Question & Answer

A Wall Street Journal article noted that Apple reported higher income than its competitors by using a more aggressive policy for recognizing revenue on future upgrades to its products. Some contend that Apple’s quality of earnings is low. What does the term “quality of earnings” mean?

What is meant by the terms elements and items as they relate to the income statement? Why might items have to be disclosed in the income statement?

At the balance sheet date, Clarkson Company held title to goods in transit amounting to $214,000. This amount was omitted from the purchases figure for the year and also from the ending inventory. What is the effect of this omission on the net income for the year as calculated when the books are closed? What is the effect on the company’s financial position as shown in its balance sheet? Is materiality a factor in determining whether an adjustment for this item should be made?

Assume a taxpayer makes a nondeductible contribution to a traditional IRA. How does the taxpayer determine the taxability of distributions from the IRA on reaching retirement?

Thomas Corporation’s adjusted trial balance contained the following liability accounts at December 31, 2014: Bonds Payable (due in 3 years) $100,000; Accounts Payable $72,000; Notes Payable (due in 90 days) $22,500; Salaries and Wages Payable $4,000; Income Taxes Payable $7,000. Prepare the current liabilities section of the balance sheet.

Explain the meaning of the following terms: (a) commonsize analysis, (b) vertical analysis, (c) horizontal analysis, and (d) percentage analysis.

Oriole Corporation, a privately held company, has one class of voting common stock, of which 1,000 shares are issued and outstanding. The shares are owned as follows:  Larry Byrd400 Paul Byrd (Larry’s son)200 Lady Byrd (Larry’s daughter)200 Cal Rifkin (unrelated)   200   Total1,000   Larry is considering retirement and would like to have the corporation redeem all of his shares for $400,000.

What is the difference between a future taxable amount and a future deductible amount? When is it appropriate to record a valuation account for a deferred tax asset?

Discuss how the property limitation restricts large businesses from taking the §179 expense.

Cajun Company has outstanding 2,500 shares of $100 par, 6% preferred stock and 15,000 shares of $10 par value common. The following schedule shows the amount of dividends paid out over the last 4 years. Instructions Allocate the dividends to each type of stock under assumptions (a) and (b). Express your answers in pershare amounts using the format shown below. Assumptions (a) (b) Preferred, noncumulative, Preferred, cumulative, and nonparticipating and fully participating Year Paid-out Preferred Common Preferred Common 2012 $13,000 2013 $26,000 2014 $57,000 2015 $76,000

What is the difference between a cost that is variable and variable costing?

For what reasons might GDP be a poor indicator of (i) the level of development of a country; (ii) its rate of economic development?

Is sustainability achievable in all organisations regardless of their           operating activities?

What is the cost of a long-term investment in bonds?

For each of the following situations, indicate how much the taxpayer is required to include in gross income and explain your answer:

What are the two basic categories of structural frames used in stamping presses?

Describe a direct placement of bonds. What is an advantage of a private placement? What is a disadvantage? (LO1)

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.

Answer the following questions relatedto Dubois Inc. (a) Dubois Inc. has $600,000 to invest. The company is trying to decide between two alternative uses of the funds. One alternative provides $80,000 at the end of each year for 12 years, and the other is to receive a single lump-sum payment of $1,900,000 at the end of the 12 years. Which alternative should Dubois select? Assume the interest rate is constant over the entire investment. (b) Dubois Inc. has completed the purchase of new Dell computers. The fair value of the equipment is $824,150. The purchase agreement specifies an immediate down payment of $200,000 and semiannual payments of $76,952 beginning at the end of 6 months for 5 years. What is the interest rate, to the nearest percent, used in discounting this purchase transaction? (c) Dubois Inc. loans money to John Kruk Corporation in the amount of $800,000. Dubois accepts an 8% note due in 7 years with interest payable semiannually. After 2 years (and receipt of interest for 2 years), Dubois needs money and therefore sells the note to Chicago National Bank, which demands interest on the note of 10% compounded semiannually. What is the amount Dubois will receive on the sale of the note? (d) Dubois Inc. wishes to accumulate $1,300,000 by December 31, 2024, to retire bonds outstanding. The company deposits $200,000 on December 31, 2014, which will earn interest at 10% compounded quarterly, to help in the retirement of this debt. In addition, the company wants to know how much should be deposited at the end of each quarter for 10 years to ensure that $1,300,000 is available at the end of 2024. (The quarterly deposits will also earn at a rate of 10%, compounded quarterly.) (Round to even dollars.)

Name the various ways in which a workpart can be held in a lathe

What is the chemical formula of ethylene, the monomer for polyethylene?

There are 16 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, andeach 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. 25.1 Which one of the following conventional machining processes is closest to grinding: (a) drilling, (b) milling, (c) shaping, or (d) turning? 25.2 Of the following abrasive materials, which one has the highest hardness: (a) aluminum oxide, (b) cubic boron nitride, or (c) silicon carbide? 25.3 Smaller grain size in a grinding wheel tends to (a) degrade surface finish, (b) have no effect on surface finish, or (c) improve surface finish? 25.4 Which of the following would tend to give higher material removal rates: (a) larger grain size, or (b) smaller grain size? 25.5 Which of the following will improve surface finish in grinding (three best answers): (a) denser wheel structure, (b) higher wheel speed, (c) higher workspeeds, (d) larger infeed, (e) lower infeed, (f) lower wheel speed, (g) lower workspeed, and (h) more open wheel structure? 25.6 Which one of the following abrasive materials is most appropriate for grinding steel and cast iron: (a) aluminum oxide, (b) cubic boron nitride, (c) diamond, or (d) silicon carbide? 25.7 Which one of the following abrasive materials is most appropriate for grinding hardened tool steel: (a) aluminum oxide, (b) cubic boron nitride, (c) diamond, or (d) silicon carbide? 25.8 Which one of the following abrasive materials is most appropriate for grinding nonferrous metals: (a) aluminum oxide, (b) cubic boron nitride, (c) diamond, or (d) silicon carbide? 25.9 Which of the following will help to reduce the incidence of heat damage to the work surface in grinding (four correct answers): (a) frequent dressing or truing of the wheel, (b) higher infeeds, (c) higher wheel speeds, (d) higher workspeeds, (e) lower infeeds, (f) lower wheel speeds, and (g) lower workspeeds? 25.10 Which one of the following abrasive processes achieves the best surface finish: (a) centerless grinding, (b) honing, (c) lapping, or (d) superfinishing? 25.11 The term deep grinding refers to which one of the following: (a) alternative name for any creep feed grinding operation, (b) external cylindrical creep feed grinding, (c) grinding operation performed at the bottom of a hole, (d) surface grinding that uses a large crossfeed, or (e) surface grinding that uses a large infeed?

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?

Fred currently earns $9,000 per month. Fred has been offered the chance to transfer for three to five years to an overseas affiliate. His employer is willing to pay Fred $12,000 per month if he accepts the assignment. Assume that the maximum foreign earned income exclusion for next year is $126,500.

Lance contributed investment property worth $500,000, purchased three years ago for $200,000 cash, to Cloud Peak LLC in exchange for an 85 percent profits and capital interest in the LLC. Cloud Peak owes $300,000 to its suppliers but has no other liabilities. a. What is Lance’s tax basis in his LLC interest? b. What is Lance’s holding period in his interest? c. What is Cloud Peak’s basis in the contributed property? d. What is Cloud Peak’s holding period in the contributed property?