Boston Company recently purchased land and a building in a downtown district where land values are rapidly increasing. Archie, the CFO and Edith, the controller are meeting to allocate the lump sum purchase price between the land and the building. Aware that depreciation can only be taken on the building, Edith favors placing a larger share of the purchase price on the building, thus increasing annual depreciation expense and decreasing taxable income and income taxes and therefore increasing cash flow. Archie, the CFO, (and Edith’s boss) argues that the market value of the land is increasing faster than the value of the building. Besides, Archie says GAAP net income will be negatively affected by the additional depreciation and will cause the company’s stock price to go down. 1) Who are the stakeholders in this situation? And what interests are in conflict for each stakeholder?
2) What ethical issues does Edith face?
3) What ethical issues does Archie face?
4) How should this ethical dilemma be resolved and how should these costs be allocated?

True or false: a fitted model with more predictors will necessarily have a lower training set error than a model with fewer predictors.

Solomon chemical company makes three products, b7, k6, and x9, which are joint products from the same materials. in a standard batch of 320,000 pounds of raw materials, the company generates 70,000 pounds of b7, 150,000 pounds of k6, and 100,000 pounds of x9. a standard batch costs $3,840,000 to produce. the sales prices per pound are $10, $14, and $20 for b7, k6, and x9, respectively. (a) allocate the joint product cost among the three final products using weight as the allocation base. (b) allocate the joint product cost among the three final products using market value as the allocation base. (c) allocate the joint product cost among the three final products using weight as the allocation base.

The gilbert instrument corporation is considering replacing the wood steamer it currently uses to shape guitar sides. the steamer has 6 years of remaining life. if kept,the steamer will have depreciaiton expenses of $650 for five years and $325 for the sixthyear. its current book value is $3,575, and it can be sold on an internet auction site for$4,150 at this time. if the old steamer is not replaced, it can be sold for $800 at the endof its useful life. gilbert is considering purchasing the side steamer 3000, a higher-end steamer, whichcosts $12,000 and has an estimated useful life of 6 years with an estimated salvage value of$1,500. this steamer falls into the macrs 5-year class, so the applicable depreciationrates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. the new steamer is fasterand allows for an output expansion, so sales would rise by $2,000 per year; the newmachine's much greater efficiency would reduce operating expenses by $1,900 per year.to support the greater sales, the new machine would require that inventories increase by$2,900, but accounts payable would simultaneously increase by $700. gilbert's marginalfederal-plus-state tax rate is 40%, and its wacc is 15%.a. should it replace the old steamer? b. npv of replace = $2,083.51