Question & Answer

Which of the above assumptions do you think would be correct in each of the following cases?                (a)  Supermarket checkout operators.                (b)  Agricultural workers.                (c)  Crane operators.                (d)  Economics teachers.                (e)  Call-centre workers.                (f)   Professional footballers.                (g)  Bar workers.

Your aunt recently received the annual report for a company in which she has invested. The report notes that the statements have been prepared in accordance with IFRS. She has also heard that certain terms have special meanings in accounting relative to everyday use. She would like you to explain the meaning of terms she has come across related to accounting. Instructions Access the IASB Framework 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 prepare responses to the following items. (Provide paragraph citations.) (a) How is “materiality” defined in the framework? (b) Briefly discuss how materiality relates to (1) the relevance of financial information, and (2) completeness. (c) Your aunt observes that under IFRS, the financial statements are prepared on the accrual basis. According to the framework, what does “accrual basis” mean?

The financial statements of Marks and Spencer plc (M&S) are available at the book’s companion website or can be accessed at http://annualreport.marksandspencer.com/_assets/downloads/Marksand- Spencer-Annual-report-and-financial-statements-2012.pdf. Instructions Refer to M&S’s financial statements and the accompanying notes to answer the following questions. (a) Using the notes to the consolidated financial statements, determine M&S’s revenue recognition policies. (b) Give two examples of where historical cost information is reported in M&S’s financial statements and related notes. Give two examples of the use of fair value information reported in either the financial statements or related notes. (c) How can we determine that the accounting principles used by M&S are prepared on a basis consistent with those of last year? (d) What is M&S’s accounting policy related to refunds and loyalty schemes? Why does M&S include the accounting for refunds and loyalty schemes in its critical accounting estimates and judgments?

Using the lead-tin phase diagram in Figure 6.3, determine the liquid and solid phase compositions for a nominal composition of 90% Sn and 10% Pb at 204°C (400°F).

Pam, Sergei, and Mercedes are all one-third partners in the capital and profits of Oak Grove General Partnership. Partnership liabilities are allocated among the partners in accordance with their capital and profits interests. In addition to their normal share of the partnership’s annual income, Pam and Sergei receive annual guaranteed payments of $20,000 each to compensate them for additional services they provide. Oak Grove’s income statement for the current year reflects the following revenues and expenses: Sales revenue $476,700 Dividend income 6,600 §1231 losses (3,800) Cost of goods sold (245,000) Employee wages (92,000) Depreciation expense (31,000) Guaranteed payments (40,000) Miscellaneous expenses (11,500) Overall net income $ 60,000 In addition, Oak Grove owed creditors $90,000 at the beginning of the year and $150,000 at the end, and Pam, Sergei and Mercedes had a tax basis of $50,000 in their interests at the beginning of the year. Also, on December 31 of the current year, Sergei and Mercedes agreed to increase Pam’s capital and profits interest from 1∕3 to 40 percent in exchange for additional services she provided to the partnership. The current liquidation value of the additional capital interest Pam received at the end of the tax year is $40,000. a. What tax basis do the partners have in their partnership interests at the end of the year? b. If, in addition to the expenses listed above, the partnership donated $12,000 to a political campaign, what tax basis do the partners have in their partnership interests at the end of the year assuming the liquidation value of the additional capital interest Pam receives at the end of the year remains at $40,000?

What is the theoretical justification of the allowance method as contrasted with the direct write-off method of accounting for bad debts?

Suppose in Example 30.3 in the text that the fuel used in the welding operation is MAPP instead of acetylene, and the proportion of heat concentrated in the 9 mm circle is 60% instead of 75 %. Compute (a) rate of heat liberated during combustion, (b) rate of heat transferred to the work surface, and (c) average power density in the circular area.

1. We defined the factor of production ‘land’ to include raw materials. Does the analysis of rent that we have just been looking at apply to raw materials? 2. The supply of land in a particular area may be totally inelastic, but the supply of land in that area for a specific purpose (e.g. growing wheat) will be upward sloping: the higher the price of wheat and thus the higher the rent that wheat producers are prepared to pay, the more will be made available for wheat production. Using the concept of transfer earnings, what will determine the elasticity of supply of land for any particular purpose?

Suppose you asked your favorite AI query tool “What types of assets held in a partnership are treated as hot assets for tax purposes?” and the AI tool responded as follows:

What requirements do an abandoned spouse and qualifying surviving spouse have in common?

Suppose you asked your favorite AI query tool the following question: “Do IRS Temporary Regulations have a limited life?”  The AI tool provided the following response: Is the AI response correct? Explain.

Worf Co. both purchases and constructs various equipment it uses in its operations. The following items for two different types of equipment were recorded in random order during the calendar year 2014.3 Purchase Cash paid for equipment, including sales tax of $5,000 $105,000 Freight and insurance cost while in transit 2,000 Cost of moving equipment into place at factory 3,100 Wage cost for technicians to test equipment 4,000 Insurance premium paid during fi rst year of operation on this equipment 1,500 Special plumbing fi xtures required for new equipment 8,000 Repair cost incurred in fi rst year of operations related to this equipment 1,300 Construction Material and purchased parts (gross cost $200,000; failed to take 2% cash discount) $200,000 Imputed interest on funds used during construction (stock fi nancing) 14,000 Labor costs 190,000 Allocated overhead costs (fi xed—$20,000; variable—$30,000) 50,000 Profi t on self-construction 30,000 Cost of installing equipment 4,400 Instructions Compute the total cost for each of these two pieces of equipment. If an item is not capitalized as a cost of the equipment, indicate how it should be reported.

Briefly describe some of the similarities and differences between GAAP and IFRS with respect to the accounting for dilutive securities, stock-based compensation, and earnings per share.

Joseph contributed $22,000 in cash and equipment with a tax basis of $5,000 and a fair market value of $11,000 to Berry Hill Partnership in exchange for a partnership interest. a. What is Joseph’s tax basis in his partnership interest? b. What is Berry Hill’s basis in the equipment?

Robert Parish Corporation purchased a new machine for its assembly process on August 1, 2014. The cost of this machine was $117,900. The company estimated that the machine would have a salvage value of $12,900 at the end of its service life. Its life is estimated at 5 years, and its working hours are estimated at 21,000 hours. Year-end is December 31. Instructions Compute the depreciation expense under the following methods. Each of the following should be considered unrelated. (a) Straight-line depreciation for 2014. (b) Activity method for 2014, assuming that machine usage was 800 hours. (c) Sum-of-the-years’-digits for 2015. (d) Double-declining-balance for 2015.

If anti-monopoly legislation is effective enough, is there ever any need to prevent mergers from going ahead?

Question: The following data were taken from the balance sheet accounts of Masefield Corporation on December 31, 2013. Current assets $540,000 Debt investments 624,000 Common stock (par value $10) 500,000 Paid-in capital in excess of par 150,000 Retained earnings 840,000 Instructions Prepare the required journal entries for the following unrelated items. (a) A 5% stock dividend is declared and distributed at a time when the market price per share is $39. (b) The par value of the common stock is reduced to $2 with a 5-for-1 stock split. (c) A dividend is declared January 5, 2014, and paid January 25, 2014, in bonds held as an investment. The bonds have a book value of $100,000 and a fair value of $135,000.

During 2014, Williamson Company changed from FIFO to weighted-average inventory pricing. Pretax income in 2013 and 2012 (Williamson’s first year of operations) under FIFO was $160,000 and $180,000, respectively. Pretax income using weighted-average pricing in the prior years would have been $145,000 in 2013 and $170,000 in 2012. In 2014, Williamson Company reported pretax income (using weighted-average pricing) of $180,000. Show comparative income statements for Williamson Company, beginning with “Income before income tax,” as presented on the 2014 income statement. (The tax rate in all years is 30%.)

Vargo Corp. owes $270,000 to First Trust. The debt is a 10-year, 12% note due December 31, 2014. Because Vargo Corp. is in financial trouble, First Trust agrees to extend the maturity date to December 31, 2016, reduce the principal to $220,000, and reduce the interest rate to 5%, payable annually on December 31. Instructions (a) Prepare the journal entries on Vargo’s books on December 31, 2014, 2015, 2016. (b) Prepare the journal entries on First Trust’s books on December 31, 2014, 2015, 2016.

How does the Fed’s monetary policy affect economic conditions? (LO5)

Solve Problem 22.17 except that the workpiece is 5.0 in wide and the cutter is offset to one side so that the swath cut by the cutter = 1.0 in wide. This is called partial face milling, Figure 22.20(b).

Why is the supply curve drawn as a vertical straight line in Figure 3.10?

Using the facts in Problem 51, 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?

What are some common point defects in a crystal lattice structure?

Explain the meaning of a temporary difference as it relates to deferred tax computations, and give three examples.