Question & Answer

1.      : Are Connie and her staff on the right track to avoid manager mishaps by defining a new set of leader rules and core values and imposing it by fiat, from the top down?

Identify the segment information that is required to be disclosed by GAAP.

Under what circumstances would (a) contractionary and (b) expansionary policies cause no conflict between internal and external objectives?

What are common book-tax differences relating to corporate charitable contributions?  Are these differences favorable or unfavorable?

] Are both corporations and individuals subject to depreciation recapture when they sell depreciable real property at a gain?  Explain.

Explain why securities firms from the United States have expanded into foreign markets. (LO1)

Rock Creek LLC was recently formed with the following members: Name Tax Year-End Capital/Profits % Mark Banks December 31 35% Highball Properties LLC March 31 25% Chavez Builders Inc. November 30 40% What is the required taxable year-end for Rock Creek LLC?

1.       : Do you agree with the idea that people have innate biases and will automatically discriminate if left to their own devices? Discuss.

1.    How might a corporate management team go about determining whether the company should diversify? What factors should team members consider? What kinds of information should they collect?

How do parents determine who claims the child as a dependent if the child is a qualifying child of both parents when the parents are divorced or file separate tax returns?

Refer to the Partridge Insurance Illustration in the chapter. Explain how         the support departments can be classified as both cost objects and cost        pools in the costing system.

Kobe strongly dislikes SUVs and is appalled that so many are on the road.  He proposes to eliminate the federal income tax and replace it with a $50,000 annual tax per SUV.  Based on the number of SUVs currently owned in the United States, he estimates the tax will generate exactly the amount of tax revenue currently collected from the income tax.  What is wrong with Kobe’s proposal?  What type of forecasting is Kobe likely using?

* In Problem 42.1, the design specification on the part is: diameter = 6.250 ±0.013 cm. (a) What proportion of parts fall outside the tolerance limits? (b) If the process were adjusted so that its mean diameter = 6.250 cm and the standard deviation remained the same, what proportion of parts would fall outside the tolerance limits?

Refer to the data for Barwood Corporation in BE16-6. Repeat the requirements assuming that instead of options, Barwood granted 2,000 shares of restricted stock.

How could we model a credit market disruption and its impact on interest-rate differentials using the Keynesian cross (Keynesian 45° line) diagram?

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.

During the credit crisis of 2008 and 2009, U.S. interest rates were extremely low, which enabled businesses to borrow at a low cost. Holding other factors constant, this should have resulted in a higher number of feasible projects, which should have encouraged businesses to borrow more money and expand. Yet, many businesses that had access to loanable funds were unwilling to borrow during the credit crisis. What other factor changed during this period that more than offset the potentially favorable effect of the low interest rates on project feasibility, therefore discouraging businesses from expanding? (LO2)

By referring to each of the above determinants of supply, identify what would cause (a) the supply of potatoes to fall and (b) the supply of leather to rise.

1.    You are a middle manager helping to implement a new corporate cost-cutting strategy, and you’re meeting skepticism, resistance, and, in some cases, outright hostility from your subordinates. In what ways might you or the company have been able to avoid this situation? Where do you go from here?

To stimulate the sales of its Alladin breakfast cereal, Loptien Company places 1 coupon in each box. Five coupons are redeemable for a premium consisting of a children’s hand puppet. In 2015, the company purchases 40,000 puppets at $1.50 each and sells 480,000 boxes of Alladin at $3.75 a box. From its experience with other similar premium offers, the company estimates that 40% of the coupons issued will be mailed back for redemption. During 2015, 115,000 coupons are presented for redemption. Instructions Prepare the journal entries that should be recorded in 2015 relative to the premium plan.

] Meg O’Brien received a gift of some small-scale jewelry manufacturing equipment that her father had used for personal purposes for many years. Her father originally purchased the equipment for $1,500. Because the equipment is out of production and no longer available, the property is currently worth $4,000. Meg has decided to begin a new jewelry manufacturing trade or business. What is her depreciable basis for depreciating the equipment?

Explain when a taxpayer will be subject to the 10 percent penalty when receiving distributions from a Roth IRA.

Grady is a 45-year-old employee with AMUCK Garbage Corporation. AMUCK pays group-term life insurance premiums for employees, and Grady chose the maximum face amount of $120,000. What amount, if any, of the premium AMUCK paid on his behalf must Grady include in his gross income for the year? Provide a tax authority to support your answer.

Below is the comparative balance sheet for Stevie Wonder Corporation. Dec. 31, Dec. 31, 2014 2013 Cash $ 16,500 $ 21,000 Short-term investments 25,000 19,000 Accounts receivable 43,000 45,000 Allowance for doubtful accounts (1,800) (2,000) Prepaid expenses 4,200 2,500 Inventory 81,500 65,000 Land 50,000 50,000 Buildings 125,000 73,500 Accumulated depreciation—buildings (30,000) (23,000) Equipment 53,000 46,000 Accumulated depreciation—equipment (19,000) (15,500) Delivery equipment 39,000 39,000 Accumulated depreciation—delivery equipment (22,000) (20,500) Patents 15,000 202 $379,400 $300,000 Dec. 31, Dec. 31, 2014 2013 Accounts payable $ 26,000 $ 16,000 Short-term notes payable (trade) 4,000 6,000 Accrued payables 3,000 4,600 Mortgage payable 73,000 53,400 Bonds payable 50,000 62,500 Capital stock 140,000 102,000 Paid-in capital in excess of par 10,000 4,000 Retained earnings 73,400 51,500 $379,400 $300,000 Dividends in the amount of $15,000 were declared and paid in 2014. Instructions From this information, prepare a worksheet for a statement of cash flows. Make reasonable assumptions as appropriate. The short-term investments are considered available-for-sale and no unrealized gains or losses have occurred on these securities.

What are the major sources of cash (inflows) in a statement of cash flows? What are the major uses (outflows) of cash?