Question & Answer

What are the advantages of a mixed model line over a batch model line for producing different product styles?

Uhura Company has decided to expand its operations. The bookkeeper recently completed the balance sheet presented below in order to obtain additional funds for expansion.   Intangible assets Goodwill 80,000 Cash surrender value of life insurance 90,000 Prepaid expenses 12,000 Current liabilities Accounts payable 135,000 Notes payable (due next year) 125,000 Pension obligation 82,000 Rent payable 49,000 Premium on bonds payable 53,000 Long-term liabilities Bonds payable 500,000 Stockholders’ equity Common stock, $1.00 par, authorized 400,000 shares, issued 290,000 290,000 Additional paid-in capital 160,000 Retained earnings ? Instructions Prepare a revised balance sheet given the available information. Assume that the accumulated depreciation balance for the buildings is $160,000 and for the equipment, $105,000. The allowance for doubtful accounts has a balance of $17,000. The pension obligation is considered a long-term liability.

Explain the argument that the deductions for charitable contributions and home mortgage interest represent indirect subsidies for these activities.

Mayaguez Corporation provides its officers with bonuses based on net income. For 2014, the bonuses total $350,000 and are paid on February 15, 2015. Prepare Mayaguez’s December 31, 2014, adjusting entry and the February 15, 2015, entry.

How suitable are legal restrictions in the following cases? (a)  Ensuring adequate vehicle safety (e.g. that tyres have sufficient tread or that the vehicle is roadworthy). (b)  Reducing traffic congestion. (c)  Preventing the abuse of monopoly power. (d)  Ensuring that mergers are in the public interest. (e)  Ensuring that firms charge a price equal to marginal cost.

A machinability rating is to be determined for a new work material using the cutting speed for a 60- min tool life as the basis of comparison. For the base material (B1112 steel), test data resulted in Taylor equation parameter values of n = 0.29 and C = 500, where speed is in m/min and tool life is min. For the new material, the parameter values were n = 0.21 and C = 400. These results were obtained using cemented carbide tooling. (a) Compute a machinability rating for the new material. (b) Suppose the machinability criterion were the cutting speed for a 10-min tool life rather than the present criterion. Compute the machinability rating for this case. (c) What do the results of the two calculations show about the difficulties in machinability measurement?

What is self-assembly in nanofabrication?

List the accessory tools that can be used during open die forging according to the video on forging

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 kind of pension plan does P&G provide its employees in the United States? (b) What was P&G’s pension expense for 2011, 2010, and 2009 for the United States? (c) What is the impact of P&G’s pension plans for 2011 on its financial statements? (d) What information does P&G provide on the target allocation of its pension assets? (Compare the asset allocation for “Pensions and Other Retiree Benefits.”) How do the allocations relate to the expected returns on these assets?

Name the four forming processes listed in the video clip on sheet-metal stamping dies and processes

Besides the starting material, what other feature distinguishes the rapid prototyping technologies?

What is service cost, and what is the basis of its measurement?

During 2010, George Winston Corporation spent $170,000 in research and development costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2010, and had a legal life of 20 years and a useful life of 10 years. Legal costs of $18,000 related to the patent were incurred as of October 1, 2010. Instructions (a) Prepare all journal entries required in 2010 and 2011 as a result of the transactions above. (b) On June 1, 2012, Winston spent $9,480 to successfully prosecute a patent infringement suit. As a result, the estimate of useful life was extended to 12 years from June 1, 2012. Prepare all journal entries required in 2012 and 2013. (c) In 2014, Winston determined that a competitor’s product would make the New Age Piano obsolete and the patent worthless by December 31, 2015. Prepare all journal entries required in 2014 and 2015.

Tonkawa Company purchased land for use as its corporate headquarters. A small factory that was on the land when it was purchased was torn down before construction of the office building began. Furthermore, a substantial amount of rock blasting and removal had to be done to the site before construction of the building foundation began. Because the office building was set back on the land far from the public road, Tonkawa Company had the contractor construct a paved road that led from the public road to the parking lot of the office building. Three years after the office building was occupied, Tonkawa Company added four stories to the office building. The four stories had an estimated useful life of 5 years more than the remaining estimated useful life of the original office building. Ten years later, the land and building were sold at an amount more than their net book value, and Tonkawa Company had a new office building constructed in another state for use as its new corporate headquarters. Instructions (a) Which of the expenditures above should be capitalized? How should each be depreciated or amortized? Discuss the rationale for your answers. (b) How would the sale of the land and building be accounted for? Include in your answer an explanation of how to determine the net book value at the date of sale. Discuss the rationale for your answer.

Explain the current environment regarding revenue recognition.

In 2013, Grishell Trucking Company negotiated and closed a long-term lease contract for newly constructed truck terminals and freight storage facilities. The buildings were erected to the company’s specifications on land owned by the company. On January 1, 2014, Grishell Trucking Company took possession of the lease properties. On January 1, 2014 and 2015, the company made cash payments of $948,000 that were recorded as rental expenses. Although the terminals have a composite useful life of 40 years, the noncancelable lease runs for 20 years from January 1, 2014, with a bargain-purchase option available upon expiration of the lease. The 20-year lease is effective for the period January 1, 2014, through December 31, 2033. Advance rental payments of $800,000 are payable to the lessor on January 1 of each of the first 10 years of the lease term. Advance rental payments of $320,000 are due on January 1 for each of the last 10 years of the lease. The company has an option to purchase all of these leased facilities for $1 on December 31, 2033. It also must make annual payments to the lessor of $125,000 for property taxes and $23,000 for insurance. The lease was negotiated to assure the lessor a 6% rate of return. Instructions (a) Prepare a schedule to compute for Grishell Trucking Company the present value of the terminal facilities and related obligation at January 1, 2014. (b) Assuming that the present value of terminal facilities and related obligation at January 1, 2014, was $7,600,000, prepare journal entries for Grishell Trucking Company to record the: (1) Cash payment to the lessor on January 1, 2016. (2) Amortization of the cost of the leased properties for 2016 using the straight-line method and assuming a zero salvage value. (3) Accrual of interest expense at December 31, 2016. Selected present value factors are as follows. For an Ordinary Periods Annuity of $1 at 6% For $1 at 6% 1 .943396 .943396 2 1.833393 .889996 8 6.209794 .627412 9 6.801692 .591898 10 7.360087 .558395 19 11.158117 .330513 20 11.469921 .311805

On December 31, 2014, Faital Company acquired a computer from Plato Corporation by issuing a $600,000 zero-interest-bearing note, payable in full on December 31, 2018. Faital Company’s credit rating permits it to borrow funds from its several lines of credit at 10%. The computer is expected to have a 5-year life and a $70,000 salvage value. Instructions (Round answers to the nearest cent.) (a) Prepare the journal entry for the purchase on December 31, 2014. (b) Prepare any necessary adjusting entries relative to depreciation (use straight-line) and amortization (use effective-interest method) on December 31, 2015. (c) Prepare any necessary adjusting entries relative to depreciation and amortization on December 31, 2016.

1.    You are a bright, hard-working, entry-level manager who fully intends to rise through the ranks. Your performance evaluation gives you high marks for your technical skills, but low marks when it comes to people skills. Do you think people skills can be learned, or do you need to rethink your career path? If people skills can be learned, how would you go about it?

Explain a principal-agent relationship and its significance to revenue recognition.

What is the fundamental feature that distinguishes fusion welding from solid-state welding?

Using a graph similar to Figure 20.7, trace through the effect of a reduction in aggregate demand.

Define legal–political risk and give an example of how it can affect an international corporation.

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/   -and-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 kind of pension plan does M&S provide its employees? (b) What was M&S’s pension expense for 2012 and 2011? (c) What is the impact of M&S’s pension plans for 2012 on its financial statements? (d) What information does M&S provide on the target allocation of its pension assets? How do the allocations relate to the expected returns on these assets?

Hiram Co. uses the equity method to account for investments in common stock. What accounting should be made for dividends received from these investments subsequent to the date of investment?

Explain the government’s dilemma regarding whether it should rescue American International Group (AIG) during the credit crisis. (LO5)