Question & Answer

What actions can either the buyers or sellers take in each of the examples in Table 5.1 to help overcome some of the potential problems caused by the unobservable characteristics?

Assume that a country had no state education at all. For what reasons might the private education system not provide the optimal allocation of resources to and within education?

In a turning operation, spindle speed is set to provide a cutting speed of 1.8 m/s. The feed and depth of cut of cut are 0.30 mm and 2.6 mm, respectively. The tool rake angle is 8°. After the cut, the deformed chip thickness is measured to be 0.49 mm. Determine (a) shear plane angle, (b) shear strain, and (c) material removal rate. Use the orthogonal cutting model as an approximation of the turning process

Pechstein Corporation issued 2,000 shares of $10 par value common stock upon conversion of 1,000 shares of $50 par value preferred stock. The preferred stock was originally issued at $60 per share. The common stock is trading at $26 per share at the time of conversion. Record the conversion of the preferred

Discuss the accounting treatment or disclosure that should be accorded a declared but unpaid cash dividend, an accumulated but undeclared dividend on cumulative preferred stock, and a stock dividend distributable.

Lotoya Davis Corporation has 10 million shares of common stock issued and outstanding. On June 1, the board of directors voted an 80 cents per share cash dividend to stockholders of record as of June 14, payable June 30. Instructions (a) Prepare the journal entry for each of the dates above assuming the dividend represents a distribution of earnings. (b) How would the entry differ if the dividend were a liquidating dividend?

What are the characteristics of high-quality information in a company’s first IFRS financial statements?

According to the video on composites, list the primary purpose of the matrix and the reinforcement in a composite.

: Explain how factors such as creating an open communication climate, the choice of communication channels, candor, questions, and nonverbal communications influence the quality of communication.

What are the components of an interest rate? Why is it important for accountants to understand these components?

How can the interaction of the multiplier and accelerator explain cyclical fluctuations in national income?

Why is it difficult to test the assumption that firms seek to maximise long-run profits?

1.       : Have you experienced any of the five contributions of teams shown in Exhibit 18.2 with a team in which you have participated? Describe your experience and why you think the team was able to make that specific contribution.

Transfer price; sale to outside versus inside customer The Enviro division of Solar Sun produces electric motors, 20 per cent of which are sold to the Energy Plus division of Solar Sun and the remainder to outside customers. Solar Sun treats its divisions as profit centres and allows division managers to choose their sources of sale and supply. Corporate policy requires that all interdivisional sales and purchases be recorded at variable cost as transfer price. Enviro division’s estimated sales and standard cost data for 2017, based on its full capacity of 100 000 units are as follows:     Enviro has an opportunity to sell the 20 000 units to an outside customer at a price of $75 per unit on a continuing basis. Energy Plus can purchase its requirements from an outside supplier for $85 per unit.   Required Assuming that Enviro division desires to maximise its gross margin, should Enviro accept the new customer and drop its sales to Energy Plus for 2019? Why?

1.       : Some senior managers believe they should rely on written information and computer reports because these sources yield more accurate data than do face-to-face communications. Do you agree? Why or why not? \

If a partner’s outside basis is less than the partnership’s inside basis in distributed assets, how does the partner determine their basis of the distributed assets in an operating distribution?

Presented below is information related to Viel Company at December 31, 2014, the end of its first year of operations. Sales revenue $310,000 Cost of goods sold 140,000 Selling and administrative expenses 50,000 Gain on sale of plant assets 30,000 Unrealized gain on non-trading equity securities 10,000 Interest expense 6,000 Loss on discontinued operations 12,000 Allocation to non-controlling interest 40,000 Dividends declared and paid 5,000 Instructions Compute the following: (a) income from operations, (b) net income, (c) net income attributable to Viel Company controlling shareholders, (d) comprehensive income, and (e) retained earnings balance at December 31, 2014. (Ignore income taxes.)

Your client took accounting a number of years ago and was unaware of comprehensive income reporting. He is not convinced that any accounting standards exist for comprehensive income. Instructions Access the IFRS authoritative literature at the IASB website (http://www.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 IFRS addresses reporting in the statement of comprehensive income? When was it issued? (b) Provide the definition of total comprehensive income. (c) Explain the rationale for presenting additional line items, headings, and subtotals in the statement of comprehensive income. (d) What items of income or expense may be presented either in the statement of comprehensive income or in the notes?

The financial statements of Marks and Spencer plc (M&S) are available at the book’s companion website or can be accessed at http://annualreport.marksandspencer.com/_assets/downloads/Marks-and- Spencer-Annual-report-and-financial-statements-2012.pdf. Instructions Refer to M&S’s financial statements and the accompanying notes to answer the following questions. (a) What type of income statement format does M&S use? Indicate why this format might be used to present income statement information. (b) What are M&S’s primary revenue sources? (c) Compute M&S’s gross profit for each of the years 2011 and 2012. Explain why gross profit increased in 2012. (d) Why does M&S make a distinction between operating and non-operating profit? (e) Does M&S report any non-GAAP measures? Explain.

Distinguish between publicly provided goods, public goods and merit goods.

As a newly enrolled accounting major, you are anxious to better understand accounting institutions and sources of accounting literature. As a first step, you decide to explore the FASB Conceptual Framework. Instructions Go to the FASB website, http://www.fasb.org, to access the FASB Concepts Statements. When you have accessed the documents, you can use the search tool in your Internet browser to respond to the following items. (Provide paragraph citations.) (a) What is the objective of financial reporting? (b) What other means are there of communicating information, besides financial statements? (c) Indicate some of the users and the information they are most directly concerned with in economic decision-making.

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 these financial statements and the accompanying notes to answer the following questions. (a) What were P&G’s total assets at June 30, 2011? At June 30, 2010? (b) How much cash (and cash equivalents) did P&G have on June 30, 2011? (c) What were P&G’s research and development costs in 2010? In 2011? (d) What were P&G’s revenues in 2010? In 2011? (e) Using P&G’s financial statements and related notes, identify items that may result in adjusting entries for deferrals and accruals. (f) What were the amounts of P&G’s depreciation and amortization expense in 2009, 2010, and 2011?

Explain the types of cash flow characteristics that would cause a firm to hedge interest rate risk by swapping floating-rate payments for fixed payments. Why would some firms avoid the use of interest rate swaps, even when they are highly exposed to interest rate risk? (LO1)

Aamodt Music sold CDs to retailers and recorded sales revenue of $700,000. During 2014, retailers returned CDs to Aamodt and were granted credit of $78,000. Past experience indicates that the normal return rate is 15%. Prepare Aamodt’s entries to record (a) the $78,000 of returns and (b) estimated returns at December 31, 2014.

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) What type of income statement format does P&G use? Indicate why this format might be used to present income statement information. (b) What are P&G’s primary revenue sources? (c) Compute P&G’s gross profit for each of the years 2009–2011. Explain why gross profit decreased in 2011. (d) Why does P&G make a distinction between operating and nonoperating revenue? (e) What financial ratios did P&G choose to report in its “Financial Summary” section covering the years 2001–2011?