Question & Answer

The financial statements of P&G are presented in Appendix 5B. The company’s complete annual report, including the notes to the financial statements, can be accessed at the book’s companion website, www. wiley.com/college/kieso. Instructions Refer to P&G’s financial statements and the accompanying notes to answer the following questions. (a) What criteria does P&G use to classify “Cash and cash equivalents” as reported in its balance sheet? (b) As of June 30, 2011, what balances did P&G have in cash and cash equivalents? What were the major uses of cash during the year? (c) P&G reports no allowance for doubtful accounts, suggesting that bad debt expense is not material for this company. Is it reasonable that a company like P&G would not have material bad debt expense? Explain.

For what reasons might GDP be a poor indicator of (i) the level of development of a country; (ii) its rate of economic development?

How does a confidence shock differ from the idea of confidence as an amplifier?

Using the facts in Problem 51, what is the minimum tax that Pedro should pay to make the tax structure vertically equitable with respect to the amount of tax paid?  This would result in what type of tax rate structure?

How does the ultrasonic machining process work?

A direct extrusion operation produces the cross section shown in Figure P19.32(a) from a brass billet whose diameter = 125 mm and length = 350 mm. The flow curve parameters of the brass are K = 700 MPa and n = 0.35. In the Johnson strain equation, a = 0.7 and b = 1.4. Determine (a) the extrusion ratio, (b) the shape factor, (c) the force required to drive the ram forward during extrusion at the point in the process when the billet length remaining in the container = 300 mm, and (d) the length of the extruded section at the end of the operation if the volume of the butt left in the container is 600,000 mm3 .

As the new staff person in your company’s treasury department, you have been asked to conduct research related to a proposed transfer of receivables. Your supervisor wants the authoritative sources for the following items that are discussed in the receivables transfer agreement. Instructions Access the IFRS authoritative literature at the IASB website (http://eifrs.iasb.org/). (Click on the IFRS tab and then register for free eIFRS access if necessary.) When you have accessed the documents, you can use the search tool in your Internet browser to prepare responses to the following items. (a) Identify relevant IFRSs that address transfers of receivables. (b) What are the objectives for reporting transfers of receivables? (c) Provide the definition for “Amortized cost.”

The financial statements of Marks and Spencer plc (M&S) are available at the book’s companion website or can be accessed at http://annualreport.marksandspencer.com/_assets/downloads/Marks-and- Spencer-Annual-report-and-financial-statements-2012.pdf. Instructions Refer to M&S’s financial statements and the accompanying notes to answer the following questions. (a) What criteria does M&S use to classify “Cash and cash equivalents” as reported in its statement of financial position? (b) As of 31 March 2012, what balances did M&S have in cash and cash equivalents? What were the major uses of cash during the year? (c) What amounts related to trade receivables does M&S report? Does M&S have any past due but not impaired receivables?

If an industry regulator adopts an RPI – X formula for price regulation, is it desirable that the value of X should be adjusted as soon as cost conditions change?

A tensile test for a certain metal provides flow curve parameters: strain-hardening exponent is 0.3 and strength coefficient is 600 MPa. Determine (a) the flow stress at a true strain = 1.0 and (b) true strain at a flow stress = 600 MPa.

Assume that you maintain bonds and money market securities in your portfolio, and you suddenly believe that long-term interest rates will rise substantially tomorrow (even though the market does not share the same view), while short-term interest rates will remain the same. a. How would you rebalance your portfolio between bonds and money market securities?  b. If other market participants suddenly recognize that long-term interest rates will rise tomorrow and they respond in the same manner as you do, explain how the demand for these securities (bonds and money market securities), the supply of these securities for sale, and the prices and yields of these securities will be affected. c. Assume that the yield curve is flat today. Explain how the slope of the yield curve will change tomorrow in response to the market activity. (LO2)

Illustrate on two separate indifference diagrams the income and substitution effects of the following: (a)    A decrease in the price of good X (and no change in the price of good Y). (b)    An increase in the price of good Y (and no change in the price of good X)

Explain how income could fall even though the unit sales level rises.

The U.S. Constitution is the highest tax authority but provides very little in the way of tax laws.  What are the next highest tax authorities beneath the U.S. Constitution?

Solve Problem 19.7 using a roll radius = 250 mm

Henning Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2014 in which no benefits were paid. 1. The actuarial present value of future benefits earned by employees for services rendered in 2014 amounted to $56,000. 2. The company’s funding policy requires a contribution to the pension trustee amounting to $145,000 for 2014. 3. As of January 1, 2014, the company had a projected benefit obligation of $900,000, an accumulated benefit obligation of $800,000, and a debit balance of $400,000 in accumulated OCI (PSC). The fair value of pension plan assets amounted to $600,000 at the beginning of the year. The actual and expected return on plan assets was $54,000. The settlement rate was 9%. No gains or losses occurred in 2014 and no benefits were paid. 4. Amortization of prior service cost was $50,000 in 2014. Amortization of net gain or loss was not required in 2014. Instructions (a) Determine the amounts of the components of pension expense that should be recognized by the company in 2014. (b) Prepare the journal entry or entries to record pension expense and the employer’s contribution to the pension trustee in 2014. (c) Indicate the amounts that would be reported on the income statement and the balance sheet for the year 2014.

The following comment appeared in the financial press: “Inadequate financial disclosure, particularly with respect to how management views the future and its role in the marketplace, has always been a stone in the shoe. After all, if you don’t know how a company views the future, how can you judge the worth of its corporate strategy?” What are some arguments for reporting earnings forecasts?

An NC machine tool table is powered by a servomotor, leadscrew, and optical encoder. The leadscrew has a pitch = 5.0 mm and is connected to the motor shaft with a gear ratio of 16:1 (16 turns of the motor for each turn of the leadscrew). The optical encoder is connected directly to the leadscrew and generates 200 pulses/rev of the leadscrew. The table must move a distance = 100 mm at a feed rate = 500 mm/min. Determine (a) the pulse count received by the control system to verify that the table has moved exactly 100 mm; and (b) the pulse rate and (c) motor speed that correspond to the feed rate of 500 mm/min.

Hart Golf Co. uses titanium in the production of its specialty drivers. Hart anticipates that it will need to purchase 200 ounces of titanium in November 2014, for clubs that will be shipped in the spring and summer of 2015. However, if the price of titanium increases, this will increase the cost to produce the clubs, which will result in lower profit margins. To hedge the risk of increased titanium prices, on May 1, 2014, Hart enters into a titanium futures contract and designates this futures contract as a cash flow hedge of the anticipated titanium purchase. The notional amount of the contract is 200 ounces, and the terms of the contract give Hart the option to purchase titanium at a price of $500 per ounce. The price will be good until the contract expires on November 30, 2014. Assume the following data with respect to the price of the call options and the titanium inventory purchase Spot Price for Date November Delivery May 1, 2014 $500 per ounce June 30, 2014 520 per ounce September 30, 2014 525 per ounce Instructions Present the journal entries for the following dates/transactions. (a) May 1, 2014—Inception of futures contract, no premium paid. (b) June 30, 2014—Hart prepares financial statements. (c) September 30, 2014—Hart prepares financial statements. (d) October 5, 2014—Hart purchases 200 ounces of titanium at $525 per ounce and settles the futures contract. (e) December 15, 2014—Hart sells clubs containing titanium purchased in October 2014 for $250,000. The cost of the finished goods inventory is $140,000. (f) Indicate the amount(s) reported in the income statement related to the futures contract and the inventory transactions on December 31, 2014.

Bart is the favorite nephew of his aunt Thelma. Thelma transferred several items of value to Bart. For each of the following transactions, determine the effect on Bart’s gross income:

How are qualified distributions from Roth IRAs taxed? How are nonqualified distributions taxed?

Assume the same information as in E17-19 for Lilly Company. In addition, assume that the investment in the Woods Inc. stock was sold during 2015 for $195,000. At December 31, 2015, the following information relates to its two remaining investments of common  stock. Cost Fair Value (at purchase date) (at December 31) Investment in Arroyo Company stock $100,000 $140,000 Investment in Lee Corporation stock 250,000 310,000 Total $350,000 $450,000 Net income before any security gains and losses for 2015 was $905,000. Instructions (a) Compute the amount of net income or net loss that Lilly should report for 2015, taking into consideration Lilly’s security transactions for 2015. (b) Prepare the journal entry to record unrealized gain or loss related to the investment in Arroyo Company stock at December 31, 2015.

What are diversified companies? What accounting problems are related to diversified companies?

Define the term manufacturing system.

There are 16 correct answers in the following multiple choice questions (some questions have multiple answers 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 on the quiz is based on the total number of correct answers. 34.1 How many electronic devices would be contained in an IC chip in order for it to be classified in the VLSI category: (a) 1000, (b) 10,000, (c) 1 million, or (d) 100 million? 34.2 An alternative name for chip in semiconductor processing is which one of the following (one best answer): (a) component, (b) device, (c) die, (d) package, or (e) wafer? 34.3 Which one of the following is the source of silicon for semiconductor processing: (a) pure Si in nature, (b) SiC, (c) Si3N4, or (d) SiO2? 34.4 Which one of the following is the most common form of radiation used in photolithography: (a) electronic beam radiation, (b) incandescent light, (c) infrared light, (d) ultraviolet light, or (e) X-ray? 34.5 After exposure to light, a positive resist becomes (a) less soluble or (b) more soluble to the chemical developing fluid? 34.6 Which of the following processes are used to add layers of various materials in IC fabrication (three best answers): (a) chemical vapor deposition, (b) diffusion, (c) ion implantation, (d) physical vapor deposition, (e) plasma etching, (f) thermal oxidation, and (g) wet etching? 34.7 Which of the following are doping processes in IC fabrication (two best answers): (a) chemical vapor deposition, (b) diffusion, (c) ion implantation, (d) physical vapor deposition, (e) plasma etching, (f) thermal oxidation, and (g) wet etching? 34.8 Which one of the following is the most common metal for intraconnection of devices in a silicon integrated circuit: (a) aluminum, (b) copper, (c) gold, (d) nickel, (e) silicon, or (f) silver? 34.9 Which etching process produces the more anisotropic etch in IC fabrication: (a) plasma etching or (b) wet chemical etching? 34.10 Which of the following are the two principal packaging materials used in IC packaging: (a) aluminum, (b) aluminum oxide, (c) copper, (d) epoxies, and (e) silicon dioxide? 34.11 Which of the following metals are commonly used for wire bonding of chip pads to the lead frame (two best answers): (a) aluminum, (b) copper, (c) gold, (d) nickel, (e) silicon, and (f) silver?