Question & Answer

Data for Brecker Inc. are presented in E23-13. Instructions Prepare a statement of cash flows using the indirect method.

Would any of these problems be lessened by the world returning to an adjustable peg system? If so, what sort of adjustable peg system would you recommend?

How would the radical right reply to these arguments?

When is the financial components approach to recording the transfers of receivables used? When should a transfer of receivables be recorded as a sale?

Would it be possible for a country with a comparative disadvantage in a given product at pre-trade levels of output to obtain a comparative advantage in it by specialising in its production and exporting it?

How does behavioural economics differ from standard economics?

Last year, Zeno Company recorded an impairment on an intangible asset held for use. Recent appraisals indicate that the asset has increased in value. Should Zeno record this recovery in value?

Part B: $187,222 computed as follows: Description Amount Explanation (1) AGI$207,000  From AGI deductions: a) and b) Medical expenses 0 Medical expenses in excess of 7.5 percent of AGI are deductible. See note A below. c) and d) State taxes 2,050 State income taxes paid last year are deductible ($1,800 withheld and $250 overpayment applied on last year’s return treated as paid last year. e) Real property taxes 3,200 Real property taxes deductible from AGI. Payment to developer is not a tax. f) Personal property taxes 200 Property tax on personal property based on value deductible from AGI g) Interest on loans secured by her home 12,300 Primary home loan and home equity loan deductible from AGI h) Charitable contributions 1,828 See note B below i) Investment expenses and tax return preparation fees 0 Nondeductible expenses j) Horse racing activities 0 Nondeductible hobby expenses k) Gambling losses 200 Gambling losses are limited to earnings from gambling deductible as a miscellaneous itemized deduction but not subject to 2% of AGI floor or phase out. (2) Total itemized deductions19,778 (3) Standard deduction 14,600 Single taxpayer (4) Greater of Itemized deductions or standard deduction 19,778 Greater of (2) or (3). Shauna should choose to itemize deductions. Taxable income $187,222 (1) − (4) Note A: $0. Medical expenses = $4,680 (medical expenses for broken ankle), + $24 (115 miles × 21¢ per mile) + 3,400 (unreimbursed health insurance premiums) + 3,000 (Lasik eye surgery) + 450 (other medical expenses) − $15,525 (AGI of 207,000 × 7.5 percent) < $0. Because 7.5 percent of Shauna’s AGI exceeds her total medical expenses, Shauna is unable to deduct any medical expenses. Note B: $1,828. Capital gain property generally in the form of stock is deductible at FMV; Thus, Shauna can deduct $1,000 for her ZYX stock donation to the Red Cross. Cash contributions of $300 are fully deductible. Religious artifacts are used by church in its normal function as a non-profit organization and thus are deductible at FMV of $500. Finally, Shauna may deduct $28 (as a cash donation) expense for her charitable mileage (200 miles × 14¢ per mile). Note that the value of services donated is not deductible. Accordingly, Shauna’s charitable contribution deduction is $1,828 (1,000 + 300 + 500 + 28). Shauna need not be concerned about the AGI-based limitations on her contributions because her AGI is relatively high and her contributions are relatively low.

What are the two basic classes of metal powders as far as chemistry is concerned?

Chippewas Inc. has decided to purchase equipment from Central Michigan Industries on January 2, 2014, to expand its production capacity to meet customers’ demand for its product. Chippewas issues an $800,000, 5-year, zero-interest-bearing note to Central Michigan for the new equipment when the prevailing market rate of interest for obligations of this nature is 12%. The company will pay off the note in five $160,000 installments due at the end of each year over the life of the note. Instructions (Round to nearest dollar in all computations.) (a) Prepare the journal entry(ies) at the date of purchase. (b) Prepare the journal entry(ies) at the end of the first year to record the payment and interest, assuming that the company employs the effective-interest method. (c) Prepare the journal entry(ies) at the end of the second year to record the payment and interest. (d) Assuming that the equipment had a 10-year life and no salvage value, prepare the journal entry Anecessary to record depreciation in the first year. (Straight-line depreciation is employed.)

Assume that there is a positive technological shock. How would this impact on the equilibrium level of employment and the economy’s potential output?  Illustrate using diagrams of both the labour and goods markets.

Would it matter if all prices rose by 20 per cent, but everyone’s income also rose by 20 per cent?

As the recently appointed auditor for William J. Bryan Corporation, you have been asked to examine selected accounts before the 6-month financial statements of June 30, 2014, are prepared. The controller for William J. Bryan Corporation mentions that only one account is kept for intangible assets. The account is shown below. Intangible Assets Debit Credit Balance Jan. 4 Research and development costs 940,000 940,000 Jan. 5 Legal costs to obtain patent 75,000 1,015,000 Jan. 31 Payment of 7 months’ rent on property 91,000 1,106,000 leased by Bryan Feb. 11 Premium on common stock 250,000 856,000 March 31 Unamortized bond discount on bonds 84,000 940,000 due March 31, 2034 April 30 Promotional expenses related to 207,000 1,147,000 start-up of business June 30 Operating losses for fi rst 6 months 241,000 1,388,000 Instructions Prepare the entry or entries necessary to correct this account. Assume that the patent has a useful life of 10 years.

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.

Criticise the use of increasing government expenditure as a means of reducing unemployment.

In addition to cash contributions to charity, Dean decided to donate shares of stock and a portrait painted during the earlier part of the last century. Dean purchased the stock and the portrait many years ago as investments. Dean reported the following recipients in 2024: Charity Property Cost FMV State University Cash $ 15,000 $15,000 Red Cross Cash 14,500 14,500 State History Museum Antique painting 5,000 82,000 City Medical Center Dell stock 28,000 17,000 a. Determine the maximum amount of charitable deduction for each of these contributions ignoring the AGI ceiling on charitable contributions. b. Assume that Dean’s AGI this year is $150,000. Determine Dean’s itemized deduction for his charitable contributions this year and any carryover. c. Suppose Dean is a dealer in antique paintings, and he held the painting for sale before the contribution. What is Dean’s charitable contribution deduction for the painting in this situation? d. Suppose that Dean’s objective with the donation to the museum was to finance expansion of the historical collection. Hence, Dean was not surprised when the museum announced the sale of the portrait because of its limited historical value. What is Dean’s charitable contribution deduction for the painting in this situation (ignoring AGI limitations)?

Distinguish among depreciation, depletion, and amortization.

Contingent Costs List some costs that may be considered to be ‘contingent’ sustainability-related costs for the mining industry. (LO4)

“Tax avoidance is discouraged by the courts and Congress.”  Is this statement true or false? Please explain.

Increasing current is applied to a workpart surface in an electroplating process according to the relation I = 12.0 + 0.2t, where I = current, amps; and t = time, min. The plating metal is chromium, and the part is submersed in the plating solution for a duration of 20 min. What volume of coating will be applied in the process?

1.       : Using Hackman and Oldham’s core job dimensions, compare and contrast the jobs of these two state employees: (1) Jared, who spends much of his time researching and debating energy policy to make recommendations that will eventually be presented to the state legislature, and (2) Anise, who spends her days planting and caring for the flower gardens and grounds surrounding the state capitol building.

Using the same facts from the previous problem, how would your answer change if Randy estimates that there is only a 20 percent chance that the position will be sustained upon audit or judicial proceeding?

Many of the design guidelines that are applicable to plastics are also applicable to rubber. However, the extreme flexibility of rubber results in certain differences. What are some examples of these differences?

Hamderson Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes. (Assume the carryback provision is used for a net operating loss.) Year Pretax Income (Loss) Tax Rate 2012 $120,000 34% 2013 90,000 34% 2014 (280,000) 38% 2015 220,000 38% The tax rates listed were all enacted by the beginning of 2012. Instructions (a) Prepare the journal entries for the years 2012–2015 to record income tax expense (benefit) and income taxes payable (refundable) and the tax effects of the loss carryback and carryforward, assuming that at the end of 2014 the benefits of the loss carryforward are judged more likely than not to be realized in the future. (b) Using the assumption in (a), prepare the income tax section of the 2014 income statement beginning with the line “Operating loss before income taxes.” (c) Prepare the journal entries for 2014 and 2015, assuming that based on the weight of available evidence, it is more likely than not that one-fourth of the benefits of the loss carryforward will not be realized. (d) Using the assumption in (c), prepare the income tax section of the 2014 income statement beginning with the line “Operating loss before income taxes.”

From inception of operations to December 31, 2014, Fortner Corporation provided for uncollectible accounts receivable under the allowance method. Provisions were made monthly at 2% of credit sales, bad debts written off were charged to the allowance account; recoveries of bad debts previously written off were credited to the allowance account, and no year-end adjustments to the allowance account were made. Fortner’s usual credit terms are net 30 days The balance in Allowance for Doubtful Accounts was $130,000 at January 1, 2014. During 2014, credit sales totaled $9,000,000, interim provisions for doubtful accounts were made at 2% of credit sales, $90,000 of bad debts were written off, and recoveries of accounts previously written off amounted to $15,000. Fortner installed a computer system in November 2014, and an aging of accounts receivable was prepared for the first time as of December 31, 2014. A summary of the aging is as follows. Classifi cation by Balance in Estimated % Month of Sale Each Category Uncollectible November–December 2014 $1,080,000 2% July–October 650,000 10% January–June 420,000 25% Prior to 1/1/14 150,000 80% $2,300,000 Based on the review of collectibility of the account balances in the “prior to 1/1/14” aging category, additional receivables totaling $60,000 were written off as of December 31, 2014. The 80% uncollectible estimate applies to the remaining $90,000 in the category. Effective with the year ended December 31, 2014, Fortner adopted a different method for estimating the allowance for doubtful accounts at the amount indicated by the year-end aging analysis of accounts receivable. Instructions (a) Prepare a schedule analyzing the changes in Allowance for Doubtful Accounts for the year ended December 31, 2014. Show supporting computations in good form. (Hint: In computing the 12/31/14 allowance, subtract the $60,000 write-off.) (b) Prepare the journal entry for the year-end adjustment to Allowance for Doubtful Accounts balance as of December 31, 2014.