Question & Answer

Neither depreciation on replacement cost nor depreciation adjusted for changes in the purchasing power of the dollar has been recognized as generally accepted accounting principles for inclusion in the primary financial statements. Briefly present the accounting treatment that might be used to assist in the maintenance of the ability of a company to replace its productive capacity.

Identify which itemized deductions are subject to floor limitations, ceiling limitations, or some combination of these limits.

2 A bearing of simple geometry is to be pressed out of bronze powders, using a compacting pressure of 207 MPa. The outside diameter = 44 mm, the inside diameter = 22 mm, and the length of the bearing = 25 mm. What is the required press tonnage to perform this operation?

What is the resistance R of a length of copper wire whose length = 10 m and whose diameter = 0.10 mm? Use Table 4.3 as a reference

Explain how the credit crisis affected the credit risk premium in the commercial paper market. (LO1)

The following are the trial balance and the other information related to Yorkis Perez, a consulting engineer.   1. Fees received in advance from clients $6,000. 2. Services performed for clients that were not recorded by December 31, $4,900. 3. Bad debt expense for the year is $1,430. 4. Insurance expired during the year $480. 5. Equipment is being depreciated at 10% per year. 6. Yorkis Perez gave the bank a 90-day, 10% note for $7,200 on December 1, 2014. 7. Rent of the building is $750 per month. The rent for 2014 has been paid, as has that for January 2015. 8. Office salaries and wages earned but unpaid December 31, 2014, $2,510. Instructions (a) From the trial balance and other information given, prepare annual adjusting entries as of December 31, 2014. (Omit explanations.) (b) Prepare an income statement for 2014, a statement of owner’s equity, and a classified balance sheet. Yorkis Perez withdrew $17,000 cash for personal use during the year.

Why must an S corporation report separately stated items to its shareholders? How is the character of a separately stated item determined?  How does the S corporation report this information to each shareholder?

What are the three committees that debate proposed tax legislation?

Some accountants have said that politicization in the development and acceptance of generally accepted accounting principles (i.e., rule-making) is taking place. Some use the term “politicization” in a narrow sense to mean the influence by governmental agencies, particularly the Securities and Exchange Commission, on the development of generally accepted accounting principles. Others use it more broadly to mean the compromise that results when the bodies responsible for developing generally accepted accounting principles are pressured by interest groups (SEC, American Accounting Association, businesses through their various organizations, Institute of Management Accountants, financial analysts, bankers, lawyers, and so on). Instructions (a) The Committee on Accounting Procedure of the AICPA was established in the mid- to late 1930s and functioned until 1959, at which time the Accounting Principles Board came into existence. In 1973, the Financial Accounting Standards Board was formed and the APB went out of existence. Do the reasons these groups were formed, their methods of operation while in existence, and the reasons for the demise of the first two indicate an increasing politicization (as the term is used in the broad sense) of accounting standard-setting? Explain your answer by indicating how the CAP, the APB, and the FASB operated or operate. Cite specific developments that tend to support your answer. (b) What arguments can be raised to support the “politicization” of accounting rule-making? (c) What arguments can be raised against the “politicization” of accounting rule-making?

When are partnerships eligible to use the cash method of accounting?

A casualty loss from the complete destruction of a personal asset is limited to the lesser of fair market value or the property’s adjusted basis.  Explain the rationale for this rule as opposed to just allowing a deduction for the basis of the asset.

Question: What is the dollar-value method of LIFO inventory valuation? What advantage does the dollar-value method have over the specific goods approach of LIFO inventory valuation? Why will the traditional LIFO inventory costing method and the dollar-value LIFO inventory costing method produce different inventory valuations if the composition of the inventory base changes?

How did the creation of money market deposit accounts influence the overall cost of funds for a savings institution? (LO2)

Which factors might be considered by financial market participants who are assessing whether an increase in money supply growth will affect inflation? (LO5)

Using a diagram like Figure 10.13, demonstrate what will happen under perfect competition when there is an increase in the productivity of a particular type of capital. Consider the effects on the demand, price (rental rate) and quantity supplied of the services of this type of capital.

: Describe functional, divisional, matrix, team, and virtual network approaches to structure

Simms Corp. controlled four domestic subsidiaries and one foreign subsidiary. Prior to the current year, Simms Corp. had excluded the foreign subsidiary from consolidation. During the current year, the foreign subsidiary was included in the financial statements. How should this change in accounting entity be reflected in the financial statements?

Describe ESG investing and how it is allowing firms to become more focused on environmental, social, and governance issues. (LO6)

Kevan, Jerry, and Dave formed Albee LLC. Jerry and Dave each contributed $245,000 in cash. Kevan contributed the following assets:  Kevan: Basis Fair Market Value Cash $ 15,000 $ 15,000 Land* 120,000 440,000 Totals $ 135,000 $ 455,000

The FASB requires a reconciliation between the effective tax rate and the federal government’s statutory rate. Of what benefit is such a disclosure requirement?

Would a cut in benefits affect the Wo curve? If so, with what effect?

: Do you think Kevin could make a go of the business alone? Should he try? Discuss.

Explain the effects of a stimulative monetary policy on a firm’s cost of capital. (LO2)

1. Why may a food shop charge higher prices than supermarkets for ‘essential items’ and yet very similar prices for delicatessen items? 2. Which of these two items is a petrol station more likely to sell at a discount: (a) oil; (b) sweets? Why?

Using the appropriate interest table, answer the following questions. (Each case is independent of the others). (a) What is the future value of 20 periodic payments of $4,000 each made at the beginning of eachperiod and compounded at 8%? (b) What is the present value of $2,500 to be received at the beginning of each of 30 periods, discounted at 10% compound interest? (c) What is the future value of 15 deposits of $2,000 each made at the beginning of each period and compounded at 10%? (Future value as of the end of the fifteenth period.) (d) What is the present value of six receipts of $1,000 each received at the beginning of each period, discounted at 9% compounded interest?