Question & Answer

For Warren Corporation, year-end plan assets were $2,000,000. At the beginning of the year, plan assets were $1,780,000. During the year, contributions to the pension fund were $120,000, and benefits paid were $200,000. Compute Warren’s actual return on plan assets.

What is the nature of an installment sale? How do installment sales differ from ordinary credit sales?

1.              If you were Amara, how would you try to conduct yourself at the oil company? Would you act differently from your normal personality? Do you think your approach would be successful? Why or why not?

Where can authoritative IFRS be found related to investments?

Morlan Corporation is preparing its December 31, 2014, financial statements. Two events that occurred between December 31, 2014, and March 10, 2015, when the statements were issued, are described below. 1. A liability, estimated at $160,000 at December 31, 2014, was settled on February 26, 2015, at $170,000. 2. A flood loss of $80,000 occurred on March 1, 2015. What effect do these subsequent events have on 2014 net income?

Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation’s stock. The property transferred to the corporation had the following fair market values and adjusted tax bases.       FMV       Adjusted Tax Basis Inventory$    20,000$        10,000 Building    150,000        100,000 Land    230,000        300,000 Total$  400,000$      410,000   The corporation also assumed a mortgage (liability) of $100,000 attached to the building and land. The fair market value of the corporation’s stock received in the exchange was $300,000. The transaction met the requirements to be tax-deferred under §351.

Could production and consumption take place without money? If you think they could, give examples.

What other types of transport could be directly provided by the government or a local authority?

Ralph owns a building that he is trying to lease. Ralph is a calendar-year, cash-method taxpayer and is trying to evaluate the tax consequences of three different lease arrangements. Under lease 1, the building rents for $500 per month, payable on the first of the next month, and the tenant must make a $500 security deposit that is refunded at the end of the lease. Under lease 2, the building rents for $5,500 per year, payable at the time the lease is signed, but no security deposit is required. Under lease 3, the building rents for $500 per month, payable at the beginning of each month, and the tenant must pay a security deposit of $1,000 that is to be applied toward the rent for the last two months of the lease.

Travis and Alix Weber are equal partners in the Tralix Partnership, which does not have a §754 election in place. Alix sells one-half of her interest (25 percent) to Michael Tomei for $30,000 cash. Just before the sale, Alix’s basis in her entire partnership interest is $75,000, including her $30,000 share of the partnership liabilities. Tralix’s assets on the sale date are as follows: Basis Fair Market Value Cash $ 40,000 $ 40,000 Inventory 30,000 90,000 Land held for investment 80,000 50,000    Totals $ 150,000 $ 180,000 a. What are the amount and character of Alix’s recognized gain or loss on the sale? b. What is Alix’s basis in her remaining partnership interest? c. What is Michael’s basis in his partnership interest? d. What is the effect of the sale on the partnership’s basis in the assets?

Why is an overvalued exchange rate likely to encourage the use of capital-intensive technology?

You have been assigned to examine the financial statements of Zarle Company for the year ended December 31, 2014. You discover the following situations. 1. Depreciation of $3,200 for 2014 on delivery vehicles was not recorded. 2. The physical inventory count on December 31, 2013, improperly excluded merchandise costing $19,000 that had been temporarily stored in a public warehouse. Zarle uses a periodic inventory system. 3. A collection of $5,600 on account from a customer received on December 31, 2014, was not recorded until January 2, 2015. 4. In 2014, the company sold for $3,700 fully depreciated equipment that originally cost $25,000. The company credited the proceeds from the sale to the Equipment account. 5. During November 2014, a competitor company filed a patent-infringement suit against Zarle claiming damages of $220,000. The company’s legal counsel has indicated that an unfavorable verdict is probable and a reasonable estimate of the court’s award to the competitor is $125,000. The company has not reflected or disclosed this situation in the financial statements. 6. Zarle has a portfolio of trading securities. No entry has been made to adjust to market. Information on cost and fair value is as follows. Cost Fair Value December 31, 2013 $95,000 $95,000 December 31, 2014 $84,000 $82,000 7. At December 31, 2014, an analysis of payroll information shows accrued salaries of $12,200. The Salaries and Wages Payable account had a balance of $16,000 at December 31, 2014, which was unchanged from its balance at December 31, 2013. 8. A large piece of equipment was purchased on January 3, 2014, for $40,000 and was charged to Maintenance and Repairs Expense. The equipment is estimated to have a service life of 8 years and no residual value. Zarle normally uses the straight-line depreciation method for this type of equipment. 9. A $12,000 insurance premium paid on July 1, 2013, for a policy that expires on June 30, 2016, was charged to insurance expense. 10. A trademark was acquired at the beginning of 2013 for $50,000. No amortization has been recorded since its acquisition. The maximum allowable amortization period is 10 years. Instructions Assume the trial balance has been prepared but the books have not been closed for 2014. Assuming all amounts are material, prepare journal entries showing the adjustments that are required. (Ignore income tax considerations.)

SCC corporation (a calendar-year C corporation) has a net operating loss (NOL) carryover to 2024 in the amount of $30,000.  How much tax will SCC pay for 2024 if it reports taxable income from operations of $20,000 before considering loss carryovers under the following assumptions?   a. The NOL originated in 2017.

What is the role of rewards and incentives for executives in reducing    agency costs?

Explain how the yield on a foreign money market security would be affected if the foreign currency denominating that security declined to a significant degree. (LO3)

The drive unit of a positioning table for a component insertion machine is based on a stepping motor and leadscrew mechanism. The specifications are for the table speed to be 25 mm/s over a 600 mm range and for the accuracy to be 0.025 mm. The pitch of the leadscrew = 4.5 mm, and the gear ratio = 5:1 (5 turns of the motor for each turn of the leadscrew). The mechanical errors in the motor, gear box, leadscrew, and table connection are characterized by a normal distribution with standard deviation = 0.005 mm. Determine (a) the minimum number of step angles in the stepping motor, and (b) the frequency of the pulse train required to drive the table at the desired maximum speed for the stepping motor in part (a).

Equipment was purchased on January 2, 2014, for $24,000, but no portion of the cost has been charged to depreciation. The corporation wishes to use the straight-line method for these assets, which have been estimated to have a life of 10 years and no salvage value. What effect does this error have on net income in 2014? What entry is necessary to correct for this error, assuming that the books are not closed for 2014?

Describe how a business element is reflected in the requirements to deduct moving expenses and how Congress limited this deduction to substantial moves.

Balanced scorecard measures for four perspectives Part of the process for developing a balanced scorecard is to identify one or more measures for each perspective.   Required Categorise each of the following potential balanced scorecard measures according to the following perspectives:   F     Financial C    Customer I      Internal business process L     Learning and growth (a)       Percentage of customer orders delivered on time (b)       Ratio of research and development cost to number of new products developed (c)        Economic value added (EVA) (d)       Number of hours of employee training (e)        Direct labour price variance (f)        Market share (g)       Percentage of customer orders delivered without error (h)       Days in accounts receivables (i)        Throughput time (j)        Direct materials efficiency variance (k)       Asset turnover (l)        Employee retention rate (m)      Percentage of bad debts collected (n)       Customer satisfaction ratings (o)       Number of degrees and certificates held per employee or department (p)       Percentage of purchase orders that are error free

What is the difference between dry pressing and semi-dry pressing of traditional ceramic parts?

An extruder has a barrel diameter = 5.0 in and length = 12 ft. The extruder screw rotates at 50 rev/min; it has channel depth = 0.30 in and flight angle = 17.7°. The plastic melt has a shear viscosity = 100 x 10-4 lb-sec/in2 . Find: (a) the extruder characteristic, (b) the values of Q and p at the operating point, given that the die characteristic is Qx = 0.00150 p.

The qualitative characteristics that make accounting information useful for decision-making purposes are as follows. Relevance Neutrality Verifi ability Faithful representation Completeness Understandability Predictive value Timeliness Comparability Confi rmatory value Materiality Free from error Instructions Identify the appropriate qualitative characteristic(s) to be used given the information provided below. (a) Qualitative characteristic being employed when companies in the same industry are using the same accounting principles. (b) Quality of information that confirms users’ earlier expectations. (c) Imperative for providing comparisons of a company from period to period. (d) Ignores the economic consequences of a standard or rule. (e) Requires a high degree of consensus among individuals on a given measurement. (f) Predictive value is an ingredient of this fundamental quality of information. (g) Four qualitative characteristics that are related to both relevance and faithful representation. (h) An item is not recorded because its effect on income would not change a decision. (i) Neutrality is an ingredient of this fundamental quality of accounting information. (j) Two fundamental qualities that make accounting information useful for decision-making purposes. (k) Issuance of interim reports is an example of what enhancing quality of relevance?

In what situations do partners need to know the tax basis in their partnership interests?

Wasatch Corp. (WC) received a $200,000 dividend from Tager Corporation (TC).  WC owns 15 percent of the TC stock.  Compute WC’s deductible DRD in each of the following situations:

Earnhart Corporation has outstanding 3,000,000 shares of common stock of a par value of $10 each. The balance in its Retained Earnings account at January 1, 2014, was $24,000,000, and it then had Paid-in Capital in Excess of Par—Common Stock of $5,000,000. During 2014, the company’s net income was $4,700,000. A cash dividend of $0.60 a share was declared on May 5, 2014, and was paid June 30, 2014, and a 6% stock dividend was declared on November 30, 2014, and distributed to stockholders of record at the close of business on December 31, 2014. You have been asked to advise on the proper accounting treatment of the stock dividend. The existing stock of the company is quoted on a national stock exchange. The market price of the stock has been as follows. October 31, 2014 $31 November 30, 2014 $34 December 31, 2014 $38 Instructions (a) Prepare the journal entry to record the declaration and payment of the cash dividend. (b) Prepare the journal entry to record the declaration and distribution of the stock dividend. (c) Prepare the stockholders’ equity section (including schedules of retained earnings and additionalpaid-in capital) of the balance sheet of Earnhart Corporation for the year 2014 on the basis of the foregoing information. Draft a note to the financial statements setting forth the basis of the accounting for the stock dividend, and add separately appropriate comments or explanations regarding the basis chosen.