Question & Answer

Explain how the credit crisis in the 2008–2009 period affected some savings institutions. Compare the causes of the credit crisis to the causes of the SI crisis in the late 1980s. (LO6)

Explain the use of a prospectus developed before an IPO. Why does a firm do a road show before its IPO? What factors influence the offer price of stock at the time of the IPO? (LO3)

For what reasons may the natural rate of unemployment increase?

Explain how return on investment (ROI) is calculated and how it can be         decomposed into two financial measures.

Assume that the yield curves in the United States, France, and Japan are flat. If the U.S. yield curve suddenly becomes positively sloped, do you think the yield curves in France and Japan would be affected? If so, how? (LO3)

When is the cost of education deductible as an employee business expense?

(Threshold Concept 7) 1. What market failures could be corrected by the use of welfare benefits? Does the payment of such benefits create any problems for society? (Threshold Concept 7) 2. Assume that the government sees litter as a market failure that requires government action. Give some examples of policies it could adopt to reduce litter.

At the beginning of the year, Poplock began a calendar-year, dog-boarding business called Griff’s Palace. Poplock bought and placed in service the following assets during the year:

In a production turning operation, the foreman has decreed that a single pass must be completed on the cylindrical workpiece in 5.0 min. The piece is 400 mm long and 150 mm in diameter. Using a feed = 0.30 mm/rev and a depth of cut = 4.0 mm, what cutting speed must be used to meet this machining time requirement?

Discuss some of the difficulties regulators face when attempting to provide regulatory oversight over fintech. (LO5)

1. Why do economists treat normal profit as a cost of production? 2. What determines (a) the level and (b) the rate of normal profit for a particular firm?

Assume Congress increases the dividend tax rate to the ordinary tax rate while leaving all other tax rates unchanged. How would this change affect the overall tax rate on corporate taxable income?

Jamel and Jennifer have been married 30 years and have filed a joint return every year of their marriage. Their three daughters, Jade, Lindsay, and Abbi are ages 12, 17, and 22 respectively, and all live at home. None of the daughters provides more than half of her own support. Abbi is a full-time student at a local university and does not have any gross income.  a. Which, if any, of the daughters qualify as dependents of Jamel and Jennifer?

Sustainability; outsourcing; monitoring measures To reduce costs and focus on core competencies, many entities are increasingly outsourcing manufacturing activities to vendors in countries having low labour costs such as China, India, Thailand, Indonesia and Mexico. Certain activists claim that this practice is socially irresponsible. They claim that numerous factory problems in low-cost countries include excessive work hours, poverty wages, toxic gas releases and harassment of union organisers. The problems were exacerbated after the collapse of a garment factory in Bangladesh resulting in 1137 deaths and 2500 injuries. As a result, 41 people, including the building’s owner, were charged with murder or culpable homicide. Such conditions have prompted individuals and organisations to reconsider their purchasing habits and policies. However, some people argued that boycotts against certain companies cause more harm than good; workers who were already poor often lost their jobs, and unionisation efforts and other improvements were hindered.64 They suggest it is difficult for companies to adequately monitor working conditions at outsource locations. Workers were often afraid to talk to inspectors, and they sometimes provided inaccurate information. For example, they sometimes erroneously said that they were not paid overtime because they did not understand how their pay was calculated. In the Bangladesh case, it was found that the owner and managers of the garment factory had forced the workers to enterthe building on the day of the accident despite major cracks appearing on the building a day earlier.   Required (a)     Describe whether and how sustainability management practices (that is, business practices related to human rights, labour standards and the environment) affect your decisions as a consumer. (b)     Is it possible for you to know the conditions under which the products you purchase are produced? Why? (c)     Is it possible for managers of companies that retail the final products to know with certainty that their outsource partners comply with agreed-upon working conditions? Why? (d)     Would the inclusion of compliance monitoring costs in its purchasing decision process help? (e)     Identify and explain four measures that a company could use to monitor worker conditions in outsource factories. For each measure, describe how the company might collect reliable data. (f)      How should entities weigh corporate social responsibility and profits when deciding whether or how to outsource manufacturing? Describe the values you use in drawing your conclusions. (LO5)

Describe submerged arc welding (SAW).

What is a capital good? Provide an example.

Patrick Corporation’s adjusted trial balance contained the following asset accounts at December 31, 2014: Prepaid Rent $12,000; Goodwill $50,000; Franchise Fees Receivable $2,000; Franchises $47,000; Patents $33,000; Trademarks $10,000. Prepare the intangible assets section of the balance sheet.

The following example was provided to encourage the use of the LIFO method. In a nutshell, LIFO subtracts inflation from inventory costs, deducts it from taxable income, and records it in a LIFO reserve account on the books. The LIFO benefit grows as inflation widens the gap between currentyear and past-year (minus inflation) inventory costs. This gap is: With LIFO Without LIFO Revenues $3,200,000 $3,200,000 Cost of goods sold 2,800,000 2,800,000 Operating expenses 150,000 150,000 Operating income 250,000 250,000 LIFO adjustment 40,000 0 Taxable income $ 210,000 $ 250,000 Income taxes @ 36% $ 75,600 $ 90,000 Cash fl ow $ 174,400 $ 160,000 Extra cash $ 14,400 0 Increased cash fl ow 9% 0% Instructions (a) Explain what is meant by the LIFO reserve account. (b) How does LIFO subtract inflation from inventory costs? (c) Explain how the cash flow of $174,400 in this example was computed. Explain why this amount may not be correct. (d) Why does a company that uses LIFO have extra cash? Explain whether this situation will always exist.

Riverbend Inc. received a $200,000 dividend from stock it held in Hobble Corporation.  Riverbend’s taxable income is $2,100,000 before deducting the dividends-received deduction (DRD) and a $100,000 charitable contribution.

1.    : Which style of communicating do you think would be most beneficial to the long-term success of a U.S. company operating internationally—high-context or low-context communications? Why?

Flexible budget variance analysis Cardinal Products hired a new marketing manager early this year. After an informal consumer survey, the marketing manager decided to lower the firm’s selling price by 10 per cent and increase television advertising. The operating results at year end were disappointing. The marketing manager prepared the following analysis for the president. He assumed that direct materials and direct labour were variable costs and that advertising was a fixed cost.       ‘As you can see’, the marketing manager reported, ‘the major problem is due to inefficiencies in production. My plan would have worked if production had kept its costs in line.’   Required (a) Prepare a flexible budget report. (b) What is the real source of the disappointing results? Explain.

The Dotson Company, owner of Bleacher Mall, charges Rich Clothing Store a rental fee of $600 per month plus 5% of yearly profits over $500,000. Matt Rich, the owner of the store, directs his accountant, Ron Hamilton, to increase the estimate of bad debt expense and warranty costs in order to keep profits at $475,000. Instructions Answer the following questions. (a) Should Hamilton follow his boss’s directive? (b) Who is harmed if the estimates are increased? (c) Is Matt Rich’s directive ethical?

Name the three basic categories of commercial adhesives.

Woolard Supplies (a sole proprietorship) has taxable income in 2024 of $240,000 before any depreciation deductions (§179, bonus, or MACRS) and placed some office furniture into service during the year. The furniture does not qualify for bonus depreciation.

What is earnings management?