Question & Answer

A building that was purchased on December 31, 2000, for $2,500,000 was originally estimated to have a life of 50 years with no salvage value at the end of that time. Depreciation has been recorded through 2014. During 2015, an examination of the building by an engineering firm discloses that its estimated useful life is 15 years after 2014. What should be the amount of depreciation for 2015?

Ahmed does not have enough cash on hand to pay his taxes.  He was excited to hear that he can request an extension to file his tax return.  Does this solve his problem?  What are the ramifications if he doesn’t pay his tax liability by April 15?

A manual assembly line has 17 workstations with one operator per station. Total work content time to assemble the product = 22.2 minutes. The production rate of the line = 36 units per hour. A synchronous transfer system is used to advance the products from one station to the next, and the transfer time = 6 seconds. The workers remain seated along the line. Proportion uptime = 0.90. Determine the balance efficiency.

On January 1, 2014, Roosevelt Company purchased 12% bonds, having a maturity value of $500,000, for $537,907.40. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2014, and mature January 1, 2019, with interest receivable December 31 of each year. Roosevelt’s business model is to hold these bonds to collect contractual cash flows. Instructions (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare a bond amortization schedule. (c) Prepare the journal entry to record the interest received and the amortization for 2014. (d) Prepare the journal entry to record the interest received and the amortization for 2015.

When salaries and wages expense for the year is computed, why are beginning accrued salaries and wages subtracted from, and ending accrued salaries and wages added to, salaries and wages paid during the year?

1. Why does this conclusion remain the same if the BP curve is steeper than the LM curve?   2. Trace through the effects of a fall in exports (thereby shifting the BP curve)   3. Show what will happen if there is (a) a rise in business confidence and a resulting increase in investment; (b) a rise in the demand for money balances (say for precautionary purposes).

Use the information for Kemper Company from BE9-5. In 2015, Kemper paid $1,000,000 to obtain the raw materials which were worth $950,000. Prepare the entry to record the purchase.

Felicia Rashad Corporation has pretax financial income (or loss) equal to taxable income (or loss) from 2006 through 2014 as follows. Income (Loss) Tax Rate 2006 $ 29,000 30% 2007 40,000 30% 2008 17,000 35% 2009 48,000 50% 2010 (150,000) 40% 2011 90,000 40% 2012 30,000 40% 2013 105,000 40% 2014 (60,000) 45% Pretax financial income (loss) and taxable income (loss) were the same for all years since Rashad has been in business. Assume the carryback provision is employed for net operating losses. In recording the benefits of a loss carryforward, assume that it is more likely than not that the related benefits will be realized. Instructions (a) What entry(ies) for income taxes should be recorded for 2010? (b) Indicate what the income tax expense portion of the income statement for 2010 should look like. Assume all income (loss) relates to continuing operations. (c) What entry for income taxes should be recorded in 2011? (d) How should the income tax expense section of the income statement for 2011 appear? (e) What entry for income taxes should be recorded in 2014? (f) How should the income tax expense section of the income statement for 2014 appear?

Gramps purchased a joint survivor annuity that pays $500 monthly over his remaining life and that of his wife, Gram. Gramps is 70 years old and Gram is 65 years old. Gramps paid $97,020 for the contract. How much income will Gramps recognize on the first payment?

Bronson Paper Products purchased 10,000 acres of forested timberland in March 2014. The company paid $1,700 per acre for this land, which was above the $800 per acre most farmers were paying for cleared land. During April, May, June, and July 2014, Bronson cut enough timber to build roads using moveable equipment purchased on April 1, 2014. The cost of the roads was $250,000, and the cost of the equipment was $225,000; this equipment was expected to have a $9,000 salvage value and would be used for the next 15 years. Bronson selected the straight-line method of depreciation for the moveable equipment. Bronson began actively harvesting timber in August and by December had harvested and sold 540,000 board feet of timber of the estimated 6,750,000 board feet available for cutting. In March 2015, Bronson planted new seedlings in the area harvested during the winter. Cost of planting these seedlings was $120,000. In addition, Bronson spent $8,000 in road maintenance and $6,000 for pest spraying during calendar-year 2015. The road maintenance and spraying are annual costs. During 2015, Bronson harvested and sold 774,000 board feet of timber of the estimated 6,450,000 board feet available for cutting. In March 2016, Bronson again planted new seedlings at a cost of $150,000, and also spent $15,000 on road maintenance and pest spraying. During 2016, the company harvested and sold 650,000 board feet of timber of the estimated 6,500,000 board feet available for cutting. Instructions Compute the amount of depreciation and depletion expense for each of the 3 years (2014, 2015, and 2016). Assume that the roads are usable only for logging and therefore are included in the depletion base.

George Zidek Corporation bought a machine on June 1, 2012, for $31,000, f.o.b. the place of manufacture. Freight to the point where it was set up was $200, and $500 was expended to install it. The machine’s useful life was estimated at 10 years, with a salvage value of $2,500. On June 1, 2013, an essential part of the machine is replaced, at a cost of $1,980, with one designed to reduce the cost of operating the machine. The cost of the old part and related depreciation cannot be determined with any accuracy. On June 1, 2016, the company buys a new machine of greater capacity for $35,000, delivered, trading in the old machine which has a fair value and trade-in allowance of $20,000. To prepare the old machine for removal from the plant cost $75, and expenditures to install the new one were $1,500. It is estimated that the new machine has a useful life of 10 years, with a salvage value of $4,000 at the end of that time. (The exchange has commercial substance.) Instructions Assuming that depreciation is to be computed on the straight-line basis, compute the annual depreciation on the new equipment that should be provided for the fiscal year beginning June 1, 2016. (Round to the nearest dollar.)

Manno Corporation has the following information available concerning its postretirement benefit plan for 2014. Service cost $40,000 Interest cost 47,400 Actual and expected return on plan assets 26,900

Thomas More Company incurred the following costs during the current year in connection with its research and development activities. Cost of equipment acquired that will have alternative uses in future R&D projects over the next 5 years (uses straight-line depreciation) $280,000 Materials consumed in R&D projects 59,000 Consulting fees paid to outsiders for R&D projects 100,000 Personnel costs of persons involved in R&D projects 128,000 Indirect costs reasonably allocable to R&D projects 50,000 Materials purchased for future R&D projects 34,000 Instructions Compute the amount to be reported as research and development expense by More on its current year income statement. Assume equipment is purchased at the beginning of the year.

What is a chill in casting?

Using the same information as in E14-22 and , answer the following questions related to American Bank (creditor). Instructions (a) Compute the loss American Bank will suffer under this new term modification. Prepare the journal entry to record the loss on American’s books. (b) Prepare the interest receipt schedule for American Bank after the debt restructuring. (c) Prepare the interest receipt entry for American Bank on December 31, 2015, 2016, and 2017. (d) What entry should American Bank make on January 1, 2018?

Why might the Fed have difficulty in controlling the economy in the manner desired? Be specific. (LO2; LO3)

Why should turbulent flow of molten metal into the mold be avoided?

You are about to start a coffee shop business. What do you understand by ‘cost behaviour’? Explain how your accountants could help you in building an understanding of cost behaviour. Identify the likely key costs and classify each as fixed or variable.

Developing a reward system and reward targets You are a remuneration consultant. The board of a large multi-national bank has asked you to draft a proposal for a new reward system for senior executives. Currently all senior executives are paid a fixed salary. Your investigations at the entity reveal its mission is to be ‘the number one provider of quality banking services in the southern hemisphere’. You note that the entity has planned for 10 per cent profit growth over the next five years with a corresponding growth in share price. The entity has identified customer satisfaction, product quality and product innovation as the key indicators of success.   The directors are concerned as company profits have been declining. They consider a revised remuneration scheme may motivate senior executives to grow profits and the share price.   Required Prepare a report to the board outlining a new remuneration plan for the executives of the entity.             (LO2, 3 and 4)

Explain how the holding of a range of assets in people’s portfolios may help to create a more direct link between changes in money supply and changes in aggregate demand.

Why is the 15-year mortgage attractive to homeowners? Is the interest rate risk to the financial institution higher for a 15-year mortgage or a 30-year mortgage? Why? (LO2)

Clyde is a cash-method taxpayer who reports on a calendar-year basis. This year Paylate Corporation has decided to pay Clyde a year-end bonus of $1,000. Determine the amount Clyde should include in his gross income this year under the following circumstances:

Describe the advantages and disadvantages of equity rewards.             (LO3)

Consider a discussion during FOMC meetings in which there is a weak economy and a war, with potential major damage to oil wells. Explain why this possible effect would have received much attention at the FOMC meetings. If this possibility was perceived to be highly likely at the time of the meetings, explain how it may have complicated the decision about monetary policy at that time. Given the conditions stated in this question, would you suggest that the Fed use a restrictive monetary policy or a stimulative monetary policy? Support your decision logically and acknowledge any adverse effects of your decision. (LO4)

A power shears is used to cut soft cold-rolled steel that is 4.75 mm thick. At what clearance should the shears be set to yield an optimum cut?