Question & Answer

Draw a diagram like Figure 13.2, only this time assume that the activity has the effect of reducing pollution, with the result that there are marginal external benefits. Identify the socially optimal level of the activity. What would be the level of subsidy required to achieve this level of activity?

Explain the current environment regarding revenue recognition.

What is the difference between the wet lay-up approach and the prepreg approach in hand lay-up?

Bedard Corporation reported net income of $300,000 in 2014 and had 200,000 shares of common stock outstanding throughout the year. Also outstanding all year were 45,000 options to purchase common stock at $10 per share. The average market price of the stock during the year was $15. Compute diluted earnings per share.

Briefly explain the accounting requirements for stock compensation plans under GAAP.

What will be the effects on the domestic economy under free-floating exchange rates if there is a rapid expansion in world economic activity? What will determine the size of these effects?

What are the criteria by which machinability is commonly assessed in a production machining operation?

Explain the meaning of efficient markets. Why might we expect markets to be efficient most of the time? In recent years, several securities firms have been guilty of using inside information when purchasing securities, thereby achieving returns well above the norm (even when accounting for risk). Does this suggest that the security markets are not efficient? Explain. (LO2)

Briefly describe the structure and role of the Securities and Exchange Commission. (LO4)

On February 1, 2015, one of the huge storage tanks of Viking Manufacturing Company exploded. Windows in houses and other buildings within a one-mile radius of the explosion were severely damaged, and a number of people were injured. As of February 15, 2015 (when the December 31, 2014, financial statements were completed and sent to the publisher for printing and public distribution), no suits had been filed or claims asserted against the company as a consequence of the explosion. The company fully anticipates that suits will be filed and claims asserted for injuries and damages. Because the casualty was uninsured and the company considered at fault, Viking Manufacturing will have to cover the damages from its own resources. Instructions Discuss fully the accounting treatment and disclosures that should be accorded the casualty and related contingent losses in the financial statements dated December 31, 2014.

Define cellular manufacturing.

Khamsah Mining Company has purchased a tract of mineral land for $900,000. It is estimated that this tract will yield 120,000 tons of ore with sufficient mineral content to make mining and processing profitable. It is further estimated that 6,000 tons of ore will be mined the first and last year and 12,000 tons every year in between. (Assume 11 years of mining operations.) The land will have a salvage value of $30,000. The company builds necessary structures and sheds on the site at a cost of $36,000. It is estimated that these structures can serve 15 years but, because they must be dismantled if they are to be moved, they have no salvage value. The company does not intend to use the buildings elsewhere. Mining machinery installed at the mine was purchased secondhand at a cost of $60,000. This machinery cost the former owner $150,000 and was 50% depreciated when purchased. Khamsah Mining estimates that about half of this machinery will still be useful when the present mineral resources have been exhausted, but that dismantling and removal costs will just about offset its value at that time. The company does not intend to use the machinery elsewhere. The remaining machinery will last until about one-half the present estimated mineral ore has been removed and will then be worthless. Cost is to be allocated equally between these two classes of machinery. Instructions (a) As chief accountant for the company, you are to prepare a schedule showing estimated depletion and depreciation costs for each year of the expected life of the mine. (b) Also compute the depreciation and depletion for the first year assuming actual production of 5,000 tons. Nothing occurred during the year to cause the company engineers to change their estimates of either the mineral resources or the life of the structures and equipment.

Presented below are three different transactions related to materiality. Explain whether you would  classify these transactions as material. (a) Blair Co. has reported a positive trend in earnings over the last 3 years. In the current year, it reduces its bad debt allowance to ensure another positive earnings year. The impact of this adjustment is equal to 3% of net income. (b) Hindi Co. has an extraordinary gain of $3.1 million on the sale of plant assets and a $3.3 million loss on the sale of investments. It decides to net the gain and loss because the net effect is considered immaterial. Hindi Co.’s income for the current year was $10 million. (c) Damon Co. expenses all capital equipment under $25,000 on the basis that it is immaterial. The company has followed this practice for a number of years.

What are the advantages and disadvantages to a firm that issues low- or zero-coupon bonds? (LO2)

In recent years, the Wall Street Journal has indicated that many companies have changed their accounting principles. What are the major reasons why companies change accounting methods?

There are 14 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 24.1 Which of the following criteria are generally recognized to indicate good machinability (four best answers): (a) ease of chip disposal, (b) high cutting temperatures, (c) high power requirements, (d) high value of Ra, (e) long tool life, (f) low cutting forces, and (g) zero shear plane angle? 24.2 Of the various methods for testing machinability, which one of the following is the most important: (a) cutting forces, (b) cutting temperature, (c) horsepower consumed in the operation, (d) surface roughness, (e) tool life, or (f) tool wear? 24.3 A machinability rating greater than 1.0 indicates that the work material is (a) easier to machine than the base metal or (b) more difficult to machine than the base metal, where the base metal has a rating = 1.0? 24.4 In general, which one of the following materials has the highest machinability: (a) aluminum, (b) cast iron, (c) copper, (d) low carbon steel, (e) stainless steel, (f) titanium alloys, or (g) unhardened tool steel? 24.5 Which one of the following operations is generally capable of the closest tolerances: (a) broaching, (b) drilling, (c) end milling, (d) planing, or (e) sawing? 24.6 When cutting a ductile work material, an increase in cutting speed will generally (a) degrade surface finish, which means a higher value of Ra or (b) improve surface finish, which means a lower value of Ra? 24.7 Which one of the following operations is generally capable of the best surface finishes (lowest value of Ra): (a) broaching, (b) drilling, (c) end milling, (d) planing, or (e) turning? 24.8 Which of the following time components in the average production machining cycle is affected by cutting speed (two correct answers): (a) part loading and unloading time, and (b) setup time for th 24.9 Which cutting speed is always lower for a given machining operation: (a) cutting speed for maximum production rate, or (b) cutting speed for minimum cost? 24.10 A high tooling cost and/or tool change time will tend to (a) decrease, (b) have no effect on, or (c) increase the cutting speed for minimum cost?

How easy do you think it would be for a firm to split customers into different groups based on their incomes?

Mark received 10 ISOs at the time he started working for Hendricks Corporation five years ago, when Hendricks’s price was $5 per share (each option gives him the right to purchase 10 shares of Hendricks Corporation stock for $5 per share). Now that Hendricks’s share price is $35 per share, Mark intends to exercise all of his options and hold all of his shares for more than one year. Assume that more than a year after exercise, Mark sells the stock for $35 a share. What are Mark’s tax consequences on the grant date, the exercise date, and the date he sells the shares, assuming his ordinary marginal rate is 32 percent and his long-term capital gains rate is 15 percent?

Daniel is considering selling two stocks that have not fared well over recent years. A friend recently informed Daniel that one of his stocks has a special designation, which allows him to treat a loss up to $50,000 on this stock as an ordinary loss rather than the typical capital loss. Daniel figures that he has a loss of $60,000 on each stock. If Daniel’s marginal tax rate is 35 percent and he has $120,000 of other capital gains (taxed at 15 percent), what is the tax savings from the special tax treatment

The trend line developed using regression analysis provides a more accurate representation of a mixed cost function than the two-point or high-low methods. Explain why.

1.       : Is there a role for personality characteristics such as authoritarianism and Machiavellianism in contemporary organizations? Explain your thinking.

Explain the difference between operating departments and support departments

1.       Go to the team and tell them what you’ve been asked to do. If they refuse to support you, threaten to reveal the true numbers to the CEO and board members.

Define and sketch a fillet weld.

Compare and contrast the relationship test requirements for a qualifying child with the relationship requirements for a qualifying relative.