Question & Answer

Compare and contrast the built-in loss duplication rule as it relates to §351 with the built-in loss disallowance rule as it applies to a complete liquidation.

Compare and contrast the FICA tax burden of S corporation shareholder-employees and LLC members (assume the LLC is taxed as a partnership) receiving compensation for working for the entity (guaranteed payments) and business income allocations to S corporation shareholders and LLC members assuming the owners are actively involved in the entity’s business activities. How does your analysis change if the owners are not actively involved in the entity’s business activities?

In general, what is the concept of earnings and profits (E&P) designed to represent?

Describe the underwriting function of a securities firm. (LO1)

Gordon Company sponsors a defined benefit pension plan. The following information related to the pension plan is available for 2014 and 2015. 2014 2015 Plan assets (fair value), December 31 $699,000 $849,000 Projected benefi t obligation, January 1 700,000 800,000 Pension asset/liability, January 1 140,000 Cr. ? Prior service cost, January 1 250,000 240,000 Service cost 60,000 90,000 Actual and expected return on plan assets 24,000 30,000 Amortization of prior service cost 10,000 12,000 Contributions (funding) 115,000 120,000 Accumulated benefi t obligation, December 31 500,000 550,000 Interest/settlement rate 9% 9% Instructions (a) Compute pension expense for 2014 and 2015. (b) Prepare the journal entries to record the pension expense and the company’s funding of the pension plan for both years.

Mel and Cindy Gibson’s 12-year-old daughter Rachel was abducted on her way home from school on March 15, 2017.Police reports indicated that a stranger had physically dragged Rachel into a waiting car and sped away.Everyone hoped that the kidnapper and Rachel would be located quickly.However, as of the end of the year, Rachel was still missing.The police were still pursuing several promising leads and had every reason to believe that Rachel was still alive.In 2018, Rachel was returned safely to her parents.a.Are the Gibsons allowed to claim an exemption deduction for Rachel in 2017 even though she only lived in the Gibson’s home for two-and-one-half months?Explain and cite your authority.

There are 21 correct answers in the following multiple choice questions (some questions have multiple answers that are correct). To attain a perfect score on the quiz, all correct answers must be given. Each correct answer is worth 1 point. Each omitted answer or wrong answer reduces the score by 1 point, and each additional answer beyond the correct number of answers reduces the score by 1 point. Percentage on the quiz is based on the total number of correct answers. 38.1 The three components of an automated system are which of the following: (a) actuators, (b) communication system, (c) control system, (d) feedback loop, (e) humans, (f) power, (g) program of instructions, and (h) sensors? 38.2 The three basic types of automated systems used in manufacturing are fixed automation, programmable automation, and flexible automation. Flexible automation is an extension of programmable automation in which there is virtually no lost production time for setup changes or reprogramming: (a) true or (b) false. 38.3 The input/output relationship of a sensor is called which one of the following: (a) analog, (b) converter, (c) sensitivity, or (d) transfer function? 38.4 A stepper motor is which one of the following types of devices: (a) actuator, (b) interface device, (c) pulse counter, or (d) sensor? 38.5 A contact input interface is a device that reads analog data into the computer from an external source: (a) true of (b) false? 38.6 A programmable logic controller (PLC) normally replaces which one of the following in control applications: (a) computer numerical control, (b) distributed process control, (c) humans, (d) industrial robots, or (e) relay control panel? 38.7 The standard coordinate system for numerical control machine tools is based on which one of the following: (a) Cartesian coordinates, (b) cylindrical coordinates, or (c) polar coordinates? 38.8 Identify which of the following applications are point-to-point and not continuous path operations (three correct answers): (a) arc welding, (b) drilling, (c) hole punching in sheet metal, (d) milling, (e) spot welding, and (f) turning? 38.9 The ability of a positioning system to return to a previously defined location is measured by which one of the following terms: (a) accuracy, (b) control resolution, or (c) repeatability? 38.10 The APT command GORGT is which of the following (two best answers): (a) continuous path command, (b) geometry statement involving a volume of revolution about a central axis, (c) name of the humanoid in the latest Star Wars movie, (d) point-to-point command, and (e) tool path command in which the tool must go right in the next move? 38.11 The arm-and-body of a robot manipulator generally performs which one of the following functions in an application: (a) holds the end effector, (b) orients the end effector within the work volume, or (c) positions the wrist within the work volume? 38.12 A SCARA robot is normally associated with which one of the following applications: (a) arc welding, (b) assembly, (c) inspection, (d) machine loading and unloading, or (e) resistance welding? 38.13 In robotics, spray-painting applications are classified as which of the following: (a) continuous path operation or (b) point-to-point operation? 38.14 Which of the following are characteristics of work situations that tend to promote the substitution of a robot in place of a human worker (three best answers): (a) frequent job changeovers, (b) hazardous work environment, (c) repetitive work cycle, (d) multiple work shifts, and (e) task requires mobility?

What will happen to the demand for capital services and the equilibrium rental if the price of some other factor, say labour, changes? Assume that wage rates fall. Trace through the effects on a three-section diagram like that of Figure 10.13. (Clue: a fall in wages will have two significant effects: it will reduce costs and hence the price of the product, so that more will be sold; and it will make labour cheaper relative to capital. How will these two things affect the demand for capital?)

Refer to the Partridge Insurance Illustration in the chapter. Explain how         the support departments can be classified as both cost objects and cost        pools in the costing system.

How is the market price of land related to its productivity?

Describe in general how the cash method of accounting differs from the accrual method.

The upper and lower control limits for a p chart are: LCL = 0.19 and UCL = 0.24. Determine the sample size n that is used with this control chart.

Explain how implicit taxes may limit the benefits of the conversion strategy.

How can target measures be used to promote either short-term or long-            term performance?

How are financial accountants challenged in their work tomake ethical decisions? Is technical mastery of GAAP not sufficient to the practice of financial accounting?

Do all shareholders receive the same tax treatment in a complete liquidation of a corporation? Explain.

Which of the following activities should be expensed currently as R&D costs? (a) Testing in search for or evaluation of product or process alternatives. (b) Engineering follow-through in an early phase of commercial production. (c) Legal work in connection with patent applications or litigation, and the sale or licensing of patents.

Obtain a large common nail (flat head). Measure the head diameter and thickness, as well as the diameter of the nail shank. (a) What stock length must project out of the die in order to provide sufficient material to produce the nail? (b) Using appropriate values for strength coefficient and strain hardening exponent for the metal out of which the nail is made (Table 3.4), compute the maximum force in the heading operation to form the head.

Presented below is the current liabilities section and related note of Mohican Company.   Instructions Answer the following questions. (a) What is the difference between the cash basis and the accrual basis of accounting for warranty costs? (b) Under what circumstance, if any, would it be appropriate for Mohican Company to recognize deferred revenue on warranty contracts? (c) If Mohican Company recognized deferred revenue on warranty contracts, how would it recognize this revenue in subsequent periods?

In a turning operation on low carbon steel (175 BHN), cutting speed = 400 ft/min, feed = 0.010 in/rev, and depth of cut = 0.075 in. The lathe has a mechanical efficiency = 0.85. Based on the unit horsepower values in Table 21.2, determine (a) the horsepower consumed by the turning operation and (b) the horsepower that must be generated by the lathe.

Operating profits and losses for the seven industry segments of Foley Corporation are: Penley $ 90 Cheng $ (20) Konami (40) Takuhi 34 KSC 25 Molina 150 Red Moon 50 Based only on the operating profit (loss) test, which industry segments are reportable?

What would the isoquant map look like if there were (a) continuously increasing returns to scale; (b) continuously decreasing returns to scale?

Draw another two indifference curves on Figure 4.5, one outward from and one inward from the original curve. Read off various combinations of pears and oranges along these two new curves and enter them on a table like Table 4.2.

What is calorizing?

On March 1, 2014, Pechstein Construction Company contracted to construct a factory building for Fabrik Manufacturing Inc. for a total contract price of $8,400,000. The building was completed by October 31, 2016. The annual contract costs incurred, estimated costs to complete the contract, and accumulated billings to Fabrik for 2014, 2015, and 2016 are given below. 2014 2015 2016 Contract costs incurred during the year $2,880,000 $2,230,000 $2,190,000 Estimated costs to complete the contract at 12/31 3,520,000 2,190,000 –0– Billings to Fabrik during the year 3,200,000 3,500,000 1,700,000 Instructions (a) Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2014, 2015, and 2016. (Ignore income taxes.) (b) Using the completed-contract method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2014, 2015, and 2016. (Ignore incomes taxes.)