Question & Answer

Developing a reward system and reward targets You are a remuneration consultant. The board of a large multi-national bank has asked you to draft a proposal for a new reward system for senior executives. Currently all senior executives are paid a fixed salary. Your investigations at the entity reveal its mission is to be ‘the number one provider of quality banking services in the southern hemisphere’. You note that the entity has planned for 10 per cent profit growth over the next five years with a corresponding growth in share price. The entity has identified customer satisfaction, product quality and product innovation as the key indicators of success.   The directors are concerned as company profits have been declining. They consider a revised remuneration scheme may motivate senior executives to grow profits and the share price.   Required Prepare a report to the board outlining a new remuneration plan for the executives of the entity.             (LO2, 3 and 4)

Explain how the Treasury uses the primary market to obtain adequate funding from the U.S. government. (LO1)

Daria is considering investing in one of two partnerships that will build, own, and operate a hotel. One is located in Canada and one is located in Arizona. Assuming both investments will generate the same before-tax rate of return, which entity should Daria invest in when considering the after-tax consequences of the investment?  Assume Daria’s marginal tax rate is 37 percent, she will be a passive investor in the business, and she will report the flow-through income from either entity on her tax return. Explain (ignore any foreign tax credit issues).

What accounting treatment is normally given to the following items in accounting for plant assets? (a) Additions. (b) Major repairs. (c) Improvements and replacements.

What is the significance of the term ‘endogenous’ in endogenous growth theory? What, according to this theory, determines the long-run rate of economic growth?

Explain the difference between the proportional method and the incremental method of allocating the proceeds of lump-sum sales of capital stock.

Ames Quartet Inc. factors receivables with a carrying amount of $200,000 to Joffrey Company for $160,000 on a with recourse basis. Instructions The recourse provision has a fair value of $1,000. This transaction should be recorded as a sale. Prepare the appropriate journal entry to record this transaction on the books of Ames Quartet Inc.

A blanking operation is to be performed on 2.0 mm thick cold-rolled steel (half hard). The part is circular with diameter = 75.0 mm. Determine the appropriate punch and die sizes for this operation

Alvarado Company sells a machine for $7,400 with a 12-month warranty agreement that requires the company to replace all defective parts and to provide the repair labor at no cost to the customers. With sales being made evenly throughout the year, the company sells 600 machines in 2014 (warranty expense is incurred half in 2014 and half in 2015). As a result of product testing, the company estimates that the warranty cost is $390 per machine ($170 parts and $220 labor). Instructions Assuming that actual warranty costs are incurred exactly as estimated, what journal entries would be made relative to the following facts? (a) Under application of the expense warranty accrual method for: (1) Sale of machinery in 2014. (2) Warranty costs incurred in 2014. (3) Warranty expense charged against 2014 revenues. (4) Warranty costs incurred in 2015. (b) Under application of the cash-basis method for: (1) Sale of machinery in 2014. (2) Warranty costs incurred in 2014. (3) Warranty expense charged against 2014 revenues. (4) Warranty costs incurred in 2015. (c) What amount, if any, is disclosed in the balance sheet as a liability for future warranty costs as of December 31, 2014, under each method? (d) Which method best reflects the income in 2014 and 2015 of Alvarado Company? Why?

Charlie was hired by Ajax this year as a corporate executive and a member of the board of directors. During the current year, Charlie received the following payments or benefits paid on his behalf.

Describe the Financial Services Modernization Act of 1999. Explain how it affected commercial bank operations and how it changed the competitive landscape among financial institutions. (LO2)

Stan Conner and Mark Stein were discussing the statement of cash flows of Bombeck Co. In the notes to the statement of cash flows was a schedule entitled “Non-cash investing and financing activities.” Give three examples of significant non-cash transactions that would be reported in this schedule.

Consider the arguments from the perspective of an advanced country for and against protecting its industries from imports of manufactures from developing countries.

Two years ago, Kimberly became a 30 percent partner in the KST Partnership with a contribution of investment land with a $10,000 basis and $16,000 fair market value. On January 2 of this year, Kimberly has a $15,000 basis in her partnership interest, and none of her pre-contribution gain has been recognized. On January 2 Kimberly receives an operating distribution of a tract of land (not the contributed land) with a $12,000 basis and an $18,000 fair market value. a. What are the amount and character of Kimberly’s recognized gain or loss on the distribution? b. What is Kimberly’s remaining basis in KST after the distribution? c. What is KST’s basis in the land Kimberly contributed after Kimberly receives this distribution?

A hot rolling mill has rolls of diameter = 24 in. It can exert a maximum force = 400,000 lb. The mill has a maximum horsepower = 100 hp. It is desired to reduce a 1.5 in thick plate by the maximumpossible draft in one pass. The starting plate is 10 in wide. In the heated condition, the work material has a strength coefficient = 20,000 lb/in2 and a strain hardening exponent = zero. Determine (a) maximum possible draft, (b) associated true strain, and (c) maximum speed of the rolls for the operation

What are the five principal parameters of a grinding wheel?

Thriller Corporation has one class of voting common stock, of which 1,000 shares are issued and outstanding. The shares are owned as follows:  Joe Jackson400 Mike Jackson (Joe’s son)200 Jane Jackson (Joe’s daughter)200 Vinnie Price (unrelated)   200   Total1,000   Thriller Corporation has current E&P of $300,000 for this year and accumulated E&P at January 1 of this year of $500,000.  During this year, the corporation made the following distributions to its shareholders:  03/31: Paid a distribution of $10 per share to each shareholder ($10,000 in total).   06/30: Redeemed 200 shares of Joe’s stock for $200,000.  Joe’s basis in the 200 shares redeemed was $100,000.   09/30: Redeemed 60 shares of Vinnie’s stock for $60,000. His basis in the 60 shares was $36,000.   12/31: Paid a distribution of $10 per share to each shareholder ($7,400 in total).

Aruna, a sole proprietor, wants to sell two assets that she no longer needs for her business. Both assets qualify as §1231 assets. The first is machinery and will generate a $10,000 §1231 loss on the sale. The second is land that will generate a $7,000 §1231 gain on the sale. Aruna’s ordinary marginal tax rate is 32 percent. a. Assuming she sells both assets in December of year 1 (the current year), what effect will the sales have on Aruna’s tax liability? b. Assuming that Aruna sells the land in December of year 1 and the machinery in January of year 2, what effect will the sales have on Aruna’s tax liability for each year? c. Explain why selling the assets in separate years will result in greater tax savings for Aruna.

Suppose you asked your favorite AI query tool the following question: “Who Cares about taxes and why?”  The AI tool provided the following response:

Arnold and Lilly recently had a discussion about whether a sales tax is a proportional tax or a regressive tax.  Arnold argued that a sales tax is regressive.  Lilly countered that the sales tax is a flat tax.  Who was correct?

What would be the rate of economic growth if 20 per cent of national income were saved and invested and the marginal capital/output ratio was 5/2?

Why might a recovering economy (and hence a fall in government expenditure on social security benefits) make the government feel even more concerned to make discretionary cuts in government expenditure?

For a firm to be able to implement a strategy of price discrimination it must be able to prevent re-sale amongst its customers. What factors would tend to make it more difficult for a consumer to resell a good?

1.              : What does it mean to be "true to yourself"? Is being true to yourself more important than achieving personal career success in a male-dominated company? Is it okay to enable the continuation of an "unhealthy" work environment for women? Why do you think the way you do about this?

Wayne Cooper has some questions regarding the theoretical framework in which GAAP is set. He knows that the FASB and other predecessor organizations have attempted to develop a conceptual framework for accounting theory formulation. Yet, Wayne’s supervisors have indicated that these theoretical frameworks have little value in the practical sense (i.e., in the real world). Wayne did notice that accounting rules seem to be established after the fact rather than before. He thought this indicated a lack of theory structure but never really questioned the process at school because he was too busy doing the homework. Wayne feels that some of his anxiety about accounting theory and accounting semantics could be alleviated by identifying the basic concepts and definitions accepted by the profession and considering them in light of his current work. By doing this, he hopes to develop an appropriate connection between theory and practice. Instructions (a) Help Wayne recognize the purpose of and benefit of a conceptual framework. (b) Identify any Statements of Financial Accounting Concepts issued by the FASB that may be helpful to Wayne in developing his theoretical background.