Question & Answer

Travis is a professional landscaper. He provides his clients with a one-year (12-month) warranty for retaining walls he installs. In June of this year, Travis installed a wall for an important client, Sheila. In early November, Sheila informed Travis that the retaining wall had failed. To repair the wall, Travis paid $700 cash for additional stone that he delivered to Sheila’s location on November 20 of this year. Travis also offered to pay a mason $800 to repair the wall. Due to some bad weather and the mason’s work backlog, the mason agreed to begin the work by the end of January of the next year. Even though Travis expected the mason to finish the project by end of February, Travis informed the mason that he would only pay the mason the $800 when he completed the job.  a) Assuming Travis is an accrual-method taxpayer, how much can he deduct this year from these activities? b) Assuming Travis is a cash-method taxpayer, how much can he deduct this year from these activities?

What are the advantages and disadvantages of using prepreg material for lay-up of composites according to the composite video?

Treasure Land Corporation incurred the following costs in 2014. Cost of laboratory research aimed at discovery of new knowledge $120,000 Cost of testing in search for product alternatives 100,000 Cost of engineering activity required to advance the design of a product to the manufacturing stage 210,000 Prototype testing subsequent to meeting economic viability 75,000 $505,000 Prepare the necessary 2014 journal entry(ies) for Treasure Land.

The credit crisis that occurred in 2008–2009 could also be called an equity crisis due to systemic risk. Write a short essay to explain the impact of the credit markets on the equity markets during the crisis.

In a turning operation on low carbon steel (175 BHN), cutting speed = 400 ft/min, feed = 0.010 in/rev, and depth of cut = 0.075 in. The lathe has a mechanical efficiency = 0.85. Based on the unit horsepower values in Table 21.2, determine (a) the horsepower consumed by the turning operation and (b) the horsepower that must be generated by the lathe.

Bradshaw Company experienced a loss that was deemed to be both unusual in nature and infrequent in occurrence. How should Bradshaw report this item in accordance with IFRS?

Waters Corporation purchased Johnson Company 3 years ago and at that time recorded goodwill of $400,000. The Johnson Division’s net assets, including the goodwill, have a carrying amount of $800,000. The recoverable amount of the division is estimated to be $1,000,000. Prepare Waters’ journal entry, if necessary, to record impairment of the goodwill.

Describe the Financial Services Modernization Act of 1999. Explain how it affected commercial bank operations and how it changed the competitive landscape among financial institutions. (LO2)

Static and flexible budgets Plush pet toys are produced in a largely automated factory in standard lots of 100 toys each. A standard cost system is used to control costs and to assign cost to inventory.       Variable overhead, estimated at $5 per lot, consists of miscellaneous items such as thread, a variety of plastic squeakers, and paints that are applied to create features such as eyes and whiskers. Fixed overhead, estimated at $24 000 per month, consists largely of depreciation on the automated machinery and rent for the building. Variable overhead is allocated based on lots produced. The standard fixed overhead allocation rate is based on the estimated output of 1000 lots per month.             Required (a)        Prepare a production budget for the coming year based on planned production  12 000 lots. (b)       Compare the budget prepared in (a) with a flexible budget based on actual activity of 15 000 lots.

King Company is contemplating the purchase of a smaller company, which is a distributor of King’s products. Top management of King is convinced that the acquisition will result in significant synergies in its selling and distribution functions. The financial management group (of which you are a part) has been asked to analyze the effects of the acquisition on the combined company’s financial statements. This is the first acquisition for King, and some of the senior staff insist that based on their recollection of goodwill accounting, any goodwill recorded on the acquisition will result in a “drag” on future earnings for goodwill amortization. Other younger members on the staff argue that goodwill accounting has changed. Your supervisor asks you to research this issue. 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) Identify the accounting literature that addresses goodwill and other intangible assets. (b) Define goodwill. (c) Is goodwill subject to amortization? Explain. (d) When goodwill is recognized by a subsidiary, should it be tested for impairment at the consolidated level or the subsidiary level? Discuss.

A flat plate is to be cast in an open mold whose bottom has a square shape that is 200 mm by 200 mm. The mold is 40 mm deep. A total of 1,000,000 mm3 of molten aluminum is poured into the mold. Solidification shrinkage is known to be 6.0%. Table 10.1 lists the linear shrinkage due to thermal contraction after solidification to be 1.3%. If the availability of molten metal in the mold allows the square shape of the cast plate to maintain its 200 mm by 200 mm dimensions until solidification is completed, determine the final dimensions of the plate

Explain the meaning of the following terms: (a) commonsize analysis, (b) vertical analysis, (c) horizontal analysis, and (d) percentage analysis.

Clyde is a cash-method taxpayer who reports on a calendar-year basis. This year Paylate Corporation has decided to pay Clyde a year-end bonus of $1,000. Determine the amount Clyde should include in his gross income this year under the following circumstances:

Describe how a piece of glass is heat treated to produce tempered glass.

How does a turret lathe differ from an engine lathe?

What is a chaplet?

Presented below are a number of independent situations. Instructions For each individual situation, determine the amount that should be reported as cash. If the item(s) is not reported as cash, explain the rationale. 1. Checking account balance $925,000; certificate of deposit $1,400,000; cash advance to subsidiary of $980,000; utility deposit paid to gas company $180. 2. Checking account balance $600,000; an overdraft in special checking account at same bank as normal checking account of $17,000; cash held in a bond sinking fund $200,000; petty cash fund $300; coins and currency on hand $1,350. 3. Checking account balance $590,000; postdated check from customer $11,000; cash restricted due to maintaining compensating balance requirement of $100,000; certified check from customer $9,800; postage stamps on hand $620. 4. Checking account balance at bank $37,000; money market balance at mutual fund (has checking privileges) $48,000; NSF check received from customer $800. 5. Checking account balance $700,000; cash restricted for future plant expansion $500,000; short-term Treasury bills $180,000; cash advance received from customer $900 (not included in checking account balance); cash advance of $7,000 to company executive, payable on demand; refundable deposit of $26,000 paid to federal government to guarantee performance on construction contract.

Treasure Land Corporation incurred the following costs in 2014. Cost of laboratory research aimed at discovery of new knowledge $120,000 Cost of testing in search for product alternatives 100,000 Cost of engineering activity required to advance the design of a product to the manufacturing stage 210,000 $430,000 Prepare the necessary 2014 journal entry or entries for Treasure Land.

Explain why some finance companies are associated with automobile manufacturers. Why do some of these finance companies offer below-market rates on loans? (LO2)

Why was the Federal Reserve concerned about systemic risk due to the financial problems of Bear Stearns? (LO5)

Linda Day George Company had bonds outstanding with a maturity value of $300,000. On April 30, 2014, when these bonds had an unamortized discount of $10,000, they were called in at 104. To pay for these bonds, George had issued other bonds a month earlier bearing a lower interest rate. The newly issued bonds had a life of 10 years. The new bonds were issued at 103 (face value $300,000). Issue costs related to the new bonds were $3,000. Instructions Ignoring interest, compute the gain or loss and record this refunding transaction.

Presented below are three revenue recognition situations. (a) Grupo sells goods to MTN for $1,000,000, payment due at delivery. (b) Grupo sells goods on account to Grifols for $800,000, payment due in 30 days. (c) Grupo sells goods to Magnus for $500,000, payment due in two installments: the first installment payable in 6 months and the second payment due 3 months later. Instructions Indicate how each of these transactions is reported.

Solve for total solidification time in the previous problem only using an exponent value of 1.9 in Chvorinov's rule instead of 2.0. What adjustment must be made in the units of the mold constant?

“A worksheet is a permanent accounting record, and its use is required in the accounting cycle.” Do you agree? Explain.

Suppose you asked your favorite AI query tool “How is a partnership interest received for services provided treated for income tax purposes?” and the AI tool responded as follows: