Question & Answer

Describe a wheel ring test.

Jamel and Jennifer have been married 30 years and have filed a joint return every year of their marriage. Their three daughters, Jade, Lindsay, and Abbi are ages 12, 17, and 22 respectively, and all live at home. None of the daughters provides more than half of her own support. Abbi is a full-time student at a local university and does not have any gross income.  a. Which, if any, of the daughters qualify as dependents of Jamel and Jennifer?

Construct a table similar to Table 17.3, only this time assume that the mpcd is ¾. Show that national income will increase by £640 million.

What are the criteria to recognize revenue?

Using the lead-tin phase diagram in Figure 6.3, determine the liquid and solid phase compositions for a nominal composition of 90% Sn and 10% Pb at 204°C (400°F).

Mitchell Corporation had income before income taxes of $195,000 in 2014. Mitchell’s current income tax expense is $48,000, and deferred income tax expense is $30,000. Prepare Mitchell’s 2014 income statement, beginning with Income before income taxes.

Briefly describe some of the similarities and differences between GAAP and IFRS with respect to the accounting for inventories.

Why is it difficult to predict the size of the accelerator?

Does this mean that the value of manufacturing output in 2007 was 1.3 per cent higher than 2018 in money terms?

Lotoya Davis Corporation has 10 million shares of common stock issued and outstanding. On June 1, the board of directors voted an 80 cents per share cash dividend to stockholders of record as of June 14, payable June 30. Instructions (a) Prepare the journal entry for each of the dates above assuming the dividend represents a distribution of earnings. (b) How would the entry differ if the dividend were a liquidating dividend?

Describe highly leveraged transactions (HLTs) and explain why regulators closely monitor a bank’s exposure to HLTs. (LO2)

Matlock Company uses a perpetual inventory system. Its beginning inventory consists of 50 units that cost $34 each. During June, the company purchased 150 units at $34 each, returned 6 units for credit, and sold 125 units at $50 each. Journalize the June transactions.

Describe the major uses of funds by finance companies. (LO2)

Using the facts in problem 41, if Scot and Vidia earn an additional $70,000 of taxable income, what is their marginal tax rate on this income?  How would your answer differ if they, instead, had $70,000 of additional deductions?

Explain the government’s dilemma regarding whether it should rescue American International Group (AIG) during the credit crisis. (LO5)

Homer Winslow and Jane Alexander are discussing various aspects of the FASB’s concepts statement on the objective of financial reporting. Homer indicates that this pronouncement provides little, if any, guidance to the practicing professional in resolving accounting controversies. He believes that the statement provides such broad guidelines that it would be impossible toapply the objective to present-day reporting problems. Jane concedes this point but indicates that the objective is still needed to provide a starting point for the FASB in helping to improve financial reporting. Instructions (a) Indicate the basic objective established in the conceptual framework. (b) What do you think is the meaning of Jane’s statement that the FASB needs a starting point to resolve accounting controversies?

On March 1, 2014, Pechstein Construction Company contracted to construct a factory building for Fabrik Manufacturing Inc. for a total contract price of $8,400,000. The building was completed by October 31, 2016. The annual contract costs incurred, estimated costs to complete the contract, and accumulated billings to Fabrik for 2014, 2015, and 2016 are given below. 2014 2015 2016 Contract costs incurred during the year $2,880,000 $2,230,000 $2,190,000 Estimated costs to complete the contract at 12/31 3,520,000 2,190,000 –0– Billings to Fabrik during the year 3,200,000 3,500,000 1,700,000 Instructions (a) Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2014, 2015, and 2016. (Ignore income taxes.) (b) Using the completed-contract method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2014, 2015, and 2016. (Ignore incomes taxes.)

Compare and contrast financial accounting rules with the tax rules under UNICAP (§263A). Explain whether the UNICAP rules tend to accelerate or defer income relative to the financial accounting rules.

Solve Problem 24.17 except that in part (a), determine cutting speed for minimum cost.

Mike Macinski Leasing Company leases a new machine that has a cost and fair value of $95,000 to Sharrer Corporation on a 3-year noncancelable contract. Sharrer Corporation agrees to assume all risks of normal ownership including such costs as insurance, taxes, and maintenance. The machine has a 3-year useful life and no residual value. The lease was signed on January 1, 2014. Mike Macinski Leasing Company expects to earn a 9% return on its investment. The annual rentals are payable on each December 31. Instructions (a) Discuss the nature of the lease arrangement and the accounting method that each party to the lease should apply. (b) Prepare an amortization schedule that would be suitable for both the lessor and the lessee and that covers all the years involved.

Explain how the Fed increases the money supply through the ample reserves framework. (LO2)

Assume the same data as in P21-13 and that Chambers Medical Center has an incremental borrowing rate of 10%. Instructions (a) Discuss the nature of this lease in relation to the lessee, and compute the amount of the initial lease liability. (b) Prepare a 10-year lease amortization schedule. (c) Prepare all of the lessee’s journal entries for the first year.

What other forms of intervention are likely to be necessary to back up the work of regulatory bodies?

Explain the meaning and use of implied volatility. (LO4)

If a rise in aggregate demand were to encourage firms to invest more, how would this influence the size of the rise in real GDP?