Question & Answer

Rode Inc. incurred a net operating loss of $500,000 in 2014. Combined income for 2012 and 2013 was $350,000. The tax rate for all years is 40%. Rode elects the carryback option. Prepare the journal entries to record the benefits of the loss carryback and the loss carryforward.

The financial statements of P&G are presented in Appendix 5B. The company’s complete annual report, including the notes to the financial statements, can be accessed at the book’s companion website, www. wiley.com/college/kieso. Instructions Refer to P&G’s financial statements and the accompanying notes to answer the following questions. (a) What amounts relative to income taxes does P&G report in its: (1) 2011 income statement? (2) June 30, 2011, balance sheet? (3) 2011 statement of cash flows? (b) P&G’s income taxes in 2009, 2010, and 2011 were computed at what effective tax rates? (See the notes to the financial statements.) (c) How much of P&G’s 2011 total income taxes was current tax expense, and how much was deferred tax expense? (d) What did P&G report as the significant components (the details) of its June 30, 2011, deferred tax assets and liabilities?

Explain how symbols, stories, heroes, slogans, and ceremonies can be used to interpret and shape corporate culture.

Analysis of WIP T-account Jasper Company uses a job costing system. Overhead is allocated based on 120 per cent of direct labour cost. Last month’s transactions in the work in process account are shown here:       Only one job, number 850, was still in process at the end of the month. Job 850 was charged with $9000 in overhead for the month.   Required (a)          What is the ending balance in the WIP account? (b)          How much direct labour cost was used for job 850? (c)           What is the amount of direct materials used for job 850?

How do S corporations report dividends they receive?  Are they entitled to a dividends-received deduction? Why or why not?

At December 31, 2014, Hillyard Corporation has a deferred tax asset of $200,000. After a careful review of all available evidence, it is determined that it is probable that $60,000 of this deferred tax asset will not be realized. Prepare the necessary journal entry.

Explain the difference between the voting-interest model and the risk-and-reward model used for consolidation.

Explain the strategies managers can use to help organizations adapt to an uncertain or turbulent environment.

On December 31, 2014, Oakbrook Inc. rendered services to Beghun Corporation at an agreed price of $102,049, accepting $40,000 down and agreeing to accept the balance in four equal installments of $20,000 receivable each December 31. An assumed interest rate of 11% is imputed. Instructions Prepare the entries that would be recorded by Oakbrook Inc. for the sale and for the receipts and interest on the following dates. (Assume that the effective-interest method is used for amortization purposes.) (a) December 31, 2014. (c) December 31, 2016. (e) December 31, 2018. (b) December 31, 2015. (d) December 31, 2017.

Kleckner Company started operations in 2010. Although it has grown steadily, the company reported accumulated operating losses of $450,000 in its first four years in business. In the most recent year (2014), Kleckner appears to have turned the corner and reported modest taxable income of $30,000. In addition to a deferred tax asset related to its net operating loss, Kleckner has recorded a deferred tax asset related to product warranties and a deferred tax liability related to accelerated depreciation. Given its past operating results, Kleckner has determined that it is not probable that it will realize any of the deferred tax assets. However, given its improved performance, Kleckner management wonders whether there are any accounting consequences for its deferred tax assets. They would like you to conduct some research on the accounting for recognition of its deferred tax asset. Instructions Access the IFRS authoritative literature 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  canuse the search tool in your Internet browser to respond to the following questions. (Provide paragraph citations.) (a) Briefly explain to Kleckner management the importance of future taxable income as it relates to the recognition of deferred tax assets. (b) What are the sources of income that may be relied upon in assessing realization of a deferred tax asset? (c) What are tax-planning strategies? From the information provided, does it appear that Kleckner could employ a tax-planning strategy in evaluating its deferred tax asset?

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) What amounts relative to income taxes does M&S report in its: (1) 2012 income statement? (2) 31 March 2012 statement of financial position? (3) 2012 statement of cash flows? (b) M&S’s provision for income taxes in 2011 and 2012 was computed at what effective tax rates? (See the notes to the financial statements.) (c) How much of M&S’s 2012 total provision for income taxes was current tax expense, and how much was deferred tax expense? (d) What did M&S report as the significant components (the details) of its 31 March 2012 deferred tax assets and liabilities?

At the beginning of 2014, Aristotle Company acquired a mine for $970,000. Of this amount, $100,000 was ascribed to the land value and the remaining portion to the minerals in the mine. Surveys conducted by geologists have indicated that approximately 12,000,000 units of the ore appear to be in the mine. Aristotle incurred $170,000 of development costs associated with this mine prior to any extraction of minerals. It also determined that the fair value of its obligation to prepare the land for an alternative use when all of the mineral has been removed was $40,000. During 2014, 2,500,000 units of ore were extracted and 2,100,000 of these units were sold. Instructions Compute the following. (a) The total amount of depletion for 2014. (b) The amount that is charged as an expense for 2014 for the cost of the minerals sold during 2014.

Planning} Matteo,who is single and has no dependents, was planning on spending the weekend repairing his car.On Friday, Matteo’s employer called and offered him $500 in overtime pay if he would agree to work over the weekend.Matteo could get his car repaired over the weekend at Autofix for $400.If Matteo works over the weekend, he will have to pay the $400 to have his car repaired, but he will earn $500. Assume Matteo pays tax at a flat 15 percent rate. Strictly considering tax factors, should Matteo work or repair his car if the $400 he must pay to have his car fixed is not deductible?

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 amounts of Coca-Cola’s and PepsiCo’s provision for income taxes for the year 2011? Of each company’s 2011 provision for income taxes, what portion is current expense and what portion is deferred expense? (b) What amount of cash was paid in 2011 for income taxes by Coca-Cola and by PepsiCo? (c) What was the U.S. federal statutory tax rate in 2011? What was the effective tax rate in 2011 for Coca Cola and PepsiCo? Why might their effective tax rates differ? (d) For year-end 2011, what amounts were reported by Coca-Cola and PepsiCo as (1) gross deferred tax assets and (2) gross deferred tax liabilities? (e) Do either Coca-Cola or PepsiCo disclose any net operating loss carrybacks and/or carryforwards at year-end 2011? What are the amounts, and when do the carryforwards expire?

Determine the blanking force required in Problem 20.2, if the shear strength of the steel = 325 MPa and the tensile strength is 450 MPa.

Halle just acquired a vacation home. She plans on spending several months each year vacationing in the home and renting out the property for the rest of the year. She is projecting tax losses on the rental portion of the property for the year. She is not too concerned about the losses because she is confident she will be able to use the losses to offset her income from other sources. Is her confidence misplaced? Explain.

Adani Inc. sells goods to Geo Company for $11,000 on January 2, 2014, with payment due in 12 months. The fair value of the goods at the date of sale is $10,000. Prepare the journal entry to record this transaction on January 2, 2014. How much total revenue should be recognized on this sale in 2014?

Balanced scorecard perspectives, performance objectives, and measures Perspectives, performance objectives and potential performance measures for the balanced scorecard at Holiday Resorts are as follows: Perspectives (i)         Financial (ii)        Customer (iii)       Internal business (iv)       Learning and growth   Performance objectives A.      Reduce housekeeping costs B.      Improve the quality of and results from advertising campaigns C.      Decrease vacancy rate during the off-season D.      Increase number of return customers E.      Increase overall profits F.      Increase the use of Internet-based reservations G.     Retain high-quality employees H.      Increase the number of activities available to customers I.       Improve the quality of stay for holiday makers J.       Provide employee training in quality customer service K.     Reduce error rate in reservations   Potential performance measures 1.       Operating margin 2.       Customer complaint rate 3.       Survey customers at check-in about how they first heard about the resorts 4.       Housekeeping cost per room 5.       Number of employee hours spent in training 6.       Error rate in reservation process 7.       Percentage of reservations made using the website 8.       Customer surveys about satisfaction and quality 9.       Employee turnover rates 10.     Number of activities per resort that are available to customers 11.     Percentage and number of return customers 12.     Number of hours of employee training offered 13.     Vacancy rates 14.     Customer focus groups inquiring about quality and potential success of advertising 15.     Number of suggestions that improve quality of service   Required (a)     For each perspective (i–iv), identify at least one appropriate performance objective (A–K). (b)     For each performance objective (A–K), identify at least one appropriate performance measure (1–15). (c)     Explain the links between the measures.

A horizontal true centrifugal casting process is used to make brass bushings with the following dimensions: length = 10 cm, outside diameter = 15 cm, and inside diameter = 12 cm. (a) Determine the required rotational speed in order to obtain a G-factor of 70. (b) When operating at this speed, what is the centrifugal force per square meter (Pa) imposed by the molten metal on the inside wall of the mold?

1.       Make the previous numbers work. Tessa and the entire team have put massive amounts of time into the project, and they all expect you to be a team player. You don’t want to let them down. Besides, this project is a great opportunity for you in a highly visible position.

Where should the following items be shown on the balance sheet, if shown at all? (a) Allowance for doubtful accounts. (b) Merchandise held on consignment. (c) Advances received on sales contract. (d) Cash surrender value of life insurance. (e) Land. (f) Merchandise out on consignment. (g) Franchises. (h) Accumulated depreciation of equipment. (i) Materials in transit—purchased f.o.b. destination.

Jayhawk Corporation reports current E&P of $300,000 and a deficit in accumulated E&P of ($200,000). Jayhawk distributed $400,000 to its sole shareholder, Christine, on the last day of the year. Christine’s tax basis in her Jayhawk stock before the distribution is $75,000.

Hardaway earned $100,000 of compensation this year. He also paid (or had paid for him) $3,000 of health insurance (not through an exchange). What is Hardaway’s AGI in each of the following situations? (Ignore the effects of Social Security and self-employment taxes.)

Benita is concerned that she will not be able to complete her tax return by April 15.  Can she request an extension to file her return?  By what date must she do so? Assuming she requests an extension, what is the latest date that she could file her return this year without penalty?

What other factors will determine the MPP of land for industry?