Question & Answer

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:

The partner in charge of the Kappeler Corporation audit comes by your desk and leaves a letter he has started to the CEO and a copy of the cash flow statement for the year ended December 31, 2014. Because he must leave on an emergency, he asks you to finish the letter by explaining: (1) the disparity between net income and cash flow, (2) the importance of operating cash flow, (3) the renewable source(s) of cash flow, and (4) possible suggestions to improve the cash position.   Date President Kappeler, CEO Kappeler Corporation 125 Wall Street Middleton, Kansas 67458 Dear Mr. Kappeler: I have good news and bad news about the financial statements for the year ended December 31, 2014. The good news is that net income of $100,000 is close to what we predicted in the strategic plan last year, indicating strong performance this year. The bad news is that the cash balance is seriously low. Enclosed is the Statement of Cash Flows, which best illustrates how both of these situations occurred simultaneously . . . Instructions Complete the letter to the CEO, including the four components requested by your boss.

What causes the various types of changes that occur in the altered layer just beneath the surface?

Franco converted a building from personal to business use in May 2021 when the fair market value was $55,000. He purchased the building in July 2018 for $80,000. On December 15 of this year, Franco sells the building for $40,000. On the date of the sale, the accumulated depreciation on the building is $5,565. What is Franco’s recognized gain or loss on the sale?

Briefly discuss the IASB and FASB efforts to converge their accounting guidelines for leases.

Will speculators buy or sell Treasury bond futures contracts if they expect interest rates to increase? Explain. (LO2)

Based on the video about vernier calipers, are the markings on the vernier plate (moveable scale) the same spacing, slightly closer, or slightly further apart compared to the stationary bar?

Aishwarya’s husband passed away in 2016.She needs to determine whether Jasmine, her 17-year-old stepdaughter who is single, qualifies as her dependent in 2017.Jasmine is a resident but not a citizen of the United States.She lived in Aishwarya’s home from June 15 through December 31, 2017. Aishwarya provided more than half of Jasmine’s support for 2017.

Design the nominal sizes of a GO/NO-GO plug gage to inspect a 1.500 ± 0.030 in diameter hole. There is a wear allowance applied only to the GO side of the gage. The wear allowance is 2% of the entire tolerance band for the inspected feature. Determine (a) the nominal size of the GO gage including the wear allowance and (b) the nominal size of the NO-GO gage

Discuss why evaluating vertical equity simply based on tax rate structure may be less than optimal.

The copper-nickel system is a simple alloy system, as indicated by its phase diagram. Why is it so simple?

Identify some of the properties for which aluminum is noted?

1.       : If you wanted to add a group of food scientists to a large organization such as PepsiCo, would you centralize the scientists in a central pool at headquarters or decentralize them to separate divisions? Discuss your reasons.

Union Planters is a Tennessee bank holding company (that is, a corporation that owns banks). (Union Planters is now part of Regions Bank.) Union Planters manages $32 billion in assets, the largest of which is its loan portfolio of $19 billion. In addition to its loan portfolio, however, like other banks it has significant debt investments. The nature of these investments varies from short-term in nature to long-term in nature. As a consequence, consistent with the requirements of accounting rules, Union Planters reports its investments in two different categories—trading and available-for-sale. The following facts were found in a recent Union Planters’ annual report. Gross Gross Amortized Unrealized Unrealized Fair (all dollars in millions) Cost Gains Losses Value Trading account assets $ 275 — — $ 275 Securities available for sale 8,209 $108 $15 8,302 Net income 224 Net securities gains (losses) (9) Instructions (a) Why do you suppose Union Planters purchases investments, rather than simply making loans? Why does it purchase investments that vary in nature both in terms of their maturities and in type (debt versus stock)? (b) How must Union Planters account for its investments in each of the two categories? (c) In what ways does classifying investments into two different categories assist investors in evaluating the profitability of a company like Union Planters? (d) Suppose that the management of Union Planters was not happy with its net income for the year. What step could it have taken with its investment portfolio that would have definitely increased reported profit? How much could it have increased reported profit? Why do you suppose it chose not to do this?

Use the information for Rick Kleckner Corporation from IFRS21-7. Assume that at December 31, 2014, Kleckner made an adjusting entry to accrue interest expense of $29,530 on the lease. Prepare Kleckner’s January 1, 2015, journal entry to record the second lease payment of $53,920.

Morgan Sondgeroth Inc. began operations in January 2012 and reported the following results for each of its 3 years of operations. 2012 $260,000 net loss 2013 $40,000 net loss 2014 $800,000 net income At December 31, 2014, Morgan Sondgeroth Inc. capital accounts were as follows. 8% cumulative preferred stock, par value $100; authorized, issued, and outstanding 5,000 shares $500,000 Common stock, par value $1.00; authorized 1,000,000 shares; issued and outstanding 750,000 shares $750,000 Morgan Sondgeroth Inc. has never paid a cash or stock dividend. There has been no change in the capital accounts since Sondgeroth began operations. The state law permits dividends only from retained earnings. Instructions (a) Compute the book value of the common stock at December 31, 2014. (b) Compute the book value of the common stock at December 31, 2014, assuming that the preferred stock has a liquidating value of $106 per share.

Gordon Company sponsors a defined benefit pension plan. The following information related to the pension plan is available for 2014 and 2015. 2014 2015 Plan assets (fair value), December 31 $699,000 $849,000 Projected benefi t obligation, January 1 700,000 800,000 Pension asset/liability, January 1 140,000 Cr. ? Prior service cost, January 1 250,000 240,000 Service cost 60,000 90,000 Actual and expected return on plan assets 24,000 30,000 Amortization of prior service cost 10,000 12,000 Contributions (funding) 115,000 120,000 Accumulated benefi t obligation, December 31 500,000 550,000 Interest/settlement rate 9% 9% Instructions (a) Compute pension expense for 2014 and 2015. (b) Prepare the journal entries to record the pension expense and the company’s funding of the pension plan for both years.

Assume you asked your favorite AI learning tool to do the following: “Describe the §1231 netting process” and the AI tool responded as follows:

The amount of the child and dependent care credit is based on the amount of the taxpayer’s expenditures to provide care for one or more qualifying persons.  Who is considered to be a qualifying person for this purpose?

Under what circumstances might a new entrant succeed in the market for a product, despite existing firms benefiting from economies of scale?

What is so special about the superalloys? What distinguishes them from other alloys?

Under what conditions should a provision be recorded?

This year, Leron and Sheena sold their home for $750,000 after all selling costs. Under the following scenarios, how much taxable gain does the home sale generate for Leron and Sheena? Assume the couple is married filing jointly.

What are the three basic methods by which metals can be strengthened?

Would this uncertainty have a similar or a different effect on exporting companies and companies using imported inputs?