Question & Answer

Keeton Company sponsors a defined benefit pension plan for its 600 employees. The company’s actuary provided the following information about the plan. January 1, December 31, 2014 2014 2015 Projected benefi t obligation $2,800,000 $3,650,000 $4,195,000 Accumulated benefi t obligation 1,900,000 2,430,000 2,900,000 Plan assets (fair value and market-related asset value) 1,700,000 2,900,000 3,790,000 Accumulated net (gain) or loss (for purposes of the corridor calculation) –0– 198,000 (24,000) Discount rate (current settlement rate) 9% 8% Actual and expected asset return rate 10% 10% Contributions 1,030,000 600,000 The average remaining service life per employee is 10.5 years. The service cost component of net periodic pension expense for employee services rendered amounted to $400,000 in 2014 and $475,000 in 2015. The accumulated OCI (PSC) on January 1, 2014, was $1,260,000. No benefits have been paid. Instructions (Round to the nearest dollar.) (a) Compute the amount of accumulated OCI (PSC) to be amortized as a component of net periodic pension expense for each of the years 2014 and 2015. (b) Prepare a schedule which reflects the amount of accumulated OCI (G/L) to be amortized as a component of pension expense for 2014 and 2015. (c) Determine the total amount of pension expense to be recognized by Keeton Company in 2014 and 2015.

Explain the difference between a market order and a limit order. (LO1)

Distinguish between redrawing and reverse drawing.

Describe the purpose of a pension plan’s vesting schedule and explain how it works. (LO3)

Why will excessive international liquidity lead to international inflation?

Sylvan Inc. entered into a noncancelable lease arrangement with Breton Leasing Corporation for a certain machine. Breton’s primary business is leasing; it is not a manufacturer or dealer. Sylvan will lease the machine for a period of 3 years, which is 50% of the machine’s economic life. Breton will take possession of the machine at the end of the initial 3-year lease and lease it to another, smaller company that does not need the most current version of the machine. Sylvan does not guarantee any residual value for the machine and will not purchase the machine at the end of the lease term. Sylvan’s incremental borrowing rate is 10%, and the implicit rate in the lease is 9%. Sylvan has no way of knowing the implicit rate used by Breton. Using either rate, the present value of the minimum lease payments is between 90% and 100% of the fair value of the machine at the date of the lease agreement. Sylvan has agreed to pay all executory costs directly, and no allowance for these costs is included in the lease payments. Breton is reasonably certain that Sylvan will pay all lease payments. Because Sylvan has agreed to pay all executory costs, there are no important uncertainties regarding costs to be incurred by Breton. Assume that no indirect costs are involved. Instructions (a) With respect to Sylvan (the lessee), answer the following. (1) What type of lease has been entered into? Explain the reason for your answer. (2) How should Sylvan compute the appropriate amount to be recorded for the lease or asset acquired? (3) What accounts will be created or affected by this transaction, and how will the lease or asset and other costs related to the transaction be matched with earnings? (4) What disclosures must Sylvan make regarding this leased asset? (b) With respect to Breton (the lessor), answer the following. (1) What type of leasing arrangement has been entered into? Explain the reason for your answer. (2) How should this lease be recorded by Breton, and how are the appropriate amounts determined? (3) How should Breton determine the appropriate amount of earnings to be recognized from each lease payment? (4) What disclosures must Breton make regarding this lease?

Why do loans that can be prepaid on a moment’s notice complicate the bank’s assessment of interest rate risk? (LO3)

Describe a put option on interest rate futures. How does it differ from selling a futures contract? (LO6)

Explain the general difference between the portfolio composition of private pension funds and public pension funds. (LO6)

Do all shareholders receive the same tax treatment in a complete liquidation of a corporation? Explain.

A direct extrusion operation produces the cross section shown in Figure P19.32(d) from an aluminum billet whose diameter = 150 mm and length = 900 mm. The flow curve parameters for the aluminum are K = 240 MPa and n = 0.16. In the Johnson strain equation, a = 0.8 and b = 1.5. Determine (a) the extrusion ratio, (b) the shape factor, (c) the force required to drive the ram forward during extrusion at the point in the process when the billet length remaining in the container = 850 mm, and (d) the length of the extruded section at the end of the operation if the volume of the butt left in the container is 600,000 mm3 .

Why should the electromechanical system rather than the controller storage register be the limiting factor in control resolution?

Which is preferable: general subsidies for public transport, or cheap fare policies for specific groups (such as children, students and pensioners)?

Webb 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 Projected benefi t obligation 600,000  Pension asset/liability 120,000 Accumulated OCI (PSC) 100,000 Dr. As a result of the operation of the plan during 2014, the following additional data are provided by theactuary. Service cost $90,000 Settlement rate, 9% Actual return on plan assets 55,000 Amortization of prior service cost 19,000 Expected return on plan assets 52,000 Unexpected loss from change in projected benefi t obligation, due to change in actuarial predictions 76,000 Contributions 99,000 Benefi ts paid retirees 85,000 Instructions (a) Using the data above, compute pension expense for Webb Corp. for the year 2014 by preparing a pension worksheet. (b) Prepare the journal entry for pension expense for 2014.

What is the purpose of a cash flow hedge?

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. 16.1 The particle size that can pass through a screen is obtained by taking the reciprocal of the mesh count of the screen: (a) true or (b) false? 16.2 For a given weight of metallic powders, the total surface area of the powders is increased by which of the following (two best answers): (a) larger particle size, (b) smaller particle size, (c) higher shape factor, and (d) smaller shape factor? 16.3 As particle size increases, interparticle friction (a) decreases, (b) increases, or (c) remains the same? 16.4 Which of the following powder shapes would tend to have the lowest interparticle friction: (a) acicular, (b) cubic, (c) flakey, (d) spherical, and (e) rounded? 16.5 Which of the following statements is correct in the context of metallic powders (three correct answers): (a) porosity + packing factor = 1.0, (b) packing factor = 1/porosity, (c) packing factor = 1.0 - porosity, (d) packing factor = - porosity, (e) packing factor = bulk density/true density? 16.6 Repressing refers to a pressworking operation used to compress a sintered part in a closed die to achieve closer sizing and better surface finish: (a) true or (b) false? 16.7 Impregnation refers to which of the following (two best answers): (a) filling the pores of the PM part with a molten metal, (b) putting polymers into the pores of a PM part, (c) soaking oil by capillary action into the pores of a PM part, and (d) something that should not happen in a factory? 16.8 In cold isostatic pressing, the mold is most typically made of which one of the following: (a) rubber, (b) sheetmetal, (c) textile, (d) thermosetting polymer, or (e) tool steel? 16.9 Which of the following processes combines pressing and sintering of the metal powders (three best answers): (a) hot isostatic pressing, (b) hot pressing, (c) metal injection molding, (d) pressing and sintering, and (e) spark sintering? 16.10 Which of the following design features would be difficult or impossible to achieve by conventional pressing and sintering (three best answers): (a) outside rounded corners, (b) side holes, (c) threaded holes, (d) vertical stepped holes, and (e) vertical wall thickness of 1/8 inch (3 mm)?

What are some of the possible defects in drawn sheet-metal parts?

What is torque-turn tightening?

Clem is married and is a skilled carpenter. Clem’s wife, Wanda, works part-time as a substitute elementary school teacher. Determine the amount of Clem’s expenses that are deductible for AGI this year (if any) under the following independent circumstances:

Define the term manufacturing system.

In Figure 24.6, which countries’ terms of trade improved in the 2000s?

The adjusted trial balance of Eastwood Company and other related information for the year 2014 are presented as follows.   Additional information: 1. The LIFO method of inventory value is used. 2. The cost and fair value of the long-term investments that consist of stocks and bonds is the same. 3. The amount of the Construction in Progress account represents the costs expended to date on a building in the process of construction. (The company rents factory space at the present time.) The land on which the building is being constructed cost $85,000, as shown in the trial balance. 4. The patents were purchased by the company at a cost of $40,000 and are being amortized on a straight-line basis. 5. Of the discount on bonds payable, $2,000 will be amortized in 2015. 6. The notes payable represent bank loans that are secured by long-term investments carried at $120,000. These bank loans are due in 2015. 7. The bonds payable bear interest at 8% payable every December 31, and are due January 1, 2025. 8. 600,000 shares of common stock of a par value of $1 were authorized, of which 500,000 shares were issued and outstanding. Instructions Prepare a balance sheet as of December 31, 2014, so that all important information is fully disclosed.

Which elements are the noble metals?

What are the basic differences between civil and criminal tax penalties?

What does the term anisotropic mean?