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The debate regarding CFLs versus incandescent bulbs (see previously discussed) has even more wrinkles. In no particular order:

1. Incandescent bulbs generate a lot more heat than CFLs.
2. CFL prices will probably decline relative to incandescent bulbs.
3. CFLs unavoidably contain small amounts of mercury, a significant environmental hazard, and special precautions must be taken in disposing of burned-out units (and also in cleaning up a broken lamp). Currently, there is no agreed-upon way to recycle a CFL. Incandescent bulbs pose no disposal breakage hazards.
4. Depending on a light’s location (or the number of lights), there can be a nontrivial cost to change bulbs (i.e., labor cost in a business).
5. Coal-fired power generation accounts for a substantial portion of the mercury emissions in the U.S., though the emissions will drop sharply in the relatively near future.
6. Power generation accounts for a substantial portion of CO2CO_{2} emissions in the U.S.
7. CFLs are more energy and material intensive to manufacture. On-site mercury contamination and worker safety are issues.
8. If you install a CFL in a permanent lighting fixture in a building, you will probably move long before the CFL burns out.
9. Another lighting technology based on light-emitting diodes (LEDs) exists and is improving. LEDs are currently much more expensive than CFLs, but costs are coming down. LEDs last much longer than CFLs and use even less power. Plus, LEDs don’t contain mercury.

Qualitatively, how do these issues affect your position in the CFL versus incandescent lightbulb debate? Some countries have banned incandescent bulbs. Does your analysis recommend such a move is wise? Are there other regulations short of an outright ban that make sense to you?

Sherrod, Inc., reported pretax accounting income of $76\$ 76 million for 2018 . The following information relates to differences between pretax accounting income and taxable income: a. Income from installment sales of properties included in pretax accounting income in 2018 exceeded that reported for tax purposes by $3\$ 3 million. The installment receivable account at year-end had a balance of $4\$ 4 million (representing portions of 2017 and 2018 installment sales), expected to be collected equally in 2019 and 2020. b. Sherrod was assessed a penalty of $2\$ 2 million by the Environmental Protection Agency for violation of a federal law in 2018 . The fine is to be paid in equal amounts in 2018 and 2019. c. Sherrod rents its operating facilities but owns one asset acquired in 2017 at a cost of $80\$ 80 million. Depreciation is reported by the straight-line method, assuming a four-year useful life. On the tax return, deductions for depreciation will be more than straight-line depreciation the first two years but less than straight-line depreciation the next two years ( $\$ in millions):

Income Statement Tax Return Difference
2017 $20 $26 $(6)
2018 20 35 (15)
2019 20 12 8
2020 20 7 13
$80 $80 $0

d. Warranty expense of$3\$3 million is reported in 2018. For tax purposes, the expense is deducted when costs are incurred, $2\$ 2 million in 2018. At December 31,2018 , the warranty liability was $2\$ 2 million (after adjusting entries). The balance was $1\$ 1 million at the end of 2017 .

e. In 2018 , Sherrod accrued an expense and related liability for estimated paid future absences of $7million\$ 7 \mathrm{million} relating to the company's new paid vacation program. Future compensation will be deductible on the tax return when actually paid during the next two years ( $4\$ 4 million in 2019;$32019 ; \$ 3 million in 2020).

f. During 2017, accounting income included an estimated loss of $2\$ 2 million from having accrued a loss contingency. The loss is paid in 2018 , at which time it is tax deductible.

Balances in the deferred tax asset and deferred tax liability accounts at January 1, 2018, were $1.2\$ 1.2 million and $2.8\$ 2.8 million, respectively. The enacted tax rate is 40%40 \% each year.

Required:

  1. Determine the amounts necessary to record income taxes for 2018 , and prepare the appropriate journal entry.
  2. What is the 2018 net income?
  3. Show how any deferred tax amounts should be classified and reported in the 2018 balance sheet.

Write your answer to each part clearly. Support your answers with relevant information and examples. Where calculations are required, show your work. Mountaintop mining is the process of removing 50-200 vertical meters of mountaintop to extract coal from underlying seams. Following the removal of topsoil, material overlying coal seams is removed with explosives. This process leaves behind a tremendous amount of soil, rock, and coal tailings. The tailings are often pushed into adjacent valleys that contain headwater streams and floodplains. Much of the coal tailings become oxidized, and can release sulfuric acid after a rainfall. When coal extraction is complete, the mountains are not rebuilt. However, mining companies are required to contour the landscape so that rainfall and snowmelt drain from the mountain along similar paths as in the pre-mining landscape. Companies are also required to add topsoil to the mountain and seed the soil to facilitate plant growth. (a) Topsoil is often added by large tractors that compact the soil. How does soil comp action alter the flow of water down the mountain? (b) List two ways in which soil compaction may alter plant growth on the mountain following all reclamation activities. (c) List two environmental consequences that are likely to result from filling valleys with mountaintop tailings, and two consequences that might arise downstream of the mining site. (d) What other coal mining practice(s) could be used to remove the coal from mountains that would have less of an enviromnental impact than mountaintop mining?

Question

What is the scope of a local variable?

Solution

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A local variable is scoped to the block of code in which it is declared\textbf {block of code in which it is declared}, starting from the line of the declaration.

A parameter is an example of the local variable whose scope is the entire method. If the programmer tries to use it outside of it, the error would arise.

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