Question & Answer

Define nominal surface.

Would redistributing incomes from the rich to the poor reduce the overall problem of scarcity?

Erickson Company sponsors a defined benefit pension plan. The corporation’s actuary provides the following information about the plan. January 1, December 31, 2014 2014 Vested benefi t obligation $1,500 $1,900 Accumulated benefi t obligation 1,900 2,730 Projected benefi t obligation 2,500 3,300 Plan assets (fair value) 1,700 2,620 Settlement rate and expected rate of return 10% Pension asset/liability 800 ? Service cost for the year 2014 400 Contributions (funding in 2014) 700 Benefi ts paid in 2014 200 Instructions (a) Compute the actual return on the plan assets in 2014. (b) Compute the amount of the other comprehensive income (G/L) as of December 31, 2014. (Assume the January 1, 2014, balance was zero.) (c) Compute the amount of net gain or loss amortization for 2014 (corridor approach). (d) Compute pension expense for 2014.

There are 19 correct answers in the following multiple choice questions (some questions have multiple answers that are correct). To attain a perfect score on the quiz, all correct answers must be given. Eachcorrect answer is worth 1 point. Each omitted answer or wrong answer reduces the score by 1 point, and each additional answer beyond the correct number of answers reduces the score by 1 point. Percentage score on the quiz is based on the total number of correct answers. 5.1 A tolerance is which one of the following: (a) clearance between a shaft and a mating hole, (b) measurement error, (c) total permissible variation from a specified dimension, or (d) variation in manufacturing? 5.2 Which of the following two geometric terms have the same meaning: (a) circularity, (b) concentricity, (c) cylindricity, and (d) roundness? 5.3 A surface plate is most typically made of which one of the following materials: (a) aluminum oxide ceramic, (b) cast iron, (c) granite, (d) hard polymers, or (e) stainless steel? 5.4 An outside micrometer would be appropriate for measuring which of the following (two correct answers): (a) hole depth, (b) hole diameter, (c) part length, (d) shaft diameter, and (e) surface roughness? 5.5 In a GO/NO-GO gage, which one of the following best describes the function of the GO gage: (a) checks limit of maximum tolerance, (b) checks maximum material condition, (c) checks maximum size, (d) checks minimum material condition, or (e) checks minimum size? 5.6 Which of the following are likely to be GO/NO-GO gages (three correct answers): (a) gage blocks, (b) limit gage, (c) master gage, (d) plug gage, and (e) snap gage? 5.7 Surface texture includes which of the following characteristics of a surface (three correct answers): (a) deviations from the nominal surface, (b) feed marks of the tool that produced the surface, (c) hardness variations, (d) oil films, and (e) surface cracks? 5.8 Surface texture is included within the scope of surface integrity: (a) true or (b) false? 5.9 Thermal energy is normally associated with which of the following changes in the altered layer (three best answers): (a) cracks, (b) hardness variations, (c) heat affected zone, (d) plastic deformation, (e) recrystallization, or (f) voids? 5.10 Which one of the following manufacturing processes will likely result in the best surface finish: (a) arc welding, (b) grinding, (c) machining, (d) sand casting, or (e) sawing? 5.11 Which one of the following manufacturing processes will likely result in the worst surface finish: (a) cold rolling, (b) grinding, (c) machining, (d) sand casting, or (e) sawing?

At December 31, 2013, the available-for-sale equity portfolio for Steffi Graf, Inc. is as follows. Security Cost Fair Value Unrealized Gain (Loss) A $17,500 $15,000 ($2,500) B 12,500 14,000 1,500 C 23,000 25,500 2,500 Total $53,000 $54,500 1,500 Previous fair value adjustment balance—Dr. 400 Fair value adjustment—Dr. $1,100 On January 20, 2014, Steffi Graf, Inc. sold security A for $15,100. The sale proceeds are net of brokerage fees. Instructions (a) Prepare the adjusting entry at December 31, 2013, to report the portfolio at fair value. (b) Show the balance sheet presentation of the investment-related accounts at December 31, 2013. (Ignore notes presentation.) (c) Prepare the journal entry for the 2014 sale of security A.

What layer material is produced by thermal oxidation in IC fabrication?

How do money market funds differ from other types of mutual funds in terms of how they use the money invested by shareholders? Which securities do MMFs invest in most often? How can an MMF accommodate shareholders who wish to sell their shares when the amount of proceeds received from selling new shares is less than the amount needed to cover the withdrawals? (LO3)

Monat Company has grown rapidly since its founding in 2004. To instill loyalty in its employees, Monat is contemplating establishment of a defined benefit plan. Monat knows that lenders and potential investors will pay close attention to the impact of the pension plan on the company’s financial statements, particularly any gains or losses that develop in the plan. Monat has asked you to conduct some research on the accounting for gains and losses in a defined benefit plan. 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) Briefly describe how pension gains and losses are accounted for. (b) Explain the rationale behind the accounting method described in part (a). (c) What is the related pension asset or liability that will show up on the balance sheet? When will each of these situations occur?

How are tax credits and tax deductions similar?  How are they dissimilar?

0 A riser in the shape of a sphere is to be designed for a sand casting mold. The casting is a rectangular plate, with length = 200 mm, width = 100 mm, and thickness = 18 mm. If the total solidification time of the casting itself is known to be 3.5 min, determine the diameter of the riser so that it will take 25% longer for the riser to solidify

When a U.S. taxpayer pays income taxes to a foreign government, what options does the taxpayer have when determining how to treat the expenditure on their U.S. individual income tax return?

Dresser Company’s weekly payroll, paid on Fridays, totals $8,000. Employees work a 5-day week. Prepare Dresser’s adjusting entry on Wednesday, December 31, and the journal entry to record the $8,000 cash payment on Friday, January 2.

1. Draw Kate’s and Simon’s demand curves for potatoes on one diagram. Note that you will use the same vertical scale as in Figure 2.1, but you will need a quite different horizontal scale. 2. At what price is their demand the same? 3. What explanations could there be for the quite different shapes of their two demand curves? 4. Assume that Kate and Simon are the only two consumers in the market. Show how the market demand curve can be derived from their individual demand curves.

Ellison Inc., a manufacturer of steel school lockers, plans to purchase a new punch press for use in its manufacturing process. After contacting the appropriate vendors, the purchasing department received differing terms and options from each vendor. The Engineering Department has determined that each vendor’s punch press is substantially identical and each has a useful life of 20 years. In addition, Engineering has estimated that required year-end maintenance costs will be $1,000 per year for the first 5 years, $2,000 per year for the next 10 years, and $3,000 per year for the last 5 years. Following is each vendor’s sale package. Vendor A: $55,000 cash at time of delivery and 10 year-end payments of $18,000 each. Vendor A offers all its customers the right to purchase at the time of sale a separate 20-year maintenance service contract, under which Vendor A will perform all year-end maintenance at a one-time initial cost of $10,000. Vendor B: Forty semiannual payments of $9,500 each, with the first installment due upon delivery. Vendor B will perform all year-end maintenance for the next 20 years at no extra charge. Vendor C: Full cash price of $150,000 will be due upon delivery. Instructions Assuming that both Vendors A and B will be able to perform the required year-end maintenance, that Ellison’s cost of funds is 10%, and the machine will be purchased on January 1, from which vendor should the press be purchased?

How are gains and losses from extinguishment of a debt classified in the income statement? What disclosures are required of such transactions?

{Research} Last year Acme paid Ralph $15,000 to install a new air-conditioning unit at its headquarters building.  The air conditioner did not function properly, and this year Acme requested that Ralph return the payment.  Because Ralph could not repair one critical part in the unit, he refunded the cost of the repair, $5,000, to Acme. a.       Is Ralph required to include the $15,000 payment he received last year in his gross income from last year? b.       What are the tax implications of the repayment if Ralph was in the 35 percent tax bracket when he received the $15,000 payment from Acme, but was in the 28 percent tax bracket when he refunded $5,000 to Acme? c.       How would you answer part b. if Ralph refunded $2,500 to Acme and not $5,000?

Compare and contrast computing the depreciation deduction for tangible personal property versus computing the depreciation deduction for real property under both the regular tax and alternative tax systems.

Explain the circumstances under which an increase in pensions and child benefit would (a) increase national income; (b) leave national income unaffected; (c) decrease national income.

Define “cost” as applied to the valuation of inventories.

Farell is a member of Sierra Vista LLC. Although Sierra Vista is involved in a number of different business ventures, it is not currently involved in real estate either as an investor or as a developer. On January 1, year 1, Farell has a $100,000 tax basis in his LLC interest that includes his $90,000 share of Sierra Vista’s general liabilities. By the end of the year, Farell’s share of Sierra Vista’s general liabilities have increased to $100,000. Because of the time he spends in other endeavors, Farell does not materially participate in Sierra Vista. His share of the Sierra Vista losses for year 1 is $120,000. As a partner in the Riverwoods Partnership, he also has year 1, Schedule K-1 passive income of $5,000. Farell is single and has no other sources of business income or loss. a. Determine how much of the Sierra Vista loss Farell will currently be able to deduct on his tax return for year 1, and list the losses suspended due to tax basis, at-risk, and passive activity loss limitations. b. Assuming Farell’s Riverwoods K-1 indicates passive income of $30,000, determine how much of the Sierra Vista loss he will ultimately be able to deduct on his tax return for year 1, and list the losses suspended due to tax basis, at-risk, and passive activity loss limitations. c. Assuming Farell is deemed to be an active participant in Sierra Vista, determine how much of the Sierra Vista loss he will ultimately be able to deduct on his tax return for year 1, and list the losses suspended due to tax basis, at-risk, and passive activity loss limitations. d. Assuming Farell is deemed to be an active participant in Sierra Vista, and he also has a $300,000 loss from a sole proprietorship, determine how much total trade or business loss Farell will deduct on his return in year 1.

Homer Winslow and Jane Alexander are discussing various aspects of the FASB’s concepts statement on the objective of financial reporting. Homer indicates that this pronouncement provides little, if any, guidance to the practicing professional in resolving accounting controversies. He believes that the statement provides such broad guidelines that it would be impossible toapply the objective to present-day reporting problems. Jane concedes this point but indicates that the objective is still needed to provide a starting point for the FASB in helping to improve financial reporting. Instructions (a) Indicate the basic objective established in the conceptual framework. (b) What do you think is the meaning of Jane’s statement that the FASB needs a starting point to resolve accounting controversies?

How would raising interest rates in this way affect the balance between the current and financial accounts of the balance of payments?

Amanda would like to organize BAL as either an LLC (taxed as a sole proprietorship) or a C corporation. In either form, the entity is expected to generate an 8 percent annual before-tax return on a $500,000 investment. Amanda’s marginal income tax rate is 37 percent, and her tax rate on qualified dividends and net capital gains is 20%. Assume that BAL will distribute half of its after-tax earnings every year as a dividend if it is formed as a C corporation. Assume the income is not eligible for the QBI deduction. Further, when computing your answers, include the self-employment tax (use a 2.9% marginal rate for self-employment income because Amanda has salary in excess of the wage base limit) but not the additional Medicare tax or the net investment income tax.    a. How much cash after taxes would Amanda receive from her investment in the first year if BAL is organized as an LLC? What if BAL is organized as a C corporation?  b. What is the overall tax rate on BAL’s income in the first year if BAL is organized as an LLC or it is organized as a C corporation? c. At a high level, explain the primary factors contributing to differences between entities in cash flow and overall tax rate on business income.

Why would it be difficult for a central bank to predict the precise effect on money supply of open-market operations?

Rider Company negotiates a forward swap, to begin two years from now, in which it will swap fixed payments for floating-rate payments. What will be the effect on Rider if interest rates rise substantially over the next two years? That is, would Rider be better off by using this forward swap than if it had simply waited two years before negotiating the swap? Explain. (LO2)