Question & Answer

Some argue that having various organizations establish accounting principles iswasteful and inefficient. Rather than mandating accounting rules, each company could voluntarily disclosethe type of information it considered important. In addition, if an investor wants additional information, the investor could contact the company and pay to receive the additional information desired. Instructions Comment on the appropriateness of this viewpoint.

What role does a corporation’s audited income statement play in determining its taxable income?

What federal income-related taxes are (or might) taxpayers (be) required to pay? In general terms, what is the tax base for each of these other taxes on income?

Use the information for Indiana Jones Corporation from BE21-9. Assume that for Lost Ark Company, the lessor, collectibility is reasonably predictable, there are no important uncertainties concerning costs, and the carrying amount of the equipment is $202,921. Prepare Lost Ark’s January 1, 2014, journal entries.

Lansbury Inc. had the following balance sheet at December 31, 2013.   During 2014, the following occurred. 1. Lansbury Inc. sold part of its investment portfolio for $15,000. This transaction resulted in a gain of $3,400 for the firm. The company classifies its investments as available-for-sale. 2. A tract of land was purchased for $18,000 cash. 3. Long-term notes payable in the amount of $16,000 were retired before maturity by paying $16,000 cash. 4. An additional $20,000 in common stock was issued at par. 5. Dividends of $8,200 were declared and paid to stockholders. 6. Net income for 2014 was $32,000 after allowing for depreciation of $11,000. 7. Land was purchased through the issuance of $30,000 in bonds. 8. At December 31, 2014, Cash was $32,000, Accounts Receivable was $41,600, and Accounts Payable remained at $30,000. Instructions (a) Prepare a statement of cash flows for 2014. (b) Prepare an unclassified balance sheet as it would appear at December 31, 2014. (c) How might the statement of cash flows help the user of the financial statements? Compute two cash flow ratios.

What is the difference between internal broaching and external broaching?

Explain why the loan loss provisions of most banks could increase in a particular period. (LO2)

How should correction of errors be reported in the financial statements?

Theory Suppose that the U.S. Treasury decided to finance its deficit with mostly long-term funds. How could this decision affect the term structure of interest rates? If short-term and long-term markets were segmented, would the Treasury’s decision have a more or less pronounced impact on the term structure? Explain. (LO3)

How easy do you think it would be for a firm to split customers into different groups based on their incomes?

An extruder has a barrel diameter of 2.5 in and a length of 6.0 ft. The screw has a channel depth of 0.25 in, a flight angle of 20°, and rotates at 55 rev/min. The material being extruded is polypropylene. At the present settings, the volumetric flow rate of the polymer melt is 1.50 in3 /sec and the head pressure is 500 lb/in2 . (a) Under these operating characteristics, what is the viscosity of the polypropylene? (b) Using Figure 13.2, approximate the temperature in °F of the polypropylene

Is there a compromise between purely discretionary policy and adhering to strict targets?

How is the power required in a cutting operation related to the cutting force?

The income statement of Vince Gill Company is shown below. VINCE GILL COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2014 Sales revenue $6,900,000 Cost of goods sold Beginning inventory $1,900,000 Purchases 4,400,000 Goods available for sale 6,300,000 Ending inventory 1,600,000 Cost of goods sold 4,700,000 Gross profi t 2,200,000 Operating expenses Selling expenses 450,000 Administrative expenses 700,000 1,150,000 Net income $1,050,000 Additional information: 1. Accounts receivable decreased $360,000 during the year. 2. Prepaid expenses increased $170,000 during the year. 3. Accounts payable to suppliers of merchandise decreased $275,000 during the year. 4. Accrued expenses payable decreased $100,000 during the year. 5. Administrative expenses include depreciation expense of $60,000. Instructions Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2014, for Vince Gill Company, using the indirect method.

When does the Fed use a stimulative monetary policy, and when does it use a restrictive monetary policy? What is a criticism of a stimulative monetary policy? What is the risk of using a monetary policy that is too restrictive? (LO2; LO3)

Identify the lease classifications for lessors and the criteria that must be met for each classification.

Name three of the general principles and guidelines in design for manufacturability.

Indicate how each of the following accounts should be classified in the stockholders’ equity section. (a) Common Stock. (b) Retained Earnings. (c) Paid-in Capital in Excess of Par—Common Stock. (d) Treasury Stock. (e) Paid-in Capital from Treasury Stock. (f) Paid-in Capital in Excess of Stated Value—Common Stock. (g) Preferred Stock.

A surfacing weld is to be applied to a rectangular low carbon steel plate that is 200 mm by 350 mm. The filler metal to be added is a harder (alloy) grade of steel, whose melting point is assumed to be the same. A thickness of 2.0 mm will be added to the plate, but with penetration into the base metal, the total thickness melted during welding = 6.0 mm, on average. The surface will be applied by making a series of parallel, overlapped welding beads running lengthwise on the plate. The operation will be carried out automatically with the beads laid down in one long continuous operation at a travel speed = 7.0 mm/s, using welding passes separated by 5 mm. Assume the welding bead is rectangular in cross section: 5 mm by 6 mm. Ignore the minor complications of the turnarounds at the ends of the plate. Assuming the heat transfer factor = 0.8 and the melting factor = 0.6, determine (a) the rate of heat that must be generated at the welding source, and (b) how long will it take to complete the surfacing operation.

How does a partner determine their basis in distributed assets when the partnership distributes other property in addition to money and hot assets?

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

Identify and explain the different types of classifications for investments in equity securities.

McIntyre Corporation issued 2,000 $1,000 bonds at 101. Each bond was issued with one detachable stock warrant. After issuance, the bonds were selling separately at 98. The market price of the warrants without the bonds cannot be determined. Use the incremental method to record the issuance of the bonds and warrants.

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)

What methods are used in practice to determine the extent of progress toward completion? Identify some “input measures” and some “output measures” that might be used to determine the extent of progress.