Question & Answer

Would a cut in benefits affect the Wo curve? If so, with what effect?

What is the difference between industrial stitching and stapling?

Is the number of working days lost through disputes a good indication of (a) union power; (b) union militancy?

(Looking at the Maths) What is the profit-maximising price if MC = MR = £12 and PεD = –2?

Campbell, a single taxpayer, earns $400,000 in taxable income and $2,000 in interest from an investment in State of New York bonds.  Using the U.S. tax rate schedule (see Appendix C), how much federal tax will she owe?  What is her average tax rate?  What is her effective tax rate?  What is her current marginal tax rate?

Nicole organized a new corporation. The corporation began business on April 1 of year 1. She made the following expenditures associated with getting the corporation started: Expense Date Amount Attorney fees for articles of incorporation February 10 $32,000 March 1 – March 30 wages March 30 $4,500  March 1 – March 30 rent March 30 $2,000 Stock issuance costs April 1 $20,000 April 1 – May 30 wages May 30 $12,000  a. What is the total amount of the start-up costs and organizational expenditures for Nicole’s corporation? b. What amount of the start-up costs and organizational expenditures may the corporation immediately expense in year 1 (excluding the portion of the expenditures that are amortized over 180 months)? c. What amount can the corporation deduct as amortization expense for the organizational expenditures and for the start-up costs for year 1 [not including the amount determined in part (b)]? d. What would be the total allowable organizational expenditures if Nicole started a sole proprietorship instead of a corporation?

Taveras Enterprises provides the following information relative to its defined benefit pension plan. Balances or Values at December 31, 2014 Projected benefi t obligation $2,737,000 Accumulated benefi t obligation 1,980,000 Fair value of plan assets 2,278,329 Accumulated OCI (PSC) 210,000 Accumulated OCI—Net loss (1/1/14 balance, –0–) 45,680 Pension liability 458,671 Other pension plan data for 2014: Service cost 94,000 Prior service cost amortization 42,000 Actual return on plan assets 130,000 Expected return on plan assets 175,680 Interest on January 1, 2014, projected benefi t obligation 253,000 Contributions to plan 93,329 Benefi ts paid 140,000 Instructions (a) Prepare the note disclosing the components of pension expense for the year 2014. (b) Determine the amounts of other comprehensive income and comprehensive income for 2014. Net income for 2014 is $35,000. (c) Compute the amount of accumulated other comprehensive income reported at December 31, 2014.

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 kind of pension plans do Coca-Cola and PepsiCo provide their employees? (b) What net periodic pension expense (cost) did Coca-Cola and PepsiCo report in 2011? (c) What is the year-end 2011 funded status of Coca-Cola’s and PepsiCo’s U.S. plans? (d) What relevant rates were used by Coca-Cola and PepsiCo in computing their pension amounts? (e) Compare the expected benefit payments and contributions for Coca-Cola and PepsiCo.

Presented below is the balance sheet of Sargent Corporation for the current year, 2014.   The following information is presented. 1. The current assets section includes cash $150,000, accounts receivable $170,000 less $10,000 for allowance for doubtful accounts, inventories $180,000, and unearned rent revenue $5,000. Inventoy is stated on the lower-of-FIFO-cost-or-market. 2. The investments section includes the cash surrender value of a life insurance contract $40,000; investments in common stock, short-term (trading) $80,000 and long-term (available-for-sale) $270,000; and bond sinking fund $250,000. The cost and fair value of investments in common stock are the same. 3. Property, plant, and equipment includes buildings $1,040,000 less accumulated depreciation $360,000; equipment $450,000 less accumulated depreciation $180,000; land $500,000; and land held for future use $270,000. 4. Intangible assets include a franchise $165,000; goodwill $100,000; and discount on bonds payable $40,000. 5. Current liabilities include accounts payable $140,000; notes payable—short-term $80,000 and longterm $120,000; and income taxes payable $40,000. 6. Long-term liabilities are composed solely of 7% bonds payable due 2022. 7. Stockholders’ equity has preferred stock, no par value, authorized 200,000 shares, issued 70,000 shares for $450,000; and common stock, $1.00 par value, authorized 400,000 shares, issued 100,000 shares at an average price of $10. In addition, the corporation has retained earnings of $320,000. Instructions Prepare a balance sheet in good form, adjusting the amounts in each balance sheet classification as affected by the information given above.

With reference to the above, provide an assessment of the UK balance of payments in 2020.

Sketch a person’s indifference map for two goods X and Y. Mark the optimum consumption point. Now illustrate the following (you might need to draw a separate diagram for each): (a)  A rise in the price of good X, but no change in the price of good Y. (b)  A shift in the person’s tastes from good Y to good X. (c)  A fall in the person’s income and a fall in the price of good Y, with the result that the consumption of Y remains constant (but that of X falls).

This year Diane intends to file a married filing jointly return.  Diane received $197,500 of salary and paid $5,000 of interest on loans used to pay qualified tuition costs for her dependent daughter, Deb. This year Diane has also paid moving expenses of $4,300 and $28,300 of alimony to her ex-spouse, Jack, who she divorced in 2013. a. What is Diane’s adjusted gross income? b. Suppose that Diane also reported income of $8,800 from a half share of profits from a partnership. Disregard any potential self-employment taxes on this income. What AGI would Diane report under these circumstances?

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.

Presented below are three different transactions related to materiality. Explain whether you would  classify these transactions as material. (a) Blair Co. has reported a positive trend in earnings over the last 3 years. In the current year, it reduces its bad debt allowance to ensure another positive earnings year. The impact of this adjustment is equal to 3% of net income. (b) Hindi Co. has an extraordinary gain of $3.1 million on the sale of plant assets and a $3.3 million loss on the sale of investments. It decides to net the gain and loss because the net effect is considered immaterial. Hindi Co.’s income for the current year was $10 million. (c) Damon Co. expenses all capital equipment under $25,000 on the basis that it is immaterial. The company has followed this practice for a number of years.

Mason (single) is a 50 percent shareholder in Angels Corp. (an S Corporation). Mason receives a $180,000 salary working full time for Angels Corp. Angels Corp. reported $400,000 of taxable business income for the year . Before considering his business income allocation from Angels and the self-employment tax deduction (if any), Mason’s adjusted gross income is $180,000 (all salary from Angels Corp.). Mason claims $50,000 in itemized deductions. Answer the following questions for Mason. a. What is Mason’s self-employment tax liability? b. Assuming the business income allocated to Mason is income from a specified service trade or business, what is Mason’s deduction for qualified business income? Ignore the wage-based limitation when computing the deduction.  c. Assume the same facts as in question (b), except that Angels Corp. reported $150,000 of taxable business income for the year. What is Mason’s deduction for qualified business income? Ignore the wage-based limitation when computing the deduction. d. Assuming the original facts, what is Mason’s net investment income tax liability (assume no investment expenses)? e. Assuming the original facts, what is Mason’s additional Medicare tax liability?

What are the alternatives to photolithography in IC processing?

Ten samples of equal size are taken to prepare a p chart. The total number of parts in these ten samples was 900 and the total number of defects counted was 117. Determine the center, LCL and UCL for the p chart.

Qualls Corporation reported 2014 earnings per share of $7.21. In 2015, Qualls reported earnings per share as follows. On income before extraordinary item $6.40 On extraordinary item 1.88 On net income $8.28Is the increase in earnings per share from $7.21 to $8.28 a favorable trend?

How do you think the positions of these eight countries will change over the next decade?

Five Satins Company purchased a piece of equipment at the beginning of 2011. The equipment cost $430,000. It has an estimated service life of 8 years and an expected salvage value of $70,000. The sum-of-the-years’-digits method of depreciation is being used. Someone has already correctly prepared a depreciation schedule for this asset. This schedule shows that $60,000 will be depreciated for a particular calendar year. Instructions Show calculations to determine for what particular year the depreciation amount for this asset will be $60,000.

Nieland Industries had one patent recorded on its books as of January 1, 2014. This patent had a book value of $288,000 and a remaining useful life of 8 years. During 2014, Nieland incurred research and development costs of $96,000 and brought a patent infringement suit against a competitor. On December 1, 2014, Nieland received the good news that its patent was valid and that its competitor could not use the process Nieland had patented. The company incurred $85,000 to defend this patent. At what amount should patent(s) be reported on the December 31, 2014, balance sheet, assuming monthly amortization of patents?

For what reasons may the NAIRU increase?

Selection of appropriate standard Franklin Industries’ CEO was talking with the CFO about the appropriate standard to use for the new product being launched in the coming year. The CEO argued that standards based on ideal performance would enable profits to be maximised through improved efficiency. The CFO argued, however, that the standard should be based on attainable performance or recent average historical performance.   Required Briefly comment on which standard is best for Franklin Industries to use in developing the standard cost for the new product.

Give some other examples of changes in one injection or withdrawal that can affect others.

What purpose does the variety in bond features (types and characteristics) serve?