Problem 3

A) What evidence did Chetty and coauthors find about changes in absolute mobility in the United States over time?

B) How does the gender gap in absolute mobility rates vary by race?

MMV Inc., opened a chain of businesses several years ago that provide quick oil changes and other minor services in conjunction with a convenience operation consisting of a soup, sandwich, and snack bar. The strategy was that as customers brought autos in for oil changes, they would likely use the convenience operation to purchase a sandwich, bowl of soup, beverage, or some other snack while they were waiting for the work to be completed on their autos. The oil change operation occupies 75% of the facility and includes three service bays. The soup, sandwich, and snack bar occupies the remaining 25%. A general manager is responsible for the entire operation, but each segment also has a manager responsible for its individual operation.

Recently, the following annual operating information for the soup, sandwich, and snack bar at one of MMV’s locations caught the general manager’s attention. Sales for the year were $120,000, and cost of sales (food, beverages, and snack items) are 40% of sales revenue. Operating expense information for the convenience operation follows:

While investigating these operating expenses, MMV Inc. determines the following:

Utilities are allocated to each segment based on square footage; however, 50% of the amount allocated to the soup, sandwich, and snack bar results from operating the food equipment.

The general manager’s salary is allocated between the segments based on estimated time spent with each operation. It is determined that 20% of the general manager’s time is spent with the convenience operation.

Advertising is allocated to each segment equally but could be reduced by $2,700 if MMV decided to advertise only the auto services.

Insurance is allocated to each segment based on square footage, but only 25% of the amount allocated to the soup, sandwich, and snack bar results directly from its operation.

Property taxes and building depreciation are allocated to each segment based on square footage.

Required:

a. From the preceding information, calculate the operating income from the soup, sandwich, and snack bar operation that has caught the general manager’s attention.

b. Identify whether each of these operating expenses is relevant to the decision of discontinuing the soup, sandwich, and snack bar operation, if relevant, provide the relevant values.

c. If MMV Inc. discontinues the soup, sandwich, and snack bar operation, how much will operating income increase or decrease for this location?

d. Should MMV continue or discontinue the soup, sandwich, and snack bar operation at this location?

1. When an allele becomes more common in a species, what changes?

2. Which word describes what happens when different populations of the same species develop different allele frequencies?

3. What is a biological race?

The following are three independent, unrelated sets of facts relating to accounting changes.

For each of the situations described, provide the information indicated below.

Type of accounting change.

Manner of reporting the change under current generally accepted accounting principles, including a discussion where applicable of how amounts are computed.

Effect of the change on the balance sheet and income statement.

Answer the questions listed below in detail.

1.What are the types of accounting changes? Give examples. Try to find a company that has reported an accounting change recently. What are the major reasons why companies change accounting methods? The Wall Street Journal has several examples.

2. What are accounting errors and how are they reported? What are the disclosure requirements for correction of errors? See FASB codification as backup.

3. Define a change in estimate and provide an illustration. When is a change in accounting estimate effected by a change in accounting principle?

4. Distinguish between counterbalancing and noncounterbalancing errors. Give an example of each.

5. Discuss how a change to the LIFO method of inventory valuation is handled when it is impractical to determine previous LIFO inventory amounts.

Explain Peer-to-Peer lending:

How it changes the way loans are made compared to the lending approaches of traditional financial institutions (i.e. banks, financing companies, credit card etc.)

What are the differences and similarities of loans made from P2P and from other traditional institutions?

What improvement it brings to the delivery of financial service?

What changes in the city’s budgeting and accounting structure would overcome these limitations? What additional problems might these changes cause?

Government activities may be less “profitable” than they appear.

A city prepares its budget in traditional format, classifying expenditures by fund and object. In 2010, amid considerable controversy, the city authorized the sale of $20 million in bonds to finance construction of a new sports and special events arena. Critics charged that, contrary to the predictions of arena proponents, the arena could not be fiscally self‐sustaining. Five years later, the arena was completed and began to be used. After its first year of operations, its general managers submitted the following condensed statement of revenues and expenses (in millions):

At the city council meeting, when the report was submitted, the council member who had championed the center glowingly boasted that his prophecy was proving correct; the arena was “profitable.” Assume that the following information came to your attention:

• The arena is accounted for in a separate enterprise fund.

• The arena increased the number of overnight visitors to the city. City administrators and economists calculated that the additional visitors generated approximately $0.1 million in hotel occupancy tax revenues. These taxes are dedicated to promoting tourism in the city. In addition, they estimated that the ticket and concession sales, plus the economic activity generated by the arena, increased general sales tax revenues by $0.4 million.

• The city had to improve roads, highways, and utilities in the area surrounding the arena. These improvements, which cost $6 million, were financed with general obligation debt (not reported in the enterprise fund). Principal and interest on the debt, paid out of general funds, were $0.5 million. The cost of maintaining the facilities was approximately $0.1 million.

• On evenings when events were held in the arena, the city had to increase police protection in the arena’s neighborhood. Whereas the arena compensated the police department for police officers who served within the arena itself, those who patrolled outside were paid out of police department funds. The police department estimated its additional costs at $0.1 million.

• The city provided various administrative services (including legal, accounting, and personnel) to the arena at no charge at an estimated cost of $0.1 million.

• The city estimates the cost of additional sanitation, fire, and medical services due to events at the center to be approximately $0.2 million.

74) When the price of perfume changes from $24 to $26, the quantity supplied increases from 100 jars to 150 jars. What is the elasticity of supply of perfume?
A) 25.0
B) 5.0
C) 0.04
D) 0.2
76) An 18 percent increase in the price of a small car results in a 10 percent increase in the quantity supplied. The price elasticity of supply is equal to
A) 0.75.
B) 0.40.
C) 1.80.
D) 0.55.
77) Which of the following statements is CORRECT?
A) A change in the quantity demanded means a shift in the demand curve.
B) A change in demand means a shift in the demand curve while change in the quantity demanded means a movement along the demand curve.
C) A change in demand means a movement along the demand curve.
D) A change in demand and change in quantity demanded means the same thing.
78) When Janet Yellen, Chair of the Federal Reserve, addresses Congress regarding the United States role in the world economy, she is discussing
A) incentives.
B) a mic-roeconomic topic.
C) scarcity.
D) a macroeconomic topic

Burns Corporation's net income last year was $94,600. Changes in the company's balance sheet accounts for the year appear below:

The company did not dispose of any property, plant, and equipment, sell any long-term investments, issue any bonds payable, or repurchase any of its own common stock during the year. The company declared and paid a cash dividend of $4,300.

Required:

a. Prepare the operating activities section of the company's statement of cash flows for the year. (Use the indirect method.)

b. Prepare the investing activities section of the company's statement of cash flows for the year.

c. Prepare the financing activities section of the company's statement of cash flows for the year.

Question 4 – Accounting Changes

Complete the following chart – use check marks