Question & Answer

What is the difference between physical vapor deposition (PVD) and chemical vapor deposition (CVD)?

(a) Assuming no Fair Value Adjustment (available-forsale) account balance at the beginning of the year, prepare the adjusting entry at the end of the year if Laura Company’s available-for-sale securities have a fair value $60,000 below cost. (b) Assume the same information as part (a), except that Laura Company has a debit balance in its Fair Value Adjustment account of $10,000 at the beginning of the year. Prepare the adjusting entry at year-end.

Guillen, Inc. began work on a $7,000,000 contract in 2014 to construct an office building. Guillen uses the completed-contract method. At December 31, 2014, the balances in certain accounts were Construction in Process $1,715,000; Accounts Receivable $240,000; and Billings on Construction in Process $1,000,000. Indicate how these accounts would be reported in Guillen’s December 31, 2014, balance sheet.

Pierre Company has a 12% note payable with a carrying value of $20,000. Pierre applies the fair value option to this note. Given an increase in market interest rates, the fair value of the note is $22,600. Prepare the entry to record the fair value option for this note.

When should a debt security be classified as held-tomaturity?

What is isothermal forging?

Seattle Bank just took speculative positions by borrowing Canadian dollars and converting the funds to invest in Australian dollars. Explain a possible future scenario that could adversely affect the bank’s performance. (LO2, LO3)

Cemented carbides are what class of composites?

Using examples, discuss the conflicts between using the environment as productive resource and as a dump?

It is desired to determine the effect of package style on the number of circuits (logic gates) that can be fabricated onto an IC chip to which the package is assembled. Using Rent's rule with C = 4.5 and m = 0.5, compute the estimated number of devices (logic gates) that could be placed on the chip in the following cases: (a) a DIP with 16 I/O pins on a side - a total of 32 pins; (b) a square chip carrierwith 16 pins on a side - a total of 64 I/O pins; and (c) a pin grid array with 16 by 16 pins - a total of 256 pins

Use the same information as in E14-22 above except that American Bank reduced the principal to $1,900,000 rather than $2,400,000. On January 1, 2018, Barkley pays $1,900,000 in cash to American Bank for the principal. Instructions (a) Can Barkley Company record a gain under this term modification? If yes, compute the gain for Barkley Company. (b) Prepare the journal entries to record the gain on Barkley’s books. (c) What interest rate should Barkley use to compute its interest expense in future periods? Will your answer be the same as in E14-22 above? Why or why not? (d) Prepare the interest payment schedule of the note for Barkley Company after the debt restructuring. (e) Prepare the interest payment entries for Barkley Company on December 31, of 2015, 2016, and 2017. (f) What entry should Barkley make on January 1, 2018?

In an examination of Arenes Corporation as of December 31, 2014, you have learned that the following situations exist. No entries have been made in the accounting records for these items. 1. The corporation erected its present factory building in 1999. Depreciation was calculated by the straight-line method, using an estimated life of 35 years. Early in 2014, the board of directors conducted a careful survey and estimated that the factory building had a remaining useful life of 25 years as of January 1, 2014. 2. An additional assessment of 2013 income taxes was levied and paid in 2014. 3. When calculating the accrual for officers’ salaries at December 31, 2014, it was discovered that the accrual for officers’ salaries for December 31, 2013, had been overstated. 4. On December 15, 2014, Arenes Corporation declared a cash dividend on its common stock outstanding, payable February 1, 2015, to the common stockholders of record December 31, 2014. Instructions Describe fully how each of the items above should be reported in the financial statements of Arenes Corporation for the year 2014.

AJ is a 30 percent partner in the Trane Partnership, a calendar-year-end entity. On January 1, AJ has an outside basis in his interest in Trane of $73,000, which includes his share of the $50,000 of partnership liabilities. Trane generates $42,000 of income during the year and does not make any changes to its liabilities. On December 31, Trane makes a proportionate distribution of the following assets to AJ to terminate his partnership interest: Tax BasisFMV Inventory $ 55,000 $ 65,000 Land 30,000 25,000    Totals $ 85,000 $90,000 a. What are the tax consequences (gain or loss, basis adjustments) of the distribution to Trane? b. What are the amount and character of any recognized gain or loss to AJ? c. What is AJ’s basis in the distributed assets? d. If AJ sells the inventory four years after the distribution for $70,000, what are the amount and character of his recognized gain or loss?

Are C corporations or flow-through entities (S corporations and entities taxed as partnerships) more flexible in terms of selecting a tax year-end? Why are the tax rules in this area different for C corporations and flow-through business entities?

Figure 19.5 shows a steep investment demand curve. If the real rate of interest falls from r1 to r2, there is only a small rise in investment from I1 to I2. Now draw a much more elastic I curve passing through point a. Assume that this is the true I curve. Show how the rate of interest could still fall to r2 and investment still only rise to I2 if this curve were to shift.

Explain the revenue recognition principle.

Richardson Company cans a variety of vegetable-type soups. Recently, the company decided to value its inventories using dollar-value LIFO pools. The clerk who accounts for inventories does not understand how to value the inventory pools using this new method, so, as a private consultant, you have been asked to teach him how this new method works. He has provided you with the following information about purchases made over a 6-year period. Ending Inventory Date (End-of-Year Prices) Price Index Dec. 31, 2010 $ 80,000 100 Dec. 31, 2011 111,300 105 Dec. 31, 2012 108,000 120 Dec. 31, 2013 128,700 130 Dec. 31, 2014 147,000 140 Dec. 31, 2015 174,000 145 You have already explained to him how this inventory method is maintained, but he would feel better about it if you were to leave him detailed instructions explaining how these calculations are done and why he needs to put all inventories at a base-year value. Instructions (a) Compute the ending inventory for Richardson Company for 2010 through 2015 using dollar-value LIFO. (b) Using your computation schedules as your illustration, write a step-by-step set of instructions explaining how the calculations are done. Begin your explanation by briefly explaining the theory behind this inventory method, including the purpose of putting all amounts into base-year price levels.

The problem in a certain thermoforming operation is that there is too much thinning in the walls of the large cup-shaped part. The operation is conventional pressure thermoforming using a positive mold, and the plastic is an ABS sheet with an initial thickness of 3.2 mm. (a) Why is thinning occurring in the walls of the cup? (b) What changes could be made in the operation to correct the problem?

Distinguish between direct and indirect extrusion

Illustrate equilibrium in the market for loanable funds using a demand and supply diagram.

The following situations relate to Bolivia Company. 1. Bolivia provides a warranty with all its products it sells. It estimates that it will sell 1,000,000 units of its product for the year ended December 31, 2014, and that its total revenue for the product will be $100,000,000. It also estimates that 60% of the product will have no defects, 30% will have major defects, and 10% will have minor defects. The cost of a minor defect is estimated to be $5 for each product sold, and the cost for a major defect cost is $15. The company also estimates that the minimum amount of warranty expense will be $2,000,000 and the maximum will be $10,000,000. 2. Bolivia is involved in a tax dispute with the tax authorities. The most likely outcome of this dispute is that Bolivia will lose and have to pay $400,000. The minimum it will lose is $20,000 and the maximum is $2,500,000. Instructions Prepare the journal entry to record provisions, if any, for Bolivia at December 31, 2014.

What is a via hole in a printed circuit board?

Youngman Corporation has temporary differences at December 31, 2014, that result in the following deferred taxes. Deferred tax liability—current $38,000 Deferred tax asset—current $62,000 Deferred tax liability—noncurrent $96,000 Deferred tax asset—noncurrent $27,000 Indicate how these balances would be presented in Youngman’s December 31, 2014, balance sheet.

From an employee perspective, how are ISOs treated differently from NQOs for tax purposes? In general, for a given number of options, which type of stock options should employees prefer?

If inventory physically increases during the period, income under absorption costing will be higher than income using variable costing. Explain.