Question & Answer

What are the advantages and disadvantages of welding compared to other types of assembly operations?

Identify some of the general principles and guidelines for design for assembly.

Longhaul Real Estate exchanged a parcel of land it held for sale in Bryan, Texas, for a warehouse in College Station, Texas. Will the exchange qualify for like-kind treatment?

Crocker Corp. owes D. Yaeger Corp. a 10-year, 10% note in the amount of $330,000 plus $33,000 of accrued interest. The note is due today, December 31, 2014. Because Crocker Corp. is in financial trouble, D. Yaeger Corp. agrees to forgive the accrued interest, $30,000 of the principal, and to extend the maturity date to December 31, 2017. Interest at 10% of revised principal will continue to be due on 12/31 each year. Assume the following present value factors for 3 periods. 21/4% 23/8% 21/2% 25/8% 23/4% 3% Single sum .93543 .93201 .92859 .92521 .92184 .91514 Ordinary annuity of 1 2.86989 2.86295 2.85602 2.84913 2.84226 2.82861 Instructions (a) Compute the new effective-interest rate for Crocker Corp. following restructure. (Hint: Find the interest rate that establishes approximately $363,000 as the present value of the total future cash flows.) (b) Prepare a schedule of debt reduction and interest expense for the years 2014 through 2017. (c) Compute the gain or loss for D. Yaeger Corp. and prepare a schedule of receivable reduction and interest revenue for the years 2014 through 2017. (d) Prepare all the necessary journal entries on the books of Crocker Corp. for the years 2014, 2015, and 2016. (e) Prepare all the necessary journal entries on the books of D. Yaeger Corp. for the years 2014, 2015, and 2016.

Briefly discuss the implications of the financial statement presentation project for the reporting of stockholders’ equity.

What is meant by the term “qualitative characteristics of accounting information”?

Assume the facts in E13-5 except that Matt Broderick Company has chosen not to accrue paid sick leave until used, and has chosen to accrue vacation time at expected future rates of pay without discounting. The company used the following projected rates to accrue vacation time. Year in Which Vacation Projected Future Pay Rates Time Was Earned Used to Accrue Vacation Pay 2013 $10.75 2014 11.60 Instructions (a) Prepare journal entries to record transactions related to compensated absences during 2013 and 2014. (b) Compute the amounts of any liability for compensated absences that should be reported on the balance sheet at December 31, 2013, and 2014.

Identify at least two situations in which important changes in value are not reported in the income statement.

Illustrate the impact on the IS curve of a general increase in interest-rate differentials following a credit market disruption like that experienced during the financial crisis of the late 2000s.

Bobek Inc. has recently reported steadily increasing income. The company reported income of $20,000 in 2011, $25,000 in 2012, and $30,000 in 2013. A number of market analysts have recommended that investors buy the stock because they expect the steady growth in income to continue. Bobek is approaching the end of its fiscal year in 2014, and it again appears to be a good year. However, it has not yet recorded warranty expense. Based on prior experience, this year’s warranty expense should be around $5,000, but some managers have approached the controller to suggest a larger, more conservative warranty expense should be recorded this year. Income before warranty expense is $43,000. Specifically, by recording a $7,000 warranty accrual this year, Bobek could report an increase in income for this year and still be in a position to cover its warranty costs in future years. Instructions (a) What is earnings management? (b) Assume income before warranty expense is $43,000 for both 2014 and 2015 and that total warranty expense over the 2-year period is $10,000. What is the effect of the proposed accounting in 2014? In 2015? (c) What is the appropriate accounting in this situation?

At December 31, 2013, Belmont Company had a net deferred tax liability of $375,000. An explanation of the items that compose this balance is as follows3 Resulting Balances Temporary Differences in Deferred Taxes 1. Excess of tax depreciation over book depreciation $200,000 2. Accrual, for book purposes, of estimated loss contingency from pending lawsuit that is expected to be settled in 2014. The loss will be deducted on the tax return when paid. (50,000) 3. Accrual method used for book purposes and installment method used for tax purposes for an isolated installment sale of an investment. 225,000 $375,000 In analyzing the temporary differences, you find that $30,000 of the depreciation temporary difference will reverse in 2014, and $120,000 of the temporary difference due to the installment sale will reverse in 2014. The tax rate for all years is 40%. Instructions Indicate the manner in which deferred taxes should be presented on Belmont Company’s December 31, 2013, balance sheet.

At the end of 2013, Lucretia McEvil Company has $180,000 of cumulative temporary differences that will result in reporting future taxable amounts as shown on the next page. 2014 $ 60,000 2015 50,000 2016 40,000 2017 30,000 $180,000 Tax rates enacted as of the beginning of 2012 are: 2012 and 2013 40% 2014 and 2015 30% 2016 and later 25% McEvil’s taxable income for 2013 is $320,000. Taxable income is expected in all future years. Instructions (a) Prepare the journal entry for McEvil to record income taxes payable, deferred income taxes, and income tax expense for 2013, assuming that there were no deferred taxes at the end of 2012. (b) Prepare the journal entry for McEvil to record income taxes payable, deferred income taxes, and income tax expense for 2013, assuming that there was a balance of $22,000 in a Deferred Tax Liability account at the end of 2012.

Evaluate grading scheme; professional responsibilities Variance analysis reflects information about actual performance relative to a standard. Variance analysis reports provide managers with information about the performance of employees, from direct labour to supervisors and managers. Grades provide similar information for recruiters who want to hire graduating students. Following is information about Professor Grader’s performance measurement system.   Professor Grader is popular; almost all of his students receive As. This phenomenon is widely attributed to Professor Grader’s superior teaching skills. Grades for this professor’s courses are determined as follows:       A student needs 700 points for an A, 600 points for a B, 500 for a C, and 400 for a D. From the 200 points given for perfect attendance, a student loses 5 points for every class missed (out of 40 class meetings); however, attendance is seldom taken.   If the major assignment paper is 20 pages or longer, 200 points are earned; 10 points are lost for each page less than 20 (thus, a 12-page paper is worth 120 points).   Professor Grader has given the same mid-semester exam for the past 20 years. To reduce the number of exam copies in students’ files, Professor Grader does not return the exams; grades are simply reported to individual students. A student group obtained a copy of the exam 15 years ago. They have chosen not to share the exam with any person not a member of the group; thus Professor Grader usually observes that grades on this exam are nearly normally distributed.   The final exam is a take-home exam that the students have two weeks to complete.   Required (a)     Is it possible to develop a perfect system for measuring student performance in a course? Why? (b)     How much variation is likely in student performance for each of the four graded items? Explain. (c)     Describe the weaknesses in Professor Grader’s grading system as a performance measurement system. (d)     What are Professor Grader’s professional responsibilities to various stakeholders in this situation? (e)     Discuss whether Professor Grader has acted ethically in this situation. Describe the ethical values you use to draw your conclusions. (f)      Is it ethical for students in this situation to access a copy of the prior mid-semester exam or to seek assistance in completing take-home assignments? Does Professor Grader’s system affect the students’ responsibilities? Describe the ethical values you use to draw your conclusions.

A furniture company that makes upholstered chairs and sofas must cut large quantities of fabrics. Many of these fabrics are strong and wear-resistant, which properties make them difficult to cut. What nontraditional process(es) would you recommend to the company for this application? Justify your answer by indicating the characteristics of the process that make it attractive.

In a weak economy, the Fed commonly implements a stimulative monetary policy to lower interest rates and presumes that firms will be more willing to borrow money. Even if banks are willing to lend such funds, why might such a presumption about the willingness of firms to borrow be wrong? What are the consequences if the presumption is wrong? (LO2)

Assume that the government cuts its expenditure and thereby runs a public-sector surplus. (a)  What will this do initially to equilibrium national income? (b)  What will it do to the demand for money and initially to interest rates? (c)  Under what circumstances will it lead to (i) a decrease in money supply; (ii) no change in money supply? (d)  What effect will (i) and (ii) have on the rate of interest compared with its original level?

1.    : Should a multinational organization operate as a tightly integrated, worldwide business system, or would it be more effective to let each national subsidiary operate autonomously? Why?

Give some examples of how correcting problems in one part of the economy will create problems elsewhere.

Assume that a bank expects to attract most of its funds through short-term CDs and would prefer to use most of its funds to provide long-term loans. How could it follow this strategy and still reduce interest rate risk? (LO3)

As part of the year-end accounting process for your company, you are preparing the statement of cash flows according to GAAP. One of your team, a finance major, believes the statement should be prepared to report the change in working capital, because analysts many times use working capital in ratio analysis. Your supervisor would like research conducted to verify the basis for preparing the statement of cash flows. 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) What is the primary objective for the statement of cash flows? Is working capital the basis for meeting this objective? (b) What information is provided in a statement of cash flows? (c) List some of the typical cash inflows and outflows from operations.

When considering C corporations, the IRS checks to see whether salaries paid are too large.  In S corporations, however, it usually must verify that salaries are large enough. Account for this difference.

What are the disadvantages and drawbacks of soldering?

Based on previous technological advancements, make some predictions about future developments in fintech that you believe may occur over the 10 years after your graduation. (LO1)

Give two examples of price discrimination. What category of price discrimination are they? In what ways do the consumers gain or lose? What information would you need to be certain in your answer?

Assume that just some of the members of a common market like the EU adopt full economic and monetary union, including a common currency. What are the advantages and disadvantages to those members joining the full EMU and to those not?