Question & Answer

What is a production line?

Cineplex Corporation is a diversified company that operates in five different industries: A, B, C, D, and E. The following information relating to each segment is available for 2015. A B C D E Sales revenue $40,000 $ 75,000 $580,000 $35,000 $55,000 Cost of goods sold 19,000 50,000 270,000 19,000 30,000 Operating expenses 10,000 40,000 235,000 12,000 18,000 Total expenses 29,000 90,000 505,000 31,000 48,000 Operating profi t (loss) $11,000 $ (15,000) $ 75,000 $ 4,000 $ 7,000 Identifi able assets $35,000 $ 80,000 $500,000 $65,000 $50,000 Sales of segments B and C included intersegment sales of $20,000 and $100,000, respectively. Instructions (a) Determine which of the segments are reportable based on the: (1) Revenue test. (2) Operating profit (loss) test. (3) Identifiable assets test. (b) Prepare the necessary disclosures required by GAAP.

1.    : Do you think leadership is more important or less important in today’s flatter, team-based organizations? Are some leadership styles better suited to such organizations as opposed to traditional hierarchical organizations? Explain.

Why might efforts to address the issue of global warming be hampered by a lack of understanding of probability amongst the general public?

What is the difference between the tentative minimum tax (TMT) and the AMT?

Whether a business expense is “reasonable in amount” is often a difficult question. Explain why determining reasonableness is difficult, and describe a circumstance where reasonableness is likely to be questioned by the IRS.

On January 1, 2014, Evans Company entered into a noncancelable lease for a machine to be used in its manufacturing operations. The lease transfers ownership of the machine to Evans by the end of the lease term. The term of the lease is 8 years. The minimum lease payment made by Evans on January 1, 2014, was one of eight equal annual payments. At the inception of the lease, the criteria established for classification as a capital lease by the lessee were met. Instructions (a) What is the theoretical basis for the accounting standard that requires certain long-term leases to be capitalized by the lessee? Do not discuss the specific criteria for classifying a specific lease as a capital lease. (b) How should Evans account for this lease at its inception and determine the amount to be recorded? (c) What expenses related to this lease will Evans incur during the first year of the lease, and how will they be determined? (d) How should Evans report the lease transaction on its December 31, 2014, balance sheet?

Define reorder point inventory system.

What are the two basic methods by which the circuit pattern is transferred to the copper surface of the boards?

Diderot Drilling Company has leased property on which oil has been discovered. Wells on this property produced 18,000 barrels of oil during the past year that sold at an average sales price of $55 per barrel. Total oil resources of this property are estimated to be 250,000 barrels. The lease provided for an outright payment of $500,000 to the lessor (owner) before drilling could be commenced and an annual rental of $31,500. A premium of 5% of the sales price of every barrel of oil removed is to be paid annually to the lessor. In addition, Diderot (lessee) is to clean up all the waste and debris from drilling and to bear the costs of reconditioning the land for farming when the wells are abandoned. The estimated fair value, at the time of the lease, of this clean-up and reconditioning is $30,000. Instructions From the provisions of the lease agreement, you are to compute the cost per barrel for the past year, exclusive of operating costs, to Diderot Drilling Company.

At the end of the current year, Joshua Co. has a defined benefit obligation of $335,000 and pension plan assets with a fair value of $345,000. The amount of the vested benefits for the plan is $225,000. Joshua has a liability gain of $8,300 (beginning accumulated OCI is zero). What amount and account(s) related to its pension plan will be reported on the company’s statement of financial position?

On July 31, 2014, Mexico Company paid $3,000,000 to acquire all of the common stock of Conchita Incorporated, which became a division of Mexico. Conchita reported the following balance sheet at the time of the acquisition. It was determined at the date of the purchase that the fair value of the identifiable net assets of Conchita was $2,750,000. Over the next 6 months of operations, the newly purchased division experienced operating losses. In addition, it now appears that it will generate substantial losses for the foreseeable future. At December 31, 2014, Conchita reports the following balance sheet information. It is determined that the fair value of the Conchita Division is $1,850,000. The recorded amount for Conchita’s net assets (excluding goodwill) is the same as fair value, except for property, plant, and equipment, which has a fair value $150,000 above the carrying value. Instructions (a) Compute the amount of goodwill recognized, if any, on July 31, 2014. (b) Determine the impairment loss, if any, to be recorded on December 31, 2014. (c) Assume that fair value of the Conchita Division is $1,600,000 instead of $1,850,000. Determine the impairment loss, if any, to be recorded on December 31, 2014. (d) Prepare the journal entry to record the impairment loss, if any, and indicate where the loss would be reported in the income statement. Salaries and Other Expenses Number Employee (excluding Building of Projects Benefits Depreciation Charges) Completed projects with long-term benefits 15 $ 90,000 $50,000 Abandoned projects or projects that benefit the current period 10 65,000 15,000 Projects in process—results indeterminate 5 40,000 12,000 Total 30 $195,000 $77,000 Current assets $ 800,000 Current liabilities $ 600,000 Noncurrent assets 2,700,000 Long-term liabilities 500,000 Total assets $3,500,000 Stockholders’ equity 2,400,000 Total liabilities and stockholders’ equity $3,500,000 Current assets $ 450,000 Noncurrent assets (including goodwill recognized in purchase) 2,400,000 Current liabilities (700,000) Long-term liabilities (500,000) Net assets $1,650,000

Briefly describe the structure and role of the Securities and Exchange Commission. (LO4)

1. How much would be the total tax revenue for the government? 2. Will the individual producers gain from the export tax?

Suppose you asked your favorite AI query tool the following question: “What is the Kiddie Tax?”  The AI tool provided the following response:

What is the opportunity cost of holding money? Is it the real or the nominal rate of interest? Explain.

Which tax entity types are generally allowed to use the cash method of accounting?

Cougar Corporation is owned equally by Cat Stevens and a partnership that is owned equally by Cat’s father and two unrelated individuals. Cat and the partnership each owns 3,000 shares in Cougar. Cat wants to reduce his ownership in the company, and it is decided that Cougar will redeem 1,500 of his shares for $25,000 per share. Cat’s tax basis in each share is $5,000. What are the income tax consequences to Cat as a result of the stock redemption, assuming the company has earnings and profits of $10 million?

When does tax allocation within a period become necessary? How should this allocation be handled?

When salaries and wages expense for the year is computed, why are beginning accrued salaries and wages subtracted from, and ending accrued salaries and wages added to, salaries and wages paid during the year?

Identify and briefly describe the two methods generally employed to account for the cash received in situations where the collection of the sales price is not reasonably assured.

Offer an argument for why a political regime that favors a large government will cause interest rates to be higher. Offer at least one example of why a political regime that favors a large government will cause interest rates to be lower. (Hint: Recognize that the government intervention in the economy can influence other factors that affect interest rates.) (LO2)

What will be the effect on the UK economy if the European Central Bank cuts interest rates?

What must a shareholder do to waive the family attribution rules in a complete redemption of stock?

Explain how the standard deduction is rationalized and why the standard deduction might be viewed as a floor limit on itemized deductions.