Question & Answer

Francine’s mother Donna and her father Darren separated and divorced in September of this year. Francine lived with both parents until the separation. Francine does not provide more than half of her own support. Francine is 15 years old at the end of the year.  a. Is Francine a qualifying child to Donna?

What determines the rate of depreciation of capital? What would happen if the rate of depreciation fell?

Technically, what is the difference between a fiber and a filament?

Employees at your company disagree about the accounting for sales returns. The sales manager believes that granting more generous return provisions can give the company a competitive edge and increase sales revenue. The controller cautions that, depending on the terms granted, loose return provisions might lead to non-GAAP revenue recognition. The company CFO would like you to research the issue to provide an authoritative answer. Instructions If your school has a subscription to the FASB Codification, go to http://aaa.hq.org/asclogin.cfm to log in and prepare responses to the following. Provide Codification references for your responses. (a) What is the authoritative literature addressing revenue recognition when right of return exists? (b) What is meant by “right of return”? (c) When there is a right of return, what conditions must the company meet to recognize the revenue at the time of sale? (d) What factors may impair the ability to make a reasonable estimate of future returns?

Identify some of the reasons why machining is commercially and technologically important

1. If V is constant, will (a) a £10 million rise in M give a £10 million rise in MV; (b) a 10 per cent rise in M give a 10 per cent rise in MV ? (Test your answer by fitting some numbers to the terms.) 2. If both V and Y are constant, will (a) a £10 million rise in M lead to a £10 million rise in P; (b) a 10 per cent rise in M lead to a 10 per cent rise in P? (Again, try fitting some numbers to the terms.)

(a)       Pick two public companies, go to their websites and identify their      major strategies.           (b) Pick one of the companies from part (a) and go to the website of a      competitor in the same industry. (For example, if you chose Coles, you            might go to the website of Woolworths.) Now compare the strategies of      both companies and list any similarities and differences.

For tax purposes, how is the compensation paid to an S corporation shareholder similar to compensation paid to an owner of an entity taxed as a partnership?  How is it different?

MACRS depreciation requires the use of a recovery period, method, and convention to depreciate tangible personal property assets. Briefly explain why each is important to the calculation.

Longhaul Real Estate exchanged a parcel of land it held for sale in Bryan, Texas, for a warehouse in College Station, Texas. Will the exchange qualify for like-kind treatment?

A shaper is used to reduce the thickness of a 50 mm part to 45 mm. The part is made of cast iron and has a tensile strength of 270 MPa and a Brinell hardness of 165 HB. The starting dimensions of the part are 750 mm x 450 mm x 50 mm. The cutting speed is 0.125 m/sec and the feed is 0.40mm/pass. The shaper ram is hydraulically driven and has a return stroke time that is 50% of the cutting stroke time. An extra 150 mm must be added before and after the part for acceleration and deceleration to take place. Assuming the ram moves parallel to the long dimension of the part, how long will it take to machine?

1.       : Describe how diversity of thought boosts creativity and innovation in the workplace. Why do managers consider diversity of thought to be a competitive advantage?

Define viscosity of a fluid.

A milling operation is performed on an NC machining center. Total travel distance = 300 mm in a direction parallel to one of the axes of the worktable. Cutting speed = 1.25 m/s and chip load = 0.05 mm. The end milling cutter has four teeth and its diameter = 20.0 mm. The axis uses a DC servomotor whose output shaft is coupled to a leadscrew with pitch = 6.0 mm. The feedback sensing device connected to the leadscrew is an optical encoder that emits 250 pulses per revolution. Determine (a) feed rate and time to complete the cut, and (b) rotational speed of the motor and the pulse rate of the encoder at the feed rate indicated.

Using the facts in problem 52, what is the minimum tax that Pedro should pay to make the tax structure vertically equitable based on the tax rate paid?  This would result in what type of tax rate structure

Jane Geddes Engineering Corporation purchased conveyor equipment with a list price of $10,000. Presented below are three independent cases related to the equipment. (Round to the nearest dollar.) (a) Geddes paid cash for the equipment 8 days after the purchase. The vendor’s credit terms are 2/10, n/30. Assume that equipment purchases are initially recorded gross. (b) Geddes traded in equipment with a book value of $2,000 (initial cost $8,000), and paid $9,500 in cash one month after the purchase. The old equipment could have been sold for $400 at the date of trade. (The exchange has commercial substance.) (c) Geddes gave the vendor a $10,800 zero-interest-bearing note for the equipment on the date of purchase. The note was due in one year and was paid on time. Assume that the effective-interest rate in the market was 9%. Instructions Prepare the general journal entries required to record the acquisition and payment in each of the independent cases above.

What are some of the possible defects in drawn sheet-metal parts?

Burnitz Manufacturing Company was organized on January 1, 2014. During 2014, it has used in its reports to management the straight-line method of depreciating its plant assets. On November 8, you are having a conference with Burnitz’s officers to discuss the depreciation method to be used for income tax and stockholder reporting. James Bryant, president of Burnitz, has suggested the use of a new method, which he feels is more suitable than the straight-line method for the needs of the company during the period of rapid expansion of production and capacity that he foresees. Following is an example in which the proposed method is applied to a fixed asset with an original cost of $248,000, an estimated useful life of 5 years, and a salvage value of approximately $8,000. Accumulated Years of Depreciation Book Value Life Fraction Depreciation at End at End Year Used Rate Expense of Year of Year 1 1 1/15 $16,000 $ 16,000 $232,000 2 2 2/15 32,000 48,000 200,000 3 3 3/15 48,000 96,000 152,000 4 4 4/15 64,000 160,000 88,000 5 5 5/15 80,000 240,000 8,000 The president favors the new method because he has heard that: 1. It will increase the funds recovered during the years near the end of the assets’ useful lives when maintenance and replacement disbursements are high. 2. It will result in increased write-offs in later years and thereby will reduce taxes. Instructions (a) What is the purpose of accounting for depreciation? (b) Is the president’s proposal within the scope of generally accepted accounting principles? In making your decision, discuss the circumstances, if any, under which use of the method would be reasonable and those, if any, under which it would not be reasonable. (c) The president wants your advice on the following issues. (1) Do depreciation charges recover or create funds? Explain. (2) Assume that the Internal Revenue Service accepts the proposed depreciation method in this case. If the proposed method were used for stockholder and tax reporting purposes, how would it affect the availability of cash flows generated by operations?

1.      : Don’t require Rukman “connectors” to reveal their affiliation with the corporate word-of-mouth marketing campaign. They don’t have to recommend a product they don’t believe in.

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) Were there changes in accounting principles reported by P&G during the three years covered by its income statements (2009–2011)? If so, describe the nature of the change and the year of change. (b) What types of estimates did P&G discuss in 2011?

Aubrey Inc. issued $4,000,000 of 10%, 10-year convertible bonds on June 1, 2014, at 98 plus accrued interest. The bonds were dated April 1, 2014, with interest payable April 1 and October 1. Bond discount is amortized semiannually on a straight-line basis. On April 1, 2015, $1,500,000 of these bonds were converted into 30,000 shares of $20 par value common stock. Accrued interest was paid in cash at the time of conversion. Instructions (a) Prepare the entry to record the interest expense at October 1, 2014. Assume that accrued interest payable was credited when the bonds were issued. (Round to nearest dollar.) (b) Prepare the entry(ies) to record the conversion on April 1, 2015. (Book value method is used.) Assume that the entry to record amortization of the bond discount and interest payment has been made.

Five jobs are waiting to be scheduled on a machine. For order A, the remaining process time = 5 days, and the due date is day 8. For order B, the remaining process time = 7 days, and the due date is day 16. For order C, the remaining process time = 11 days, and the due date is day 22. For order D, the remaining process time = 9 days, and the due date is day 31. For order E, the remaining process time = 10 days, and the due date is day 26. Determine a production schedulebased on (a) shortest processing time, (b) earliest due date, (c) critical ratio, and (d) least slack time. All times are listed in days.

The incredible growth of Amazon.com has put fear into the hearts of traditional retailers. Amazon’s stock price has soared to amazing levels. However, it is often pointed out in the financial press that it took the company several years to report its first profit. The following financial information is taken from a recent annual report.   Instructions (a) Calculate free cash flow for Amazon for the current and prior years, and discuss its ability to finance expansion from internally generated cash. Thus far Amazon has avoided purchasing large warehouses. Instead, it has used those of others. It is possible, however, that in order to increase customer satisfaction the company may have to build its own warehouses. If this happens, how might your impression of its ability to finance expansion change? (b) Discuss any potential implications of the change in Amazon’s cash provided by operations from the prior year to the current year.

As part of the year-end accounting process and review of operating policies, Cullen Co. is considering a change in the accounting for its equipment from the straight-line method to an accelerated method. Your supervisor wonders how the company will report this change in accounting. It has been a few years since he took intermediate accounting, and he cannot remember whether this change would be treated in a retrospective or prospective manner. Your supervisor wants you to research the authoritative guidance on a change in accounting policy related to depreciation methods. 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 are the accounting and reporting guidelines for a change in accounting policy related to depreciation methods? (b) What are the conditions that justify a change in depreciation method, as contemplated by Cullen Co.?

On December 31, 2014, the American Bank enters into a debt restructuring agreement with Barkley Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $3,000,000 note receivable by the following modifications: 1. Reducing the principal obligation from $3,000,000 to $2,400,000. 2. Extending the maturity date from December 31, 2014, to January 1, 2018. 3. Reducing the interest rate from 12% to 10%. Barkley pays interest at the end of each year. On January 1, 2018, Barkley Company pays $2,400,000 in cash to Firstar Bank. Instructions (a) Will the gain recorded by Barkley be equal to the loss recorded by American Bank under the debt restructuring? (b) Can Barkley Company record a gain under the term modification mentioned above? Explain. (c) Assuming that the interest rate Barkley should use to compute interest expense in future periods is 1.4276%, prepare the interest payment schedule of the note for Barkley Company after the debt restructuring. (d) Prepare the interest payment entry for Barkley Company on December 31, 2016. (e) What entry should Barkley make on January 1, 2018?