Degree of difficulty of target achievement in the mid-1990s mobile corporation's marketing and refining (M&R) division

8-79 (Compensation tied to balanced scorecard) Degree of difficulty of target achievement in the mid-1990s mobile corporation's marketing and refining (M&R) division underwent a major reorganization and developed new strategic directions. In conjunction with these changes, M&R developed a balance scorecard around four perspectives: financial customer, internal business processes and learning and growth. Subsequently M&R linked compensation to its balanced scorecard metrics. To illustrate, all salaried employees in M&R's Natural Business Units received the following percentages of their competitive market salary:

Poor Performance within industry Average performance within industry Performance best in industry
Base Pay 90% 90% 90%
Award Based on corporate 1-2% 3-6% 10%
performance on financial metrics
Award based on performance on 0% 5-8% 20%
balanced scorecard metrics for the
M&R division and business unit 91-92% 98-104% 120%

The balanced scorecards included numerous metrics. M&R's financial metrics included return on capital employed and profitability and customer metrics included share of targeted segments of consumers and profitability of dealers. Internal business process metrics included safety and quality indices. Finally learning and growth metrics included an index of employees perceptions of the work climate at M&R

a. What are the advantages and concerns in linking compensation to a balanced scorecard generally?
B. Evaluate M&Rs approach to linking compensation to multiple measures including its system of assigning degrees of difficulty to achieving targets. In your response, consider the process that is involved in developing the compensation scheme.


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The comparative condensed balance sheets of Conard Corporation are presented below

ACC 291 Week 5 Assignment

E14-3 The comparative condensed balance sheets of Conard Corporation are presented below.

CONARD CORPORATION
Comparative Condensed Balance Sheets
December 31
Assets
Current assets $ 74,000 $ 80,000
Property, plant, and equipment (net) 99,000 90,000
Intangibles 27,000 40,000
Total assets $200,000 $210,000

Liabilities and stockholders’ equity
Current liabilities $ 42,000 $ 48,000
Long-term liabilities 143,000 150,000
Stockholders’ equity 15,000 12,000
Total liabilities and stockholders’ equity $200,000 $210,000

Instructions
1. Prepare a horizontal analysis of the balance sheet data for Conard Corporation using 2011 as a base.
2. Prepare a vertical analysis of the balance sheet data for Conard Corporation in columnar form for 2012.

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Three different plans for financing a $10,000,000 corporation are under consideration by its organizers

PR14-1A Three different plans for financing a $10,000,000 corporation are under consideration by its organizers. Under each of the following plans, the securities will be issued at their par or face amount, and the income tax rate is estimated at 40% of income

10%bonds= Plan1= blank, Plan2=blank, Plan3=$5,000,000
Preferred 10% stock,$40par Plan1=blank Plan2=$5,000,000 Plane3=2,500,000
Common stock,$10par= Plan1=$10,000,000 Plan2=5,000,000 Plan3=2,500,000
Total=Plan1=10,000,000 Plan2=10,000,000 Plan3=10,000,000

Required:
1. Determine for each plan the earnings per share of common stock, assuming that the income before bond interest and income tax is $2,000,000.
2. Determine for each plan the earnings per share of common stock, assuming that the income before bond interest and income tax is 950,000.
3. Discuss advantages and disadvantages of each plan.


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Tucson, a U.S. corporation organized in Year 1, reports the following items for a three-year period

C:16-41 Foreign Tax Credit Limitation. Tucson, a U.S. corporation organized in Year 1, reports the following items for a three-year period.

Foreign tax accrual $ 100,000 $ 120,000 $ 180,000
Foreign source taxable income 400,000 300,000 500,000
Worldwide taxable income 1,000,000 1,000,000 1,000,000
The foreign source and worldwide taxable income items are determined under U.S. law.

a. What is Tucson’s foreign tax credit limitation for each of the three years (assume a 34% U.S. corporate tax rate and that income from all foreign activities fall into a single basket)?
b. How are Tucson’s excess foreign tax credits (if any) treated? Do any carryovers remain after Year 3?
c. How would your answers to Parts a and b change if the IRS determines that $100,000 of expenses allocable to U.S.-source income should have been allocable to foreign source income?
d. What measures should Tucson consider if it expects its current excess foreign tax credit position to persist in the long-run?


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Citradoria Corporation is a regular corporation that contributes $35,000 cash to qualified charitable organizations during 2010

Citradoria Corporation is a regular corporation that contributes $35,000 cash to qualified charitable organizations during 2010. The corporation has net operating income of $140,000 before deducting the contributions, and dividends received from domestic corporations (ownership in all corporations is less than 20 percent) in the amount of $20,000.

a. What is the amount of Citradoria Corporation's allowable deduction for charitable contributions for the current year?
b. What may the corporation do with any excess amount of contributions?


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Jerry transfers property having a $32,000 adjusted basis and a $50,000 FMV to Emerald Corporation in exchange for all of Emerald’s stock

C:2-44. Jerry transfers property having a $32,000 adjusted basis and a $50,000 FMV to Emerald Corporation in exchange for all of Emerald’s stock worth $15,000 and Emerald’s assumption of a $35,000 mortgage on the property.

a. What is the amount of Jerry’s recognized gain or loss?
b. What is Jerry’s basis in the Emerald stock?
c. What is Emerald’s basis in the property?
d. How would your answers to Parts a through c change if the mortgage assumed by Emerald were $15,000 and the Emerald stock were worth $35,000?


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Using the information from Problem 47, determine the basis of the property contributed in the hands of the corporation in each instance

48. Using the information from Problem 47, determine the basis of the property contributed in the hands of the corporation in each instance. Assume that the 80% rule is met in all cases.


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Sandy White is a realtor

P1-39B Corporate attributes, applying the entity concept, and preparing financial statements

Sandy White is a realtor. She organized her business as a corporation, Sandy White, Realtor, P.C. (Professional Corporation), by investing $27,000 cash. The business issued common stock to her. Consider the following facts at May 31, 2012:

a. The business owes $62,000 on a note payable for land that the business acquired for a total price of $80,000.
b. The business spent $26,000 for a Minko Banker real estate franchise, which entitles the business to represent itself as a Minko Banker office. This franchise is a business asset.
c. White owes $70,000 on a personal mortgage for her personal residence, which she acquired in 2012 for a total price of $130,000.
d. White has $4,000 in her personal bank account, and the business has $13,000 in its bank account.
e. White owes $3,000 on a personal charge account with Chico’s.
f. The office acquired business furniture for $20,000 on May 25. Of this amount, the business owes $5,000 on account at May 31.
g. Office supplies on hand at the real estate office total $1,100.

Requirements
1. White was concerned about liability exposure. Which corporate feature limits White’s personal liability?
2. Prepare the balance sheet of the real estate business of Sandy White, Realtor, P.C., at May 31, 2012.
3. Identify the personal items that would not be reported on the business records.

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(Comprehensive Problem 1 Susquehanna Equipment Rentals) On December 1, 2011, John and Patty Driver formed a corporation called Susquehanna Equipment Rentals

Comprehensive Problem 1 Susquehanna Equipment Rentals

Susquehanna Equipment Rentals, 16th Edition

A COMPREHENSIVE ACCOUNTING CYCLE PROBLEM

On December 1, 2011, John and Patty Driver formed a corporation called Susquehanna Equipment Rentals. The new corporation was able to begin operations immediately by purchasing the assets and taking over the location of Rent-It, an equipment rental company that was going out of business. The newly formed company uses the following accounts:

AND SO ON

The corporation performs adjusting entries monthly. Closing entries are performed annually on December 31. During December, the corporation entered into the following transactions:

Dec. 1- Issued to John and Patty Driver 20,000 shares of capital stock in exchange for a total of $200,000 cash.

AND SO ON

g. Would it be ethical for Patty Driver to maintain the accounting records for this company, or must they be maintained by someone who is independent of the organization?

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Eber Wares is a division of a major corporation

Eber Wares is a division of a major corporation. The following data are for the latest year of operations.

Sales $30,000,000
Net Operating income $1,170,000
Average operating assets $8,000,000
The company's minimum required rate of return 18%

Required:
i. What is the division's margin?
ii. What is the division's turnover?
iii. What is the division's ROI?
iv. What is the division's residual income?

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Cato, Inc. is a calendar-year corporation whose financial statements for 2009 and 2010 included errors as follows

Cato, Inc. is a calendar-year corporation whose financial statements for 2009 and 2010 included errors as follows:

Year Ending Inventory Depreciation Expense
2009 $162,000 overstated $135,000 overstated
2010 54,000 understated 45,000 understated

Assume that purchases were recorded correctly and that no correcting entries were made at December 31, 2009, or at December 31, 2010. Ignoring income taxes, by how much should Cato's retained earnings be retroactively adjusted at January 1, 2011?

Click here for the solution: Cato, Inc. is a calendar-year corporation whose financial statements for 2009 and 2010 included errors as follows

Allegro Supply Company, a newly formed corporation, incurred the following expenditures related to Land, to Buildings, and to Machinery and Equipment

E10-5 (Treatment of Various Costs) Allegro Supply Company, a newly formed corporation, incurred the following expenditures related to Land, to Buildings, and to Machinery and Equipment.

Abstract company’s fee for title search $ 520
Architect’s fees 3,170
Cash paid for land and dilapidated building thereon 92,000
Removal of old building $20,000
Less: Salvage 5,500 14,500
Interest on short-term loans during construction 7,400
Excavation before construction for basement 19,000
Machinery purchased (subject to 2% cash discount, which was not taken) 65,000
Freight on machinery purchased 1,340
Storage charges on machinery, necessitated by noncompletion of building when machinery was delivered 2,180
New building constructed (building construction took 6 months from date of purchase of land and old building) 485,000
Assessment by city for drainage project 1,600
Hauling charges for delivery of machinery from storage to new building 620
Installation of machinery 2,000
Trees, shrubs, and other landscaping after completion of building (permanent in nature) 5,400

Instructions
Determine the amounts that should be debited to Land, to Buildings, and to Machinery and Equipment. Assume the benefits of capitalizing interest during construction exceed the cost of implementation. Indicate how any costs not debited to these accounts should be recorded.

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The Zygon Corporation was recently formed to produce a semiconductor chip that forms an essential part of the personal computer manufactured by a major corporation

The Zygon Corporation was recently formed to produce a semiconductor chip that forms an essential part of the personal computer manufactured by a major corporation. The direct materials are added at the start of the production process while conversion costs are added uniformly throughout the production process. June is Zygon's first month of operations, and therefore, there was no beginning inventory. Direct materials cost for the month totaled $895,000, while conversion costs equaled $4,225,000. Accounting records indicate that 475,000 chips were started in June, and that 425,000 chips were completed.

Ending inventory was 50% complete as to conversion costs.

Required:
a. What is the total manufacturing cost per chip for June?
b. Allocate the total costs between the completed chips and the chips in ending inventory.

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Dublin Medical (DM), a large established corporation with no growth in its real earnings, is considering acquiring 100% of the shares of Arlington Corporation

Dublin Medical (DM), a large established corporation with no growth in its real earnings, is considering acquiring 100% of the shares of Arlington Corporation, a young firm with a high growth rate of earnings. The acquisitions analysis group at DM has produced the following table of relevant data:

Dublin Medical Arlington
Earnings per share $3.00 $2.00
Dividend per share $3.00 $.80
Number of shares 200 million 10 million
Stock price $30 $20

DM's analysts estimate that investors currently expect growth of about 6% per year in Arlington's earnings and dividends. They assume that with the improvements in management that DM could bring to Arlington, its growth rate would be 10% per year beginning one year from now with no additional investment outlays beyond those already expected.

1. What is the expected gain from the acquisition?
2. What is the net present value (NPV) of the acquisition to DM shareholders if it costs an average $30 per share to acquire all of the outstanding shares?
3. Would it matter to DM's shareholders whether the shares of Arlington stock are acquired by paying cash or DM stock?

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Continuing Cookie Chronicle (CCC1) Solution Natalie Koebel spent much of her childhood learning the art of cookie-making from her grandmother

Continuing Cookie Chronicle
CCC1 Natalie Koebel spent much of her childhood learning the art of cookie-making from her grandmother. They spent many happy hours mastering every type of cookie imaginable and later devised new recipes that were both healthy and delicious. Now at the start of her second year in college, Natalie is investigating possibilities for starting
her own business as part of the entrepreneurship program in which she is enrolled. A long-time friend insists that Natalie has to include cookies in her business plan. After a series of brainstorming sessions, Natalie settles on the idea of operating a cookie-making school. She will start on a part-time basis and offer her services in people’s homes. Now that she has started thinking about it, the possibilities seem endless. During the fall, she will concentrate on holiday cookies. She will offer group sessions (which will probably be more entertainment than education) and individual lessons.
Natalie also decides to include children in her target market. The first difficult decision is coming up with the perfect name for her business. She settles on “Cookie Creations,” and then moves on to more important issues.
Instructions
(a) What form of business organization—proprietorship, partnership, or corporation— do you recommend that Natalie use for her business? Discuss the benefits and weaknesses of each form that Natalie might consider.
(b) Will Natalie need accounting information? If yes, what information will she need and why? How often will she need this information?
(c) Identify specific asset, liability, revenue, and expense accounts that Cookie Creations will likely use to record its business transactions.
(d) Should Natalie open a separate bank account for the business? Why or why not?
(e) Natalie expects she will have to use her car to drive to people’s homes and to pick up supplies, but she also needs to use her car for personal reasons. She recalls from her first-year accounting course something about keeping business and personal assets separate. She wonders what she should do for accounting purposes. What do you recommend?

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