What is the relationship between a bond's price and its yield to maturity?

What is the relationship between a bond's price and its yield to maturity?

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Differentiate between a defined contribution pension plan and a defined benefit pension plan

Chapter 20: Question 2

Differentiate between a defined contribution pension plan and a defined benefit pension plan. Explain how the employer’s obligation differs between the two types of plans.

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Airport Connection provides shuttle service between four hotels near a medical center and an international airport

ACC 560 Week 4 Assignment

E5-11 Airport Connection provides shuttle service between four hotels near a medical center and an international airport. Airport Connection uses two 10 passenger vans to offer 12 round trips per day. A recent month's activity in the form of a cost-volume-profit income statement is shown below.

Fare revenues (1,440 fares) $36,000
Variable costs
Fuel $5,040
Tolls and Parking 3,100
Maintenance 500 8,640
Contribution margin 27,360
Fixed costs
Salaries 13,000
Depreciation 1,300
Insurance 1,128 15,428
Net income $11,932

Instructions
(a) Identify the above costs as variable, fixed, or mixed.
(b) Calculate the expected costs when production is 5,000 units.

Click here for the solution: Airport Connection provides shuttle service between four hotels near a medical center and an international airport

The following differences between financial and taxable income were reported by Dider Corporation for the current year

2. The following differences between financial and taxable income were reported by Dider Corporation for the current year.

(a) Excess of tax depreciation over book depreciation $60,000
(b) Interest revenue on municipal bonds $9,000
(c) Excess of estimated warranty expense over actual expenditures $54,000
(d) Unearned rent received $12,000
(e) Amortization of goodwill $30,000
(f) Excess of income reported under percentage-of-completion accounting for financial reporting over competed-contract accounting used for tax reporting $45,000
(g) Interest on indebtedness incurred to purchase tax-exempt securities $3,000
(h) Unrealized losses on marketable securities recognized for financial reporting $18,000

Assume that Dider corp. had pretax accounting income [before considering items (a) through (h)] of $900,000 for the current year. Compute the taxable income for the current year. Write your figures in the form attached and show all your work

Click here for the solution: The following differences between financial and taxable income were reported by Dider Corporation for the current year

Southwest Blue Airways provides air transportation services between Seattle and San Diego

Southwest Blue Airways provides air transportation services between Seattle and San Diego. A single Seattle to San Diego round-trip flight has the following operating statistics:

Fuel $7000
Flight Crew Salaries $5400
Airplane depriciation $2600
Variable cost per business class ticket $ 50
Variable cost pereconomy class ticket $ 40
Round trip ticket business class $ 550
Round trip ticket economy class $ 290

It is assumed that the fuel, crew salaries, and airplane depreciation are fixed, regardless of the number of seats sold for the round-trip flight.

a. Compute the break-even number of seats sold on a single round-trip flight for the overall product. Assume that the overall product is 20% business class and 80% economy class tickets.
b. How many business class and economy class seats would be sold at the break-even point?

Click here for the solution: Southwest Blue Airways provides air transportation services between Seattle and San Diego

A lease agreement between Mooney Leasing Company and Rode Company is described in E21-8

E21-9 (Lessor Entries with Bargain Purchase Option) A lease agreement between Mooney Leasing Company and Rode Company is described in E21-8.

Instructions
(Round all numbers to the nearest cent.)
Refer to the data in E21-8 and do the following for the lessor.
(a) Compute the amount of the lease receivable at the inception of the lease.
(b) Prepare a lease amortization schedule for Mooney Leasing Company for the 5-year lease term.
(c) Prepare the journal entries to reflect the signing of the lease agreement and to record the receipts and income related to this lease for the years 2007, 2008, and 2009. The lessor’s accounting period ends on December 31. Reversing entries are not used by Mooney.


Click here for the solution: A lease agreement between Mooney Leasing Company and Rode Company is described in E21-8

The current conceptual distinction between liabilities and equity defines liabilities independently of assets and equity

Communication Case 18-10 Should the present two-category distinction between liabilities and equity be retained? Group interaction.

The current conceptual distinction between liabilities and equity defines liabilities independently of assets and equity, with equity defined as a residual amount. The present proliferation of financial instruments that combine features of both debt and equity and the difficulty of drawing a distinction have led many to conclude that the present two-category distinction between liabilities and equity should be eliminated. Two opposing viewpoints are:

View 1: The distinction should be maintained.
View 2: The distinction should be eliminated and financial instruments should instead be reported in accordance with the priority of their claims to enterprise assets.

One type of security that often is mentioned in the debate is convertible bonds. Although stock in many ways, such a security also obligates the issuer to transfer assets at a specified price and redemption date. Thus it also has features of debt. In considering this question, focus on conceptual issues regarding the practicable and theoretically appropriate treatment, unconstrained by GAAP.

Required:
1. Which view do you favor? Develop a list of arguments in support of your view prior to the class session for which the case is assigned.
2. In class, your instructor will pair you (and everyone else) with a classmate (who also has independently developed an argument).
a. You will be given three minutes to argue your view to your partner. Your partner likewise will be given three minutes to argue his or her view to you. During these three-minute presentations, the listening partner is not permitted to speak.
b. Then after each person has had a turn attempting to convince his or her partner, the two partners will have a three-minute discussion in which they will decide which view is more convincing and arguments will be merged into a single view for each pair.
3. After the allotted time, a spokesperson for each of the two views will be selected by the instructor. Each spokesperson will field arguments from the class in support of that view's position and list the arguments on the board. The class then will discuss the merits of the two lists of arguments and attempt to reach a consensus view, though a consensus is not necessary.

Click here for the solution: The current conceptual distinction between liabilities and equity defines liabilities independently of assets and equity

What is the difference between preparing the statement of cash flows using the direct method and using the indirect method?

12. What is the difference between preparing the statement of cash flows using the direct method and using the indirect method?


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In confirming accounts receivable on December 31, 2009, the author found 15 discrepancies between the customers' records

Auditing P 5-22 In confirming accounts receivable on December 31, 2009, the author found 15 discrepancies between the customers' records and the recorded amounts in the accounts receivable master file. A copy of all confirmations that had exceptions was turned over to the company controller investigate the reason for the difference. He, in turn, had the bookkeeper perform the analysis. The bookkeeper analyzed each exception., determined its cause, and prepared an elaborate spreadsheet explaining exceptions were caused by timing differences in the bookkeeper's report indicated that the exceptions were caused by timing differences in the clients' and customer's records. The auditor reviewed the spreadsheet and concluded that there were no material exceptions to accounts receivable.

Two years subsequent to the audit, it was determined that the bookkeeper had stolen thousands of dollars in the past 3 years by taking cash and overstating accounts receivable. In a lawsuit by the client against the CPA, an examination of the auditors December 31, 2009, accounts receivable working papers, which were subpoenaed by the court, indicated that one of the explanations in the bookkeeper's analysis of the exceptions was fictitious. The analysis stated the exception was caused by a sales allowance granted to the customer for defective merchandise the day before the end of the year. The difference was actually caused by the bookkeeper's theft.

Required:
a. What are the legal issues involved in this situation? What should the auditor use as a defense in the event that he is sued?
b. What was the CPA's deficiency in conducting the audit of accounts receivable?


Click here for the solution: In confirming accounts receivable on December 31, 2009, the author found 15 discrepancies between the customers' records

Differentiate between the operating and financial budgets that are contained in a master budget

8-5 Differentiate between the operating and financial budgets that are contained in a master budget. Why are both types needed?


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Distinguish between a strategic plan and a tactical plan

8-3 Distinguish between a strategic plan and a tactical plan. How are these two plans related?


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Your professor has asked you to complete a research paper concerning the link between the auditing profession and financial reporting standard setters and regulators

Problem 1-34 Your professor has asked you to complete a research paper concerning the link between the auditing profession and financial reporting standard setters and regulators.

Required:
For each independent situation, determine which regulating or standard-setting body you should research:
(a) The entity that sets accounting standards for the government sector.
(b) The entity that decides what is required to become a licensed CPA and conduct work as a CPA.
(c) The entity that sets standards for audits of publicly traded companies.
(d) The entity that sets financial reporting standards in the U.S.
(e) The entity that prepares and administers the Uniform CPA Exam.
(f) The entity that has ultimate authority over public company reports as well as accounting and reporting standards.


Click here for the solution: Your professor has asked you to complete a research paper concerning the link between the auditing profession and financial reporting standard setters and regulators

Button Company has two temporary differences between its income tax expense and income taxes payable

E19-8 (Two Temporary Differences, One Rate, 3 years) Button Company has two temporary differences between its income tax expense and income taxes payable. The information is shown on page 1004.

2007 2008 2009
Personal Financial income $840,000 $910,000 $945,000
Excess depreciation expense on tax return (30,000) (40,000) (10,000)
Excess warranty expense in financial income 20,000 10,000 8,000
Taxable Income 830,000 880,000 943,000

Income tax rate for all years = 40%

Prepare the income tax expense sectin of the income statement for 2009, beginning with the line "Pretax financial income."


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Elysian Fields, Inc., uses a maximum payback period of 6 years and currently must choose between two mutually exclusive projects

Elysian Fields, Inc., uses a maximum payback period of 6 years and currently must choose between two mutually exclusive projects. Project Hydrogen requires an initial outlay of $25,000; project Helium requires an initial outlay of $35,000. Using the expected cash inflows given for each project in the following table, calculate each project's payback period. Which project meets Elysian's standards?

Expected cash inflows
Year Hydrogen Helium
1 $6000 $7000
2 6,000 7,000
3 8,000 8,000
4 4,000 5,000
5 3,500 5,000
6 2,000 4,000

Click here for the solution: Elysian Fields, Inc., uses a maximum payback period of 6 years and currently must choose between two mutually exclusive projects

List and briefly describe four of the five differences between managerial accounting and financial accounting

List and briefly describe four of the five differences between managerial accounting and financial accounting.

Click here for the solution: List and briefly describe four of the five differences between managerial accounting and financial accounting.

The following selected transactions were completed during May between Sky Company and Big Co

Problem 6-6A Sales-Related and Purchase-Related Transactions for Seller and Buyer

The following selected transactions were completed during May between Sky Company and Big Co.:

AND SO ON

Instructions
1. Journalize the May transactions for Big Co. (the buyer).
2. Journalize the May transactions for Sky Company (the seller).

Note: 24th Edition
Click here for the solution: The following selected transactions were completed during May between Sky Company and Big Co

What is the difference in the treatment of liabilities between a ‘‘Type A’’ and a ‘‘Type C’’ reorganization?

What is the difference in the treatment of liabilities between a ‘‘Type A’’ and a ‘‘Type C’’ reorganization?

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Briefly describe at least two similarities and two differences between U.S. GAAP and iGAAP with respect to income tax accounting

Briefly describe at least two similarities and two differences between U.S. GAAP and iGAAP with respect to income tax accounting.

Click here for the solution: Briefly describe at least two similarities and two differences between U.S. GAAP and iGAAP with respect to income tax accounting

Briefly describe some of the similarities and differences between U.S. GAAP and iGAAP related to the accounting for pensions

1. Briefly describe some of the similarities and differences between U.S. GAAP and iGAAP related to the accounting for pensions.

2. At the beginning of the year of adoption of Statement of Financial Accounting Standards No. 106, a transition amount is computed as the excess of the
expected postretirement benefit obligation over the fair value of plan assets or vice versa.
accumulated postretirement benefit obligation over the fair value of plan assets or vice versa.
expected postretirement benefit obligation over the fair value of plan assets, but not vice versa.
accumulated postretirement benefit obligation over the fair value of plan assets, but not vice versa.

Click here for the solution: Briefly describe some of the similarities and differences between U.S. GAAP and iGAAP related to the accounting for pensions

South Co. at the end of 2010, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows

South Co. at the end of 2010, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows:

Pretax financial income $ 420,000
Extra depreciation taken for tax purposes (1,050,000)
Estimated expenses deductible for taxes when paid 840,000
Taxable income $ 210,000

Use of the depreciable assets will result in taxable amounts of $350,000 in each of the next three years. The estimated litigation expenses of $840,000 will be deductible in 2013 when settlement is expected.

Instructions
(a) Prepare a schedule of future taxable and deductible amounts.
(b) Prepare the journal entry to record income tax expense, deferred taxes, and income taxes payable for 2010, assuming a tax rate of 40% for all years.

Click here for the solution: South Co. at the end of 2010, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows