New Semester
Started
Get
50% OFF
Study Help!
--h --m --s
Claim Now
Question Answers
Textbooks
Find textbooks, questions and answers
Oops, something went wrong!
Change your search query and then try again
S
Books
FREE
Study Help
Expert Questions
Accounting
General Management
Mathematics
Finance
Organizational Behaviour
Law
Physics
Operating System
Management Leadership
Sociology
Programming
Marketing
Database
Computer Network
Economics
Textbooks Solutions
Accounting
Managerial Accounting
Management Leadership
Cost Accounting
Statistics
Business Law
Corporate Finance
Finance
Economics
Auditing
Tutors
Online Tutors
Find a Tutor
Hire a Tutor
Become a Tutor
AI Tutor
AI Study Planner
NEW
Sell Books
Search
Search
Sign In
Register
study help
business
introductory accounting
Introductory Accounting A Measurement Approach For Managers 1st Edition Daniel P. Tinkelman - Solutions
The Rosen Company spends $30 million on a research project. How much of this spending can be recognized as an asset if:A. The chance of having a successful product is 40%, with profits of $600 million if the project is successful?B. The chance of a successful project is 90%, with profits of $40
FASB rules allow a company to record amounts spent developing software to be recorded as an asset after the project has reached the stage of “technical feasibility.” Any software assets have to be amortized over the expected life of the software product. Both Alpha Corp. and Beta Corp. spent
This is a variation of the preceding problem. In that problem, both companies had a single project. This problem assumes the companies have a new project every year. This is more like the position of real software development companies.Assume that Alpha and Beta both began operations in 2010. Each
Under FASB rules, explain whether the full effect of each of the following factors that affect the pension plan is shown in net income, or whether part of the effect is in “other comprehensive income.”A. Employees worked during the year, and the company’s actuaries say that the “service
Navistar International makes a variety of vehicles, including farm equipment. It has various defined benefit pension plans. Table 8.3 shows its statement of comprehensive income for the three years ended in October 2012 to 2014. The schedule is from the company’s Form 10-K. Because the income was
Tori Corp. has taken several different positions on its tax returns. Under FASB rules, indicate if it can show a benefit for these positions in its financial statements:A. The law is unclear as to whether certain entertainment expenses are deductible. Some other companies are currently suing, and
Early in the 20th century, the main providers of capital to U.S.corporations were banks and other lenders. Later, the sale of stock grew in importance. How do you think that shift may have influenced the desirability of conservative methods of accounting?
In the U.S., the idea of conservatism in accounting was taken for granted by many people. However, conservative accounting has not always been accepted. After the end of the civil war in China in 1949, the new rulers established a communist economic system and needed a new accounting system.The
The FASB sometimes deals with uncertainty by not recognizing certain items in the financial statements. This uncertainty may explain the rule that companies cannot record their expenditures on internally developed intangibles as assets. However, in other cases the RASB requires companies to record
Both Microsoft and Google report in their Form 10-Ks that they basically expense all software costs when incurred. Why do you think they may choose to do this, rather than to try to record some of their software costs as assets?(Hint—Look at application question A11. In this question, two
Let’s assume that a company is being sued. The company’s auditor asks the lawyer who is defending the company what the odds are of losing the case, and what the company is likely to have to pay. The lawyer says:“I am not going to answer that question. If I tell you the likely settlement is
Normally, a company will not record a liability for an unasserted claim unless it is probable that the claim will be asserted, and that the company will end up paying. The FASB’s rules on uncertain tax positions are different, because the accountant must assume that the IRS will notice the
The IASB has defined “probable” to mean more than a 50% chance. The FASB has not given any exact definition of the term “probable.” As was noted in the chapter, various researchers have done studies of what auditors and other accountants think is “probable.” In these studies, the
For the Exxon Corporation:A. Look up the market value of Exxon stock as of the end of the last year.B. Find Exxon’s Form 10-K, and compute the “book value” of the outstanding shares. To do this, divide the shareholder’s equity by the number of shares outstanding.C. Which is larger, the
For Google Corp.:A. Look up the market value of its common stock as of the end of the last year.B. Find its 10-K, and compute the “book value” of the outstanding shares.To do this, divide the shareholder’s equity by the number of shares outstanding.C. Which is larger, the market or the book
Why do accountants try to allocate costs of buildings, equipment and other operating assets to several time periods, instead of considering them expenses when they are purchased?
What are the different methods of allocating revenues for a contract when the customer pays with installments?
What are the FASB’s general criteria for when revenues should be recognized?
One of the criteria for revenue recognition is that the revenue is “realized or realizable.” Does this mean that a company should never record revenue until it has received cash from the customer? Explain.
An insurance company sells home insurance to customers. The typical insurance contract calls for the insurance company to receive payment first. Once payment is received, the insurance company provides insurance for 12 months. Should the insurance company recognize the full amount of the cash
What are the installment and cost recovery methods of recognizing revenues? When is it appropriate to use one of these methods, rather than recognizing revenue when goods are shipped to customers?
Which of these three methods of recognizing revenue and costs on installment sales arrangements is the most conservative? Which is the least conservative? Explain your answer.
When is income or loss earned on a long-term contract recognized under the following methods?A. Completed contract, when the contract is expected to be profitable B. Completed contract, when the contract is expected to lose money C. Percentage of completion, when the contract is expected to be
Which of the following methods of accounting for longterm contracts is most conservative, and which is least conservative, assuming the contract will be profitable?A. Percentage of completion B. Completed contract (an alternative under U.S. GAAP)C. Cost recovery (an alternative under IFRS)
When are the following methods appropriate for accounting for long-term contracts?A. Percentage of completion B. Completed contract C. Cost recovery
Assume that a landlord offers to rent office space to an accounting firm for three years, for a total amount of rental of $360,000.The lease will start on November 1, Year 1.The landlord tells the accounting firm it can either pay a monthly rental of $10,000 each month for 36 months, or it can pay
What is the general rule for accounting for a contract under which a company delivers several products to a customer?
What is meant by the terms “period costs” and“product costs”?
What is the general rule that distinguishes between costs of maintaining a fixed asset and costs that are considered to add to the carrying value of the fixed asset?
What are three major reasons that fixed assets may lose value to a company over time?
What is meant by straight-line depreciation?What is the formula for computing the expense each period?
What is meant by units of production depreciation? What is a formula for computing the expense as production occurs?
What is meant by double declining balance depreciation? What is the formula for computing the expense each period?
This question deals with salvage value.A. Does the formula for double declining balance contain a factor for salvage value?B. How does an accountant using the double declining balance method of depreciation ensure that the asset is not depreciated so much that the book value becomes less than the
What differences, if any, are there between the following terms? When is each one used?A. Amortization B. Depletion C. Depreciation
What is meant by the “book value” of a fixed asset?
How is the gain or loss computed when a company sells a fixed asset, such as a machine?
Would the gain or loss on the sale of a fixed asset, partway through its expected life, be different if the company used straight-line depreciation than it would be if the company used accelerated depreciation?Explain your answer.
When a company changes its estimates of the remaining useful life of a machine, what effect does this have on the accounting for:Periods in the past, for which the company has already published financial statements?The current and future periods?
What method do companies typically use to amortize intangible assets that have fixed useful lives?
What method do companies typically use to compute depletion of natural resources like coal mines?
What is meant by a deferred tax asset? Give an example.
What is meant by a deferred tax liability? Give an example.
Assume that the Reardon Corp. is being sued by the Jarvis Corp. At the end of Year 1, Reardon believes it to be probable that it will eventually have to pay Jarvis $10 million. That means that this lawsuit meets the GAAP rules for a loss contingency, and an expense must be recorded in Year
What is meant by the following terms:A. Net operating loss carryback B. Net operating loss carryforward.
What is meant by a “valuation allowance” on deferred tax assets? What standard of probability is used to decide if a valuation allowance is needed?
Match the appropriate revenue recognition technique to the situation:Immediate recognition when goods are delivered Installment or cost recovery method Percentage of completion method Completed contract method A. A company is building a road on a long-term contract. It is able to estimate the
For each of the following situations, would GAAP require that revenue be recognized: at the start of the period; at the time of delivery of goods or services; evenly during a period of time; or at the end of the period? Explain your answers.A. A manufacturer sells electronics products like
The Garcia Corp. is a real estate developer. In Year 1, it sold a house to Michael Sukul for $200,000, in return for five yearly installments of $40,000 each, plus interest. The first installment was paid at the time of sale. The house cost Garcia $115,000 to build. Compute the revenue and cost of
The Lozito Corp. sold a $6,000 set of bedroom furniture to a customer. The customer agreed to pay the balance in four payments of $1,500, plus interest. The first payment was at the time of delivery. The cost of the bedroom furniture to Lozito was $4,000. Compute the revenue and cost of sales that
Macumber Corp. publishes a monthly magazine. On January 20, Year 1, it receives a check from a customer for a three-year subscription to the magazine, for $144. Macumber begins sending the magazines out in February, Year 1, and continues to send one per month through January, Year 4.A. In January,
Assume that on the first day of Year 1, Chuck Laboratory Systems, Inc. signs a contract with the state of California under which Chuck Laboratory Systems will provide the state with:Computer equipment, to be delivered in Year 1, that cost Chuck $200,000 Computer software, written by Chuck Systems,
Anker Corp. is building an office building under a long-term contract. The total construction contract price is $40 million. Anker estimates that its costs will total $32 million. The contract is expected to take three years to complete.A. In the first year, costs are $8 million. Anker estimates
Donnelly Corp is building a highway for the State of Maine. The total contract price = $100 million. The project is expected to take three years. Donnelly expects to incur$80 million of costs, and therefore it expects the gross profit on the project to be$20 million.A. In the first year, costs are
Daiva Corp. signs an agreement to rent office space to Jarvis Ltd. The lease is for 10 years. Under the terms of the lease, the “base rent” is:$2,000 per month in years 1, 2, and 3$3,000 per month in years 4 through 7$4,000 per month in the last three years A. What is the average monthly rent
Classify each of the following as either period costs or product costs of a refrigerator manufacturer. Note that overhead costs related to manufacturing are considered product costs:A. Rent on the headquarters building B. Accounting department salaries C. Materials used to make the refrigerator
For each of the following indicate whether the cost should be considered an expense in the period incurred, or whether it should be accounted for as adding value to a fixed asset.Explain your answer.A. A company that provides limousine service spends money to change a regular car into a
The Kwang Corp. paid $72,000 on July 1, Year 1, for a four-year property insurance policy.A. At the time it makes the $72,000 payment, how does this payment affect the accounting equation? What assets, liabilities, or expenses are affected?B. Each month, as Kwang records some insurance expense, how
On January 1, Year 1, the Obremski Corp. paid $14,000 for a machine that it expects to have a four-year life, and to have salvage value of $2,000. Compute the appropriate depreciation expense each year from Year 1 through Year 4.
On January 1, Year 1, the Wierciak Corp. paid $23,000 for a machine that it expects to have a five-year life, and to have salvage value of $3,000. Compute the appropriate depreciation expense each year from Year 1 through Year 5.
In Year 1, the Taslitsky Corp. paid $25,000 for a machine. It expects to use this machine to produce 300,000 units of its product. It expects the salvage value to be $5,000. Compute the depreciation expense for years in which it produced:A. 40,000 units B. 75,000 units C. 0 units D. 90,000 units
A company expects to use a coal mine for several years, and the company plans to take 20,000 tons of coal out of the mine. The cost related to the mine is $6,000,000.A. What depletion expense should be recognized per ton of coal that is mined?B. What would be the depletion expense in a year when
The Narkaj Corp. bought a machine in year 1, for a cost of $10,000. It expected the salvage value to be $1,000, and it expected to use the machine for nine years. It actually sold the machine after two years for a price of $7,500.A. If it used straight-line depreciation, what would be the book
In Year 1, the Natole Corp. sells a building that it has owned for many years for a gain of $50 million. The buyer agrees to pay Natole half the purchase price in Year 1 and the other half (plus interest) in Year 2.For GAAP, the entire gain is recognized in Year 1.For tax purposes, Natole is using
In Year 1, Zhang Corp. records a $300,000 expense on its books for vacation pay that has been earned by its employees, for vacations they have not yet taken. The tax law will not allow Zhang to take a deduction for vacation pay until the employees take their vacations. Assume that employees do take
You are comparing the financial statements of two manufacturers. The two companies have exactly the same machines, bought at the same times. The machines typically last eight years. Straight Company uses straight-line depreciation, and Fast Company uses accelerated depreciation. Which company would
Rockefeller Center is a building complex in midtown Manhattan that was originally built by the Rockefeller family in the 1930s.According to Wikipedia, construction costs were reportedly about $250 million, and the land was later purchased for $400 million. In 2000, the land and buildings were sold
The introduction to this chapter mentioned several issues in allocation, including cattle growing. Assume that Heather Cattle Ranch buys young calves at an age of six months, and then feeds them until they are three years old. It then sells the cattle.A. Economically, when does the increase in
The text explained that, for tax purposes, companies take depreciation much more quickly than they recognize it for GAAP. Why do you think the tax law allows this fast depreciation? Do you think it is good public policy?
Your friend complains to you that she is unable to figure out what the FASB wants. In its Concepts Statements, it says it wants neutral, not conservative accounting. But then it doesn’t treat gains and losses on long-term contracts equally. If you have a longterm contract, and you expect it to
In the theory of constraints:A. What is meant by a constraint? Why does the constraining process limit the company’s overall production?B. Why would a company want to keep some extra inventory on hand at the stage of production before the constraint?C. Why would a company want to have some extra
What is meant by “throughput”? What costs are considered in the computation of throughput?
In this method:A. Define throughput B. Indicate whether direct labor is used in the computation of throughput or of operating expenses
Using throughput accounting, would a manager tend to choose which products to produce based on their throughput per unit produced, or based on their throughput per minute at the constraint? Explain your answer.
What are some advantages people claim for throughput accounting?
What are some drawbacks or limitations of throughput accounting?
A company can produce 400 units per hour through its process. It can sell each unit for \($10\). It had totally variable costs of \($3\) per unit, and other costs per unit of \($5\). Compute the throughput per hour.
The Oneida Corp. runs its production line 16 hours per day, and an average of 22 days per month. This gives it 352 hours of production each month. Additional facts are as follows:Compute:A. Throughput per month B. Operating profit or loss per month Number of units produced per hour Selling price
Mohawk Corp. makes four products. The Table 10A.3 below shows the key data for these four products.Currently, Mohawk is making 300 units of Product C. The throughput per unit is$4.50 × 8 minutes per unit = $36. A customer wants to make a special offer for an additional 300 units, at a reduced
Assume the same facts for the Mohawk Company as the previous question. The throughput per unit for product A is \($18\). Currently, it takes three minutes at the constraint procedure to make one unit of A, so the throughput per minute is \($6\). The Mohawk Company is considering a change in its
Refer to Table 4.12. Express each of the following as a percentage of total assets in both 2012 and 2013. Indicate if you believe the percentages have changed substantially.A. Cash B. Inventory C. Property and equipment D. Total liabilities E. Total shareholders’ equity Table 4.12 The Gap, Inc.
Express each of the following as a percentage of total revenues for 2013 and 2014. Indicate if you believe the percentages have changed substantially.A. Gross profit B. Operating expenses C. Operating income D. Income before taxes E. Income taxes F. Net income Table 4.12 The Gap, Inc. CONSOLIDATED
For Gap, assume that all cost of goods sold and operating expenses are variable expenses. Compute the following ratios for 2014:A. Operating leverage effect B. Financial leverage effect C. Total leverage D. Capital structure leverage Table 4.12 The Gap, Inc. CONSOLIDATED BALANCE SHEETS (USD $) In
For Gap, compute the following profitability ratios for 2014. Assume a tax rate of 35%.A. Profit margin for ROA B. Asset turnover C. ROA D. Profit margin for ROCE E. Capital structure leverage F. ROCE Table 4.12 The Gap, Inc. CONSOLIDATED BALANCE SHEETS (USD $) In millions, unless otherwise
Refer to Table 4.14. Express each of the following as a percentage of total assets in both 2013 and 2014. Indicate if you believe the percentages have changed substantially.A. Cash B. Receivables C. Inventory D. Property and equipment E. Long-term debt F. Total liabilities G. Total shareholders’
Express each of the following as a percentage of total revenues for 2013 and 2014. Indicate if you believe the percentages have changed substantially.A. Cost of sales B. Depreciation, depletion and amortization expenses C. Income before taxes D. Income taxes E. Net income from continuing operations
For Occidental Petroleum, assume that all cost of goods sold and all the operating expenses except depreciation, depletion, and amortization are variable expenses. Assume that half the depreciation, amortization, and depletion expenses are fixed. Compute the following ratios for 2014:A. Operating
For Occidental Petroleum, compute the following profitability ratios for 2014. For the purposes of this question, ignore the fact that some of the income is from discontinued operations. Assume a tax rate of 30%.A. Profit margin for ROA B. Asset turnover C. ROA D. Profit margin for ROCE E. Capital
Refer to Tables 4.16 and 4.18. Express each of the following as a percentage of total assets in 2013 for both Dunkin’ and Starbucks:A. Cash B. Receivables C. Inventory D. Property and equipment E. Goodwill F. Other intangible assets G. Long term debt H. Total shareholders’ equity The
Refer to Tables 4.17 and 4.19. Express each of the following as a percentage of total revenues for the latest year shown:A. Cost of sales (includes occupancy for Starbucks; ice cream costs and costs of company restaurants for Dunkin’)B. Depreciation, and amortization expenses C. General and
Compute the following ratios for both Dunkin’ and Starbucks for the latest year shown.A. Financial leverage effect B. Capital structure leverage The next several questions deal with Starbucks and Dunkin’ Brands. These are two major companies, with many locations selling coffee and snacks.
For both Dunkin’ and Starbucks, compute the following profitability ratios for the latest year. Assume a tax rate of 30%.A. Profit margin for ROAB. Asset turnoverC. ROAD. Profit margin for ROCEE. Capital structure leverageF. ROCEThe next several questions deal with Starbucks and Dunkin’ Brands.
Assume that a company is in a fast-changing industry.You notice at the end of the latest year that the number of days’ sales in inventory has increased compared to prior years.A. What might be a valid business reason that the company might have chosen to increase inventory?B. What types of
Assume that a company normally gives credit to customers, and has substantial accounts receivable. You notice that in the latest year the accounts receivable turnover ratio has gone down. Even though sales have increased by 10%, receivables have grown proportionally faster.A. What might be valid
Assume that a new executive at Walmart decides that he has come up with a sure-fire way to increase the company’s ROA. They will keep their same planned asset turnover ratio, but they will change their pricing on all their products to get the same profit margin that Tiffany gets on
Assume a company now has the following financial figures:Assume there are no taxes.Indicate whether the following transactions would increase, decrease, or leave unchanged the ratios indicated:A. Pay 20 of accounts payable with cash:a. Current ratiob. Capital structure leveragec. Profit margin for
Assume Company A acquires Company B for a lot of money, and records the value of Company B’s brand names as intangible assets.Company B had never recorded these values. In future years, when Company A looks at the profitability of its acquisition, what will the effect of recognizing these values
Many new companies have tried to follow an “asset light” strategy. Instead of having their own factories or equipment, they obtain the goods and services they need from other companies. What would you expect the impact of this strategy of trying to own few assets to be on the company’s ratios
Research has indicated that stock prices are affected more by reported items that are “persistent,” meaning they are likely to recur.A. Explain why the market would react this way.a. Is there any value at all to one-time items, like winning or losing a lawsuit?b. Why would recurring items have
This question is designed to give you practice in accessing the SEC website, obtaining data in Excel form, and using that data.Follow the steps below:A. Go to the SEC website, and get an Excel version of the financial statements on Form 10-K for Dunkin’ Brands for the year ended December 28,
Showing 200 - 300
of 550
1
2
3
4
5
6
Step by Step Answers
Get 50% OFF
Claim Now
