Question & Answer

You run into Greg Norman at a party and begin discussing financial statements. Greg says, “I prefer the single-step income statement because the multiple-step format generally overstates income.” How should you respond to Greg?

What are some of the weaknesses of ceramics that might be corrected in fiber-reinforced ceramic matrix composites?

WCC Corp. has a $100,000 net operating loss carryover into 2024. Assume that it reported $75,000 of taxable income in 2024 (before the net operating loss deduction) and $30,000 of taxable income in 2025 (before the net operating loss deduction).

Name the two categories of component mounting to a printed circuit board.

How do the tax consequences of S corporation liquidating distributions differ from the tax consequences of S corporation operating distributions at both the corporate and shareholder levels?

To estimate revenues, costs and profits across a range of activity, we usually assume that the cost and revenue functions are linear. What are the specific underlying assumptions for linear cost and revenue functions, and how reasonable are these assumptions?

A turning operation is made with a rake angle of 10°, a feed of 0.010 in/rev and a depth of cut = 0.100 in. The shear strength of the work material is known to be 50,000 lb/in2 , and the chip thickness ratio is measured after the cut to be 0.40. Determine the cutting force and the feed force. Use the orthogonal cutting model as an approximation of the turning process.

In the current year, Jolt Inc. reported $40,000 of taxable income before any charitable contribution deduction. Jolt contributed $10,000 this year to Goodwill Industries, a public charity. Compute Jolt’s current E&P.

A turning operation is performed on an engine lathe using a tool with zero rake angle in the direction of chip flow. The work material is an alloy steel with hardness = 325 Brinell hardness. The feed is 0.015 in/rev, depth of cut is 0.125 in and cutting speed is 300 ft/min. After the cut, the chip thickness ratio is measured to be 0.45. (a) Using the appropriate value of specific energy from Table 21.2, compute the horsepower at the drive motor, if the lathe has an efficiency = 85%. (b) Based on horsepower, compute your best estimate of the cutting force for this turning operation. Use the orthogonal cutting model as an approximation of the turning process.

Keyser Beverage Company reported the following items in the most recent year. Net income $40,000 Dividends paid 5,000 Increase in accounts receivable 10,000 Increase in accounts payable 7,000 Purchase of equipment (capital expenditure) 8,000 Depreciation expense 4,000 Issue of notes payable 20000,3RIEF EXERCISES Compute net cash provided by operating activities, the net change in cash during the year, and free cash flow.

The net income per books of Linda Patrick Company was determined without knowledge of the errors indicated. Net Income Error in Ending Year per Books Inventory 2009 $50,000 Overstated $ 3,000 2010 52,000 Overstated 9,000 2011 54,000 Understated 11,000 2012 56,000 No error 2013 58,000 Understated 2,000 2014 60,000 Overstated 8,000 Instructions Prepare a worksheet to show the adjusted net income figure for each of the 6 years after taking into account the inventory errors.

What is rapid prototyping? Provide a definition of the term.

Tawana owns and operates a sole proprietorship and has a 37 percent marginal tax rate. She provides her son, Jonathon, $8,000 a year for college expenses. Jonathon works as a pizza delivery person every fall and has a marginal tax rate of 15 percent.  a. What could Tawana do to reduce her family tax burden?  b. How much pretax income does it currently take Tawana to generate the $8,000 (after taxes) given to Jonathon?  c. If Jonathon worked for his mother’s sole proprietorship, what salary would she have to pay him to generate $8,000 after taxes (ignoring any Social Security, Medicare, or self-employment tax issues)?  d. How much money would the strategy in part (c) save?

There exists a view that the UK is too small an economy to benefit from competition in many industries, with firms failing to reach minimum efficient scale. What does this imply for competition policy?

For what reasons might the price of overseas holidays rise? In each case identify whether these are reasons affecting demand or supply (or both).

Explain the differences between general and specific knowledge. Give an example of an industry where knowledge is quite general and an example of an industry that requires specific knowledge.

Addison Manufacturing holds a large portfolio of debt and equity securities as an investment. The fair value of the portfolio is greater than its original cost, even though some securities have decreased in value. Sam Beresford, the financial vice president, and Angie Nielson, the controller, are near year-end in the process of classifying for the first time this securities portfolio in accordance with GAAP. Beresford wants to classify those securities that have increased in value during the period as trading securities in order to increase net income this year. He wants to classify all the securities that have decreased in value as available-for-sale (the equity securities) and as held-to-maturity (the debt securities). Nielson disagrees. She wants to classify those securities that have decreased in value as trading securities and those that have increased in value as available-for-sale (equity) and held-to-maturity (debt). She contends that the company is having a good earnings year and that recognizing the losses will help to smooth the income this year. As a result, the company will have built-in gains for future periods when the company may not be as profitable. Instructions Answer the following questions. (a) Will classifying the portfolio as each proposes actually have the effect on earnings that each says it will? (b) Is there anything unethical in what each of them proposes? Who are the stakeholders affected by their proposals? (c) Assume that Beresford and Nielson properly classify the entire portfolio into trading, availablefor- sale, and held-to-maturity categories. But then each proposes to sell just before year-end the securities with gains or with losses, as the case may be, to accomplish their effect on earnings. Is this unethical?

Presented below are various account balances of K.D. Lang Inc. (a) Unamortized premium on bonds payable, of which $3,000 will be amortized during the next year. (b) Bank loans payable of a winery, due March 10, 2018. (The product requires aging for 5 years before sale.) (c) Serial bonds payable, $1,000,000, of which $200,000 are due each July 31. (d) Amounts withheld from employees’ wages for income taxes. (e) Notes payable due January 15, 2017. (f) Credit balances in customers’ accounts arising from returns and allowances after collection in full of account. (g) Bonds payable of $2,000,000 maturing June 30, 2016. (h) Overdraft of $1,000 in a bank account. (No other balances are carried at this bank.) (i) Deposits made by customers who have ordered goods. Instructions Indicate whether each of the items above should be classified on December 31, 2014, as a current liability, a long-term liability, or under some other classification. Consider each one independently from all others; that is, do not assume that all of them relate to one particular business. If the classification of some of the items is doubtful, explain why in each case.

Under what conditions will weighted average and FIFO process costing consistently produce similar equivalent unit costs?

How might multiplier effects (the principle of cumulative causation) lead to prosperous regions becoming more prosperous and less prosperous regions falling even further behind?

Are an employee’s entire wages subject to the FICA tax? Explain.

On January 1, 2013, when its $30 par value common stock was selling for $80 per share, Plato Corp. issued $10,000,000 of 8% convertible debentures due in 20 years. The conversion option allowed the holder of each $1,000 bond to convert the bond into five shares of the corporation’s common stock. The debentures were issued for $10,800,000. The present value of the bond payments at the time of issuance was $8,500,000, and the corporation believes the difference between the present value and the amount paid is attributable to the conversion feature. On January 1, 2014, the corporation’s $30 par value common stock was split 2 for 1, and the conversion rate for the bonds was adjusted accordingly. On January 1, 2015, when the corporation’s $15 par value common stock was selling for $135 per share, holders of 30% of the convertible debentures exercised their conversion options. The corporation uses the straightline method for amortizing any bond discounts or premiums. Instructions (a) Prepare in general journal form the entry to record the original issuance of the convertible debentures. (b) Prepare in general journal form the entry to record the exercise of the conversion option, using the book value method  Show supporting computations in good form.

What is an intermediate phase in the context of alloys?

The Fed attempts to use monetary policy to control the level of inflation and economic growth in the United States. Write a short essay on how the government’s fiscal policy can make the Fed’s role more difficult. Specifically, assume that the administration plans to implement a new program that will expand the government benefits provided to most people in the country. The new program will likely increase the budget deficit. Discuss the impact of this policy on interest rates and explain how this makes the Fed’s role more challenging.

(a) Name the important refractory metals. (b) What does the term refractory mean?