11 Which of the following riser types are completely enclosed within the sand mold and connected to the main cavity by a channel to feed the molten metal (two correct answers): (a) blind riser, (b) open riser, (c) side riser, and (d) top riser?

1. What is the significance of the slope of the line ac in the top part of Figure 6.1? 2. Given that there is a fixed supply of land in the world, what implications can you draw from Figure 6.1 about the effects of an increase in world population for food output per head?

In early January 2013, Outkast Corporation applied for a trade name, incurring legal costs of $16,000. In January 2014, Outkast incurred $7,800 of legal fees in a successful defense of its trade name. Instructions (a) Compute 2013 amortization, 12/31/13 book value, 2014 amortization, and 12/31/14 book value if the company amortizes the trade name over 10 years. (b) Compute the 2014 amortization and the 12/31/14 book value, assuming that at the beginning of 2014, Outkast determines that the trade name will provide no future benefits beyond December 31, 2017. (c) Ignoring the response for part (b), compute the 2015 amortization and the 12/31/15 book value, assuming that at the beginning of 2015, based on new market research, Outkast determines that the fair value of the trade name is $15,000. Estimated total future cash flows from the trade name is $16,000 on January 3, 2015.

Explain the concept of cash flow underwriting. (LO4)

Describe the general differences between a call option and a futures contract. (LO1)

How does electroless plating differ from electrochemical plating?

Why might the Fed want to focus its efforts on reducing long-term interest rates rather than short-term interest rates during a weak economy? Explain how it might use a monetary policy focused on influencing long-term interest rates. Why might such a policy also affect short-term interest rates in the same direction? (LO2)

Do the following events represent business transactions? Explain your answer in each case. (a) A computer is purchased on account. (b) A customer returns merchandise and is given credit on account. (c) A prospective employee is interviewed. (d) The owner of the business withdraws cash from the business for personal use. (e) Merchandise is ordered for delivery next month.

A face milling operation is performed on the top surface of a steel rectangular workpiece 12.0 in long by 2.5 in wide. The milling cutter follows a path that is centered over the workpiece. It has five teeth and a 3.0 in diameter. Cutting speed = 250 ft/min, feed = 0.006 in/tooth, and depth of cut = 0.150 in. Determine (a) the actual cutting time to make one pass across the surface and (b) the maximum metal removal rate during the cut. (c) If an additional approach distance of 0.5 in is provided at the beginning of the pass (before cutting begins), and an overtravel distance is provided at the end of the pass equal to the cutter radius plus 0.5 in, what is the duration of the feed motion