MANAGERIAL ACCOUNTING CONNECT ACCESS <C>
5th Edition
ISBN: 9781264191635
Author: Noreen
Publisher: MCG CUSTOM
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Textbook Question
Chapter P, Problem P.7E
Ethics In Business
Consumers and attorney generals in more than 40 states accused a prominent nationwide chain of auto repair shops of misleading customers and selling them unnecessary parts and services, from brake jobs to front-end alignments. Lynn Sharpe Paine reported the situation as follows in Managing for Organizational Integrity” Harvard Business Review Volume 72 Issue 3:
In the face of declining revenues, shrinking market share, and an increasingly competitive market. . . management attempted to spur performance of its auto Centers.. . . The automotive service advisers were given product-specific sales quotas—sell so many springs shock absorbers, alignments, or brake jobs per shift—and paid a commission based on sales. . .
[F]ailure to meet quotas could lead to a transfer or a reduction in work hours. Some employees spoke of the “pressure. Pressure, pressure” to bring in sales.
This pressure-cooker atmosphere created conditions under which employees felt that the only way to satisfy top management was by selling products and services to customers that they didn’t really need.
Suppose all automotive repair businesses routinely followed the practice of attempting to sell customers unnecessary parts and services.
Required:
- How would this behavior affect customers? How might customers attempt to protect themselves against this behavior?
- How would this behavior probably affect profits and employment in the automotive service industry?
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Evergreen Corporation (calendar-year-end) acquired the following assets during the current year: (Use MACRS Table 1 and
Table 2.)
Date Placed in
Asset
Machinery
Service
October 25
Original
Basis
$ 120,000
Computer equipment
February 3
47,500
Used delivery truck*
August 17
Furniture
April 22
60,500
212,500
The delivery truck is not a luxury automobile.
Note: Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.
b. What is the allowable depreciation on Evergreen's property in the current year if Evergreen does not elect out of bonus depreciation
and elects out of §179 expense?
Lina purchased a new car for use in her business during 2024. The auto was the only business asset she purchased
during the year, and her business was extremely profitable. Calculate her maximum depreciation deductions (including
§179 expense unless stated otherwise) for the automobile in 2024 and 2025 (Lina doesn't want to take bonus
depreciation for 2024) in the following alternative scenarios (assuming half-year convention for all): (Use MACRS Table 1,
Table 2, and Exhibit 10-10.)
a. The vehicle cost $40,000, and business use is 100 percent (ignore §179 expense).
Year
Depreciation
deduction
2024
2025
Evergreen Corporation (calendar-year-end) acquired the following assets during the current year: (Use MACRS Table 1 and
Table 2.)
Date Placed in
Asset
Machinery
Service
October 25
Original
Basis
$ 120,000
Computer equipment
February 3
47,500
Used delivery truck*
August 17
Furniture
April 22
60,500
212,500
The delivery truck is not a luxury automobile.
Note: Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.
a. What is the allowable depreciation on Evergreen's property in the current year, assuming Evergreen does not elect §179 expense
and elects out of bonus depreciation?
Chapter P Solutions
MANAGERIAL ACCOUNTING CONNECT ACCESS <C>
Ch. P - Prob. P.1QCh. P - Pick any major television network and describe...Ch. P - If you had to decide whether to continue making a...Ch. P - Why do companies prepare budgets?Ch. P - Prob. P.5QCh. P - Why is managerial accounting relevant to...Ch. P - Prob. P.7QCh. P - Why do management accountants need to understand...Ch. P - Prob. P.9QCh. P - Pick three industries and describe how the risks...
Ch. P - Pick any large company and explain three ways that...Ch. P - Why do companies that implement Lean Production...Ch. P - Why are leadership skills important to managers?Ch. P - Why are leadership skills important to managers?Ch. P - Prob. P.16QCh. P - Prob. P.17QCh. P - Prob. P.18QCh. P - Why do companies take a physical count of their...Ch. P - Why do companies use sequential prenumbering for...Ch. P - Planning and Control Many companies use budgets...Ch. P - Prob. P.2ECh. P - Prob. P.3ECh. P - Ethics and the Manager Richmond, Inc., operates a...Ch. P - Prob. P.6ECh. P - Ethics In Business Consumers and attorney generals...Ch. P - Prob. P.8ECh. P - Prob. P.9ECh. P - Corporate Social Responsibility In his book...Ch. P - Prob. P.11ECh. P - Cognitive Bias and Decision Making During World...Ch. P - Ethics and Decision Making Assume that you just...
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