Question & Answer

Identify the segment information that is required to be disclosed by GAAP.

Under what circumstances does a corporate shareholder receive tax deferral in a complete liquidation?

Why does Congress provide tax deferral on the formation of a corporation?

1.      : Recommend a meeting with the sales representatives entitled to a bonus and tell them that the company’s deteriorating financial situation triggers one of the contingency clauses in their contract so the company won’t be issuing their bonus checks. Tacoma will just have to deal with the negative impact on sales rep motivation.

When is the cost of education deductible as an employee business expense?

Dax Jones submitted his 2024 tax return on time and elected to file a joint tax return with his wife, Darlene. Dax and Darlene did not request an extension for their 2024 tax return. Dax and Darlene owed and paid the IRS $124,000 for their 2024 tax liability. Two years later, Dax amended his return and claimed married filing separate status. By changing his filing status, Dax sought a refund for an overpayment for the tax year 2024 (he paid more tax in the original joint return than he owed on a separate return). Is Dax allowed to change his filing status for the 2024 tax year and receive a tax refund with his amended return?

Simms Company has significant amounts of trade accounts receivable. Simms uses the allowance method to estimate bad debts instead of the direct write-off method. During the year, some specific accounts were written off as uncollectible, and some that were previously written off as uncollectible were collected. Instructions (a) What are the deficiencies of the direct write-off method? (b) What are the two basic allowance methods used to estimate bad debts, and what is the theoretical justification for each? (c) How should Simms account for the collection of the specific accounts previously written off as uncollectible?

Jones Co. is in a technology-intensive industry. Recently, one of its competitors introduced a new product with technology that might render obsolete some of Jones’s inventory. The accounting staff wants to follow the appropriate authoritative literature in determining the accounting for this significant market event. Instructions If your school has a subscription to the FASB Codification, go to http://aaahg.org/asclogin.cfm to log in and prepare responses to the following. Provide Codification references for your responses. (a) Identify the primary authoritative guidance for the accounting for inventories. What is the predecessor literature? (b) List three types of goods that are classified as inventory. What characteristic will automatically exclude an item from being classified as inventory? (c) Define “market” as used in the phrase “lower-of-cost-or-market.” (d) Explain when it is acceptable to state inventory above cost and which industries allow this practice.

1. How much would be supplied at a price of 70p per kilo? 2. Draw a supply curve for farmer X. Are the axes drawn to the same scale as in Figure 2.3?

Explain the difference between ordinary, capital, and §1231 assets.

Indicate whether the following items are capitalized or expensed in the current year. (a) Purchase cost of a patent from a competitor. (b) Research costs. (c) Development costs (after achieving economic viability). (d) Organizational costs. (e) Costs incurred internally to create goodwill.

Identify the four major types of ingredients in organic coatings.

Using the facts in problem 52, what is the minimum tax that Pedro should pay to make the tax structure vertically equitable with respect to the amount of tax paid?  This would result in what type of tax rate structure?

Table 6.4 illustrates five different short-run production functions: i.e. where the number of machines remains constant at one, two, three, four or five. In each case explain if there are diminishing or increasing marginal returns

Midwest Enterprises made the following entry on December 31, 2014. Interest Expense 10,000 Interest Payable 10,000 (To record interest expense due on loan from Anaheim National Bank) What entry would Anaheim National Bank make regarding its outstanding loan to Midwest Enterprises? Explain why this must be the case.

A two-spindle drill simultaneously drills a ½ in hole and a ¾ in hole through a workpiece that is 1.0 inch thick. Both drills are twist drills with point angles of 118°. Cutting speed for the material is 230 ft/min. The rotational speed of each spindle can be set individually. The feed rate for both holes must be set to the same value because the 2 spindles lower at the same rate. The feed rate is set so the total metal removal rate does not exceed 1.50 in3 /min. Determine (a) the maximum feed rate (in/min) that can be used, (b) the individual feeds (in/rev) that result for each hole, and (c) the time required to drill the holes.

1.              : What does it mean to be "true to yourself"? Is being true to yourself more important than achieving personal career success in a male-dominated company? Is it okay to enable the continuation of an "unhealthy" work environment for women? Why do you think the way you do about this?

Chelsea Finance Company receives floating inflow payments from its provision of floating-rate loans. Its outflow payments are fixed because of its recent issuance of long-term bonds. Chelsea is concerned that interest rates will decline in the future. Yet, it does not want to hedge its interest rate risk because it believes interest rates may increase. Recommend a solution to Chelsea’s dilemma. (LO1, LO2)

The petty cash fund of Fonzarelli’s Auto Repair Service, a sole proprietorship, contains the following. The general ledger account Petty Cash has a balance of $300. 1. Coins and currency $ 15.20 2. Postage stamps 2.90 3. An I.O.U. from Richie Cunningham, an employee, for cash advance 40.00 4. Check payable to Fonzarelli’s Auto Repair from Pottsie Weber, an employee, marked NSF 34.00 5. Vouchers for the following: Stamps $ 20.00 Two Rose Bowl tickets for Nick Fonzarelli 170.00 Printer cartridge 14.35 204.35 $296.45 Instructions Prepare the journal entry to record the reimbursement of the petty cash fund.

1.       : Some people argue that the presence of an outside threat correlates with a high degree of team cohesiveness. Would you agree or disagree? Explain your answer.

For what reasons might GDP be a poor indicator of (i) the level of development of a country; (ii) its rate of economic development?

Instructions Go to the book’s companion website, and use information found there to answer the following questions related to The Coca-Cola Company and PepsiCo, Inc. (a) What are the primary lines of business of these two companies as shown in their notes to the financial statements? (b) Which company has the dominant position in beverage sales? (c) How are inventories for these two companies valued? What cost allocation method is used to report inventory? How does their accounting for inventories affect comparability between the two companies? (d) Which company changed its accounting policies, which then affected the consistency of the financial results from the previous year? What were these changes?

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?

Bruno Corporation’s post-closing trial balance at December 31, 2014, is shown on the next page.   At December 31, 2014, Bruno had the following number of common and preferred shares. Common Preferred Authorized 600,000 60,000 Issued 200,000 10,000 Outstanding 190,000 10,000 The dividends on preferred stock are $4 cumulative. In addition, the preferred stock has a preference in liquidation of $50 per share. Instructions Prepare the stockholders’ equity section of Bruno’s balance sheet at December 31, 2014.

What is a hybrid composite?