Question & Answer

1. Fill in the missing figures (without referring to Table 6.8 or 6.9). 2. Why are the figures for MR and MC entered in the spaces between the lines in Table 6.10?

Pueblo Co. acquires machinery by paying $10,000 cash and signing a $5,000, 2-year, zero-interest-bearing note payable. The note has a present value of $4,208, and Pueblo purchased a similar machine last month for $13,500. At what cost should the new equipment be recorded?

How can financial institutions with stock portfolios use stock options when they expect stock prices to rise substantially but do not yet have sufficient funds to purchase more stock? (LO3)

On May 1, 2014, Friendly Company issued 2,000 $1,000 bonds at 102. Each bond was issued with one detachable stock warrant. Shortly after issuance, the bonds were selling at 98, but the fair value of the warrants cannot be determined. Instructions (a) Prepare the entry to record the issuance of the bonds and warrants. (b) Assume the same facts as part (a), except that the warrants had a fair value of $30. Prepare the entry to record the issuance of the bonds and warrants.

1. The income–consumption curve in Figure 4.12 is drawn as positively sloped at low levels of income. Why? 2. Show the effect of a rise in income on the demand for X and Y where this time Y is the inferior good and X is the normal good. Is the income–consumption curve positively or negatively sloped?

What are the general rules for measuring and recognizing gain or loss by both the debtor and the creditor in a troubleddebt restructuring involving a modification of terms?

Are taxpayers allowed to claim depreciation on assets they use for both business and personal purposes? What are the tax consequences if the business use drops from above 50 percent in one year to below 50 percent in the next?

Summarise the relative benefits to consumers of (a) privatising a nationalised industry; (b) keeping it in the public sector but introducing competition.

] Describe the two methods that taxpayers use to prepay their taxes.

If a bank is very uncertain about future interest rates, how might it insulate its future performance from future interest rate movements? (LO3)

1. Which of the above theories overlap and in what way? 2. Why, do you think, is it difficult to find adequate empirical support for any of them?

The following information relates to Starbucks for the year ended October 2, 2011: net income 1,245.7 million; unrealized holding loss of $10.9 million related to available-for-sale securities during the year; accumulated other comprehensive income of $57.2 million on October 3, 2010. Assuming no other changes in accumulated other comprehensive income, determine (a) other comprehensive income for 2011, (b) comprehensive income for 2011, and (c) accumulated other comprehensive income at October 2, 2011.

Are taxpayers allowed to deduct net capital losses (capital losses in excess of capital gains)? Explain.

What are the relative advantages of the cash and accrual methods of accounting?

1.    : What, specifically, would the experience of studying in another country contribute to your skills and effectiveness as a future manager in your own country?

A machinability rating is to be determined for a new work material. For the base material (B1112), test data resulted in a Taylor equation with parameters n = 0.29 and C = 490. For the new material, the Taylor parameters were n = 0.23 and C = 430. Units in both cases are: speed in m/min and tool life in min. These results were obtained using cemented carbide tooling. (a) Compute a machinability rating for the new material using cutting speed for a 30-min tool life as the basis of comparison. (b) If the machinability criterion were tool life for a cutting speed of 150 m/min, what is the machinability rating for the new material?

How are state-sponsored 529 educational savings plans taxed if investment returns are used for educational purposes? Are the returns taxed differently if they are not ultimately used to pay for education costs?

1.      : What goal or mission for the Park Hill Museum do you personally prefer? As director, would you try to implement your preferred direction? Explain.

A static memory device will have a two-dimensional array with 64 by 64 cells. Determine the number of input/output pins required using Rent's rule with C = 6.0 and m = 0.12.

Using the appropriate interest table, answer each of the following questions. (Each case is independent of the others.) (a) What is the future value of $7,000 at the end of 5 periods at 8% compounded interest? (b) What is the present value of $7,000 due 8 periods hence, discounted at 11%? (c) What is the future value of 15 periodic payments of $7,000 each made at the end of each period and compounded at 10%? (d) What is the present value of $7,000 to be received at the end of each of 20 periods, discounted at 5% compound interest?

1.    : As a manager, how would you use symbols to build an adaptability culture that encourages teamwork and risk taking? What kinds of symbols could you use to promote the values of an involvement culture?

Contrast ceiling and floor limitations, and provide an example of each.

What strategies will help a business maximize its current depreciation deductions (including §179)? Why might a taxpayer choose not to maximize its current depreciation deductions?

1. Assume that demand for a product is inelastic. Will consumer expenditure go on increasing as price rises? Would there be any limit? 2. Can you think of any examples of goods which have a totally inelastic demand (a) at all prices; (b) over a particular price range?

Morgan Leasing Company signs an agreement on January 1, 2014, to lease equipment to Cole Company. The following information relates to this agreement. 1. The term of the noncancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years. 2. The cost of the asset to the lessor is $245,000. The fair value of the asset at January 1, 2014, is $245,000. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $43,622, none of which is guaranteed. 4. Cole Company assumes direct responsibility for all executory costs. 5. The agreement requires equal annual rental payments, beginning on January 1, 2014. 6. Collectibility of the lease payments is reasonably predictable. There are no important uncertainties surrounding the amount of costs yet to be incurred by the lessor. Instructions (Round all numbers to the nearest cent.) (a) Assuming the lessor desires a 10% rate of return on its investment, calculate the amount of the annual rental payment required. (Round to the nearest dollar.) (b) Prepare an amortization schedule that would be suitable for the lessor for the lease term. (c) Prepare all of the journal entries for the lessor for 2014 and 2015 to record the lease agreement, the receipt of lease payments, and the recognition of income. Assume the lessor’s annual accounting period ends on December 31.