Question & Answer

What is the meaning of an initial return for an IPO? (LO3)

Determine the bending force required in Problem 20.11 if the bend is to be performed in a V-die with a die opening width dimension = 1.25 in. The material has a tensile strength = 70,000 lb/in2 .

What methods are used in practice to determine the extent of progress toward completion? Identify some “input measures” and some “output measures” that might be used to determine the extent of progress.

What are some of the resource changes that can be made to increase plant capacity in the short run?

Roundtree Manufacturing Co. is preparing its year-end financial statements and is considering the accounting for the following items. 1. The vice president of sales had indicated that one product line has lost its customer appeal and will be phased out over the next 3 years. Therefore, a decision has been made to lower the estimated lives on related production equipment from the remaining 5 years to 3 years. 2. The Hightone Building was converted from a sales office to offices for the Accounting Department at the beginning of this year. Therefore, the expense related to this building will now appear as an administrative expense rather than a selling expense on the current year’s income statement. 3. Estimating the lives of new products in the Leisure Products Division has become very difficult because of the highly competitive conditions in this market. Therefore, the practice of deferring and amortizing preproduction costs has been abandoned in favor of expensing such costs as they are incurred. Identify and explain whether each of the above items is a change in principle, a change in estimate, or an error.

Draw up a similar table to Table 24.3, only this time assume that the figures are: LDC 6 wheat or 2 cloth; DC 8 wheat or 20 cloth. What are the opportunity cost ratios now?

Verify that the derivative of Eq. (24.6) results in Eq. (24.7)

Explain the difference between the voting-interest model and the risk-and-reward model used for consolidation.

Many years ago a famous member of Congress proposed eliminating federal income tax withholding.  What criterion for evaluating tax systems did this proposal violate?  What would likely have been the result of eliminating withholding?

Describe the pultrusion process

A blanking die is to be designed to blank the part outline shown in Figure P20.4. The material is 4 mm thick stainless steel (half hard). Determine the dimensions of the blanking punch and the die opening.

Explain the incentive for private equity funds to invest in a firm and improve its operations. (LO1)

An oxyacetylene torch supplies 8.5 ft3 of acetylene per hour and an equal volume rate of oxygen for an OAW operation on 1/4 in steel. Heat generated by combustion is transferred to the work surface with a heat transfer factor of 0.3. If 80% of the heat from the flame is concentrated in a circular area on the work surface whose diameter = 0.40 in, find: (a) rate of heat liberated during combustion, (b) rate of heat transferred to the work surface, and (c) average power density in the circular area.

Why are fillers added to a polymer?

Explain why some hedge funds failed as a result of the credit crisis of 2008–2009. (LO4)

The following comments were made at an Annual Conference of the Financial Executives Institute (FEI). There is an irreversible movement toward the harmonization of financial reporting throughout the world. The international capital markets require an end to: 1. The confusion caused by international companies announcing different results depending on the set of accounting standards applied. 2. Companies in some countries obtaining unfair commercial advantages from the use of particular national accounting standards. 3. The complications in negotiating commercial arrangements for international joint ventures caused by different accounting requirements. 4. The inefficiency of international companies having to understand and use a myriad of different accounting standards depending on the countries in which they operate and the countries in which they raise capital and debt. Executive talent is wasted on keeping up to date with numerous sets of accounting standards and the never-ending changes to them. 5. The inefficiency of investment managers, bankers, and financial analysts as they seek to compare financial reporting drawn up in accordance with different sets of accounting standards. Instructions (a) What is the International Accounting Standards Board? (b) What stakeholders might benefit from the use of International Accounting Standards? (c) What do you believe are some of the major obstacles to convergence?

Compare the relative merits of increased road fuel taxes, electronic road pricing and tolls as means of reducing urban traffic congestion.

Shown below is the liabilities and stockholders’ equity section of the balance sheet for Jana Kingston Company and Mary Ann Benson Company. Each has assets totaling $4,200,000. Jana Kingston Co. Mary Ann Benson Co. Current liabilities $ 300,000 Current liabilities $ 600,000 Long-term debt, 10% 1,200,000 Common stock ($20 par) 2,900,000 Common stock ($20 par) 2,000,000 Retained earnings (Cash Retained earnings (Cash dividends, $328,000) 700,000 dividends, $220,000) 700,000 $4,200,000 $4,200,000 For the year, each company has earned the same income before interest and taxes. Jana Kingston Co. Mary Ann Benson Co. Income before interest and taxes $1,200,000 $1,200,000 Interest expense 120,000 –0– 1,080,000 1,200,000 Income taxes (45%) 486,000 540,000 Net income $ 594,000 $ 660,000 At year end, the market price of Kingston’s stock was $101 per share, and Benson’s was $63.50. Instructions (a) Which company is more profitable in terms of return on total assets? (b) Which company is more profitable in terms of return on common stock equity? (c) Which company has the greater net income per share of stock? Neither company issued or reacquired shares during the year. (d) From the point of view of net income, is it advantageous to the stockholders of Jana Kingston Co. to have the long-term debt outstanding? Why? (e) What is the book value per share for each company?

Cost of sales schedule Rebecca Ltd is a manufacturer of machines made to customer specifications. All production costs are accumulated by means of a job order costing system. The following information is available at the beginning of the month of October.       A review of the job order cost sheets revealed the composition of the work in process inventory on October 1 as follows:         Activity during the month of October was as follows:       On 31 October, inventories consisted of the following:       Required Prepare a detailed schedule showing the cost of goods manufactured for October.

A 12-inch diameter silicon wafer has a processable area that is circular with a diameter = 11.4 in. The IC chips that will be fabricated on the wafer surface are square with 0.75 in on a side, including an allowance for subsequent chip separation. However, the processable area on each chip is only 0.60 in by 0.60 in. The density of circuits within each chip’s processable area is 100,000 circuits per square inch. (a) How many IC chips can be placed onto the wafer? (b) Using Rent’s Rule with C = 3.8 and m = 0.43, how many input/output terminals (pins) will be needed for each chip package?

Transactions for Mehta Company for the month of May are presented below. Prepare journal entries for each of these transactions. (You may omit explanations.) May 1 B.D. Mehta invests $4,000 cash in exchange for common stock in a small welding corporation. 3 Buys equipment on account for $1,100. 13 Pays $400 to landlord for May rent. 21 Bills Noble Corp. $500 for welding work done.

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/Marks-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 is the company’s main line of business? (b) In what countries does the company operate? (c) What is the address of the company’s corporate headquarters? (d) What is the company’s reporting currency?

A 250 mm diameter silicon wafer has a processable area that is circular with a diameter = 225 mm. The IC chips that will be fabricated on the wafer surface are square with 20 mm on a side. However, the processable area on each chip is only 18 mm by 18 mm. The density of circuits within each chip’s processable area is 465 circuits per mm2. (a) How many IC chips can be placed onto the wafer? (b) Using Rent’s Rule with C = 4.5 and m = 0.35, how many input/output terminals (pins) will be needed for each chip package?

Shin Corporation had a projected benefit obligation of $3,100,000 and plan assets of $3,300,000 at January 1, 2014. Shin also had a net actuarial loss of $465,000 in accumulated OCI at January 1, 2014. The average remaining service period of Shin’s employees is 7.5 years. Compute Shin’s minimum amortization of the actuarial loss.

If the average percentage (as opposed to the average level) of potential output that was unutilised remained constant, would the trend line have the same slope as the potential output line?