Question & Answer

When the records of Debra Hanson Corporation were reviewed at the close of 2015, the errors listed below were discovered. For each item, indicate by a check mark in the appropriate column whether the error resulted in an overstatement, an understatement, or had no effect on net income for the years 2014 and 2015. 2014 2015 Over- Under- No Over- Under- No Item statement statement Effect statement statement Effect 1. Failure to record amortization of patent in 2015. 2. Failure to record the correct amount of ending 2014 inventory. The amount was understated because of an error in calculation. 3. Failure to record merchandise purchased in 2014. Merchandise was also omitted from ending inventory in 2014 but was not yet sold. 4. Failure to record accrued interest on notes payable in 2014; that amount was recorded when paid in 2015. 5. Failure to refl ect supplies on hand on balance sheet at end of 2014.

Identify three situations in which accounting measures are based on present values. Do these present value applications involve single sums or annuities, or both single sums and annuities? Explain.

Cammie received 100 NQOs (each option provides a right to purchase 10 shares of MNL stock for $10 per share). She started working for MNL Corporation four years ago (5/1/Y1) when MNL’s stock price was $8 per share. Now( 8/15/Y5) that MNL’s stock price is $40 per share, she intends to exercise all of her options. After acquiring the 1,000 MNL shares with her stock options, she held the shares for over one year and sold (on 10/1/Y6) them at $60 per share. What are Cammie’s taxes due on the grant date (5/1/Y1), exercise date (8/15/Y5), and sale date (10/1/Y6), assuming her ordinary marginal rate is 32 percent and her long-term capital gains rate is 15 percent?

What are the two basic mechanisms of corrosion protection?

What is the purpose of FASB Staff Positions?

Sustainable management practices In an Environmental Victoria audit, it was found that Australian supermarkets could save $41.6 million annually if ‘green bags’ were universally adopted. This audit was conducted at Leo’s Fine Foods in Kew, Victoria. It was conducted as a timed experiment; that is, clocking a checkout operator on the time taken to fill reusable green or single-use plastic shopping bags. The results are highlighted in the table below.         The results show that there was little difference in transaction times for single-use bags compared with reusable bags.  As a result of this experiment, Henty strongly suggests governments introduce a levy on single-use plastic bags to encourage further use of green bags.38   Required (a)     If you were designing/conducting this experimental process, what are some of the concerns might you have for results being considered representative of the true situation being investigated? (b)     What other sustainable management practices might supermarkets employ to decrease waste?             (LO4 and 5)

1.    : TikTok, a Chinese video-sharing social networking service, was founded in 2012 and became available in the United States in 2018. TikTok is wildly popular, with a global reach mostly among 16- to 24-year-olds. Why and how might a company such as TikTok want to use contingency planning? Scenario planning? Discuss.

What is the “call” feature of a bond issue? How does the call feature affect the amortization of bond premium or discount?

In 2014, Steinrotter Construction Corp. began construction work under a 3-year contract. The contract price was $1,000,000. Steinrotter uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of cost incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2014, are shown below. Balance Sheet Accounts receivable $18,000 Construction in process $65,000 Less: Billings 61,500 Costs and recognized profi t in excess of billings 3,500 Income Statement Income (before tax) on the contract recognized in 2014 $19,500 Instructions (a) How much cash was collected in 2014 on this contract? (b) What was the initial estimated total income before tax on this contract?

Could each of these types of resources be increased in quantity or quality? Is there a time dimension to your answer?

Distinguish between product costs and period costs as they relate to inventory

You have the choice of investing in toprated commercial paper or commercial paper that has a lower risk rating. How do you think the risk and return performances of the two investments differ? (LO1)

Explain how finance companies provide financing through leasing. (LO2)

Explain how variable costing income statements can be reconciled to absorption costing income statements.

Your client is in the planning phase for a major plant expansion, which will involve the construction of a new warehouse. The assistant controller does not believe that interest cost can be included in the cost of the warehouse, because it is a financing expense. Others on the planning team believe that some interest cost can be included in the cost of the warehouse, but no one could identify the specific authoritative guidance for this issue. Your supervisor asks you to research this issue. Instructions If your school has a subscription to the FASB Codification, go to http://aaahq.org/asclogin.cfm to log in and prepare responses to the following. Provide Codification references for your responses. (a) Is it permissible to capitalize interest into the cost of assets? Provide authoritative support for your answer. (b) What are the objectives for capitalizing interest? (c) Discuss which assets qualify for interest capitalization. (d) Is there a limit to the amount of interest that may be capitalized in a period? (e) If interest capitalization is allowed, what disclosures are required?

What is the difference between a full year and a short year? Describe circumstances in which a business may have a short year.

Question: What does it mean to say that a married couple filing a joint tax return has joint and several liability for the taxes associated with the return?

Robert Parish Corporation purchased a new machine for its assembly process on August 1, 2014. The cost of this machine was $117,900. The company estimated that the machine would have a salvage value of $12,900 at the end of its service life. Its life is estimated at 5 years, and its working hours are estimated at 21,000 hours. Year-end is December 31. Instructions Compute the depreciation expense under the following methods. Each of the following should be considered unrelated. (a) Straight-line depreciation for 2014. (b) Activity method for 2014, assuming that machine usage was 800 hours. (c) Sum-of-the-years’-digits for 2015. (d) Double-declining-balance for 2015.

Describe the major components of the humanistic management perspective.

What is the general relationship between mortgage rates and long-term government security rates? Explain how mortgage lenders can be affected by interest rate movements. Also explain how they can insulate themselves against interest rate movements. (LO3)

1.      : How would you resolve the underlying conflicts among key stakeholders about museum direction and goals? What actions would you take?

How might uncertainty propagate the impact of shocks, such as the COVID-19 pandemic, on the macroeconomy?

Winans Company uses the lower-of-cost-or-market method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2013, included product X. Relevant per-unit data for product X appear below. 2 Estimated selling price $45 Cost 40 Replacement cost 35 Estimated selling expense 14 Normal profi t 9 There were 1,000 units of product X on hand at December 31, 2013. Product X was incorrectly valued at $35 per unit for reporting purposes. All 1,000 units were sold in 2014. Instructions Compute the effect of this error on net income for 2013 and the effect on net income for 2014, and indicate the direction of the misstatement for each year.

Consider the prevailing conditions for inflation (including oil prices), the economy, the budget deficit, and the Fed’s monetary policy that could affect interest rates. Based on these conditions, do you think bond prices will increase or decrease during this semester? Offer some logic to support your answer. Which factor do you think will have the biggest impact on bond prices? (LO2)

An entry to record Purchases and related Accounts Payable of $13,000 for merchandise purchased on December 23, 2015, was recorded in January 2016. This merchandise was not included in inventory at December 31, 2015. What effect does this error have on reported net income for 2015? What entry should be made to correct for this error, assuming that the books are not closed for 2015?