Question & Answer

At December 31, 2014, Cascade Company had a net deferred tax liability of $450,000. An explanation of the items that compose this balance is as follows. Temporary Differences in Deferred Taxes Resulting Balances 1. Excess of tax depreciation over book depreciation. $200,000 2. Accrual, for book purposes, of estimated loss contingency from pending lawsuit that is expected to be settled in 2015. The loss will be deducted on the tax return when paid. $ (50,000) 3. Accrual method used for book purposes and installment method used for tax purposes for an isolated installment sale of an investment. $300,000 In analyzing the temporary differences, you find that $30,000 of the depreciation temporary difference will reverse in 2015, and $120,000 of the temporary difference due to the installment sale will reverse in 2015. The tax rate for all years is 40%. Instructions Indicate the manner in which deferred taxes should be presented on Cascade Company’s December 31, 2014, statement of financial position.

Latoya Company provides the following selected information related to its defined benefit pension plan for 2014. Pension asset/liability (January 1) $ 25,000 Cr. Accumulated benefi t obligation (December 31) 400,000 Actual and expected return on plan assets 10,000 Contributions (funding) in 2014 150,000 Fair value of plan assets (December 31) 800,000 Settlement rate 10% Projected benefi t obligation (January 1) 700,000 Service cost 80,000 Instructions (a) Compute pension expense and prepare the journal entry to record pension expense and the employer’s contribution to the pension plan in 2014. Preparation of a pension worksheet is not required. Benefits paid in 2014 were $35,000. (b) Indicate the pension-related amounts that would be reported in the company’s income statement and balance sheet for 2014.

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 fair value of the division is estimated to be $1,000,000. Prepare Waters’ journal entry, if necessary, to record impairment of the goodwill.

What is sheet molding compound (SMC)?

You are called by Tim Duncan of Spurs Co. on July 16 and asked to prepare a claim for insurance as a result of a theft that took place the night before. You suggest that an inventory be taken immediately. The following data are available. Inventory, July 1 $ 38,000 Purchases—goods placed in stock July 1–15 85,000 Sales revenue—goods delivered to customers (gross) 116,000 Sales returns—goods returned to stock 4,000 Your client reports that the goods on hand on July 16 cost $30,500, but you determine that this figure includes goods of $6,000 received on a consignment basis. Your past records show that sales are made at approximately 40% over cost. Duncan’s insurance covers only goods owned. Instructions Compute the claim against the insurance company.

: Describe transformational leadership and when it should be used.

Why do costs tend to increase when better surface finish is required on a machined part?

Cost driver selection For each of the following activities undertaken to bake pastries and cakes, identify a suitable cost driver to allocate costs. (a)          Mixing ingredients (b)          Baking pastries and cakes (c)           Decorating cakes (d)          Packing pastries and cakes on trays (e)           Sales (f)           Dispatch to customers

An extrusion operation produces continuous tubing with outside diameter = 2.0 in and inside diameter = 1.7 in. The extruder barrel has a diameter = 4.0 in and length = 10 ft. The screw rotates at 50 rev/min; it has a channel depth = 0.25 in and flight angle = 16°. The head pressure has a value of 350 lb/in2 and the viscosity of the polymer melt is 80 x 10-4 lb-sec/in2 . Under these conditions, what is the production rate in length of tube/min, assuming the extrudate is pulled at a rate that eliminates the effect of die swell (i.e., the tubing has the same OD and ID as the die profile)?

Clem is married and is a skilled carpenter. Clem’s wife, Wanda, works part-time as a substitute elementary school teacher. Determine the amount of Clem’s expenses that are deductible for AGI this year (if any) under the following independent circumstances:

Why are Wo and Wa curves rather than straight lines?

Use the information for Indiana Jones Corporation from BE21-9. Assume that for Lost Ark Company, the lessor, collectibility is reasonably predictable, there are no important uncertainties concerning costs, and the carrying amount of the equipment is $202,921. Prepare Lost Ark’s January 1, 2014, journal entries.

A deep drawing operation is performed in which the inside of the cylindrical cup has a diameter of 4.25 in and a height = 2.65 in. The stock thickness = 3/16 in, and the starting blank diameter = 7.7 in. Punch and die radii = 5/32 in. The metal has a tensile strength = 65,000 lb/in2 , a yield strength = 32,000 lb/in2 , and a shear strength of 40,000 lb/in2 . Determine (a) drawing ratio, (b) reduction, (c) drawing force, and (d) blankholder force

McIntyre Corporation issued 2,000 $1,000 bonds at 101. Each bond was issued with one detachable stock warrant. After issuance, the bonds were selling separately at 98. The market price of the warrants without the bonds cannot be determined. Use the incremental method to record the issuance of the bonds and warrants.

What is the difference between adaptive expectations and rational expectations?

Jackel Industries presents you with the following information. Accumulated Date Salvage Life in Depreciation Depreciation to Depreciation Description Purchased Cost Value Years Method 12/31/15 for 2016 Machine A 2/12/14 $142,500 $16,000 10 (a) $33,350 (b) Machine B 8/15/13 (c) 21,000 5 SL 29,000 (d) Machine C 7/21/12 75,400 23,500 8 DDB (e) (f) Machine D 10/12/(g) 219,000 69,000 5 SYD 70,000 (h) Instructions Complete the table for the year ended December 31, 2016. The company depreciates all assets using the half-year convention.

What is the unit melting energy in welding, and what are the factors on which it depends?

Mortonson Company has not yet prepared a formal statement of cash flows for the 2014 fiscal year. Comparative balance sheets as of December 31, 2013 and 2014, and a statement of income and retained earnings for the year ended December 31, 2014, are presented as follows. MORTONSON COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2014 ($000 OMITTED) Sales revenue $3,800 Expenses Cost of goods sold $1,200 Salaries and benefi ts 725 Heat, light, and power 75 Depreciation 80 Property taxes 19 Patent amortization 25 Miscellaneous expenses 10 Interest 30 2,164 MORTONSON COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2014 (CONTINUED) Income before income taxes 1,636 Income taxes 818 Net income 818 Retained earnings—Jan. 1, 2014 310 1,128 Stock dividend declared and issued 600 Retained earnings—Dec. 31, 2014 $ 528 MORTONSON COMPANY COMPARATIVE BALANCE SHEETS AS OF DECEMBER 31 ($000 OMITTED) Assets 2014 2013 Current assets Cash $ 333 $ 100 U.S. Treasury notes (available-for-sale) 10 50 Accounts receivable 780 500 Inventory 720 560 Total current assets 1,843 1,210 Long-term assets Land 150 70 Buildings and equipment 910 600 Accumulated depreciation—buildings and equipment (200) (120) Patents (less amortization) 105 130 Total long-term assets 965 680 Total assets $2,808 $1,890 Liabilities and Stockholders’ Equity Current liabilities Accounts payable $ 420 $ 330 Income taxes payable 40 30 Notes payable 320 320 Total current liabilities 780 680 Long-term notes payable—due 2016 200 200 Total liabilities 980 880 Stockholders’ equity Common stock 1,300 700 Retained earnings 528 310 Total stockholders’ equity 1,828 1,010 Total liabilities and stockholders’ equity $2,808 $1,890 Instructions Prepare a statement of cash flows using the direct method. Changes in accounts receivable and accounts payable relate to sales and cost of goods sold. Do not prepare a reconciliation schedule.

What are the taxpayer’s standards to avoid the substantial understatement of tax penalty?

Flexible budget Helium Industries manufactures glitter balloons used as party accessories. The balloons are bagged in packages of 100 and sold for $20 per pack. The company incurs fixed manufacturing overhead of $25 000 per year and the fixed overhead is applied based on packs produced. Standard costs are: material $8 per unit, direct labour $5 per unit and variable overhead $3 per unit. The marketing manager believes sales for the coming year will be somewhere between 10 000 and 15 000 packs.   Required (a) Prepare a flexible budget for sales of 10 000, 12 000 and 15 000. (Allocate fixed overhead based on the sales volume.) (b) What advantages are there for Helium Industries in using a flexible budget?

Recent financial statements of General Mills, Inc. report net sales of $12,442,000,000. Accounts receivable are $912,000,000 at the beginning of the year and $953,000,000 at the end of the year. Compute General Mills’ accounts receivable turnover. Compute General Mills’ average collection period for accounts receivable in days.

What type of atomic bonding characterizes the ceramics?

1.       : Research on team interactions indicates that when people eat lunch at 12-person tables, they are more talkative and collaborative than when they eat at 4-person tables, even if they aren’t eating with their own team members. What do you think would explain this finding?

Why is silicon a desirable work material in microsystem technology?

What is a tool-chip thermocouple?