Question & Answer

Capulet Company establishes a stock-appreciation rights program that entitles its new president Ben Davis to receive cash for the difference between the market price of the stock and a pre-established price of $30 (also market price) on December 31, 2010, on 30,000 SARs. The date of grant is December 31, 2010, and the required employment (service) period is 4 years. President Davis exercises all of the SARs in 2016. The fair value of the SARs is estimated to be $6 per SAR on December 31, 2011; $9 on December 31, 2012; $15 on December 31, 2013; $6 on December 31, 2014; and $18 on December 31, 2015. Instructions (a) Prepare a 5-year (2011–2015) schedule of compensation expense pertaining to the 30,000 SARs granted president Davis. (b) Prepare the journal entry for compensation expense in 2011, 2014, and 2015 relative to the 30,000 SARs.

How does abrasive belt grinding differ from a conventional surface grinding operation?

: How do you think that the team evolved to this low level of cooperation and cohesiveness?

At the beginning of 2014, Aristotle Company acquired a mine for $970,000. Of this amount, $100,000 was ascribed to the land value and the remaining portion to the minerals in the mine. Surveys conducted by geologists have indicated that approximately 12,000,000 units of the ore appear to be in the mine. Aristotle incurred $170,000 of development costs associated with this mine prior to any extraction of minerals. It also determined that the fair value of its obligation to prepare the land for an alternative use when all of the mineral has been removed was $40,000. During 2014, 2,500,000 units of ore were extracted and 2,100,000 of these units were sold. Instructions Compute the following. (a) The total amount of depletion for 2014. (b) The amount that is charged as an expense for 2014 for the cost of the minerals sold during 2014.

: Explain the strategic management process.

What modifications to the conventional retail method are necessary to approximate a LIFO retail flow?

Do you think that the U.S. financial system will be able to avoid another credit crisis in the future? (LO5)

: Identify the biases that frequently cause managers to make bad decisions.

Identify the three basic types of sheet metalworking operations.

Linda Berstler Company sponsors a defined benefit pension plan. The corporation’s actuary provides the following information about the plan. January 1, December 31, 2014 2014 Defi ned benefi t obligation $2,500 $3,300 Plan assets (fair value) 1,700 2,620 Discount rate 10% Pension asset/liability 800 ? Service cost for the year 2014 400 Contributions (funding in 2014) 700 Benefi ts paid in 2014 200 Instructions (a) Compute the actual return on the plan assets in 2014. (b) Compute the amount of other comprehensive income (G/L) as of December 31, 2014. (Assume the January 1, 2014, balance was zero.)

Presented below is information related to Rembrandt Inc.’s inventory. (per unit) Skis Boots Parkas Historical cost $190.00 $106.00 $53.00 Selling price 212.00 145.00 73.75 Cost to distribute 19.00 8.00 2.50 Current replacement cost 203.00 105.00 51.00 Normal profi t margin 32.00 29.00 21.25 Determine the following: (a) the two limits to market value (i.e., the ceiling and the floor) that should be used in the lower-of-cost-or-market computation for skis, (b) the cost amount that should be used inthe lower-of-cost-or-market comparison of boots, and (c) the market amount that should be used to valueparkas on the basis of the lower-of-cost-or-market.

Using the same information as in E14-22, answer the following questions related to American Bank (creditor). Instructions (a) What interest rate should American Bank use to calculate the loss on the debt restructuring? (b) Compute the loss that American Bank will suffer from the debt restructuring. Prepare the journal entry to record the loss. (c) Prepare the interest receipt schedule for American Bank after the debt restructuring. (d) Prepare the interest receipt entry for American Bank on December 31, 2016. (e) What entry should American Bank make on January 1, 2018?

How do earnings surprises affect valuations of stocks? (LO3)

] In July of this year, Stephen started a proprietorship called ECR (which stands for electric car repair). ECR uses the cash method of accounting and Stephen has produced the following financial information for this year:

: Explain innovative techniques for decision making, including brainstorming, evidence-based management, and after-action reviews.

In a wire EDM operation performed on 7-mm-thick C1080 steel using a tungsten wire electrode whose diameter = 0.125 mm, past experience suggests that the overcut will be 0.02 mm, so that the kerf width will be 0.165 mm. Using a discharge current = 10 amps, what is the allowable feed rate that can be used in the operation? Estimate the melting temperature of 0.80% carbon steel from the phase diagram of Figure 6.4.

Imagine that the banking system receives additional deposits of £100 million and that all the individual banks wish to retain their current liquidity ratio of 20 per cent. (a)  How much will banks choose to lend out initially? (b)  What will happen to banks’ liabilities when the money that is lent out is spent and the recipients of it deposit it in their bank accounts? (c)  How much of these latest deposits will be lent out by the banks? (d)  By how much will total deposits (liabilities) eventually have risen, assuming that none of the additional liquidity is held outside the banking sector? (e)  How much of these are matched by (i) liquid assets; (ii) illiquid assets? (f)   What is the size of the bank deposits multiplier? (g)  If one-half of any additional liquidity is held outside the banking sector, by how much less will deposits have risen compared with (d) above?

1.       : In zero-based budgeting, every account starts at $0, and every dollar added to the budget is supported by an actual, documented need. Identify the possible advantages of zero-based budgeting.

Presented below is information for Jones Company. 1. Beginning-of-the-year Accounts Receivable balance was $15,000. 2. Net sales (all on account) for the year were $100,000. Jones does not offer cash discounts. 3. Collections on accounts receivable during the year were $70,000. Instructions (a) Prepare (summary) journal entries to record the items noted above. (b) Compute Jones’s accounts receivable turnover for the year. The company does not believe it will have any bad debts. (c) Use the turnover ratio computed in (b) to analyze Jones’s liquidity. The turnover ratio last year was 6.0.

There are 20 correct answers in the following multiple choice questions (some questions have multiple answer(a).s 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, and each 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. 28.1 Which of the following are reasons why workparts must be cleaned in industry (four best answers): (a) to avoid air pollution, (b) to avoid water pollution, (c) to enhance appearance, (d) to enhance mechanical properties of the surface, (e) to improve hygiene conditions for workers, (f) to improve surface finish, (g) to prepare the surface for subsequent processing, and (h) to remove contaminants that might chemically attack the surface? 28.2 Which of the following chemicals are associated with alkaline cleaning (two correct answers): (a) 28.3 In sand blasting, which one of the following blast media is used: (a) Al2O3, (b) crushed nut shells, (c) nylon beads, (d) SiC, or (e) SiO2?borax, (b) 28.4 Which of the following processes generally produces a deeper penetration of atoms in the impregnated surface: (a) diffusion or (b) ion implantation? 28.5 Calorizing is the same as which one of the following surface processes: (a) aluminizing, (b) doping, (c) hot sand blasting, or (d) siliconizing? 28.9 Which one of the following plate metals produces the hardest surface on a metallic substrate: (a) cadmium, (b) chromium, (c) copper, (d) nickel, or (e) t28.3 In sand blasting, which one of the following blast media is used: (a) Al2O3, (b) crushed nut shells, (c) nylon beads, (d) SiC, or (e) SiO2? 28.10 Which one of the following plating metals is associated with the term galvanizing: (a) iron, (b) lead, (c) steel, (d) tin, or (e) zinc?   28.11 Which of the following processes involves electrochemical reactions (two correct answers): (a) anodizing, (b) chromate coatings, (c) electroless plating, (d) electroplating, and (e) phosphate coatings? 28.12 With which one of the following metals is anodizing most commonly associated (one answer): (a) aluminum, (b) magnesium, (c) steel, (d) titanium, or (e) zinc? 28.13 Sputtering is a form of which one of the following: (a) chemical vapor deposition, (b) defect in arc welding, (c) diffusion, (d) ion implantation, or (e) physical vapor deposition? 28.14 Which one of the following gases is the most commonly used in sputtering and ion plating: (a) argon, (b) chlorine, (c) neon, (d) nitrogen, or (e) oxygen? 28.15 The principal methods of applying powder coatings are which of the following (two best answers): (a) brushing, (b) electrostatic spraying, (c) fluidized bed, (d) immersion, and (e) roller coating? 28.16 Porcelain enamel is applied to a surface in which one of the following forms: (a) liquid emulsion, (b) liquid solution, (c) molten liquid, or (d) powders? 28.17 Hard facing utilizes which one of the following basic processes: (a) arc welding, (b) brazing, (c) dip coating, (d) electroplating, or (e) mechanical deformation to work harden the surface?

Will the envelope curve be tangential to the bottom of each of the short-run average cost curves? Explain why it should or should not be.

You are called by Tim Duncan of Spurs Co. on July 16 and asked to prepare a claim for insurance as a result of a theft that took place the night before. You suggest that an inventory be taken immediately. The following data are available. Inventory, July 1 $ 38,000 Purchases—goods placed in stock July 1–15 85,000 Sales revenue—goods delivered to customers (gross) 116,000 Sales returns—goods returned to stock 4,000 Your client reports that the goods on hand on July 16 cost $30,500, but you determine that this figure includes goods of $6,000 received on a consignment basis. Your past records show that sales are made at approximately 40% over cost. Duncan’s insurance covers only goods owned. Instructions Compute the claim against the insurance company.

Assume that oil begins to run out and that extraction becomes more expensive. Trace through the effects of this on the market for oil and the market for other fuels.

Use the information provided in BE12-7. Assume that the fair value of the division is estimated to be $750,000 and the implied goodwill is $350,000. Prepare Waters’ journal entry, if necessary, to record impairment of the goodwill.

1. Which of the economies of scale we have considered are due to increasing returns to scale and which are due to other factors? 2. What economies of scale is a large department store likely to experience?