Questions from Accounting Principles

Q: Gary Stanten is concerned with control over mail receipts at Gary’s Sporting

Gary Stanten is concerned with control over mail receipts at Gary’s Sporting Goods. All mail receipts are opened by Al Krane. Al sends the checks to the accounting department, where they are stamped “...

Q: Jimmy West, a business major, is working on a case

Jimmy West, a business major, is working on a case problem for one of his classes. In the case problem, the company needs to raise cash to market a new product it developed. Ron Thayer, an engineering...

Q: Under what conditions is goodwill recorded?

Under what conditions is goodwill recorded?

Q: McDonald’s Corporation reports total average assets of $28.9 billion

McDonald’s Corporation reports total average assets of $28.9 billion and net sales of $20.5 billion. What is the company’s asset turnover?

Q: Stark Corporation and Zuber Corporation operate in the same industry. Stark

Stark Corporation and Zuber Corporation operate in the same industry. Stark uses the straight-line method to account for depreciation; Zuber uses an accelerated method. Explain what complications migh...

Q: Gomez Corporation uses straight-line depreciation for financial reporting purposes but

Gomez Corporation uses straight-line depreciation for financial reporting purposes but an accelerated method for tax purposes. Is it acceptable to use different methods for the two purposes? What is G...

Q: You are comparing two companies in the same industry. You have

You are comparing two companies in the same industry. You have determined that Ace Corp. depreciates its plant assets over a 40- year life, whereas Liu Corp. depreciates its plant assets over a 20-yea...

Q: Sosa Company is doing significant work to revitalize its warehouses. It

Sosa Company is doing significant work to revitalize its warehouses. It is not sure whether it should capitalize these costs or expense them. What are the implications for current-year net income and...

Q: When assets are exchanged in a transaction involving commercial substance, how

When assets are exchanged in a transaction involving commercial substance, how is the gain or loss on disposal of plant assets computed?

Q: Unruh Refrigeration Company trades in an old machine on a new model

Unruh Refrigeration Company trades in an old machine on a new model when the fair value of the old machine is greater than its book value. The transaction has commercial substance. Should Unruh recogn...