Question & Answer

Describe the ways in which the timing strategy has limitations.

On July 1, 2014, Moresan Company sold special-order merchandise on credit and received in return an interest-bearing note receivable from the customer. Moresan will receive interest at the prevailing rate for a note of this type. Both the principal and interest are due in one lump sum on June 30, 2015. On September 1, 2014, Moresan sold special-order merchandise on credit and received in return a zero-interest-bearing note receivable from the customer. The prevailing rate of interest for a note of this type is determinable. The note receivable is due in one lump sum on August 31, 2016. Moresan also has significant amounts of trade accounts receivable as a result of credit sales to its customers. On October 1, 2014, some trade accounts receivable were assigned to Indigo Finance Company on a non-notification (Moresan handles collections) basis for an advance of 75% of their amount at an interest charge of 8% on the balance outstanding. On November 1, 2014, other trade accounts receivable were sold on a without recourse basis. The factor withheld 5% of the trade accounts receivable factored as protection against sales returns and allowances and charged a finance charge of 3%. Instructions (a) How should Moresan determine the interest revenue for 2014 on the: (1) Interest-bearing note receivable? Why? (2) Zero-interest-bearing note receivable? Why? (b) How should Moresan report the interest-bearing note receivable and the zero-interest-bearing note receivable on its balance sheet at December 31, 2014? (c) How should Moresan account for subsequent collections on the trade accounts receivable assigned on October 1, 2014, and the payments to Indigo Finance? Why? (d) How should Moresan account for the trade accounts receivable factored on November 1, 2014? Why?

: Describe the practices of effective virtual teams and how these practices are implemented.

What is the difference between the tentative minimum tax (TMT) and the AMT?

Assume that Amazon.com has a stock-option plan for top management. Each stock option represents the right to purchase a share of Amazon $1 par value common stock inthe future at a price equal to the fair value of the stock at the date of the grant. Amazon has 5,000 stock options outstanding, which were granted at the beginning of 2014. The following data relate to the option grant. Exercise price for options $40 Market price at grant date (January 1, 2014) $40 Fair value of options at grant date (January 1, 2014) $6 Service period 5 years Instructions (a) Prepare the journal entry(ies) for the first year of the stock-option plan. (b) Prepare the journal entry(ies) for the first year of the plan assuming that, rather than options, 700 shares of restricted stock were granted at the beginning of 2014. (c) Now assume that the market price of Amazon stock on the grant date was $45 per share. Repeat the requirements for (a) and (b). (d) Amazon would like to implement an employee stock-purchase plan for rank-and-file employees, but it would like to avoid recording expense related to this plan. Which of the following provisions must be in place for the plan to avoid recording compensation expense? (1) Substantially all employees may participate. (2) The discount from market is small (less than 5%). (3) The plan offers no substantive option feature. (4) There is no preferred stock outstanding.

When an employer makes a below-market loan to an employee, what are tax consequences to the employer and employee?

A horizontal true centrifugal casting process is used to make brass bushings with the following dimensions: length = 10 cm, outside diameter = 15 cm, and inside diameter = 12 cm. (a) Determine the required rotational speed in order to obtain a G-factor of 70. (b) When operating at this speed, what is the centrifugal force per square meter (Pa) imposed by the molten metal on the inside wall of the mold?

A particular metal has a flow curve with strength coefficient = 35,000 lb/in2 and strain-hardening exponent = 0.26. A tensile specimen of the metal with gage length = 2.0 in is stretched to a length = 3.3 in. Determine the flow stress at this new length and the average flow stress that the metal has been subjected to during deformation.

An extruder barrel has a diameter of 4.0 in and an L/D ratio of 28. The screw channel depth = 0.25 in, and its pitch = 4.8 in. It rotates at 60 rev/min. The viscosity of the polymer melt is 100 x 10- lb-sec/in2 . What head pressure is required to obtain a volume flow rate = 150 in3 /min?-

Assume that Sonic Foundry Corporation has a contractual debt outstanding. Sonic has available two means of settlement. It can either make immediate payment of $2,600,000, or it can make annual payments of $300,000 for 15 years, each payment due on the last day of the year. Instructions Which method of payment do you recommend, assuming an expected effective interest rate of 8% during the future period?

Why is PM technology so well suited to the production of gears and bearings?

What does the centerburst defect in extrusion have in common with the roll piercing process?

A 2.0-in-long billet with diameter = 1.25 in is direct extruded to a diameter of 0.50 in. The extrusion die angle = 90°. For the work metal, K = 45,000 lb/in2 , and n = 0.20. In the Johnson extrusion strain equation, a = 0.8 and b = 1.5. Determine (a) extrusion ratio, (b) true strain (homogeneous deformation), (c) extrusion strain, and (d) ram pressure at L = 2.0, 1.5, 1.0, 0.5 and zero in. Use of a spreadsheet calculator is recommended for part (d).

(Looking at the Maths) Given the following supply schedule: P 2 4 6 8 10 0 10 20 30 40 (a)  Draw the supply curve. (b)  Using the arc method calculate price elasticity of supply (i) between P = 2 and P = 4;                      (ii) between P = 8 and P = 10 (c)  Using the point method calculate price elasticity of supply at P = 6. (d)  Does the elasticity of the supply curve increase or decrease as P and Q increase? Why? (e)  What would be the answer to (d) if the supply curve had been a straight line but intersecting the horizontal axis to the right of the origin?

For each of the following citations, identify the type of authority     (statutory, administrative, or judicial) and explain the citation.

A drilling operation is to be performed with a 12.7 mm diameter twist drill in a steel workpart. The hole is a blind hole at a depth of 60 mm and the point angle is 118°. The cutting speed is 25 m/min and the feed is 0.30 mm/rev. Determine (a) the cutting time to complete the drilling operation, and (b) metal removal rate during the operation, after the drill bit reaches full diameter.

Presented below are selected accounts for Alvarez Company as reported in the worksheet at the end of May 2014.   Instructions Complete the worksheet by extending amounts reported in the adjusted trial balance to the appropriate columns in the worksheet. Do not total individual columns.

(a) Assuming no Fair Value Adjustment (available-forsale) account balance at the beginning of the year, prepare the adjusting entry at the end of the year if Laura Company’s available-for-sale securities have a fair value $60,000 below cost. (b) Assume the same information as part (a), except that Laura Company has a debit balance in its Fair Value Adjustment account of $10,000 at the beginning of the year. Prepare the adjusting entry at year-end.

On July 31, 2014, Mexico Company paid $3,000,000 to acquire all of the common stock of Conchita Incorporated, which became a division of Mexico. Conchita reported the following balance sheet at the time of the acquisition. It was determined at the date of the purchase that the fair value of the identifiable net assets of Conchita was $2,750,000. Over the next 6 months of operations, the newly purchased division experienced operating losses. In addition, it now appears that it will generate substantial losses for the foreseeable future. At December 31, 2014, Conchita reports the following balance sheet information. It is determined that the fair value of the Conchita Division is $1,850,000. The recorded amount for Conchita’s net assets (excluding goodwill) is the same as fair value, except for property, plant, and equipment, which has a fair value $150,000 above the carrying value. Instructions (a) Compute the amount of goodwill recognized, if any, on July 31, 2014. (b) Determine the impairment loss, if any, to be recorded on December 31, 2014. (c) Assume that fair value of the Conchita Division is $1,600,000 instead of $1,850,000. Determine the impairment loss, if any, to be recorded on December 31, 2014. (d) Prepare the journal entry to record the impairment loss, if any, and indicate where the loss would be reported in the income statement. Salaries and Other Expenses Number Employee (excluding Building of Projects Benefits Depreciation Charges) Completed projects with long-term benefits 15 $ 90,000 $50,000 Abandoned projects or projects that benefit the current period 10 65,000 15,000 Projects in process—results indeterminate 5 40,000 12,000 Total 30 $195,000 $77,000 Current assets $ 800,000 Current liabilities $ 600,000 Noncurrent assets 2,700,000 Long-term liabilities 500,000 Total assets $3,500,000 Stockholders’ equity 2,400,000 Total liabilities and stockholders’ equity $3,500,000 Current assets $ 450,000 Noncurrent assets (including goodwill recognized in purchase) 2,400,000 Current liabilities (700,000) Long-term liabilities (500,000) Net assets $1,650,000

Howie Long has just learned he has won a $500,000 prize in the lottery. The lottery has given him two options for receiving the payments. (1) If Howie takes all the money today, the state and federal governments will deduct taxes at a rate of 46% immediately. (2) Alternatively, the lottery offers Howie a payout of 20 equal payments of $36,000 with the first payment occurring when Howie turns in the winning ticket. Howie will be taxed on each of these payments at a rate of 25%. Instructions Assuming Howie can earn an 8% rate of return (compounded annually) on any money invested during this period, which pay-out option should he choose?

Capulet Company establishes a stock-appreciation rights program that entitles its new president Ben Davis to receive cash for the difference between the market price of the stock and a pre-established price of $30 (also market price) on December 31, 2010, on 30,000 SARs. The date of grant is December 31, 2010, and the required employment (service) period is 4 years. President Davis exercises all of the SARs in 2016. The fair value of the SARs is estimated to be $6 per SAR on December 31, 2011; $9 on December 31, 2012; $15 on December 31, 2013; $6 on December 31, 2014; and $18 on December 31, 2015. Instructions (a) Prepare a 5-year (2011–2015) schedule of compensation expense pertaining to the 30,000 SARs granted president Davis. (b) Prepare the journal entry for compensation expense in 2011, 2014, and 2015 relative to the 30,000 SARs.

1.    : This chapter described studies that show that people work harder and better for managers who put the interests of others above their own. Do you believe being more of a “giver” than a “taker” will translate into greater career success for these managers? Discuss

1.       : What opportunities and potential problems are posed by the formation of more than one coalition within an organization, each one advocating a different direction or alternative? What steps can you take as a manager to make sure that dueling coalitions result in constructive discussion rather than dissension?

What is the opportunity cost of holding money? Is it the real or the nominal rate of interest? Explain.

During pouring into a sand mold, the molten metal can be poured into the downsprue at a constant flow rate during the time it takes to fill the mold. At the end of pouring the sprue is filled and there is negligible metal in the pouring cup. The downsprue is 6.0 in long. Its cross-sectional area at the top = 0.8 in2 and at the base = 0.6 in2 . The cross-sectional area of the runner leading from the sprue also = 0.6 in2 , and it is 8.0 in long before leading into the mold cavity, whose volume = 65 in3 . The volume of the riser located along the runner near the mold cavity = 25 in3 . It takes a total of 3.0 sec to fill the entire mold (including cavity, riser, runner, and sprue. This is more than the theoretical time required, indicating a loss of velocity due to friction in the sprue and runner. Find (a) the theoretical velocity and flow rate at the base of the downsprue; (b) the total volume of the mold; (c) the actual velocity and flow rate at the base of the sprue; and (d) the loss of head in the gating system due to friction.