Question & Answer

Describe two disclosures required by the Corporations Act with respect to       executive remuneration.             (LO4 and 5)

Name some of the reasons for the commercial importance of powder metallurgy technology.

Define machinability.

What is the name given to the furnace used to fire ceramic ware?

Describe the slip casting process in traditional ceramics processing

How might we go about assessing whether quantitative easing actually worked?

What is Rent's rule?

1. What would be the ‘first-best’ solution to the problem of an infant industry not being able to compete with imports? 2. Protection to allow the exploitation of monopoly/monopsony power can be seen as a ‘first-best’ policy for the country concerned. Similarly, the use of tariffs to counteract externalities directly involved in the trade process (e.g. the environmental costs of an oil tanker disaster) could be seen to be a first-best policy. Explain why.

A bend test is used for a certain hard material. If the transverse rupture strength of the material is known to be 1000 MPa, what is the anticipated load at which the specimen is likely to fail, given that its width = 15 mm, thickness = 10 mm, and length = 60 mm?

Show how Eq. (21.4) is derived from Figure 21.6.

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) Which method of computing net cash provided by operating activities does P&G use? What were the amounts of net cash provided by operating activities for the years 2009, 2010, and 2011? Which two items were most responsible for the decrease in net cash provided by operating activities in 2011? (b) What was the most significant item in the cash flows used for investing activities section in 2011? What was the most significant item in the cash flows used for financing activities section in 2011? (c) Where is “deferred income taxes” reported in P&G’s statement of cash flows? Why does it appear in that section of the statement of cash flows? (d) Where is depreciation reported in P&G’s statement of cash flows? Why is depreciation added to net income in the statement of cash flows?

Name three common types of income shifting.

Minuteman wants to enter into a like-kind exchange by exchanging its old New England manufacturing facility for a ranch in Wyoming. Minuteman is using a third-party intermediary to facilitate the exchange. The purchaser of the manufacturing facility wants to complete the transaction immediately, but, for various reasons, the ranch transaction will not be completed for three to four months. Will this delay cause a problem for Minuteman’s desire to accomplish this through a like-kind exchange?  Explain.

Two economists disagree over the best way of tackling the problem of unemployment. For what types of reasons might they disagree? Are these reasons positive or normative?

Credit default swaps were once viewed as a great innovation that could make mortgage markets more stable. However, these swaps have been criticized for making the credit crisis worse. Why? (LO7)

Wasserman Corporation issued 10-year bonds on January 1, 2014. Costs associated with the bond issuance were $160,000. Wasserman uses the straight-line method to amortize bond issue costs. Prepare the December 31, 2014, entry to record 2014 bond issue cost amortization.

Dingel Corporation has contracted with you to prepare a statement of cash flows. The controller has provided the following information. December 31 2014 2013 Buildings $ –0– $29,750 Equipment 45,000 20,000 Patents 5,000 6,250 Investments –0– 3,000 Inventory 12,000 9,000 Accounts receivable 12,250 10,000 Cash 33,500 13,000 $107,750 $91,000 Share capital—ordinary $ 43,000 $33,000 Retained earnings 20,750 6,000 Allowance for doubtful accounts 3,000 4,500 Accumulated depreciation on equipment 2,000 4,500 Accumulated depreciation on buildings –0– 6,000 Accounts payable 5,000 3,000 Dividends payable –0– 5,000 Long-term notes payable 31,000 25,000 Notes payable, short-term (non-trade) 3,000 4,000 $107,750 $91,000 Additional data related to 2014 are as follows. 1. Equipment that had cost $11,000 and was 40% depreciated at time of disposal was sold for $2,500. 2. $10,000 of the long-term notes payable was paid by issuing ordinary shares. 3. Cash dividends paid were $5,000. 4. On January 1, 2014, the building was completely destroyed by a flood. Insurance proceeds on the building were $32,000. 5. Equity investments (non-trading) were sold at $1,700 above their cost. 6. Cash was paid for the acquisition of equipment. 7. A long-term note for $16,000 was issued for the acquisition of equipment. 8. Interest of $2,000 and income taxes of $6,500 were paid in cash. Instructions Prepare a statement of cash flows using the indirect method.

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) Which method of computing net cash provided by operating activities does M&S use? What were the amounts of net cash provided by operating activities for the years 2011 and 2012? Which two items were most responsible for the increase in net cash provided by operating activities in 2012? (b) What was the most significant item in the cash flows used for investing activities section in 2012? What was the most significant item in the cash flows used for financing activities section in 2012? (c) Where is “deferred income taxes” reported in M&S’s statement of cash flows? Why does it appear in that section of the statement of cash flows? (d) Where is depreciation reported in M&S’s statement of cash flows? Why is depreciation added to net income in the statement of cash flows?

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 method of computing net cash provided by operating activities does Coca-Cola use? What method does PepsiCo use? What were the amounts of cash provided by operating activities reported by Coca-Cola and PepsiCo in 2011? (b) What was the most significant item reported by Coca-Cola and PepsiCo in 2011 in their investing activities sections? What is the most significant item reported by Coca-Cola and PepsiCo in 2011 in their financing activities sections? (c) What were these two companies’ trends in net cash provided by operating activities over the period 2009 to 2011? (d) Where is “depreciation and amortization” reported by Coca-Cola and PepsiCo in their statements of cash flows? What is the amount and why does it appear in that section of the statement of cash flows? (e) Based on the information contained in Coca-Cola’s and PepsiCo’s financial statements, compute the following 2011 ratios for each company. These ratios require the use of statement of cash flows data. (These ratios were covered in Chapter 5.) (1) Current cash debt coverage. (2) Cash debt coverage. (f) What conclusions concerning the management of cash can be drawn from the ratios computed in (e)?

Raleigh Corp. has an investment with a carrying value (equity method) on its books of $170,000 representing a 30% interest in Borg Company, which suffered a $620,000 loss this year. How should Raleigh Corp. handle its proportionate share of Borg’s loss?

1.    : What do you see as the primary advantage of using big data analytics—understanding the environment or influencing the environment? Why?

Question: Where can authoritative IFRS guidance related to stockholders’ equity be found?

When a taxpayer works as an employee and as a self-employed independent contractor during the year, how does the taxpayer determine their employment and self-employment taxes payable?

Plant-wide versus production cost pools Flexible Manufacturers produces small batches of customised products. The accounting system is set up to allocate plant overhead to each job using the following production cost pools and overhead allocation rates       Actual resources used for job 75:       The manufacturing accountant wants to simplify the cost accounting system and use a plant wide rate. If the preceding costs are grouped into a single cost pool and allocated based on labour hours, the rate would be $35 per direct labour hour.   Required (a)          What cost should be allocated to job 75 using the plant-wide overhead rate? (b)          What cost should be allocated to job 75 using the production cost pool overhead rates? (c)           Why do the allocated amounts in parts (a) and (b) differ? (d)          Which method would you recommend? Explain your choice.

Job costing, over- and underapplied overhead, journal entries Shane’s Shovels produces small, custom earth-moving equipment for landscaping companies. Manufacturing overhead is allocated to work in process using an estimated overhead rate. During April, transactions for Shane’s Shovels included the following:       Beginning and ending work in process were both zero.   Required (a)     What was the cost of jobs completed in April? (b)     Was manufacturing overhead underapplied or overapplied? By how much? (c)      Write out the journal entries for these transactions, including the adjustment.