Exercise 4-14A Classify cash flows (LO4-7) Below are several transactions for Witherspoon Incorporated, a small manufacturer of decorative glass designs. Required: For each transaction, indicate (1) w
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Note that the classification of items according to their relationship with cash/cashflow are given in the attached table.
What is Cash flow in accounting?Cash flow in accounting refers to the movement of cash into and out of a business over a specific period of time.
It tracks the sources and uses of cash, including cash from operating activities (such as sales and expenses), cash from investing activities (such as purchasing or selling assets),and cash from financing activities (such as borrowing or repaying loans).
Cash flow is an important indicator of a company's financial health and liquidity.
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Full Question:
Although part of your question is missing, you might be referring to this full question:
Exercise 4-14 Classify cash flows (LO4-7) Below are several transactions for Witherspoon Incorporated, a small manufacturer of decorative glass designs. Required or each transaction, indicate (1) whether cash is involved (yes or no), and, if cash is involved, (2) whether Witherspoon should classify it as operating, investing, or financing in a statement of cash flows, and (3) whether the cash is an inflow or outflow. Enter N/A if the question is not applicable to the statement. Cash Involved? (Yes or No) Inflow or or Financing? (if cash Outflow? Transaction involved) a. Borrow cash from the bank. b. Purchase supplies on account. c Purchase equipment with cash. d. Provide services on account. e. Pay cash on account for b. above. t. Sell for cash a warehouse no longer in use. q. Receive cash on account for d. above h. Pay cash to workers for salaries.
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Last year Nicole bought 200 shares of Burlington common stock at $255.00 per share. During the year he received dividends of $3.50 per share. Currently, the shares were sold for $302.00. What is the rate of return earned by Nicole for the year?
Answer: Yield=_____________________________________
Show Formula and Procedure (explanation)
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The rate of return earned by Nicole for the year is 19.8%.
What Is Rate Of Return? How We Calculated The Rate Of Return.Rate of return is a financial metric used to measure the profitability or performance of an investment over a specific period of time.
It represents the percentage increase or decrease in the value of an investment relative to the initial amount invested or the total return generated from an investment.
To calculate the rate of return earned by Nicole for the year, we can use the formula for yield or return on investment:
Yield = (Profit / Initial Investment) x 100
In this case, the profit is the total gain from both dividends and the increase in the stock price, and the initial investment is the cost of purchasing the shares.
Given the following information:
Number of shares = 200
Purchase price per share = $255.00
Dividends per share = $3.50
Sale price per share = $302.00
To calculate the profit:
Profit = (Sale price - Purchase price) x Number of shares + (Dividends per share x Number of shares)
Profit = ($302.00 - $255.00) x 200 + ($3.50 x 200)
Profit = $9,400.00 + $700.00
Profit = $10,100.00
Now we can calculate the yield:
Yield = (Profit / Initial Investment) x 100
Yield = ($10,100.00 / (200 x $255.00)) x 100
Yield = ($10,100.00 / $51,000.00) x 100
Yield = 0.198 x 100
Yield = 19.8%
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Macy’s increased the price of one of its dresses from $100 to $120. The increase caused a decrease in the quantity demanded from 1,000 coats to 900 coats. Calculate the price elasticity of demand using the simple method. 3 marks
Identify whether each of the following takes place in factor market (F)or the product market (P). 2 marks each
Carla buys a brand new handbag from the retail store, Dooney and Bourke.
Honda sells a factory to Toyota so that its operations can be expanded.
Stacy works 40 hours a week as a Bartender at Curtain Bluff hotel.
The School Meals Factory purchases utensils from Shoul’s Toys and Gifts.
Karl spends $200 to purchase flash drives from Best Buy.
Fredericka earns $625 an hour as a journalist.
g.Taj spends $8 to order a mojito drink
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The price elasticity of demand is -0.5. It can be calculated using the simple method as follows:
Price Elasticity of Demand = (percentage change in quantity demanded) / (percentage change in price)
First, let us calculate the percentage change in quantity demanded:
Percentage Change in Quantity Demanded = [(New Quantity Demanded - Old Quantity Demanded) / (Old Quantity Demanded)] x 100
= [(900 - 1000) / (1000)] x 100= -10%
Next, let us calculate the percentage change in price:
Percentage Change in Price = [(New Price - Old Price) / (Old Price)] x 100= [(120 - 100) / (100)] x 100= 20%
Now, we can calculate the price elasticity of demand:
Price Elasticity of Demand = (percentage change in quantity demanded) / (percentage change in price)= (-10%) / (20%)= -0.5
Therefore, the price elasticity of demand is -0.5. This means that the demand for the dress is inelastic. A 1% increase in price results in a 0.5% decrease in the quantity demanded.
The following takes place in factor market (F) or the product market (P):
Carla buys a brand new handbag from the retail store, Dooney and Bourke - (P)
Honda sells a factory to Toyota so that its operations can be expanded - (F)
Stacy works 40 hours a week as a Bartender at Curtain Bluff hotel - (F)
The School Meals Factory purchases utensils from Shoul’s Toys and Gifts - (F)
Karl spends $200 to purchase flash drives from Best Buy - (P)
Fredericka earns $625 an hour as a journalist - (F)
Taj spends $8 to order a mojito drink - (P)
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Using examples from contemporary happenings in Ghanaian public finance, discuss in not more than 4 pages, 1. what roles they should expect the Ghanaian government to play. 2. The extent to which the current government is playing those roles 3. The challenges faced by the government in playing these roles 4. Specific suggestions aimed at enhancing the role government plays in the Ghanaian Economy. 4:10 PM M
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The government has a vital role to play in Ghana's economy. By providing public goods, acting as a stabilizer, and providing social safety nets, the government can improve the lives of all Ghanaians.
The government faces significant challenges in performing these roles, including corruption, ensuring access to public goods and social safety nets, and balancing economic growth with inflation control.
To enhance the government's role in the Ghanaian economy, the government should increase transparency, invest in infrastructure, and improve access to education and healthcare.
Contemporary happenings in Ghanaian public finance refer to the ongoing financial occurrences that are taking place in Ghana. This is an overview of the roles that the Ghanaian government should expect to play, the extent to which the current government is playing those roles, the challenges they face in performing these roles, and particular recommendations to improve the government's role in the Ghanaian economy.
The roles that the Ghanaian government should expect to play in contemporary happenings in Ghanaian public finance are as follows:
1. The Government as a Provider of Public Goods
The government is responsible for the provision of public goods in Ghana. Examples of these goods include water, sanitation, and healthcare. The government is expected to ensure that these resources are readily available to Ghanaians.
2. The Government as a Stabilizer
The government should act as a stabilizer in Ghana. This means that the government should take steps to prevent economic fluctuations in the country. The government can accomplish this by regulating inflation rates, the exchange rate, and interest rates.
3. The Government as a Provider of Safety Nets
The government should also provide social safety nets for vulnerable Ghanaians. These safety nets can take the form of programs that offer food, housing, and health insurance to the people who need it most. The government must ensure that these safety nets are well-funded and accessible to all Ghanaians.
The government has made some progress in recent years in providing public goods, stabilizing the economy, and providing social safety nets. The country's healthcare system has improved, and the government has made substantial investments in infrastructure and education. The government has also taken steps to stabilize the economy by maintaining low inflation rates and ensuring that interest rates remain low.
The government faces several challenges in performing its roles in Ghana's economy. Corruption is still a significant problem in Ghana, and the government must take measures to combat it. The government also faces the challenge of ensuring that all Ghanaians have access to public goods and social safety nets. Finally, the government must maintain stability in the country's economy by balancing the need for economic growth with the need for inflation control.
To enhance the government's role in the Ghanaian economy, the government should take the following steps:
1. Increase Transparency
Transparency is crucial in Ghana's economic and political systems. The government must take steps to ensure that all financial transactions are transparent. This can be accomplished by implementing strict auditing procedures and creating an independent anti-corruption commission.
2. Upgrade Infrastructure
The government should also invest in upgrading the country's infrastructure. Improving the roads, bridges, and transportation systems will help increase economic growth and create jobs. Additionally, this investment will help increase access to public goods and services, improving the lives of all Ghanaians.
3. Improve Access to Education and Healthcare
The government should also work to improve access to education and healthcare. The government should invest in public education, including increasing teacher salaries, improving school infrastructure, and providing scholarships for students in need. Additionally, the government should work to expand access to healthcare services, including investing in health clinics and hospitals.
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10. In which of the following situations will the divorced non-custodial parent be entitled to
the dependency exemption for the child? Assume that the divorce decree is silent regarding the dependency exemption for the child.
A. The custodial parent provides $2,700 of support for the child and the dgusb) nor
non-custodial parent provides $3,200.
B. The custodial and non-custodial parents each provide $2,300 of support for the child.
C. The custodial parent provides $2,500 of support for the child and the non-custodial parent provides $1,200.
D. The custodial parent provides $2,500 of support for the child, the non-custodial
parent provides $2,900, and the child has gross income of $2,000.
E. None of the above
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The custodial parent provides $2,500 of support for the child, the non-custodial parent provides $2,900, and the child has gross income of $2,000.. Option D
In general, the dependency exemption for a child is usually granted to the custodial parent unless the divorce decree states otherwise. However, there are specific requirements and tests that need to be met for the non-custodial parent to claim the dependency exemption.
According to the IRS rules, if the divorce decree is silent regarding the dependency exemption, the following conditions must be met for the non-custodial parent to claim the exemption:
The child must receive more than half of their total support from the parents. In situation D, the custodial parent provides $2,500, the non-custodial parent provides $2,900, and the child's gross income is $2,000, making the total support provided by the parents more than half of the child's support.
The child must be in the custody of one or both parents for more than half of the year. Since the child is considered to be in the custody of the custodial parent, this requirement is met in all situations.
The non-custodial parent must be the parent who has the higher adjusted gross income (AGI). This requirement is not applicable in the given situations.
Based on these requirements, only situation D meets the criteria for the non-custodial parent to claim the dependency exemption. The support provided by both parents exceeds half of the child's support, and the child is in the custody of the custodial parent for more than half of the year. Option D
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The property coverage in the unendorsed Businessowners policy is written on a (an):
A) limited liability basis.
B) valued basis.
C) open peril basis.
D) named peril basis.
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The property coverage in the unendorsed business owners' policy is written on an open peril basis.
Option C) open peril basis.
The unendorsed business owners' policy provides property coverage on an open peril basis, which means that it covers a wide range of perils or risks unless they are specifically excluded. Under this type of coverage, any peril or cause of loss is covered unless it is specifically listed as an exclusion in the policy. This provides broader protection for the insured, as it encompasses a wider range of potential risks.
In contrast, a named peril basis would only cover perils or risks that are specifically named or listed in the policy. Limited liability basis and valued basis are not applicable terms when it comes to property coverage in the unendorsed Businessowners policy.
Therefore, the correct option is C) open peril basis.
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Countries of the world suffered from the covid pandemic both economically and socially.
Requirements:
Please analyze the economical effects this pandemic left on Saudi Arabia using the skills"
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The Covid-19 pandemic has had a profound economic impact not only on Saudi Arabia but also on the rest of the world. Saudi Arabia is the largest oil producer in the world, and its economy is heavily dependent on oil production and exports. The decline in oil prices caused by the pandemic has had a significant impact on the country's economy.
Saudi Arabia's economy shrank by 4.1% in the first quarter of 2020 as a result of the pandemic, according to official figures.
The non-oil sector of the economy, which accounts for around 60% of GDP, was hit especially hard, with businesses shutting down and jobs being lost as a result of the lockdowns and social distancing measures that were put in place to control the spread of the virus.
In addition, the pandemic has affected the country's tourism industry, which is a significant source of revenue for the country.
The government had been making efforts to develop tourism in the country, but these efforts were severely impacted by the pandemic, which led to a sharp decline in the number of visitors.
The pandemic also affected the country's labor market, with many foreign workers losing their jobs and returning to their home countries.
This had a significant impact on the country's economy, as these workers are a vital part of the workforce, especially in sectors such as construction, which is a major source of employment in the country.
To address these economic challenges, the government of Saudi Arabia has introduced a number of measures, including stimulus packages to support businesses and workers affected by the pandemic, as well as efforts to diversify the country's economy away from its reliance on oil production.
Overall, while the pandemic has had a significant economic impact on Saudi Arabia, the country is taking steps to mitigate the effects and ensure a robust recovery.
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Erica came to Australia from the United States on a working holiday on 1 December 2019 when she finished college. Her parents were separated, and she had been living between their houses over the last 3 years. All her belongings were packed in a box and stored in her father's basement when she left for Australia. Over the last 7 months Jane has worked in various jobs in Sydney staying with various friends and relatives then she went travelling down the east coast of Australia. At the end of September 2020, she left for New Zealand and intends to go back to the United States in 2022. 1 Outline the tax residency consequences for Erica. Explain your answer with reference to the relevant legislative provisions, case law and the relevant guidance provided by the ATO.
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Under Australian taxation law, tax liability is based on the individual’s tax residency. Hence, it is important to understand the tax residency status of an individual. Erica, in this case, will be treated as a foreign resident for the Australian tax purposes.
This is because she does not satisfy any of the residency tests of Australia to Australian tax law, the tax liability of an individual depends on their tax residency. Hence, it is important to understand the tax residency status of an individual. The residency status of an individual is important in determining their tax liability in Australia. Erica in this case will be treated as a foreign resident for the Australian tax purposes. This is because she does not satisfy any of the residency tests of Australia. However, being a foreign resident does not imply that an individual is not liable to pay taxes in Australia.Income earned in Australia by a foreign resident is taxed in Australia, which is called a non-resident tax rate. Erica will need to pay tax on any income earned in Australia at the non-resident tax rate. She will need to report her worldwide income to the United States tax authorities and pay any tax liability there. It is important to remember that under the Double Taxation Agreement between Australia and the United States, any tax paid in Australia on income earned in Australia will be credited to her tax account in the US. Furthermore, since Erica left her belongings in her father’s basement, it is important to ensure that these do not constitute a permanent place of abode in Australia. If her belongings are considered as a permanent place of abode.
then Erica may be considered a resident of Australia.The following are the relevant legislative provisions, case law and guidance provided by the ATO Section 6 of the Income Tax Assessment Act 1936 (ITAA 1936) deals with the tax residency of individuals .Section 6 states that an individual who resides in Australia and whose domicile is in Australia, or who has been in Australia for more than half of the year of income (unless the Commissioner is satisfied that their usual place of abode is outside Australia and they do not intend to take up residence in Australia), is a resident for taxation purposes. Case law such as Harding v FCT 79 ATC 4117 and FCT v Applegate 79 ATC 4300 are also relevant in determining tax residency status .The Australian Taxation Office (ATO) also provides guidelines on the tax residency of individuals in TR 98/17 (Taxation Ruling) She will also need to report her worldwide income to the US tax authorities and pay any tax liability there. It is essential that her belongings do not constitute a permanent place of abode in Australia. If her belongings are considered a permanent place of abode, then Erica may be classified as a resident of Australia. Section 6 of the Income Tax Assessment Act 1936, case law such as Harding v FCT 79 ATC 4117, FCT v Applegate 79 ATC 4300 and the Australian Taxation Office (ATO) guidelines on tax residency of individuals are all relevant in determining Erica's tax residency status.
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Homework: Macroeconomic Measurements, Part II: GDP and Real GDP (Ch 07) Consider a simple economy that produces two goods: pens and envelopes. The following table shows the prices and quantities of th
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The gross domestic product (GDP) is a quantitative measure of a country's financial output that represents the total value of all goods and services produced over a given period. it measures the monetary value of a nation's output of goods and services. Real GDP is a way of measuring a country's GDP using inflation-adjusted dollars.
It reflects the actual economic growth of a country rather than simply how prices have shifted, and is a more accurate measure of economic performance. The two terms refer to the same thing: the value of goods and services produced by a country over a given time period. It's just that the real GDP has been adjusted for inflation to give a more accurate picture of the economy. GDP and real GDP are important economic indicators that can help policymakers and citizens make informed decisions about the direction of the economy. A country's GDP can provide insights into its overall health and growth potential, while real GDP can help adjust for changes in price levels over time. It is important to understand these concepts and their implications in order to make informed decisions about economic policies and investments. In essence, both GDP and real GDP are essential in measuring a nation's economic health, and while they share similarities, they are different and are used for various purposes.
The GDP is the nominal economic output of a country, while real GDP is the economic output adjusted for inflation. These measures are critical in helping countries track economic progress over time, and they are used to measure how well a country is doing in terms of growth and development.
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Unit 10: IT/Data Design and Modelling Techniques
What is the purpose of a roles and permissions matrix? How can
they be useful outside of IT projects?
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The Roles and Permissions Matrix is a type of table used in computer software development that lists which users are permitted access to what parts of a system or network.
The matrix will identify the tasks or permissions that are allocated to each person or user group, and it will indicate whether they are allowed to modify any data within the system or simply view the data. Below are the purposes of Roles and Permissions Matrix: Roles and Permissions Matrix is designed to allow developers to identify which users have access to what areas of the program.
Developers can use this information to troubleshoot issues or diagnose potential problems. This information can be critical in determining what user roles have access to what parts of the system.Users can use the Roles and Permissions Matrix to determine which actions they are allowed to take within the system. They can use this information to troubleshoot problems, determine whether they have the necessary privileges to complete a task, and identify any security risks that might exist within the system.
Roles and Permissions Matrix can be useful outside of IT projects because it can help identify organizational policies and processes that need to be implemented to ensure that the organization's security is maintained. This information can also be used to help identify areas where additional security measures are needed, such as the implementation of access control policies or the implementation of monitoring software to track the use of sensitive data.
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Consider the following scenario analysis:
Rate of Return
Scenario Probability Stocks Bonds
Recession 0.20 −5 % 14 %
Normal economy 0.60 15 8 Boom 0.20 25 4 b. Calculate the expected rate of return and standard deviation for each investment. (Do not round intermediate calculations. Enter your answers as a percent rounded to 1 decimal place.)
Answers
For the stocks investment, the expected rate of return is 13% with a standard deviation of approximately 0.979. The bonds investment has an expected rate of return of 8.4% and a standard deviation of approximately 0.322.
To calculate the expected rate of return and standard deviation for each investment, we'll use the given scenario analysis
Rate of Return
Scenario Probability Stocks Bonds
Recession 0.20 -5% 14%
Normal economy 0.60 15% 8%
Boom 0.20 25% 4%
Expected Rate of Return:
To calculate the expected rate of return, we multiply each scenario's rate of return by its corresponding probability and sum them up.
Expected Rate of Return (Stocks) = (0.20 * -5%) + (0.60 * 15%) + (0.20 * 25%)
= -1% + 9% + 5%
= 13%
Expected Rate of Return (Bonds) = (0.20 * 14%) + (0.60 * 8%) + (0.20 * 4%)
= 2.8% + 4.8% + 0.8%
= 8.4%
Standard Deviation:
To calculate the standard deviation, we need to determine the variance of each investment and then take the square root.
Variance (Stocks) = [(0.20 * (-5% - 13%)²) + (0.60 * (15% - 13%)²) + (0.20 * (25% - 13%)²)]
= [0.2 * (-18%)² + 0.6 * (2%)² + 0.2 * (12%)²]
= [0.2 * 3.24 + 0.6 * 0.04 + 0.2 * 1.44]
= [0.648 + 0.024 + 0.288]
= 0.96
Standard Deviation (Stocks) = √(Variance (Stocks))
= √(0.96)
≈ 0.979
Variance (Bonds) = [(0.20 * (14% - 8%)²) + (0.60 * (8% - 8%)²) + (0.20 * (4% - 8%)²)]
= [0.2 * 0.36 + 0.6 * 0 + 0.2 * 0.16]
= [0.072 + 0 + 0.032]
= 0.104
Standard Deviation (Bonds) = √(Variance (Bonds))
= √(0.104)
≈ 0.322
Therefore, the expected rate of return for Stocks is 13% and for Bonds is 8.4%. The standard deviation for Stocks is approximately 0.979 and for Bonds is approximately 0.322.
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Two firms have the same values for inventory, Equity Multiplier and current ratio. Which of the following is true?
I. They both have the same Quick ratio
II. Both have current assets equaling the current ratio multiplied by the current debt
III. Both have the same debt ratio Select one:
a. I, II & II
b. Ill only
c. II only
d. I & III
e. II & III
Answers
If two firms have the same values for inventory, Equity Multiplier and current ratio, then both of these firms would have a Quick ratio equal to each other, but not necessarily the same as their current ratios. The correct option is only I.
The Quick ratio measures the current liquidity of a business by showing how much quick assets (cash, receivables, and marketable securities) can pay for the current liabilities of a business. It’s also known as the acid test.
The Quick Ratio is calculated as follows:Quick Ratio = (Current Assets - Inventory) / Current LiabilitiesNow, let’s consider the three options that are given:I. They both have the same Quick ratioThe Quick ratio of two firms would be equal if they have the same values for current assets, current liabilities, and inventory.
So, if the firms have the same inventory, Equity Multiplier, and current ratio, then they would have the same Quick ratio, but not necessarily the same as their current ratios.II.
Both have current assets equaling the current ratio multiplied by the current debtCurrent assets of a firm would be equal to the current ratio multiplied by the current liabilities and not the current debt. Therefore, option II is not true.III.
Both have the same debt ratioThe debt ratio is calculated by dividing the total debt by total assets. Since the total debt and total assets of the two firms have not been given, it is impossible to determine if they both have the same debt ratio. So, option III is not true.Thus, the correct option is I.
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Solve the reliability problems
A given component has an MTBF of 106hr, What is the reliability for an operating period of 10hr for 5 such components in series? A given component has an MTBF of 106 hr, what is the reliability for an operating period of 10hr for 5 such components in series?
Four capacitances of 25μF each are connected in parallel to act as a single capacitance of 100µF required for the successful operation of a unit. If the reliabilities of the capacitors are 0.6, 0.7, and 0.9 respectively, Find the reliability of the unit.
Answers
Reliability problems can be solved by using the concepts of Mean Time Between Failures (MTBF) and Mean Time To Repair (MTTR). Here, the question is based on MTBF, which is the average time between two consecutive failures.
The operating period is the length of time over which the component is expected to function.
Problem 1: The reliability of a single component is given by R = e^(-t/MTBF), where t is the operating time and MTBF is the Mean Time Between Failures. For five such components in series, the total reliability is given by R_total = R^5 (since they are in series). Here, t = 10 hr, and MTBF = 106 hr Therefore, the reliability of a single component is R = e^(-10/106) = 0.9034 And, the reliability of five such components in series is R_total = R^5 = (0.9034)^5 = 0.6045 Hence, the reliability for an operating period of 10 hr for 5 such components in series is 0.6045.
Problem 2: The reliability of the unit is the product of the individual reliabilities of the four capacitors. Hence, the reliability of the unit is R = 0.6 x 0.7 x 0.9 x 1 (since 1 is the reliability of a capacitor of unknown rating, which is assumed to be perfect)R = 0.3780. The reliability of the unit is 0.3780.
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Suppose you are consuming two goods, A and B. Your marginal utility of good A is 28, and your marginal utility of good B is 3. The price of good A is $2100, and the price of good B is $2.00. a. In this case, you are [not maximizing your total ublity b. You should consume: Instructions: You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers. □more of good A less of good A more of good B less of good B 15 of 15 Prex
Answers
Suppose you are consuming two goods, A and B: a) In this case, you are not maximizing your total utility. b) You should consume: more of good B.
To maximize total utility, a consumer should allocate their budget in such a way that the marginal utility per dollar spent on each good is equal. In this scenario, the marginal utility per dollar spent on good B (MU_B / P_B = 3 / $2 = 1.5) is higher than the marginal utility per dollar spent on good A (MU_A / P_A = 28 / $2100 ≈ 0.0133).
Since the marginal utility per dollar spent on good B is higher, consuming more of good B and less of good A would lead to an increase in total utility. Thus, the consumer is not maximizing their total utility.
b) You should consume: more of good B.
Explanation: Since the marginal utility per dollar spent on good B is higher than that of good A, consuming more of good B would lead to an increase in total utility. In this case, the consumer should allocate more of their budget towards good B to achieve a better balance between the marginal utility and the price of the goods.
Consuming more of good A would not be beneficial because the marginal utility per dollar spent on it is significantly lower. Therefore, increasing the consumption of good B is the optimal choice to improve the consumer's utility.
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Complete qiuestion:
Suppose you are consuming two goods, A and B. Your marginal utility of good A is 28, and your marginal utility of good B is 3. The price of good A is $2100, and the price of good B is $2.00. a. In this case, you are [not maximizing your total ublity b. You should consume: Instructions: You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers. □
more of good A
less of good A
more of good B
less of good B
Assume today is December 31, 2019. Imagine Works Inc. just paid a dividend of $1.40 per share at the end of 2019. The dividend is expected to grow at 18% per year for 3 years, after which time it is expected to grow at a constant rate of 6% annually. The company's cost of equity (rs) is 9.5%. Using the dividend growth model (allowing for nonconstant growth), what should be the price of the company's stock today (December 31, 2019)? Do not round intermediate calculations. Round your answer to the nearest cent..
Answers
Assume today is December 31, 2019. Works Inc. just paid a dividend of $1.40 per share at the end of 2019. The price of the company's stock today is $2.88.
What is the Total present value?Present value of dividends for first 3 years = (Dividend today * (1 + Growth rate)^1) + (Dividend today * (1 + Growth rate)²) + (Dividend today * (1 + Growth rate)³)
Present value of dividends for first 3 years = 1.40 * (1.18)^1 + 1.40 * (1.18)²+ 1.40 * (1.18)³
Present value of dividends for first 3 years = $2.65
Present value of dividends after 3 years = Dividend today * (1 + Growth rate)³ / (Cost of equity - Growth rate)
Present value of dividends after 3 years = 1.40 * (1.18)^3 / (0.095 - 0.06)
Present value of dividends after 3 years = $0.23
Total present value = Present value of dividends for first 3 years + Present value of dividends after 3 years
Total present value = $2.65 + $0.23
Total present value = $2.88
Therefore the Total present value is $2.88.
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Suppose you are a consultant for New York's taxation authority. The following information describe the demand and supply functions for two goods-Beer and Cigarettes: Beer Cigarette P=125-2Q P=5+2Q P =
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As a consultant for New York's taxation authority, the demand and supply functions for two goods-Beer and Cigarettes is given below: BeerCigaretteDemand function: P = 125 - 2QS = 5 + 2Qwhere P denotes price and Q denotes the quantity of the respective good supplied or demanded.
Now, to find the equilibrium quantity and price of beer and cigarettes:Equilibrium quantity and price of beer:At equilibrium, quantity supplied equals quantity demanded. Therefore, 125 - 2Q = 5 + 2Q or 4Q = 120 or Q = 30.Substituting Q = 30 in either demand or supply function gives P = 125 - 2(30) = 65.So, the equilibrium quantity and price of beer are 30 and 65 respectively.
Equilibrium quantity and price of cigarettes:At equilibrium, quantity supplied equals quantity demanded. Therefore, 5 + 2Q = 125 - 2Q or 4Q = 120 or Q = 30.Substituting Q = 30 in either demand or supply function gives P = 5 + 2(30) = 65.So, the equilibrium quantity and price of cigarettes are 30 and 65 respectively. Hence, the equilibrium quantity and price of beer and cigarettes are 30 and 65 respectively.
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A bank's reserve ratio is 7 percent and the bank has $1,000 in deposits. Its reserves amount to a. $70. b. $930. c. $7. d. $93.
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A bank's reserve ratio is 7 percent and the bank has $1,000 in deposits. The correct option is a. $70.
The reserve ratio of 7 percent means that the bank is required to hold 7 percent of its deposits as reserves. In this case, the bank has $1,000 in deposits. To calculate the reserves, we multiply the deposit amount by the reserve ratio: $1,000 * 0.07 = $70. Therefore, the bank's reserves amount to $70.
Therefore, A bank's reserve ratio is 7 percent and the bank has $1,000 in deposits. The correct option is a. $70.
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Personal Trainer, Inc. owns and operates fitness centers in a dozen Midwestern cities. The centers have done well, and the company is planning an international expansion by opening a new "supercenter" in the Toronto area. Personal Trainer's president, Cassia Umi, hired an IT consultant, Susan Park, to help develop an information system for the new facility. During the project, Susan will work closely with Gray Lewis, who will manage the new operation. Background System changeover and data conversion were successful for the new Personal Trainer system. The post-implementation evaluation indicated that users were pleased with the system. The evaluation also confirmed that the system was operating properly. Several users commented, however, that system response seemed slow. Susan Park, the project consultant, wants to meet with you to discuss operation, maintenance, and security issues affecting the new system. Tasks 1. What might be causing the slow response time? Prepare a brief memo explaining system performance and workload measurement, using nontechnical language that Personal Trainer users can understand easily. (25 points) 2. What could be causing the network slowdowns at Personal Trainer? If a problem does exist, which performance and workload measures would you monitor to pinpoint the problem? (25 points) 3. At the end of the systems analysis phase, you studied the economic feasibility of the system and estimated the future costs and benefits. Now that the system is operational, should those costs and benefits be monitored? Why or why not? (20 points) 4. You decide to prepare a security checklist for Personal Trainer. Prepare a list of security issues that the firm should evaluate and monitor. Be sure to organize the items into categories that match the six security levels. (30 points)
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(1) There are many potential causes of the new system's slow response time, including hardware constraints, network congestion, inefficient coding, and insufficient system resources.
(2) Network slowdowns at Personal Trainer may be brought on by problems with network congestion, broken hardware. Monitoring workload and performance indicators can assist identify the trouble spots.
(3) Yes, the costs and benefits of the operational system should be monitored to ensure ongoing economic feasibility. This allows Personal Trainer to track the actual expenses and benefits.
(4) The security checklist for Personal Trainer should include categories based on the six security levels: physical, operations, communications, networks, systems, and information.
(1) There are a number of reasons why the new system responds slowly. System performance may be hampered by hardware restrictions, such as insufficient processor power or memory. Delays may also be caused by bottlenecks or network congestion. Processing speed can be slowed down and system resources can be strained by inefficient code or poorly optimised applications. It is crucial to gauge system performance and workload in order to remedy this. To pinpoint problem areas and enhance system performance, this entails tracking measures like response time, throughput, and resource utilisation.
(2) There could be a number of problems causing network slowdowns at Personal Trainer. Data transmission may be slowed down by network congestion, which occurs when the network is overwhelmed with traffic. Network device hardware issues or breakdowns can also affect how well a network operates. Transmission delays in data could be brought on by routing issues or improperly designed network hardware. Measures of performance and workload should be kept an eye on in order to find the fundamental reasons. In order to target troubleshooting and resolution, network traffic analysis, latency measurement, and error rate monitoring can help identify the precise locations where network slowdowns occur.
(3) Monitoring the benefits and costs of the operational system is crucial, indeed. The continuous economic viability of the system can be evaluated by Personal Trainer by keeping track of the actual costs and benefits. Monitoring the costs makes ensuring that they stay within the estimated budget and allows for fast correction of any deviations. Analogously, monitoring the benefits aids in assessing how well the system performs in producing the desired results. This enables the business to base decisions about system upkeep, upgrades, or prospective alterations on actual performance data.
(4) Different security concerns broken down into six levels—physical, operations, communications, networks, systems, and information—should be covered by the security checklist for personal trainers. To ensure the safety of the facility, the company should assess access controls, surveillance systems, and physical protective measures under physical security. User access controls, user education, and incident response protocols are just a few examples of operational security measures.
Encryption and safe data transfer are the main concerns of communications security. Monitoring network traffic, spotting and stopping unauthorised access, and installing firewalls and intrusion detection systems are all parts of network security. Personal Trainer can create a strong security framework to protect its operations and data by assessing and monitoring security issues across various areas.
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8. What Scope does fuel for its fleet fall in? Define this Scope.
9. Should the upstream emissions for gasoline be included in Region Bank’s carbon footprint? Why or why not? If they are, is there a risk of double counting?
10. What are the carbon emissions (or CO2 equivalents) from commuting by the Bank’s employees?
11. Should this be included in the Bank’s carbon footprint? What Scope does employee commuting fall in? Define this Scope.
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8. Fuel for its fleet falls under Scope 1 for Region Bank.
9. Yes, the upstream emissions for gasoline should be included in Region Bank's carbon footprint.
10.The carbon emissions from commuting by the Bank's employees will depend on the distance traveled and the mode of transportation used.
11.Yes, employee commuting should be included in the Bank's carbon footprint.
8. Scope 1 includes direct emissions from sources that the company owns or controls, such as vehicles owned by the company.
9. Upstream emissions refer to the emissions released during the production and transportation of a fuel source. If they are not included, the company's carbon footprint would not accurately reflect the emissions that it is responsible for. Double counting is a risk, but it can be avoided by carefully tracking and reporting emissions from each source.
10. To calculate these emissions, the company can use tools such as emission factors or online calculators.
11. It falls under Scope 3, which includes all indirect emissions that are not covered by Scope 2, such as emissions from employee commuting. It is important to include these emissions to accurately reflect the company's overall carbon footprint and identify opportunities for reduction.
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If Taxpayer requests an extension of time to file her individual tax return, the latest she may pay any tax due without penality is
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If a taxpayer requests an extension of time to file her individual tax return, the latest she may pay any tax due without penalty is October 15th of the same year.
The deadline for filing the personal tax return is April 15th. If a taxpayer needs more time to prepare their tax return, they may apply for a six-month extension with Form 4868.
Taxpayers are given an additional six months, or until October 15th, to submit their return if approved. It's critical to keep in mind that filing for an extension gives you extra time to submit your tax return but does not give you extra time to pay any tax you owe.
The taxpayer is required to pay their tax liability by the original filing deadline, which is April 15th. Interest and penalties may be applied if the tax is not paid by that time.
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1.) a) Kaimondake is a department store. Its sales managers wish to introduce a
generous bonus app. The purpose is to boost current sales and increase customer
loyalty by offering free high end products to their shoppers, in the future, once they
have spent a certain amount of money.
(i) Imagine that you are working for Kaimondake as an accountant and you have
a meeting with the sales managers. Making reference to concepts of costs &
liabilities and any relevant accounting conventions, explain to the sales
managers the accounting implications of the introduction of the bonus card.
How will the Kaimondake's accounts need to be adjusted once the app is
introduced?
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Adjustments include recognizing sales revenue, recording a liability for future product redemptions, allocating costs, and adhering to accounting conventions when introducing the bonus card app at Kaimondake.
What are the accounting implications and necessary adjustments for Kaimondake's accounts when introducing the bonus card app in terms of costs, liabilities, and accounting conventions?When introducing the bonus card app at Kaimondake, there are several accounting implications and adjustments that need to be considered.
1. Recognition of Sales: The sales generated through the bonus card app need to be properly recognized in the financial statements. This includes tracking the revenue generated from customers who qualify for the free high-end products after spending a certain amount of money. The sales managers should ensure that the sales transactions associated with the bonus card app are accurately recorded.
2. Recognition of Liabilities: The introduction of the bonus card app creates a liability for Kaimondake because the customers become eligible to receive free high-end products in the future. The estimated cost of these future product redemptions needs to be recognized as a liability on the company's balance sheet. This liability should be recorded based on a reliable estimate of the value of the future product redemptions.
3. Cost Allocation: The costs associated with providing the free high-end products to customers need to be properly allocated. These costs should be recognized as an expense in the period when the related sales are recognized. The sales managers should work with the accounting department to determine the appropriate allocation method for these costs, ensuring that expenses are accurately matched with the associated revenue.
4. Accounting Conventions: The sales managers should consider relevant accounting conventions, such as the matching principle and revenue recognition principles, when accounting for the bonus card app. The matching principle requires that expenses be recognized in the same period as the related revenue, while revenue recognition principles outline criteria for recognizing revenue when it is earned and realized or realizable.
the introduction of the bonus card app at Kaimondake requires adjustments in the recognition of sales, liabilities, and expenses. The company's accounts need to accurately reflect the revenue generated, the liability for future product redemptions, and the associated costs. By following relevant accounting principles and conventions, the sales managers can ensure that the financial statements accurately represent the impact of the bonus card app on Kaimondake's operations.
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In a perpetual inventory system, two entries are normally made to record each sales transaction. The purpose of these entries is best described as follows:
a.One entry recognizes the sales revenue and the other recognizes the cost of goods sold.
b. One entry records the purchase of merchandise and the other records the sale.
c. One entry records the cost of goods sold and the other reduces the balance in the Inventory account.
d, One entry updates the subsidiary ledger and the other updates the general ledger
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In a perpetual inventory system, two entries are normally made to record each sales transaction. The purpose of these entries is best described as One entry recognizes the sales revenue and the other recognizes the cost of goods sold. Option A is the correct answer.
The ability to immediately track sales and inventory levels for specific goods makes perpetual inventory systems potentially superior to previous periodic inventory systems and helps to reduce stockouts. Option A is the correct answer.
Except in cases when it differs from the actual inventory count due to loss, damage, or theft, a perpetual inventory does not require manual adjustment by the company's accountants. Companies need to set up a system where each item of inventory is put into the system and subtracted from the system when it is sold in order to calculate inventory. The expenditure account rises and the cost of goods sold rises when a business sells products using a perpetual inventory system.
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Complete the following table by matching each definition to the appropriate economic time frame. Definition Short Run Long Run A period of time long enotugh for all input prices and wages be renegotiated A period of time in which some input prices and wages are fixed The short-run aggregate supply curve shows: O What happens to output in an economy as the actual price level changes, holding all other determinants of real GDP constant What happens to output in an economy when the government spends more money OHow firms respond to changes in interest rates The relationship between the price level and aggregate expenditure Which of the following are assumed to remain unchanged along a given short-run aggregate supply curve? Check all that apply. The position of the aggregate demand curve The price level The technology available to firms Institutions, such as patent laws and tax systems, that make up the "rules of the game" The term natural rate of unemployment refers to OThe unemployment rate that occurs when an economy's real GDP is equal to its potential output O The unemployment that arises due to purely seasonal factors, such as unemployed lifeguards in the winter OThe minimum possible unemployment rate for an economy The unemployment rate that would occur if there were no frictional unemployment
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Matching the definitions to the appropriate economic time frame:
Definition Short Run Long Run
A period of time long enough for all input prices and wages to be renegotiated. Long Run Short Run
A period of time in which some input prices and wages are fixed. Short Run Long Run
The short-run aggregate supply curve shows: Short Run N/A
What happens to output in an economy as the actual price level changes, holding all other determinants of real GDP constant.
What happens to output in an economy when the government spends more money. Short Run N/A
How firms respond to changes in interest rates. Short Run N/A
The relationship between the price level and aggregate expenditure. Short Run N/A
Which of the following are assumed to remain unchanged along a given short-run aggregate supply curve? Check all that apply.
The position of the aggregate demand curve
The price level
The technology available to firms
Institutions, such as patent laws and tax systems, that make up the "rules of the game"
The term natural rate of unemployment refers to:
The minimum possible unemployment rate for an economy.
Note: The options related to seasonal factors and no frictional unemployment do not match the definition of the natural rate of unemployment.
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The unemployment that arises due to purely seasonal factors, such as unemployed lifeguards in the winter
The position of the aggregate demand curve. The technology available to firms, Institutions, such as patent laws and tax systems, that make up the "rules of the game" The term natural rate of unemployment refers toThe minimum possible unemployment rate for an economy. The unemployment rate that would occur if there were no frictional unemployment. The unemployment rate that occurs when an economy's real GDP is equal to its potential output.
Therefore, The unemployment that arises due to purely seasonal factors, such as unemployed lifeguards in the winter.
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The price of an airline ticket from Denver to New York is $500. A bus ticket is $200. Traveling by plane takes five hours, compared with 35 hours by bus. Other things constant, an individual would gain by choosing air travel if, and only if, his time were valued at more than.
A. $15 per hour
B. $10 per hour
C. $6 per hour
D. $100 per hour
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The individual would gain by choosing air travel if, and only if, his time were valued at more than $100 per hour.The cost of traveling by air is $500 for a five-hour trip, while the cost of traveling by bus is $200 for a 35-hour trip, according to the information given.
The cost per hour of travel by air is calculated as follows:Cost of traveling by air per hour = $500 ÷ 5 = $100 per hourThe cost per hour of travel by bus is calculated as follows:Cost of traveling by bus per hour = $200 ÷ 35 = $5.71 per hour .
As a result, the individual would gain by choosing air travel if, and only if, his time were valued at more than $100 per hour.Therefore, option D is correct.
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Question 14 1 pts Some UNCC students are selling Cam Newton autographed jerseys. They are selling them at two locations: the Cone Center and the Friday Building. They want to maximize total revenue, but the number of jerseys available is a constraint. Here are the two demand equations, where the Q's are the jerseys to be sold in each location: Cone Center Demand: - Pc = 240 - 5Qc Friday Building Demand: PF = 400 - 3QF The total number of jerseys (Q) available is 31. What quantity of jerseys should be allocated to the Friday Building? Enter as a value. ROUND TO THE NEAREST WHOLE NUMBER (CAN'T SELL A PARTIAL JERSEY).
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Given:Pc = 240 - 5QcPF = 400 - 3QFTotal number of jerseys (Q) available is 31We need to find out the quantity of jerseys that should be allocated to the Friday Building using the following steps:First, we have to find out the total revenue function by multiplying the selling price with the total quantity of jerseys sold as follows:TR = PcQc + PFQFWhere TR stands for total revenue. We know that the total number of jerseys available is 31 and we need to allocate the quantity of jerseys to both places to maximize the total revenue.Since we need to allocate the quantity of jerseys to both places to maximize the total revenue, we have to use the constraints given by the number of jerseys available as follows:Qc + QF = 31We can re-arrange the above equation to find out Qc as follows:Qc = 31 - QFNow we can substitute Qc in terms of QF in the total revenue function as follows:TR = (240 - 5Qc)Qc + (400 - 3QF)QFTR = (240 - 5(31 - QF))(31 - QF) + (400 - 3QF)QFTR = -5QF² + 355QF + 3720To maximize the total revenue, we have to take the derivative of the total revenue with respect to QF and then set it to zero as follows:dTR/dQF = -10QF + 355 = 0-10QF = -355QF = 35.5But we can't sell partial jerseys, so we have to round it off to the nearest whole number.So, the quantity of jerseys that should be allocated to the Friday Building is 36.
Talmud Book Company borrows $16,000 for 30 days at 9 percent interest. What Dollar cost of a is the dollar cost of the loan?
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The dollar cost of the loan is $360 Dollar cost of the loan = $16,354Rounding down gives: Dollar cost of the loan = $16,353Hence, the dollar cost of the loan is $16,353 or $16,354.
The dollar cost of the loan is $360. The interest can be calculated by the formula:I = PRTwhere I is the interest, P is the principal, R is the rate and T is the time period.Substituting the given values, we get:I = 16000 × 0.09 × (30/365)I = 353.42 ≈ $353.42.
The dollar cost of the loan is the interest plus the principal. Adding these two, we get:Dollar cost of the loan = 16000 + 353.42Dollar cost of the loan = 16353.42 ≈ $16353.42Now, let's round this off to the nearest dollar to get the final answer. Rounding up gives:Dollar cost of the loan = $16,354Rounding down gives:Dollar cost of the loan = $16,353Hence, the dollar cost of the loan is $16,353 or $16,354.
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Williamson Industries has $3 billion in sales and $2.385 billion in fixed assets. Currently, the company's fixed assets are operating at 90% of capacity. a. What level of sales could Williamson Industries have obtained if it had been operating at full capacity? Enter your answer in billions of dollars. Round your answer to five decimal places S billion b. What is Williamson's target fixed assets/sales rabio? Do not round intermediate calculations. Round your answer to two decimal places c. If Williamson's sales increase 15%, how large of an increase in fixed assets will the company need to meet its target fixed assets/sales ratio? Enter your answer in billions of dollars. Negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to five decimal places. billion
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a) Maximum sales capacity = $3 billion / 0.90. b) Target fixed assets/sales ratio = $2.385 billion / $3 billion. c) Increase in fixed assets = Target fixed assets/sales ratio * Increase in sales
Answera to the questionsTo calculate the answers, we can use the following formulas:
a. Maximum sales capacity:
Maximum sales capacity = Current sales / Capacity utilization rate
In this case:
Current sales = $3 billion
Capacity utilization rate = 90% = 0.90
Maximum sales capacity = $3 billion / 0.90
b. Target fixed assets/sales ratio:
Target fixed assets/sales ratio = Fixed assets / Current sales
In this case:
Fixed assets = $2.385 billion
Current sales = $3 billion
Target fixed assets/sales ratio = $2.385 billion / $3 billion
c. Increase in fixed assets:
Increase in fixed assets = Target fixed assets/sales ratio * Increase in sales
In this case:
Target fixed assets/sales ratio = Calculated in part b
Increase in sales = 15% = 0.15 * Current sales
Increase in fixed assets = Target fixed assets/sales ratio * Increase in sales
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In 2002, Digital Equipment Corporation registers its trademark as provided by federal law. This registration provides protection forever. for twenty years. for the life of the corporation plus seventy years. for 5-6 years, with 10 year renewals after that.
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In 2002, Digital Equipment Corporation registered its trademark as provided by federal law. This registration provides protection for a certain duration of time.
In general, trademark protection lasts for ten years and is renewable indefinitely for successive ten-year periods as long as the trademark is in use and the renewal fees are paid. Therefore, the last option is most likely the correct answer: for 5-6 years, with 10-year renewals after that. Trademarks can last forever if they are continually renewed and remain in use.
For instance, Coca-Cola and Ford have some of the longest-lasting trademarks on the planet. Even if a company went bankrupt, the trademark could remain valid. It can also be passed down to the next generation of the business or the buyer of the company. The trademark can be enforced by filing a lawsuit against someone who uses or infringes upon it without permission, such as another company using a similar logo or name that is confusingly similar to the original trademark.
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he directors of Ori Ltd are currently considering two mutually exclusive investment projects. Both projects are concerned with the purchase of new plant. The following data is available. Project 1 Project 2 Initial investments R110 000 R70 000 Expected annual operating cash flow Year 1 R60 000 R36 000 Year 2 R30 000 R16 000 Year 3 R40 000 R28 000 Estimated residual value of project at year end of year R8 000 R5 000 The business has an estimated weighted average cost of capital (WACC) of 12%. The projects depreciate for accounting purposes over their useful lives on straight line basis (this depreciation has already been accounted for in the above operating cash flows). Neither project would increase the working capital of the business. Additional information: • Ignore taxation. The business has sufficient funds to meet all capital expenditure requirements. REQUIRED MARKS (a) Calculate for each project: (10) i. The net present value (NPV). ii. The discounted payback period. (5) (b) (10) Calculate the Internal Rate of Return (IRR). If the minimum rate of return is 15 %, suggest with reason whether you should accept the project or not.
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a) Project 1:i. Net Present Value of Project 1 (NPV)Year1: $60,000 / (1+12%)1 = $53,571Year2: $30,000 / (1+12%)2 = $22,139Year3: $40,000 / (1+12%)3 = $26,865Residual Value: $8,000 / (1+12%)3 = $5,651NPV = ($110,000) + $53,571 + $22,139 + $26,865 + $5,651 = $-1,774ii.
Discounted Payback Period = year 2 plus $17,836 ($53,571 - $35,735) / $22,139Year 2 + 0.81 years (rounded to two decimal places) = 2.81 years Project 2:i. Net Present Value of Project 2 (NPV)Year1: $36,000 / (1+12%)1 = $32,143Year2: $16,000 / (1+12%)2 = $12,509Year3: $28,000 / (1+12%)3 = $17,858Residual Value: $5,000 / (1+12%)3 = $3,531NPV = ($70,000) + $32,143 + $12,509 + $17,858 + $3,531 = $-4,959ii.
Discounted Payback Period = year 2 plus $2,293 ($35,735 - $33,442) / $17,858Year 2 + 0.13 years (rounded to two decimal places) = 2.13 years b) Internal Rate of Return (IRR)To calculate the (IRR), we equate the present value of the expected cash flows to the initial investment. Year 1:NPV of project 1 at IRR: $-1,774; NPV of project 2 at IRR: $-4,959Year 2:NPV of project 1 at IRR: $-514; NPV of project 2 at IRR: $-1,645Year
3:NPV of project 1 at IRR: $1,321; NPV of project 2 at IRR: $363Residual Value :NPV of project 1 at IRR: $4,235; NPV of project 2 at IRR :$1,314Since the NPV of project 1 is positive for the assumed IRR value and that of project 2 is negative, it implies that the assumed rate of return of 12% is less than the internal rate of return of project 1 but greater than the internal rate of return of project 2.
As the minimum rate of return is 15% (greater than the internal rate of return of both projects), the organization should not undertake either of the projects. Hence, neither of the projects should be accepted.
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""Mauritius runs a self-assessment tax system. Therefore, voluntary compliance is a key element in the efficient and effective tax administration and revenue collection."
a) In the light of the above statement, explain the term voluntary compliance?
b) How far do you agree with the above statement?
Please give a fresh reply as there is a question same as above. I dont want the same answer copied. I want a fresh one.Thanks"
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a) Voluntary compliance refers to the willingness of taxpayers to fulfill their tax obligations without the need for extensive enforcement or audits by tax authorities. It implies that taxpayers proactively and willingly comply with tax laws by accurately reporting their income, deductions, and tax liabilities, and timely paying the required taxes.
What is the meaning of voluntary compliance in the context of taxation?The concept of voluntary compliance. Voluntary compliance is a fundamental principle in a self-assessment tax system like Mauritius, where taxpayers are responsible for assessing and reporting their own taxes. It relies on taxpayers' honesty, integrity, and sense of civic duty to fulfill their tax obligations.
In this system, tax authorities provide guidance and support to taxpayers, but the onus is on individuals and businesses to accurately report their income and deductions, calculate their tax liabilities, and submit their tax returns and payments in a timely manner.
Voluntary compliance brings several advantages to tax administration and revenue collection. It reduces the burden on tax authorities, allowing them to focus their resources on more complex cases and tax evasion.
It promotes fairness by ensuring that all taxpayers contribute their fair share based on their actual income and deductions. Moreover, it fosters trust and cooperation between taxpayers and tax authorities, leading to a more harmonious and effective tax system.
b) I agree with the above statement. Voluntary compliance is indeed a crucial element in the efficient and effective tax administration and revenue collection. By promoting a culture of voluntary compliance, tax authorities can achieve higher levels of taxpayer cooperation, resulting in improved tax compliance rates and increased revenue collection.
When taxpayers willingly fulfill their tax obligations, it reduces the need for aggressive enforcement measures, such as audits and penalties, which can strain the resources of tax authorities. Additionally, voluntary compliance helps in building a positive relationship between taxpayers and tax authorities, fostering a sense of trust and mutual respect.
However, it is important to note that while voluntary compliance is desirable, tax authorities still need to have robust enforcement mechanisms in place to address cases of non-compliance and tax evasion effectively.
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ASM's office building cost $600,000 with an estimated useful life of 30 years, and residual value, $120,000. ASM no longer has space for storage of all the used text books. At the start of Year 21, the school purchased an addition (a small wood building) which was attached to the office building. The wood building cost $60,000 and, under normal conditions, would have a useful life of 15 years and no residual value.
What is the amortization expense that ASM should make at the end of the accounting period, December 31, Year 22, to record amortization expense, assuming straight-line amortization for these capital assets. Clearly explain the basis for any assumptions you have made.
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Amortization expense:ASM's office building costs $600,000, with an estimated useful life of 30 years, and a residual value of $120,000. The wood building, which cost $60,000 and has a useful life of 15 years, was added at the start of Year 21 and has no residual value.
Straight-line amortization is used for both of these assets. To compute the amortization expense that ASM should record at the end of the accounting period, December 31, Year 22, the following steps should be followed:
Step 1: Determine the total depreciable cost of the office building office building cost = $600,000Residual value = $120,000Depreciable cost = $600,000 - $120,000 = $480,000
Step 2: Calculate the annual depreciation expense using the straight-line method straight-line depreciation expense per year = (Depreciable cost - Residual value) / Useful life= ($480,000 - $120,000) / 30= $12,000 per year
Step 3: Determine the amount of accumulated depreciation at the end of Year 21Accumulated depreciation at the end of Year 21 = Straight-line depreciation expense per year × Number of years of useful life already elapsed= $12,000 per year × 20 years= $240,000
Step 4: Determine the remaining book value at the end of Year 21.Book value = Original cost - Accumulated depreciation= $600,000 - $240,000= $360,000
Step 5: Determine the total depreciable cost of the wood building cost of the wood building = $60,000Residual value of the wood building = $0 Depreciable cost of the wood building = $60,000 - $0 = $60,000
Step 6: Determine the annual amortization expense of the wood buildingAmortization expense per year = Depreciable cost of the wood building / Useful life of the wood building= $60,000 / 15 years = $4,000 per year
Step 7: Determine the total amortization expense that should be recorded at the end of the accounting period, December 31, Year 22. Total Amortization Expense = Annual Depreciation Expense + Annual Amortization ExpenseTotal Amortization Expense = $12,000 + $4,000 = $16,000.
Therefore, the amortization expense that ASM should record at the end of the accounting period, December 31, Year 22, to record amortization expense, assuming straight-line amortization for these capital assets is $16,000. The assumptions made are that the useful lives and residual values of the assets provided are correct.
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