Described below are three independent and unrelated situations involving accounting changes. Each change occurs during 2018 before any adjusting entries or closing entries are prepared.

1. On December 30, 2014, Rival Industries acquired its office building at a cost of $9,600,000. It has been depreciated on a straight-line basis assuming a useful life of 30 years and no residual value. Early in 2018, the estimate of useful life was revised to 18 years in total with no change in residual value.
2. At the beginning of 2014, the Hoffman Group purchased office equipment at a cost of $576,000. Its useful life was estimated to be 8 years with no residual value. The equipment has been depreciated by the sum-of-the-years’-digits method. On January 1, 2018, the company changed to the straight-line method.
3. At the beginning of 2018, Jantzen Specialties, which uses the sum-of-the-years’-digits method, changed to the straight-line method for newly acquired buildings and equipment. The change increased current year net income by $565,000.

Required:

1. Identify the type of change.
2. Prepare any journal entry necessary as a direct result of the change as well as any adjusting entry for 2018 related to the situation described. (Ignore income tax effects.)

Described below are six independent and unrelated situations involving accounting changes. Each change occurs during 2018 before any adjusting entries or closing entries were prepared. Assume the tax rate for each company is 40% in all years. Any tax effects should be adjusted through the deferred tax liability account.

1. Fleming Home Products introduced a new line of commercial awnings in 2017 that carry a one-year warranty against manufacturer’s defects. Based on industry experience, warranty costs were expected to approximate 4% of sales. Sales of the awnings in 2017 were $2,500,000. Accordingly, warranty expense and a warranty liability of $100,000 were recorded in 2017. In late 2018, the company’s claims experience was evaluated and it was determined that claims were far fewer than expected: 3% of sales rather than 4%. Sales of the awnings in 2018 were $3,000,000, and warranty expenditures in 2018 totaled $68,250.
2. On December 30, 2014, Rival Industries acquired its office building at a cost of $800,000. It was depreciated on a straight-line basis assuming a useful life of 40 years and no salvage value. However, plans were finalized in 2018 to relocate the company headquarters at the end of 2022. The vacated office building will have a salvage value at that time of $600,000.
3. Hobbs-Barto Merchandising, Inc., changed inventory cost methods to LIFO from FIFO at the end of 2018 for both financial statement and income tax purposes. Under FIFO, the inventory at January 1, 2018, is $590,000.
4. At the beginning of 2015, the Hoffman Group purchased office equipment at a cost of $220,000. Its useful life was estimated to be 10 years with no salvage value. The equipment was depreciated by the sum-of-the-years’-digits method. On January 1, 2018, the company changed to the straight-line method.
5. In November 2016, the State of Minnesota filed suit against Huggins Manufacturing Company, seeking penalties for violations of clean air laws. When the financial statements were issued in 2017, Huggins had not reached a settlement with state authorities, but legal counsel advised Huggins that it was probable the company would have to pay $100,000 in penalties. Accordingly, the following entry was recorded:

Late in 2018, a settlement was reached with state authorities to pay a total of $240,000 in penalties.

6. At the beginning of 2018, Jantzen Specialties, which uses the sum-of-the-years’-digits method, changed to the straight-line method for newly acquired buildings and equipment. The change increased current year net earnings by $335,000.

Required:
For each situation:
1. Identify the type of change.
2. Prepare any journal entry necessary as a direct result of the change as well as any adjusting entry for 2018 related to the situation described.

Determine the most appropriate third-party intervention to transform the conflict and answer the following questions for your selected conflict.

1. What form of intervention would you use to transform this case? In your answer, be sure to provide a rationale for your choice and state the advantages and disadvantages of using this form of intervention.

2. Based on the parties involved, who is in the best position to make a difference in the conflict as you understand it? Why?

Case:

Family Problems In this case, three adult siblings are involved in a dispute over the distribution of property following the death of their remaining parent. The middle child, Delores, had been named the executor of her parent’s estate, but chose not to do anything other than what was required by law at her father’s death. According to the will, the estate was to be evenly divided between the surviving children. However, this has not yet occurred. As time went on (a couple of years) Delores’ older sister Jane took several large pieces of furniture from her parent’s home and gave them to her children. The younger brother, Ernie wanted to make other investments that would require the sale of the parent’s property. He also wanted to make sure that part of his parent’s estate would be available to pass on to his children.

Other Relevant Information

 Delores never married and has no children.

 The siblings have another sister, Penny, who was killed in a car accident many years ago. Penny was survived by an estranged spouse and four children.

 Jane’s reasoning abilities are hampered by a brain injury incurred in her late teens.

 Jane and her spouse live in California and visit for extended periods of time at least twice a year. Jane typically stays at her late parent’s home.

 Delores and Ernie live in Washington.

 Delores and Ernie’s family have generally gotten along well up to the death of their father.

 Ernie and Jane have not agreed on much of anything since Ernie married someone Jane did not approve of for him.

 Ernie and Jane had a further falling out when Jane said that Ernie’s wife would not be able to participate in their father’s funeral and that Ernie’s daughter had told him about Jane’s comment.

 Delores and Ernie and Jane all agreed in principle at least that Penny’s children should be included in the distribution of property when and if it should occur.

How is fat digested and absorbed after eating a peanut and jelly sandwich on whole wheat including the constituents representing fat and how and where they are digested and absorbed and how and where fat is utilized or stored in the body. Include the chemical, hormonal, and enzyme changes that impact the proper environment of this meal.

A bond with Macaulay duration of 2.1 years has a yield of 4.88% and makes coupon payments semiannually. If the yield changes to 5.51%, what percentage price change would the duration measure predict? (Round to the nearest 0.001%, drop the % symbol. E.g., if your answer is -5.342%, record it as -5.342.)

The beta of an all equity firm is 1.6. The beta of debt is 0.2.If the firm changes its capital structure to 60% debt and 40% equity using 10% debt financing, what will be the beta of the levered firm? (Assume no taxes.)

A. 4.0

B. 3.7

C. 3.4

D. 2.8

Suppose a person has utility function, prices, and income: U(a,B) = 2 ln(A) + ln(B), Pb=1 and m=12. Draw her price offer curve and explain. Hint: it may be useful to think about the number of B's she purchases as Pa changes.

The firm has the following marginal cost function: MC ( y ) = 3 +. 25 y what is the change in producer surplus when the price of y changes from $ 20 to $ 50. (Recall, the change in producer surplus is equal to the new producer surplus minus the old producer surplus).