Question & Answer

You are about to start a coffee shop business. What do you understand by ‘cost behaviour’? Explain how your accountants could help you in building an understanding of cost behaviour. Identify the likely key costs and classify each as fixed or variable.

During 2012, Robin Wright Tool Company purchased a building site for its proposed research and development laboratory at a cost of $60,000. Construction of the building was started in 2012. The building was completed on December 31, 2013, at a cost of $320,000 and was placed in service on January 2, 2014. The estimated useful life of the building for depreciation purposes was 20 years. The straight-line method of depreciation was to be employed, and there was no estimated residual value. Management estimates that about 50% of the projects of the research and development group will result in long-term benefits (i.e., at least 10 years) to the corporation. The remaining projects either benefit the current period or are abandoned before completion. A summary of the number of projects and the direct costs incurred in conjunction with the research and development activities for 2014 appears below. Salaries and Other Expenses Number Employee (excluding Building of Projects Benefits Depreciation Charges) Completed projects with long-term benefits 15 $ 90,000 $50,000 Abandoned projects or projects that benefit the current period 10 65,000 15,000 Projects in process—results indeterminate 5 40,000 12,000 Total 30 $195,000 $77,000 Upon recommendation of the research and development group, Robin Wright Tool Company acquired a patent for manufacturing rights at a cost of $88,000. The patent was acquired on April 1, 2013, and has an economic life of 10 years. Instructions If generally accepted accounting principles were followed, how would the items above relating to research and development activities be reported on the following financial statements? (a) The company’s income statement for 2014. (b) The company’s balance sheet as of December 31, 2014. Be sure to give account titles and amounts, and briefly justify your presentation.

Data for Brecker Inc. are presented in E23-13. Instructions Prepare a statement of cash flows using the indirect method.

In a tensile test on a metal specimen, true strain = 0.08 at a stress = 265 MPa. When true stress = 325 MPa, true strain = 0.27. Determine the strength coefficient and the strain-hardening exponent in the flow curve equation.

JB Corporation is a C corporation owned 80 percent by Jacob and 20 percent by Bauer.  Jacob would like JB to make an S election, but Bauer is opposed to the idea.  Can JB elect to be taxed as an S corporation without Bauer’s consent?  Explain.

1.      : Launch a full-scale investigation of employee complaints about Pate and make Pate aware that his documented history over the past ten years has put him on thin ice.

What are “liability gains and losses,” and how are they accounted for?

Describe the difference in mechanical properties as a function of temperature between a highly crystalline thermoplastic and an amorphous thermoplastic.

Is a corporation’s choice of its tax year independent from its year-end for financial accounting purposes?

What are the major differences between postretirement healthcare benefits and pension benefits?

What is the complicating factor that occurs in a compression test?

Aggie Corporation made a distribution of $500,000 to Rusty Cedar in partial liquidation of the company on December 31 of this year.  Rusty, an individual, owns 100 percent of Aggie Corporation. The distribution was in exchange for 50 percent of Rusty’s stock in the company. At the time of the distribution, the shares had a fair market value of $200 per share. Rusty’s tax basis in the shares was $50 per share. Aggie had E&P of $8,000,000 at the time of the distribution.

Evergreen Corporation (calendar-year-end) acquired the following assets during the current year:

What policy prescriptions do the neoclassical and endogenous growth theories offer policy makers who are looking to raise their country’s long-run growth rate?

Describe the appeal and the difficulties of investing in a franchise as a route to small business ownership.

Assume that there is a fall in aggregate demand (for goods). Trace through the short-run and long-run effect on employment.

A face milling operation is not yielding the required surface finish on the work. The cutter is a four-tooth insert type face milling cutter. The machine shop foreman thinks the problem is that the work material is too ductile for the job, but this property tests well within the ductility range for the material specified by the designer. Without knowing any more about the job, what changes in (a) cutting conditions and (b) tooling would you suggest to improve the surface finish?

What is a product financing arrangement? How should product financing arrangements be reported in the financial statements?

What is the purpose of annealing in glassworking?

Shimmer Inc. is a calendar-year-end, accrual-method corporation. This year, it sells the following long-term assets:

Explain the causes and types of conflict within and among teams, and describe ways to reduce conflict.

Identify at least two situations in which application of different accounting methods or accounting estimates results in difficulties in comparing companies.

What is the range of carbon percentages which defines an iron-carbon alloy as cast iron?

Included in Gonzalez Company’s December 31 trial balance is a note receivable of $12,000. The note is a 4-month, 10% note dated October 1. Prepare Gonzalez’s December 31 adjusting entry to record $300 of accrued interest, and the February 1 journal entry to record receipt of $12,400 from the borrower.

A spool of wire has a starting diameter of 2.5 mm. It is drawn through a die with an opening that is to 2.1 mm. The entrance angel of the die is 18° degrees. Coefficient of friction at the work-die interface is 0.08. The work metal has a strength coefficient of 450 MPa and a strain hardening coefficient of 0.26. The drawing is performed at room temperature. Determine (a) area reduction, (b) draw stress, and (c) draw force required for the operation.