Question & Answer

What are the basic types of contaminants that must be cleaned from metallic surfaces in manufacturing?

Discuss whether the changes described in each of the cases below require recognition in the CPA’s audit report as to consistency. (Assume that the amounts are material.) (a) The company changed its inventory method to FIFO from weighted-average, which had been used in prior years. (b) The company disposed of one of the two subsidiaries that had been included in its consolidated statements for prior years. (c) The estimated remaining useful life of plant property was reduced because of obsolescence.

Why are some deductions called “abovetheline” deductions and others called “belowtheline” deductions?What is the “line”?

How are deferred tax assets and deferred tax liabilities reported on the balance sheet?

1.       : Discuss some of the potential positive and negative aspects of sending digital nudges to managers via e-mail or text messages. What do you see as the most important ways for managers to use this technology?

Compare and contrast the relationship test requirements for a qualifying child with the relationship requirements for a qualifying relative.

In general terms, what are the differences in the rules for determining who is a qualifying child and who qualifies as a dependent as a qualifying relative?Is it possible for someone to be a qualifying child and a qualifying relative of the same taxpayer?Why or why not?

1.    Do you think it is realistic that BOP business practices can have a positive effect on poverty and other social problems in developing countries? Discuss how those effects might occur.

Why does the accounting profession make a distinction between internally created intangibles and purchased intangibles?

1.    : Do you think it is wise for a top executive to fire a manager who is bringing in big sales and profits for the company but not living up to a cultural value of “showing respect for employees”? Explain.

Is a qualifying relative always a qualifying person for purposes of determining head of household filing status?

Why are metals heat treated?

What are some of the noteworthy properties of magnesium?

Identify the factors that are relevant in determining the annual depreciation charge, and explain whether these factors are determined objectively or whether they are based on judgment.

How is unrecaptured §1250 gain for individuals similar to depreciation recapture?  How is it different?

For each of the following subsequent events, indicate whether a company should (a) adjust the financial statements, (b) disclose in notes to the financial statements, or (c) neither adjust nor disclose. ________ 1. Settlement of a tax case at a cost considerably in excess of the amount expected at year-end. ________ 2. Introduction of a new product line. ________ 3. Loss of assembly plant due to fire. ________ 4. Sale of a significant portion of the company’s assets. ________ 5. Retirement of the company president. ________ 6. Issuance of a significant number of ordinary shares. ________ 7. Loss of a significant customer. ________ 8. Prolonged employee strike. ________ 9. Material loss on a year-end receivable because of a customer’s bankruptcy. _______ 10. Hiring of a new president. _______ 11. Settlement of prior year’s litigation against the company (no loss was accrued). _______ 12. Merger with another company of comparable size.

List two factors that could affect managers’ choices for the number of times and points in processing to inspect units.

Define manufacturing engineering.

Each of the following items must be considered in preparing a statement of cash flows (indirect method) for Turbulent Indigo Inc. for the year ended December 31, 2014. (a) Plant assets that had cost $20,000 6 years before and were being depreciated on a straight-line basis over 10 years with no estimated scrap value were sold for $5,300. (b) During the year, 10,000 shares of common stock with a stated value of $10 a share were issued for $43 a share. (c) Uncollectible accounts receivable in the amount of $27,000 were written off against Allowance for Doubtful Accounts. (d) The company sustained a net loss for the year of $50,000. Depreciation amounted to $22,000, and a gain of $9,000 was realized on the sale of land for $39,000 cash. (e) A 3-month U.S. Treasury bill was purchased for $100,000. The company uses a cash and cash equivalent basis for its cash flow statement. (f) Patent amortization for the year was $20,000. (g) The company exchanged common stock for a 70% interest in Tabasco Co. for $900,000. (h) During the year, treasury stock costing $47,000 was purchased. Instructions State where each item is to be shown in the statement of cash flows, if at all.

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 is the company’s main line of business? (b) In what countries does the company operate? (c) What is the address of the company’s corporate headquarters? (d) What is the company’s reporting currency?

Gary and Lakesha were married on December 31 last year. They are now preparing their taxes for the April 15 deadline and are unsure of their filing status. a.    What filing status options do Gary and Lakesha have for last year?

1.    : A college professor told her students, “The purpose of a management course is to teach students about management, not to teach them to be managers.” Do you agree or disagree with this statement? Discuss.

What are the two basic categories of approaches used in nanofabrication?

Explain how changes in foreign currency values can affect the performance of international mutual funds. (LO2)

Presented below are two independent situations. (a) On January 1, 2014, Robin Wright Inc. purchased land that had an assessed value of $350,000 at the time of purchase. A $550,000, zero-interest-bearing note due January 1, 2017, was given in exchange. There was no established exchange price for the land, nor a ready fair value for the note. The interest rate charged on a note of this type is 12%. Determine at what amount the land should be recorded at January 1, 2014, and the interest expense to be reported in 2014 related to this transaction. (b) On January 1, 2014, Field Furniture Co. borrowed $5,000,000 (face value) from Gary Sinise Co., a major customer, through a zero-interest-bearing note due in 4 years. Because the note was zerointerest- bearing, Field Furniture agreed to sell furniture to this customer at lower than market price. A 10% rate of interest is normally charged on this type of loan. Prepare the journal entry to record this transaction and determine the amount of interest expense to report for 2014.