Question & Answer

Consider the argument that whether an industry is in the public sector or private sector has far less bearing on its performance than the degree of competition it faces.

Shania Twain Company was formed on December 1, 2013. The following information is available from Twain’s inventory records for Product BAP. Units Unit Cost January 1, 2014 (beginning inventory) 600 $ 8.00 Purchases: January 5, 2014 1,200 9.00 January 25, 2014 1,300 10.00 February 16, 2014 800 11.00 March 26, 2014 600 12.00 A physical inventory on March 31, 2014, shows 1,600 units on hand. Instructions Prepare schedules to compute the ending inventory at March 31, 2014, under each of the following inventory methods. (a) FIFO. (b) LIFO. (c) Weighted-average (round unit costs to two decimal places).

Look in a business periodical for news about a recent financial transaction involving two financial institutions. For this transaction, determine the following: a. How will each institution’s balance sheet be affected? b. Will either institution receive immediate income from the transaction? c. Who is the ultimate user of funds? d. Who is the ultimate source of funds? (LO3)

Silverman Company purchased machinery for $162,000 on January 1, 2014. It is estimated that the machinery will have a useful life of 20 years, salvage value of $15,000, production of 84,000 units, and working hours of 42,000. During 2014, the company uses the machinery for 14,300 hours, and the machinery produces 20,000 units. Compute depreciation under the straight-line, units-of-output, working hours, sum-of-the-years’-digits, and doubledeclining- balance methods.

Explain basis risk as it relates to a currency swap. (LO8)

The largest axis of a Cartesian coordinate robot has a total range of 750 mm. It is driven by pulley system capable of a mechanical accuracy = 0.25 mm and repeatability = ±0.15 mm. Determine the minimum number of bits required in the binary register for the axis in the robot's control memory.

Which type of entities would be suited to the use of a standard cost  system?

Are the tax consequences to the corporation the same whether a shareholder contributes property to a corporation in a §351 transaction or as a capital contribution? Explain.

What is the difference between dependent and independent demand for products?

1.              : Take swift action to notify the venture capitalists of the truth of the situation—and start cleaning house to get rid of people who would knowingly lie to close a deal.

Larry Byrd, Inc., spent $68,000 in attorney fees while developing the trade name of its new product, the Mean Bean Machine. Prepare the journal entries to record the $68,000 expenditure and the first year’s amortization, using an 8-year life.

1.       : How does relational coordination differ from teams and task forces? Explain your answer.

Explain why interest rates tend to decrease during recessionary periods. Review historical interest rates to determine how they react to recessionary periods. Explain this reaction. (LO1, LO2)

Explain why the expenses incurred to get an asset in place and operable should be included in the asset’s basis.

Ogala Corporation purchased a significant amount of raw materials inventory for a new product that it is manufacturing. Ogala uses the lower-of-cost-or-market rule for these raw materials. The replacement cost of the raw materials is above the net realizable value, and both are below the original cost. Ogala uses the average-cost inventory method for these raw materials. In the last 2 years, each purchase has been at a lower price than the previous purchase, and the ending inventory quantity for each period has been higher than the beginning inventory quantity for that period. Instructions (a) (1) At which amount should Ogala’s raw materials inventory be reported on the balance sheet? Why? (2) In general, why is the lower-of-cost-or-market rule used to report inventory? (b) What would have been the effect on ending inventory and cost of goods sold had Ogala used the LIFO inventory method instead of the average-cost inventory method for the raw materials? Why?

Would increasing the money supply growth place upward or downward pressure on interest rates? (LO1, LO2)

Which is preferable: general subsidies for public transport, or cheap fare policies for specific groups (such as children, students and pensioners)?

Until the end of year 0, Magic Carpets (MC) was a C corporation with a calendar year-end.  At the beginning of year 1, it elected to be taxed as an S corporation.  MC uses the LIFO method to value its inventory.  At the end of year 0, under the LIFO method, its inventory of rugs was valued at $150,000. Under the FIFO method, the rugs would have been valued at $170,000.  How much LIFO recapture tax must MC pay, and what is the due date of the first payment under the following alternative scenarios?

Dean Kastner is 78 years old and lives by himself in an apartment in Chicago. Dean’s gross income for the year is $2,500. Dean’s support is provided as follows: himself (5 percent), his daughters Camille (25 percent) and Rachel (30 percent), his son Zander (5 percent), his friend Frankie (15 percent), and his niece Sharon (20 percent).    a. Absent a multiple support agreement, of the parties mentioned in the problem, who may claim Dean as a dependent?

For the following taxpayers, determine the due date of their tax returns.

Piecewise linear cost function; regression measurement error The following is the description of a cost: Total fixed costs are $50 000 per month and the variable cost per unit is $10.00 when production is under 1000 units. The variable cost drops to $9.00 per unit after the first 1000 units are produced.   Required (a)          Write the algebraic expression of the cost function and graph it. (b)          Assume that the cost function just described is a reasonable representation of total costs. If the accountant performed regression analysis on weekly observations of this cost and did not realise that there were two relevant ranges, what problems would arise in the cost function that was produced? In other words, how would the cost function be mismeasured?

You are the vice president of finance of Sandy Alomar Corporation, a retail company that prepared two different schedules of gross margin for the first quarter ended March 31, 2014. These schedules appear below. Sales Cost of Gross ($5 per unit) Goods Sold Margin Schedule 1 $150,000 $124,900 $25,100 Schedule 2 150,000 129,400 20,600 The computation of cost of goods sold in each schedule is based on the following data. Cost Total Units per Unit Cost Beginning inventory, January 1 10,000 $4.00 $40,000 Purchase, January 10 8,000 4.20 33,600 Purchase, January 30 6,000 4.25 25,500 Purchase, February 11 9,000 4.30 38,700 Purchase, March 17 11,000 4.40 48,400 Jane Torville, the president of the corporation, cannot understand how two different gross margins can be computed from the same set of data. As the vice president of finance, you have explained to Ms. Torville that the two schedules are based on different assumptions concerning the flow of inventory costs, i.e., FIFO and LIFO. Schedules 1 and 2 were not necessarily prepared in this sequence of cost flow assumptions. Instructions Prepare two separate schedules computing cost of goods sold and supporting schedules showing the composition of the ending inventory under both cost flow assumptions.

On July 1, 2015, Fontaine Company purchased for cash 40% of the outstanding capital stock of Knoblett Company. Both Fontaine Company and Knoblett Company have a December 31 year-end. Knoblett Company, whose common stock is actively traded in the over-the-counter market, reported its total net income for the year to Fontaine Company and also paid cash dividends on November 15, 2015, to Fontaine Company and its other stockholders. Instructions How should Fontaine Company report the above facts in its December 31, 2015, balance sheet and its income statement for the year then ended? Discuss the rationale for your answer.

Commercial banks use some funds to purchase securities and other funds to make loans. Why are the securities more marketable than the loans in the secondary market? (LO3)

1.      Georgio owns a 20 percent profits and capital interest in Rain Tree LLC. For the current year, Rain Tree had the following revenues, expenses, gains, and losses: Sales revenue $70,000 Gain on sale of land (§1231) $11,000 Cost of goods sold ($26,000) Depreciation - MACRS ($3,000) §179 deduction* ($10,000) Employee wages ($11,000) Nondeductible fines and penalties ($3,000) Municipal bond interest $6,000 Short-term capital gains $4,000 Guaranteed payment to Sandra ($3,000)