ACC 306 Week 1 E 13-21 – Disclosures of liabilities

E13–21 – Disclosures of liabilities ● LO1 through LO6

Required:

Indicate (by letter) the way each of the items listed below should be reported in a

balance sheet at December 31, 2011.

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ACC 306 Week 1 DQ2 – Judgment Case 13–9 – Valleck Corporation – Loss contingency and full disclosure

ACC306 – ACC 306 – Week 1 DQ2 – Judgment Case 13-9 – Intermediate Accounting I – AU

Judgment Case 13–9 – Valleck Corporation – Loss contingency and full disclosure ● LO5 LO6

In the March 2012 meeting of Valleck Corporation’s board of directors, a question arose as to the way a possible obligation should be disclosed in the forthcoming financial statements for the year ended December 31. A veteran board member brought to the meeting a draft of a disclosure note that had been prepared by the controller’s office for inclusion in the annual report. Here is the note:

On May 9, 2011, the United States Environmental Protection Agency (EPA) issued a Notice of Violation (NOV) to Valleck alleging violations of the Clean Air Act. Subsequently, in June 2011, the EPA commenced a civil action with respect to the foregoing violation seeking civil penalties of approximately $853,000. The EPA alleges that Valleck exceeded applicable volatile organic substance emission limits. The Company estimates that the cost to achieve compliance will be $190,000; in addition the Company expects to settle the EPA lawsuit for a civil penalty of $205,000 which will be paid in 2014.

“ Where did we get the $205,000 figure? ” he asked. On being informed that this is the amount negotiated last month by company attorneys with the EPA, the director inquires, “Aren’t we supposed to report a liability for that in addition to the note? ”

Required:

Explain whether Valleck should report a liability in addition to the note. Why or why not? For full disclosure, should anything be added to the disclosure note itself?

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ACC 306 Week 1 DQ1 – P 12–13 – Miller Properties – Equity method

P 12–13 – Miller Properties – Equity method ● LO5 LO6

On January 2, 2011, Miller Properties paid $19 million for 1 million shares of Marlon Company’s 6 million outstanding common shares. Miller’s CEO became a member of Marlon’s board of directors during the first quarter of 2011.

The carrying amount of Marlon’s net assets was $66 million. Miller estimated the fair value of those net as- sets to be the same except for a patent valued at $24 million above cost. The remaining amortization period for the patent is 10 years.

Marlon reported earnings of $12 million and paid dividends of $6 million during 2011. On December 31, 2011, Marlon’s common stock was trading on the NYSE at $18.50 per share.

Required:

1. When considering whether to account for its investment in Marlon under the equity method, what criteria should Miller’s management apply?

2. Assume Miller accounts for its investment in Marlon using the equity method. Ignoring income taxes, deter- mine the amounts related to the investment to be reported in its 2011:

a. Income statement.

b. Balance sheet.

c. Statement of cash flows.

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One item is omitted from each of the following summaries of balance sheet and income statement data for four different corporations

One item is omitted from each of the following summaries of balance sheet and income statement data for four different corporations.

Earth Mars Neptune Pluto

Beginning of the year:

Assets $216,000 $250,000 $100,000 (d)

Liabilities 129,600 130,000 76,000 $120,000

End of the year:

Assets 268,200 350,000 90,000 248,000

Liabilities 117,000 110,000 80,000 136,000

During the year:

Additional issuance

Of capital stock (a) 50,000 10,000 40,000

Dividends 14,400 16,000 (c) 60,000

Revenues 71,190 (b) 115,000 112,000

Expenses 38,880 64,000 122,500 128,000

Determine the amounts of missing items, identifying them by letter.

(Suggestion: First determine the amount of increase or decrease in stockholder’s equity during the year.)

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bus 475 final exam

bus 475 final exam

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David’s Entertainment is a merchandising business

David’s Entertainment is a merchandising business. Their account balances as of November 30, 2012 (unless otherwise indicated), are as
follows:

110 Cash $ 73,920
112 Accounts Receivable 34,250
113 Allowance for Doubtful Accounts 11,000
115 Merchandise Inventory 123,900
116 Prepaid Insurance 3,750
117 Store Supplies 2,850

AND SO ON

During December, the last month of the accounting year, the following transactions were completed:

Dec. 1. Issued check number 2632 for the December rent, $2,600.
3. Purchased three TV C units on account from Prince Co., terms 2/10, n/30, FOB shipping point, $11,100.
4. Issued check number 2633 to pay the transportation changes on
purchase of December 3, $400. (NOTE: Do not include shipping and
purchase discounts to the Inventory Control sheet for this project.)
6. Sold four TV A and four TV B on account to Albert Co., invoice 891, terms 2/10, n/30, FOB shipping point.
10. Sold two projector systems for cash.

AND SO ON

Check Figures for Accounting Project:
Cash Receipts Journal; Cash Column: 97,939
Unadjusted Trial Balance Total: 1,080,620
Net Income: 264,350
Post Closing Trial Balance: 347,490

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ECO 312 Final Exam – (TCO 1) When a state government chooses to build more roads

Devry ECO 312 Final Exam

Question 1.1. (TCO 1) When a state government chooses to build more roads, the required resources are no longer available for spending on public education. This dilemma illustrates the concept of (Points : 4)

production expenses.
unemployment issues.
unintended consequences.
opportunity cost.

Question 2.2. (TCO1) Which is not a factor of production? (Points : 4)

Money
Land
Labor
Capital

Question 3.3. (TCO1) A point on the production possibilities curve is (Points : 4)

attainable and resources are fully employed.
attainable, but resources are unemployed.
unattainable, but resources are unemployed.
unattainable and resources are fully employed.

Question 4.4. (TCO1) A basic characteristic of a command system is that (Points : 4)

wages paid to labor are higher.
government owns most economic resources.
free markets are never permitted in a command economy.
government planners play a limited role in deciding what goods will be produced.

Question 5.5. (TCO 2) Which is consistent with the law of demand? (Points : 4)

A decrease in the price of tacos causes no change in the quantity of tacos demanded.
An increase in the price of pizza causes an increase in the quantity of pizza demanded.
An increase in the price of hamburgers causes a decrease in the quantity of hamburgers demanded.
A decrease in the price of turkey sandwiches causes a decrease in the quantity of turkey sandwiches demanded.

Question 6.6. (TCO 2) What combination of changes would most likely decrease the equilibrium price? (Points : 4)

 


When supply decreases and demand increases
When demand increases and supply increases
When demand decreases and supply decreases
When supply increases and demand decreases

Question 7.7. (TCO 2) When the price of movie tickets in a certain town was reduced, the movie theaters’ revenues did not change. This suggests that the demand for movie tickets in that town has a price-elasticity coefficient of (Points : 4)

 


1.0.
greater than 1.
0.5.
zero.

Question 8.8. (TCO 2) The price elasticity of demand increases with the length of the period considered because (Points : 4)

 


consumers’ incomes will increase over time.
the demand curve will shift outward as time passes.
all prices will increase over time.
consumers will be better able to find substitutes.

Question 9.9. (TCO 2) A purely competitive firm’s output is such that its marginal cost is $4 and marginal revenue is $5. Hint: remember that MR = P for Pure Competition and the Profit Maximizing rule. Assuming profit maximization, the firm should (Points : 4)

 


cut its price and raise its output.
raise its price and cut output.
leave price unchanged and raise output.
leave price unchanged and cut output.

Question 10.10. (TCO 2) Which would definitely not be an example of price discrimination? (Points : 4)

 


A theater charges children less than adults for a movie.
Universities charge higher tuition for out-of-state residents.
A doctor charges for services according to the income of patients.
An electric power company charges less for electricity used during off-peak hours when production costs are lower.

Question 11.11. (TCO 3) In the kinked demand model of oligopoly, if one firm increases its price, the most likely reaction of the other firms will be to (Points : 4)

 


decrease their prices.
increase their prices.
not change their prices.
reduce their quantity.

Question 12.12. (TCO 3) In the short run (Points : 4)

 


a firm cannot vary its output level.
all factors of production can be varied.
a firm can change its fixed inputs.
output is raised or reduced by changing the levels of variable inputs.

Question 13.13. (TCO 4) Refer to the diagram. The phases of the business cycle from points A to D are, respectively: Graph Description(Points : 4)

Peak, recession, expansion, trough
Trough, recovery, expansion, peak
Expansion, recession, trough, peak
Peak, recession, trough, expansion

Question 14.14. (TCO 4) In calculating the unemployment rate, part-time workers are (Points : 4)

 


counted as unemployed because they are not working full-time.
counted as employed because they are receiving payment for work.
used to determine the size of the labor force, but not the unemployment rate.
treated the same as “discouraged” workers who are not actively seeking employment.

Question 15.15. (TCO 4) To avoid multiple counting in national income accounts (Points : 4)

 


only final goods and services should be counted.
intermediate goods and services should be counted.
both final and intermediate goods and services should be counted.
primary, intermediate, and final goods and services should be counted.

Question 16.16. (TCO 4) GDP tends to overstate economic well-being because it takes into account (Points : 4)

 


improvements in product quality over time.
expenditures undertaken to correct pollution.
illegal activities of individuals and businesses.
nonmarket activities, such as the productive work of homemakers.

Question 17.17. (TCO 6) Fiscal policy is enacted through changes in (Points : 4)

 


interest rates and the price level.
the supply of money and foreign exchange.
unemployment and inflation.
taxation and government spending.

Question 18.18. (TCO 6) Refer to the graph. What combination would most likely cause a shift from AD1 to AD3? Graph Description (Points : 4)

 


Increases in taxes and government spending
Decrease in taxes and increase in government spending
Increase in taxes and decrease in government spending
Decreases in taxes and government spending

Question 19.19. (TCO 6) Which of the following serves as an automatic stabilizer in the economy? (Points : 4)

 


Interest rates
Exchange rates
Inflation rate
Progressive income tax

Question 20.20. (TCO 6) If people expected that a tax cut was temporary, then this fiscal policy’s effect on the economy will tend to be (Points : 4)

 


stronger.
weaker.
the exact opposite of what was intended.
as the multiplier effect would predict.

Page 2

Question 1.1. (TCO 5) A decrease in government spending will cause a(n) (Points : 4)

 


increase in the quantity of real domestic output demanded.
decrease in the quantity of real domestic output demanded.
decrease in aggregate demand.
increase in aggregate demand.

Question 2.2. (TCO 5) The long-run aggregate supply curve is (Points : 4)

 


upward-sloping and becomes steeper at output levels above the full-employment output.
upward-sloping and becomes flatter at output levels above the full-employment output.
horizontal.
vertical.

Question 3.3. (TCO 5) If the price of crude oil decreases, then this event would most likely (Points : 4)

 


decrease aggregate supply in the U.S.
increase aggregate supply in the U.S.
increase aggregate demand in the U.S.
decrease aggregate demand in the U.S.

Question 4.4. (TCO 5) With cost-push inflation in the short run, there will be (Points : 4)

 


an increase in real GDP.
a leftward shift in the aggregate demand curve.
a decrease in real GDP.
a decrease in unemployment.

Question 5.5. (TCO 6) Dissaving occurs when (Points : 4)

 


income is greater than saving.
income is less than consumption.
saving is greater than consumption.
saving is greater than the interest rate.

Question 6.6. (TCO 7) The M1 money supply is composed of (Points : 4)

 


all coins and paper money held by the general public and the banks.
bank deposits of households and business firms.
bank deposits and mutual funds.
checkable deposits and currency in circulation.

Question 7.7. (TCO 7) United States currency has value primarily because it (Points : 4)

 


is legal tender, is generally acceptable in exchange for goods or services, and is backed by the gold and silver of the federal government.
is generally acceptable in exchange for goods or services, is backed by the gold and silver of the federal government, and facilitates trade.
is relatively scarce, is legal tender, and is generally acceptable in exchange for goods and services.
facilitates trade, is legal tender, and permits the use of credit cards and near-monies.

Question 8.8. (TCO 7) The Federal Reserve System consists of which of the following? (Points : 4)

 


Federal Open Market Committee and Office of Thrift Supervision
Federal Deposit Insurance Corporation and Controller of the Currency
U.S. Treasury Department and Bureau of Engraving and Printing
Board of Governors and the 12 Federal Reserve Banks

Question 9.9. (TCO 7) Which of the following is the most important function of the Federal Reserve System? (Points : 4)

 


Setting reserve requirements
Controlling the money supply
Lending money to banks and thrifts
Acting as fiscal agent for the U.S. government

Question 10.10. (TCO 7) Money is “created” when (Points : 4)

 


a depositor gets cash from the bank’s ATM.
a bank accepts deposits from its customers.
people receive loans from their banks.
people spend the incomes that they receive.

Question 11.11. (TCO 7) The establishment of a federal deposit insurance program resulted from the (Points : 4)

 


establishment of the Federal Reserve System in 1913.
speculation during World War I.
stock market crash of 1987.
bank panics of 1930-1933.

Question 12.12. (TCO 7) The purchase and sale of government securities by the Fed is called (Points : 4)

 


federal funds market.
open market operations.
money market transactions.
term auction facility.

Question 13.13. (TCO 7) The tools of monetary policy for altering the reserves of commercial banks are the (Points : 4)

 


tax rate, transfer payments, and level of government spending.
consumer price index, inflation, and unemployment rate.
public debt, budget surplus, budget deficit, and interest rates.
discount rate, reserve ratio, open market operations, and term auction facility.

Question 14.14. (TCO 8) Which country is the United States’ largest trading partner in terms of volume of trade? (Points : 4)

 


Mexico
Japan
China
Canada

Question 15.15. (TCO 8) Nation X has a comparative advantage in the production of a product compared to Nation Y when (Points : 4)

 


it imposes a tariff on the importation of the product.
its production possibilities curve expands, allowing it to produce more of the product.
it is achieving full employment and is producing the maximum amount of the product.
it has the lower domestic opportunity cost of producing the product.

Question 16.16. (TCO 8) An excise tax on imported commodities is known as a(n) (Points : 4)

 


quota.
tariff.
export restriction.
price ceiling.

Question 17.17. (TCO 8) Tariffs and quotas are costly to consumers because (Points : 4)

 


the price of the imported good falls.
the supply of the imported good increases.
import competition increases for domestic goods.
consumers shift purchases to higher-priced domestic goods.

Question 18.18. (TCO 8) Tariffs and import quotas would benefit the following groups, except (Points : 4)

 


consumers of the product.
domestic producers of the product.
workers in domestic firms producing the product.
the government of the importing country.

Question 19.19. (TCO 8) Which organization meets regularly to establish rules and settle disputes related to international trade? (Points : 4)

 


The United Nations Commission on Trade Law
The United Nations Conference on Trade and Development
The World Trade Organization
The Federal Reserve Board

Question 20.20. (TCO 9) French and German farmers wanting to buy equipment from an American manufacturer based in the U.S. will be (Points : 4)

 


supplying dollars and also supplying euros in the foreign exchange market.
demanding dollars and also demanding euros in the foreign exchange market.
supplying dollars and demanding euros in the foreign exchange market.
supplying euros and demanding dollars in the foreign exchange market.

Page 3

Question 1.1. (TCO 9) In the balance of payments statement, a current account surplus will be matched by a (Points : 4)

 


capital and financial accounts deficit.
capital and financial accounts surplus.
trade deficit.
trade surplus.

Question 2.2. (TCO 9) If the United States wants to regain ownership of domestic assets sold to foreigners, it will have to (Points : 4)

 


increase domestic consumption.
increase its national debt.
export more than it imports.
import more than it exports.

Question 3.3. (TCO 9) Foreign exchange rates refer to the (Points : 4)

 


price at which purchases and sales of foreign goods take place.
movement of goods and services from one nation to another.
price of one nation’s currency in terms of another nation’s currency.
difference between exports and imports in a particular nation.

Question 4.4. (TCO 9) If the exchange rate is $1 = 0.7841 euro, then a French DVD priced at 20 euros would cost an American buyer (excluding taxes and other fees) (Points : 4)

 


$15.68.
$20.78.
$25.51.
$27.84.

Question 5.5. (TCO 9) Which system would be accompanied by occasional currency interventions by central banks to stabilize or alter rates to avoid persistent balance of payments deficits or surpluses? (Points : 4)


Gold standard
Fixed exchange rates
Flexible exchange rates
Managed floating exchange rates

Question 6. 6.(TCO 8) a) Explain four problems with the argument that trade protection is needed to protect American jobs. b) Describe the economic reasons why businesses use offshoring.

Question 7. 7. (TCO 6) a) Identify the four major tools of monetary policy.
b) How can monetary policy address the problem of inflation?

Here’s the SOLUTION

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Dog Up! Franks is looking at a new sausage system with an installed cost of $450,000

Dog Up! Franks is looking at a new sausage system with an installed cost of $450,000. This cost will be depreciated straight-line to zero over the project’s five-year life, at the end of which the sausage system can be scrapped for $64,000. The sausage system will save the firm $240,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $23,000. If the tax rate is 35 percent and the discount rate is 9 percent, what is the NPV of this project? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Here’s the SOLUTION

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Health Scan, Inc. paid $50,000 for X-ray equipment four years ago

Relevant Costs for Equipment Replacement Decision

Health Scan, Inc. paid $50,000 for X-ray equipment four years ago. The equipment was expected to have a useful life of 10 years from the date of acquisition with annual operating costs of $50,000. Technological advances have made the machine purchased four years ago obsolete with a zero salvage value. An improved X-ray device incorporating the new technology is available at an initial cost of $146,000 and annual operating costs of $23,000. The new machine is expected to last only six years before it, too, is obsolete. Asked to analyze the financial aspects of replacing the obsolete but still functional machine, Health Scan’s accountant prepared the following analysis. After looking over these numbers, the Center’s manager rejected the proposal.

Six-year savings [($50,000 ? $23,000) × 6] $162,000
Cost of new machine (146,000)
Undepreciated cost of old machine (30,000)
Advantage (disadvantage) of replacement $(14,000)

Calculate the net benefit (cost) of purchasing the new machine

Here’s the SOLUTION

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ECO 301 Week 2 Quiz (A+ Guaranteed)

Question 1

Let QD= -5P + 54 and QS= P – 6. Equilibrium can be found at

Q = 4; P = 10

Q = 6; P = 10

P = 6; Q = 0

Q =; P = 2

Question 2

Suppose a production possibilities frontier can be expressed as 9X2+ Y2= 81 what is the opportunity cost of going from 1 unit of X to 2 units of X (in terms of units of Y)?

a. 45
b. sqrt of 45
c. sqrt of 72 – sqrt of 45
d. 1

Question 3

The Ricardian notion that of diminishing returns implies that

As more input is used more output will be made.

As more input is used less output will be made.

As more input is used the increase in output will increase.

As more input is used the increase in output will decrease.

Question 4

Suppose the equilibrium quantity is

2

3

4

5

Question 5

If the production possibilities frontier can be expressed as 4X2+ Y2= 16 then the point X = 1; Y = 4 is

outside the production possibilities frontier

on the production possibilities frontier

inside the production possibilities frontier

in the wrong quadrant to be on the graph

Question 6

If society is producing a combination of goods on its production possibilities frontier

it must be employing all available resources.

it must be growing.

it is using all the available natural resources but may not be using all available labor resources.

Both a and b.

Question 7

Suppose right (R) and left (L) shoes are only useful if produced in equal proportion and societal happiness is expressed as min(R,L). The contour lines would be

downward sloping lines

upward sloping lines

L-shaped

backward L-shaped

Question 8

IfY=X2+Z2, the contour lines

are concentric circles.

are parabolas.

are hyperbolas.

intersect whenever either X or Z is zero.

Question 9

Suppose you can write generic supply and demand curves such that QS= A + BP and QD= D + CP. Equilibrium price is given by

Question 10

The underlying reason early economists believed a (short-run) supply curve would be upward sloping is because of

decreasing average costs

increasing average cost

decreasing marginal costs

increasing marginal costs

Question 11

If an individual has a constant MRS of shoes for sneakers of 3/4 (that is, he or she is always willing to give up 3 pairs of sneakers to get 4 pairs of shoes) then, if sneakers and shoes are equally costly, he or she will

buy only sneakers.

buy only shoes.

spend his or her income equally on sneakers and shoes.

wear sneakers only 3/4 of the time.

Question 12

Suppose a cup of coffee at the campus coffee shop is $2.50 and a cup of hot tea is $1.25. Suppose a student’s beverage budget is $20 per week. What is the algebraic expression of the budget?

Question 13

If bundles of goods A and B lie on the same indifference curve, one can assume the individual

prefers bundle A to bundle B.

prefers bundle B to bundle A.

enjoys bundle A and B equally.

bundle A contains the same goods as bundle B.

Question 14

The X-intercept of the budget constraint represents

how much of good Y can be purchased if no good X is purchased and all income is spent.

how much of good X can be purchased if no good Y is purchased and all income is spent.

total income divided by the price of X.

a and c.

Question 15

Suppose an individual’s MRS (of steak for beer) is 2:1. That is, at the current consumption choices he or she is willing to give up 2 beers to get an extra steak. Suppose also that the price of a steak is $1 and a beer is 25¢. Then in order to increase utility the individual should

buy more steak and less beer.

buy more beer and less steak.

continue with current consumption plans.

Not enough information to answer the question.

Question 16

If an individual’s indifference curve map does not obey the assumption of a diminishingMRS, then

the individual will not maximize utility.

the individual will buy none of good X.

tangencies of indifference curves to the budget constraint may not be points of utility maximization.

the budget constraint cannot be tangent to an appropriate indifference curve.

Question 17

An increase in an individual’s income without changing relative prices will

rotate the budget constraint about the X-axis.

shift the indifference curves outward.

shift the budget constraint outward in a parallel way.

rotate the budget constraint about the Y axis.

Question 18

Suppose a teenager has $20 and likes both rap music (R) and country music (C) with a set of preferences so that U = C1/2R1/2. Suppose that the iTunes price of a rap music song is and the price of a country music song is. Which level of utility is affordable?

9

16

25

Question 19

The point of tangency between a consumer’s budget constraint and his or her indifference curve represents

complete satisfaction for the consumer.

the equivalence of prices the consumer pays.

constrained utility maximization for the consumer.

the least he or she can spend.

Question 20

Suppose a cup of coffee at the campus coffee shop is $2.50 and a cup of hot tea is $1.25. Suppose a student’s beverage budget is $20 per week. Suppose the student simply prefers more caffeine to less and that the tea sold has the same amount of caffeine as the coffee. The student will buy

all tea.

all coffee.

a mix of coffee and tea.

there is insufficient information to know.

Here’s the SOLUTION

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