Question & Answer

Why is the distinction between paid-in capital and retained earnings important?

Did tax law changes effective in 2018 increase or decrease the amount of the double tax on C corporation income?  Explain.

A critic recently claimed that hedge funds increase market volatility when they publicize (and document) that a public corporation exaggerated its earnings. The critic argued that hedge funds should not be allowed to make such public statements and should not be allowed to take short positions that bet against the firm that is being criticized. Write a short essay that supports or refutes this opinion.

If importers and exporters believe that the exchange rate has ‘bottomed out’, what will they do?

Acme Corporation has 1,000 shares outstanding. Joan and Bill are married, and they each own 20 shares of Acme. Joan and Bill’s daughter, Shirley, also owns 20 shares of Acme.  Joan is an equal partner with Jeri in the J&J partnership, and this partnership owns 60 shares of Acme. Jeri is not related to Joan or Bill. How many shares of Acme is Shirley deemed to own under the stock attribution rules?

In year 2, Julio and Milania each received distributions of $25,000 from Falcons Corporation. a.  What amount of ordinary income and separately stated items are allocated to them for year 2 based on the information above? Assume that Falcons Corporation has $200,000 of qualified property (unadjusted basis).

The shear strength of a certain work material = 50,000 lb/in2 . An orthogonal cutting operation is performed using a tool with a rake angle = 20° at the following cutting conditions: cutting speed = 100 ft/min, chip thickness before the cut = 0.015 in, and width of cut = 0.150 in. The resulting chip thickness ratio = 0.50. Determine (a) the shear plane angle, (b) shear force, (c) cutting force and thrust force, and (d) friction force.

1.    : Discuss some of the ways that organizations and jobs have changed over the past ten years. What changes do you anticipate over the next ten years? How might these changes affect the manager’s job and the skills that a manager needs to be successful.

Describe the annualized income method for determining a corporation’s required estimated tax payments.  What advantages does this method have over other methods?

Using the facts from the previous problem, how would your answer change if Manny’s after-tax rate of return were 8 percent?

FIFO, average-cost, and LIFO methods are often used instead of specific identification for inventory valuation purposes. Compare these methods with the specific identification method, discussing the theoretical propriety of each method in the determination of income and asset valuation.

In some instances, accounting principles require a departure from valuing inventories at cost alone. Determine the proper unit inventory price in the following cases. Cases 1 2 3 4 5 Cost $15.90 $16.10 $15.90 $15.90 $15.90 Net realizable value 14.50 19.20 15.20 10.40 16.40 Net realizable value less normal profi t 12.80 17.60 13.75 8.80 14.80 Market (replacement cost) 14.80 17.20 12.80 9.70 16.80

This year, Darrel’s distributive share from Alcove Partnership includes $6,000 of interest income, $3,000 of dividend income, and $70,000 ordinary business income. a. Assume that Darrel materially participates in the partnership. How much of his distributive share from Alcove Partnership is potentially subject to the net investment income tax? b. Assume that Darrel does not materially participate in the partnership. How much of his distributive share from Alcove Partnership is potentially subject to the net investment income tax?

What is a buckyball?

Imagine that you are an ambassador of a developing country at an international conference. What would you try to persuade the rich countries to do in order to help you and other poor countries overcome the debt problem? How would you set about persuading them that it was in their own interests to help you?

Employees at your company disagree about the accounting for sales returns. The sales manager believes that granting more generous return provisions and allowing customers to order items on a bill and hold basis can give the company a competitive edge and increase sales revenue. The controller cautions that, depending on the terms granted, loose return or bill and hold provisions might lead to non-IFRS revenue recognition. The company CFO would like you to research the issue to provide an authoritative answer. 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 respond to the following questions. (Provide paragraph citations.) (a) What is the authoritative literature addressing revenue recognition when right of return exists? (b) What is meant by “right of return”? “Bill and hold”? (c) When there is a right of return, what conditions must the company meet to recognize the revenue at the time of sale? (d) What factors may impair the ability to make a reasonable estimate of future returns? (e) When goods are sold on a bill and hold basis, what conditions must be met to recognize revenue upon receipt

Explain why, if the firm can practise first-degree price discrimination by selling every unit at the maximum price each consumer is prepared to pay, its revenue from selling 200 units will be the sum of both the shaded areas in Figure 8.13.

Participative strategic planning process and benefits, manager behavior (This problem assumes knowledge from management classes) Quantum Computers produces and sells laptop computers. The entity is currently deciding whether to continue concentrating on the laptop computer market or to expand by entering the highly competitive computer desktop workstation market.   Most of the management staff has been with Quantum for a long time. Michael Mitchem, Quantum’s president, wants his management staff to assist him in Quantum’s strategic planning process. Mitchem has scheduled a three-day offsite meeting for the management staff to join together for the entity’s strategic planning process.   Required (a)     What functional areas should be discussed during the strategic planning process? (b)     Identify at least six factors to be considered in a thorough strategic planning process that will move a company such as Quantum to another level of product development. (c)     Identify at least three benefits that Quantum can derive from a participatory strategic planning process. (d)     Discuss the expected behavior of the managers at Quantum who participate in the three-day offsite strategic planning meeting.

Presented below are two different situations related to Mckee Corporation’s debt obligations. Mckee’s next financial reporting date is December 31, 2014. The financial statements are authorized for issuance on March 1, 2015. 1. Mckee has a long-term obligation of $400,000, which is maturing over 4 years in the amount of $100,000 per year. The obligation is dated November 1, 2014, and the first maturity date is November 1, 2015. 2. Mckee has a short-term obligation due February 15, 2015. Its lender agrees to extend the maturity date of this loan to February 15, 2017. The agreement for extension is signed on January 15, 2015.

In the previous problem, suppose an industrial robot cell were installed to replace the welder. The cell consists of the robot (using GMAW instead of SMAW or FCAW), two welding fixtures, and the fitter who loads and unloads the parts. With two fixtures, fitter and robot work simultaneously, the robot welding at one fixture while the fitter unloads and loads at the other. At the end of each work cycle, they switch places. The electrode wire spool must be changed every five workparts, which task requires 5.0 minutes and is accomplished by the fitter. Determine (a) arc time and (b) production rate for this work cell.

Contrast ceiling and floor limitations, and provide an example of each.

On July 1 of year 1, Riverside Corp. (RC), a calendar-year taxpayer, acquired the assets of another business in a taxable acquisition. When the purchase price was allocated to the assets purchased, RC determined it had purchased $1,200,000 of goodwill for both book and tax purposes.  At the end of year 1, the auditors for RC determined that the goodwill had not been impaired during the year.  In year 2, however, the auditors concluded that $200,000 of the goodwill had been impaired, and they required RC to write down the goodwill by $200,000 for book purposes.

What is extrusion?

What are the different bases for stock valuation when assets other than cash are received for issued shares of stock?

Izzy Inc. purchased a patent for $350,000 which has an estimated useful life of 10 years. Its pattern of use or consumption cannot be reliably determined. Prepare the entry to record the amortization of the patent in its first year of use.