Question & Answer

An L-shaped structural section is direct extruded from an aluminum billet in which Lo = 500 mm and Do = 100 mm. Dimensions of the cross section are given in Figure P19.29. Die angle = 90°. Determine (a) extrusion ratio, (b) shape factor, and (c) length of the extruded section if the butt remaining in the container at the end of the ram stroke is 25 mm.

In robot programming, what is the difference between powered leadthrough and manual leadthrough?

Dennis contributed business assets to a new business in exchange for stock in the company. The exchange did not qualify as a tax-deferred exchange. The fair market value of these assets was $287,000 on the contribution date. Dennis’s original basis in the assets he contributed was $143,000, and the accumulated depreciation on the assets was $78,000. a. What is the business’s basis in the assets it received from Dennis?  b. What would be the business’s basis if the transaction qualified as a tax-deferred exchange?

What is unique about the polymer cellulose?

How is it determined whether deferred tax amounts are considered to be “related” to specific asset or liability amounts?

Cathy, Heathcliff, and Isabelle are equal shareholders in Wuthering Heights (WH), an S corporation. Heathcliff has decided he would like to terminate the S election. In the following alternative scenarios, indicate whether the termination will occur and indicate the date if applicable (assume no alternative termination dates are selected).

Outline the purpose of strategy maps.

Under the percentage-of-completion method, how are the Construction in Process and the Billings on Construction in Process accounts reported in the balance sheet?

Cost allocation has no impact on the transfer price set.  Discuss.

Evaluating a reward system You are on the board of a computer software company that has three distinct divisions: home networks, small business systems and ERP systems. In a bid to encourage higher performance, it has been proposed that the company would benefit from creating a reward system with a profit-sharing component for divisional managers. At present, divisional managers are paid a fixed salary. The proposal is for the company to pool 5 per cent of the company’s profits each month and pay this amount at the end of the year based on divisional managers’ performance against targets. The targets will be set in the preliminary performance review at the beginning of the year. Targets will cover both divisional and company-wide performance. It is thought that this approach will encourage a commitment to the organisation and encourage individuals to strive for better results. There will be a vote for the current proposal at the next board meeting.   Required (a) Discuss the advantages and disadvantages of the proposal. (b) Outline an alternative reward system. (LO2 and 4)

A press release announcing the appointment of the trustees of the new Financial Accounting Foundation stated that the Financial Accounting Standards Board (to be appointed by the trustees) “. . . will become the established authority for setting accounting principles under which corporations report to the shareholders and others” (AICPA news release July 20, 1972). Instructions (a) Identify the sponsoring organization of the FASB and the process by which the FASB arrives at a decision and issues an accounting standard. (b) Indicate the major types of pronouncements issued by the FASB and the purposes of each of these pronouncements.

If a partner with a taxable year-end of December 31 is in a partnership with a March 31 taxable year-end, how many months of deferral will the partner receive? Why?

Volunteer Corporation reported taxable income of $500,000 from operations this year. The company paid federal income taxes of $105,000 on this taxable income.  During the year, the company made a distribution of land to its sole shareholder, Rocky. The land’s fair market value was $75,000 and its tax and E&P basis to Volunteer was $25,000. Rocky assumed a mortgage attached to the land of $15,000. Volunteer had accumulated E&P of $750,000 at the beginning of the year.

How are CVP analysis and breakeven analysis related?

Identify the lease classifications for lessors and the criteria that must be met for each classification.

Malone Company determined its ending inventory at cost and at lower-of-cost-or-market at December 31, 2013, December 31, 2014, and December 31, 2015, as shown below. Cost Lower-of-Cost-or-Market 12/31/13 $650,000 $650,000 12/31/14 780,000 712,000 12/31/15 905,000 830,000 Instructions (a) Prepare the journal entries required at December 31, 2014, and at December 31, 2015, assuming that the cost-of-goods-sold method of adjusting to lower-of-cost-or-market is used. (b) Prepare the journal entries required at December 31, 2014, and at December 31, 2015, assuming that the loss method of adjusting to lower-of-cost-or-market is used.

Hull Company’s record of transactions concerning part X for the month of April was as follows. Purchases Sales April 1 (balance on hand) 100 @ $5.00 April 5 300 4 400 @ 5.10 12 200 11 300 @ 5.30 27 800 18 200 @ 5.35 28 150 26 600 @ 5.60 30 200 @ 5.80 Instructions (a) Compute the inventory at April 30 on each of the following bases. Assume that perpetual inventory records are kept in units only. Carry unit costs to the nearest cent. (1) First-in, first-out (FIFO). (2) Last-in, first-out (LIFO). (3) Average-cost. (b) If the perpetual inventory record is kept in dollars, and costs are computed at the time of each withdrawal, what amount would be shown as ending inventory in (1), (2), and (3) above? (Carry average unit costs to four decimal places.)

What are some of the reasons why a controlled atmosphere furnace is desirable in sintering?

What should be the Fed’s role? Should it focus only on monetary policy? Or should it engage in the trading of various types of securities in an attempt to stabilize the financial system when securities markets are suffering from investor fears and the potential for high credit (default) risk? (LO2, LO3)

A pile of iron powder weighs 2 lb. The particles are spherical in shape and all have the same diameter of 0.002 in. (a) Determine the total surface area of all the particles in the pile. (b) If the packing factor = 0.6, determine the volume taken by the pile. Note: the density of iron = 0.284 lb/in3 .

Daniel Hardware Co. is considering alternative financing arrangements for equipment used in its warehouses. Besides purchasing the equipment outright, Daniel is also considering a lease. Accounting for the outright purchase is fairly straightforward, but because Daniel has not used equipment leases in the past, the accounting staff is less informed about the specific accounting rules for leases. The staff is aware of some general lease rules related to “risks and rewards,” but they are unsure about the meanings of these terms in lease accounting. Daniel has asked you to conduct some research on these items related to lease capitalization criteria. 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 can use the search tool in your Internet browser to respond to the following questions. (Provide paragraph citations.) (a) What is the objective of lease classification criteria? (b) An important element of evaluating leases is determining whether substantially all of the risks and rewards of ownership are transferred in the lease. How is “substantially all” defined in the authoritative literature? (c) Besides the non-cancelable term of the lease, name at least three other considerations in determining the “lease term.”

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 types of leases are used by M&S? (b) What amount of finance leases was reported by M&S in total and for less than one year? (c) What minimum annual rental commitments under all non-cancelable leases at 31 March 2012 did M&S disclose?

Define what an electrical arc is.

Some critics argue that insider trading should not be illegal, because it allows market prices to more quickly reflect the inside information. Write a short essay that supports or refutes this opinion.

Davis Corporation is a medium-sized manufacturer of paperboard containers and boxes. The corporation sponsors a noncontributory, defined benefit pension plan that covers its 250 employees. Sid Cole has recently been hired as president of Davis Corporation. While reviewing last year’s financial statements with Carol Dilbeck, controller, Cole expressed confusion about several of the items in the footnote to the financial statements relating to the pension plan. In part, the footnote reads as follows. Note J. The company has a defined benefit pension plan covering substantially all of its employees. The benefits are based on years of service and the employee’s compensation during the last four years of employment. The company’s funding policy is to contribute annually the maximum amount allowed under the federal tax code. Contributions are intended to provide for benefits expected to be earned in the future as well as those earned to date. The net periodic pension expense on Davis Corporation’s comparative income statement was $72,000 in 2014 and $57,680 in 2013. The following are selected figures from the plan’s funded status and amounts recognized in the Davis Corporation’s Statement of Financial Position at December 31, 2014 ($000 omitted). Actuarial present value of benefi t obligations: Accumulated benefi t obligation (including vested benefi ts of $636) $ (870) Projected benefi t obligation $(1,200) Plan assets at fair value 1,050 Projected benefi t obligation in excess of plan assets $ (150) Given that Davis Corporation’s work force has been stable for the last 6 years, Cole could not understand the increase in the net periodic pension expense. Dilbeck explained that the net periodic pension expense consists of several elements, some of which may increase or decrease the net expense. Instructions (a) The determination of the net periodic pension expense is a function of five elements. List and briefly describe each of the elements. (b) Describe the major difference and the major similarity between the accumulated benefit obligation and the projected benefit obligation. (c) (1) Explain why pension gains and losses are not recognized on the income statement in the period in which they arise. (2) Briefly describe how pension gains and losses are recognized.