Question & Answer

Explain the difference between shares and share options.             (LO2)

What is earnings management?

ROI; residual income; explaining the better measure The following financial data are for the evaluation of performance for Sandy Point Construction:       Sandy Point Construction currently uses return on investment to evaluate investment centre managers. An accounting intern from the local university suggested to the controller that residual income may be a better performance measure.   Required (a)     Calculate ROI for Sandy Point Construction. (b)     Calculate residual income for Sandy Point Construction. (c)     Write a brief memo to the controller explaining why residual income is a better performance measure.

How does aggregate planning differ from the master production scheduling?

Assume the same information as E17-9 and that Steffi Graf Inc. reports net income in 2013 of $120,000 and in 2014 of $140,000. Total holding gains (including any realized holding gain or loss) total $40,000. Instructions (a) Prepare a statement of comprehensive income for 2013 starting with net income. (b) Prepare a statement of comprehensive income for 2014 starting with net income.

What are the general mechanical properties of ceramic materials?

14   Sustainability threats and opportunities The World Coal Institute claims that coal provides over 26.5 per cent of global primary energy needs and generates over 41.5 per cent of the world’s electricity. Coal is one of the cheapest forms of fuel available on the planet. However, burning fuel produces carbon dioxide which contributes to excessive greenhouse gas emissions and global warming. Rather than change energy sources, Clean Coal Technologies (CCTs) have been promoted as a means of reducing emissions, reducing waste as well as increase the efficiency (or amount of energy) gained from coal.72   Required Referring to the information in this problem and drawing on comprehensive example 2, discuss some of the sustainability management threats and opportunities for the future of Australian coal producers. (LO1, 2, 3, 4 and 5)

] Circuit Corporation (CC) is a calendar-year, accrual-method taxpayer. CC manufactures and sells electronic circuitry. On November 15 of this year, CC enters into a contract with Equip Corp (EC) that provides CC with exclusive use of EC’s specialized manufacturing equipment for the five-year period beginning on January 1 of next year. Pursuant to the contract, CC pays EC $100,000 on December 30 of this year. How much of this expenditure is CC allowed to deduct this year and next year?

Describe the RP technology called laminated-object manufacturing.

An organisation experiences a 20 per cent increase in pre-tax profits when revenues increase 20 per cent. Assuming linearity, what do you know about the organisation’s cost function?

Define cellular manufacturing.

Explain how the Fed’s “quantitative easing” strategies differed from its traditional strategy of buying short-term Treasury securities. (LO3)

R.E.M., a calendar-year corporation and Athens, Georgia band, recently sold tickets ($20,000,000) for concerts scheduled in the United States for next year and the following two years. For financial statement purposes, R.E.M. will recognize the income from the ticket sales when it performs the concerts, and R.E.M is obligated to return the ticket payments should a concert be cancelled. For tax purposes, R.E.M. uses the accrual method and would prefer to defer the income from the ticket sales until after the concerts are performed. This is the first time that it has sold tickets one or two years in advance. Michael Stipe, the group’s frontman, has asked your advice. Write a memo to Michael explaining your findings.

1.    : If a male manager tries to change his behaviors to incorporate elements of interactive leadership more common to female managers, can he still be an “authentic” leader? Discuss.

Janet is a cash-basis calendar-year taxpayer.  She received a check for services provided in the mail during the last week of December.  However, rather than cash the check, Janet decided to wait until the following January because she believes that her delay will cause the income to be realized and recognized next year.  What would you tell her?  Would it matter if she didn’t open the envelope?  Would it matter if she refused to check her mail during the last week of December?  Explain.

Why should the economic, environmental and cultural dimensions be managed in unison?

What is the technical difference between a screw and a bolt?

What is the relationship between ‘successful’ supply-side policies and unemployment in (i) the short run and (ii) the long run, according to (a) Keynesian and (b) monetarist assumptions?

Under what circumstances is relative sales value an appropriate basis for determining the price assigned to inventory?

Aaron, Deanne, and Keon formed the Blue Bell General Partnership at the beginning of the current year. Aaron and Deanne each contributed $110,000 and Keon transferred an acre of undeveloped land to the partnership. The land had a tax basis of $70,000 and was appraised at $180,000. The land was also encumbered with a $70,000 nonrecourse mortgage for which no one was personally liable. All three partners agreed to split profits and losses equally. At the end of the first year, Blue Bell made a $7,000 principal payment on the mortgage. For the first year of operations, the partnership records disclosed the following information: Sales revenue $470,000 Cost of goods sold $410,000 Operating expenses $70,000 Long-term capital gains $2,400 §1231 gains $900 Charitable contributions $300 Municipal bond interest $300 Salary paid as a guaranteed payment to Deanne (not included in expenses) $3,000 a. Compute the adjusted basis of each partner’s interest in the partnership immediately after the formation of the partnership. b. List the separate items of partnership income, gains, losses, and deductions that the partners must show on their individual income tax returns that include the results of the partnership’s first year of operations. c. Using the information generated in answering parts (a) and (b), prepare Blue Bells’ page 1 and Schedule K to be included with its Form 1065 for its first year of operations along with Schedule K-1 for Deanne. d. What are the partners’ adjusted bases in their partnership interests at the end of the first year of operations?

List some of the products produced on a rolling mill.

What is the purpose of the SIPC? (LO2)

It has been suggested that plant and equipment could be replaced more quickly if depreciation rates for income tax and accounting purposes were substantially increased. As a result, business operations would receive the benefit of more modern and more efficient plant facilities. Discuss the merits of this proposition.

Why might efforts to address the issue of global warming be hampered by a lack of understanding of probability amongst the general public?

Shared bonus pool Sarah Tesar is the lead partner of a medium-sized accounting firm. The eight partners share in an annual bonus pool. The characteristics of the bonus pool system include: • The bonus pool size each year is calculated as 40 per cent of annual profit. • The bonus pool is allocated on the basis of bonus units awarded according to the partners’ performance against target fees generated from new clients. This is meant to reinforce the firm’s strategy of growth through new client acquisition. If the fees target is met, one bonus unit is awarded; if the fees target is exceeded by 10 per cent, two bonus units are awarded; if the fees target is exceeded by 20 per cent, four bonus units are awarded; and if the fees target is exceeded by more than 20 per cent, six bonus units are awarded.   This year the annual profit was $2.2 million and the partner performance according to their fees from new client target was as follows: three partners achieved 10 per cent above target; three other partners achieved 20 per cent above target; and two partners exceeded the target by more than 20 per cent.   Required (a) Calculate: (i) the value of the bonus pool to be shared (ii) the value of one bonus unit (iii) the value of the bonus each manager would receive for the year.   One of the partners, Russell Morris, has sought a meeting with Sarah to discuss the shared bonus pool system. He wrote in an email to Sarah ‘I spend a lot of my time providing our in-house training programs . . . I can’t be out chasing new clients at the same time! Why do we only have one measure for the bonus system?’   (b) How important is the selection of the bonus allocation formula and the measure(s) to be used? (c) In the light of Russell’s email, would you advise Sarah to make any changes to the current system? Explain. (LO4)