Question & Answer

Explain how the failure of a large commercial bank could cause a worldwide swap credit crisis. (LO1, LO7)

Balanced scorecard measures for four perspectives Part of the process for developing a balanced scorecard is to identify one or more measures for each perspective.   Required Categorise each of the following potential balanced scorecard measures according to the following perspectives:   F     Financial C    Customer I      Internal business process L     Learning and growth (a)       Percentage of customer orders delivered on time (b)       Ratio of research and development cost to number of new products developed (c)        Economic value added (EVA) (d)       Number of hours of employee training (e)        Direct labour price variance (f)        Market share (g)       Percentage of customer orders delivered without error (h)       Days in accounts receivables (i)        Throughput time (j)        Direct materials efficiency variance (k)       Asset turnover (l)        Employee retention rate (m)      Percentage of bad debts collected (n)       Customer satisfaction ratings (o)       Number of degrees and certificates held per employee or department (p)       Percentage of purchase orders that are error free

What depreciation methods are available for tangible personal property? Explain the characteristics of a business likely to adopt each method.

BT Openreach is responsible for providing and maintaining the fixed-line network connections to customers in the UK. This includes the huge system of telegraph poles and cable ducts (small underground tunnels) that carry telecom lines between BT exchanges and houses/business premises. To what extent do you think this is a natural monopoly?

Environmental accounting reports; ABC and ABM for environmental costs Many countries provide motivation for entities to produce environmental accounting reports. For example, 17 countries - United Kingdom, Denmark, Netherlands, Belgium, France and Germany among others - participate in the European Environmental Reporting Awards program. In Japan, the Global Sustainability Forum and the National Association for the Promotion of Environmental Conservation have given Environmental Report Awards since 1997. In addition, Toyo Keizai and the Green Reporting Forum have given a Green Reporting Award since 1998. These awards encourage organisations to take responsibility for environmental conditions that affect the wellbeing of society as a whole. Visy Industries in Australia (refer to self-study problem 1) has also been recognised by similar Australian sustainability awards programs.                                  You are required to conduct research about corporate environmental disclosures. Choose one company located in Japan and a competitor located in Australia. Go to each company’s website and search for information about its environmental policies and procedures.   Also conduct research to find governmental guidelines for environmental accounting. Go to the website of the Environmental Protection Authority in your state or territory (for example, www.epa.vic.gov.au; www.epa.sa.gov.au) and search for information about environmental or sustainability accounting. Now perform a similar search on the website of Japan’s Ministry of the Environment (www.env.go.jp/en/). Skim through the information that you find on each website.   In its Environmental Accounting Guidelines, Japan’s Ministry of the Environment identified the following environmental conservation cost categories:         Required (a)     Is environmental accounting an ethical issue? Why? (b)     Which company provides the easiest-to-find and most understandable information about environmental policies and procedures? Explain. (c)     Discuss a company’s responsibilities for reporting environmental information to various stakeholders, including shareholders, managers, employees, other companies, government regulators, product customers and the general public. (d)     If one company provides better reporting than a competitor of its environmental behaviour, policies, and procedures, does that mean the company is more environmentally responsible than its competitor? Why? (e)     What factors are likely to affect an entity’s willingness to publish an environmental accounting report? (f)      Discuss possible reasons why the governments of different countries place different degrees of emphasis on environmental accounting reports. (g)     Discuss ways in which ABC systems could be used to capture information for environmental accounting reports. (h)     Discuss ways in which the process of preparing and publishing an environmental accounting report is likely to help a company reduce its environmental costs. (i)      Should all governments require companies to publish environmental accounting reports? What values did you use to arrive at your conclusion?             (LO1, 2, 3 and 4)

The IRS recently completed an audit of Shea’s tax return and assessed $15,000 additional tax.  Shea requested an appeals conference but was unable to settle the case at the conference.  She is contemplating which trial court to choose to hear her case.  Provide a recommendation based on the following alternative facts.

Describe how you would determine the MACRS recovery period for an asset if you did not already know it.

: Define the management types and roles that managers perform in organizations.

Is trade diversion more likely or less likely in the following cases? (a)  European producers gain monopoly power in world trade. (b)  Modern developments in technology and communications reduce the differences in production costs associated with different locations. (c)  The development of the internal market produces substantial economies of scale in many industries.

In what situation will the unrealized holding gain or loss on an available-for-sale security be reported in income?

An open side planer is to be used to plane the top surface of a rectangular workpart, 20.0 in by 45.0 in. The cutting speed is 30 ft/min, the feed is 0.015 in/pass, and the depth of cut is 0.250 in. The length of the stroke across the work must be set up so that 10 in are allowed at both the beginning and end of the stroke for approach and overtravel. The return stroke, including an allowance for acceleration and deceleration, takes 60% of the time for the forward stroke. The workpart is made of carbon steel with a tensile strength of 50,000 lb/in2 and a Brinell hardness of 110 HB. How long will it take to complete the job, assuming that the part is oriented in such a way as to minimize the time?

Leppard Corporation sells DVD players. The corporation also offers its customers a 2-year warranty contract. During 2014, Leppard sold 20,000 warranty contracts at $99 each. The corporation spent $180,000 servicing warranties during 2014, and it estimates that an additional $900,000 will be spent in the future to service the warranties. Prepare Leppard’s journal entries for (a) the sale of contracts, (b) the cost of servicing the warranties, and (c) the recognition of warranty revenue. Assume the service costs are inventory costs.

What is an “implicit tax,” and how does it affect a taxpayer’s decision to purchase municipal bonds?

Faith, a resident of Florida (11th Circuit), recently found a circuit court case that is favorable to her research question.  Which two circuits would she prefer to have issued the opinion?

After several years of profitable operations, Javell, the sole shareholder of JBD Inc., a C corporation, sold 22 percent of her JBD stock to ZNO Inc., a C corporation in a similar industry. During the current year, JBD reports $1,000,000 of after-tax income. JBD distributes all of its after-tax earnings to its two shareholders in proportion to their shareholdings.  How much tax will ZNO pay on the dividend it receives from JBD? What is ZNO’s tax rate on the dividend income (after considering the DRD)? [Hint: see §243.]

] Assume that Ernesto purchased a digital camera on July 10 of year 1 for $3,000. In year 1, 80 percent of his camera usage was for his business and 20 percent was for his personal photography activities. This was the only asset he placed in service during year 1. Ignoring any potential §179 expense and bonus depreciation, answer the questions for each of the following alternative scenarios: a. What is Ernesto’s depreciation deduction for the camera in year 1? b. What would be Ernesto’s depreciation deduction for the camera in year 2 if his year 2 usage were 75 percent business and 25 percent for personal use? c. What would be Ernesto’s depreciation deduction for the camera in year 2 if his year 2 usage were 45 percent business and 55 percent for personal use?

Give some examples of mental short-cuts/heuristics that you use. Why do you use them?

Discuss the relative merits of the different methods used by the All England Club to allocate tickets for Wimbledon each year.

Leontyne Price Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2013, the company expends $325,000 on a research project, but by the end of 2013 it is impossible to determine whether any benefit will be derived from it. Instructions (a) What account should be charged for the $325,000, and how should it be shown in the financial statements? (b) The project is completed in 2014, and a successful patent is obtained. The R&D costs to complete the project are $110,000. The administrative and legal expenses incurred in obtaining patent number 472-1001-84 in 2014 total $16,000. The patent has an expected useful life of 5 years. Record these costs in journal entry form. Also, record patent amortization (full year) in 2014. (c) In 2015, the company successfully defends the patent in extended litigation at a cost of $47,200, thereby extending the patent life to December 31, 2022. What is the proper way to account for this cost?Also, record patent amortization (full year) in 2015. (d) Additional engineering and consulting costs incurred in 2015 required to advance the design of a product to the manufacturing stage total $60,000. These costs enhance the design of the product considerably. Discuss the proper accounting treatment for this cost.

Presented below are three revenue recognition situations. (a) Grupo sells goods to MTN for $1,000,000, payment due at delivery. (b) Grupo sells goods on account to Grifols for $800,000, payment due in 30 days. (c) Grupo sells goods to Magnus for $500,000, payment due in two installments: the first installment payable in 6 months and the second payment due 3 months later. Instructions Indicate how each of these transactions is reported.

Celine Dion Corporation purchases a patent from Salmon Company on January 1, 2014, for $54,000. The patent has a remaining legal life of 16 years. Celine Dion feels the patent will be useful for 10 years. Prepare Celine Dion’s journal entries to record the purchase of the patent and 2014 amortization.

] Bethany incurred $20,000 in research and experimental costs for developing a specialized product during July 2024. Bethany went through a lot of trouble and spent $10,000 in legal fees to receive a patent for the product in August 2026. Bethany expects the patent to have a remaining useful life of 10 years. a. What amount of research and experimental expenses for 2024, 2025, and 2026 may Bethany deduct? b. How much patent amortization expense would Bethany deduct 2026?

: Identify the personal challenges faced by new managers and ways of overcoming them

Describe the characteristics of multinational corporations and how they might employ the bottom-of-the-pyramid concept.

What is the formula for the net interest margin? Explain why it is closely monitored by banks. (LO3)