Reviews the book "Accounting and Tax Aspects of Patents and Research," by J.A. McFadden and C.D. Tuska.

The article presents several problems related to accounting, which were prepared by the Board of Examiners of the American Institute of Certified Public Accountants and were presented as the second half of the C.P.A. examination in accounting theory on May 19, 1961. Some of the questions were based on the topic of consolidated statements of any company, like, whose financial position is represented by consolidated statements; consolidated statements and beneficiaries; proper consolidated statements of companies, etc. One of the problem states that a company P had 300,000 shares of stock outstanding. It owned 75% of the outstanding stock of T. T owned 20,000 shares of P's stock. The figure of P's outstanding stocks in the consolidated balance sheet has been asked. A question has been asked that is it acceptable accounting treatment to carry investments in subsidiaries not consolidated at cost. A question focuses on the issue of the profit increment of any company, but no valid reasons in support of this growth has been presented to the president by the accountant, as everything seems as stable as it looked when the company started.

This article focuses on the examination in theory of accounts of the Uniform Certified Public Accountants. There were two groups of question. In one of the question one is to indicate the nature of the account or accounts to he debited when recording each transaction using tile preferred accounting treatment by placing an "X" in the proper column on the answer sheet provided. Prepayments should be recorded in balance sheet accounts. Disregard income tax considerations unless instructed otherwise. The question includes facts like, the Talbot Co. spent $8,600 during the year for experimental purposes in connection with the development of its product. This is approximately the same amount that the company has been spending for this purpose annually for many years. The Placey Co. recently purchased land and two buildings for a total cost of $35,000, and entered the purchase on the books. Razing costs of $1,200 were incurred in removing the smaller building, which had an appraised value at acquisition of $6,200, in order to make room for new construction.

This article examines the suitability of variable costing for external reports. Variable costing is the inventory costing method which applies only variable production costs to product; under this method fixed factory overhead is not assigned to product. Typically variable production costs are direct material costs, direct labor costs, and variable overhead costs. Variable costing differs from conventional costing, sometimes called absorption costing, because fixed factory overhead is treated as a period cost rather than as a product cost. If a given cost has no influence on future operations, it is irrelevant and not helpful for decision-making. Therefore, assets should consist only of relevant costs, costs that will influence future results. If costs will not have an impact on future results, they have no service potential because they cannot affect future cost incurrence. Proponents of conventional costing maintain that income is greater when production exceeds sales than when production is at the same level as sales, because fixed facilities are better utilized and render more benefit in the form of inventories that will bring future revenue.

This article presents accounting problems which were prepared by the Board of Examiners of the American Institute of Certified Public Accountants and were presented as the second half of the C.P.A. examination in accounting practice on November 3, 1960. One of the questions asks to prepare a statement showing how cash will be distributed among partners by installments as it becomes available. In yet another question it asks to prepare a worksheet showing account balances per books, any adjustments one can consider necessary, and adjusted balances. Also, indicate which balance one would consider to be current, which balances noncurrent, and which balances would be shown in the stockholders' equity section of the balance sheet. The question further asks to prepare schedules of inventories, depreciation, and deferred taxes in good form. The Johnson Appliance Co. started business on January 1, 1950. Separate accounts were established for installment and cash sales, but no perpetual inventory record was maintained.

This article presents problems and their solutions prepared by the Board of Examiners of the American Institute of Certified Public Accountants and were presented as the first half of the Certified Public Accountant examination in accounting practice on November 2, 1960. Candidates were required to solve all problems. One of the question was, "Prior to January 1, 1959, ABC Company, a wholly-owned subsidiary of XYZ Company, conducted a business of importing hemp and fiber for resale purposes. As of January 1, 1959, ABC Company changed its business by entering into an agency agreement with the parent company whereby all transactions of ABC Company would be as agent for the purposes of purchasing and selling hemp and fiber for the account of XYZ Company as principal. The agreement provided, among other things, that ABC Company receive $1.80 a ton for all hemp and fiber purchased for XYZ Company, including the beginning inventory. The beginning and ending inventories were priced at $7.15 and $7.20 per hundred pounds, respectively. The average prices per hundred pounds for purchases, as recorded in the books of account after the adjustment for ending inventory, and sales were $7.18 and $7.27, respectively.