According to Article , “U.S. Debt Is Set to Exceed Size of the Economy Next Year, a First Since World War II,” what happened to the government spending from April to June of 2020? What happened to the national saving as a result? Assume that saving depends on the real interest rate, plot the effect of this fiscal policy on the real interest rate and the amount of investment in the market for loanable funds.

Question 1 (New Zealand External Reporting Environment)

Explain ONE potential benefit and ONE potential problem that can result from the adoption of IFRSs in New Zealand.

Question 2 (Inventories)

As a part of the auditing team assigned in relation to Mandalay Ltd, you have been asked to verify the inventories at the Henderson branch at 30 June 2020. The company uses a perpetual method to account for inventories. In undertaking the task you note that there is a shipping container beside the main warehouse containing goods that Mandalay Ltd wants to sell. You ask the accountant at the Henderson branch whether he plans to include the goods in the truck in the calculation of the inventories on hand at 30 June 2020. The accountant says that the goods will not be included.

You then obtain a copy of the invoice in relation to the container of goods. The container was shipped on 24 June from Sydney, marked FOB Sydney, and the total invoice price was $200 000. The freight bill amounted to $12 000, with terms requiring payment within 30 days. The accountant says he will not pay the invoice until mid-July, and so the inventories will not be included in determining the inventories on hand at 30 June 2020.

Required:

Answer the following parts-

1. Does Mandalay Ltd have a liability that should be recorded at 30 June 2020?
2. Should the container of goods be included in the determination of the inventories balance at 30 June 2020? If so, what journal entry would be required?

Question 3 (Property, Plant and Equipment)

Trabitz Ltd has acquired a building. Which of the following items should be included in the cost of the building? If an item is excluded from the cost of the building, explain why.

1. Real estate agent’s fees
2. Cost incurred in evaluating a different building found to be unsuitable
3. Interest on the bank loan to acquire the building, and an application fee to the bank to get the loan, which is secured on the building
4. Cost of changing the name on the building
5. Cost of refurbishing the lobby to the building to attract customers and make it more user friendly

Cost of changing the parking bays

An inexperienced accountant for Can’t Add Company recorded the following transactions in the records of the company for the year ended December 31, 2019. The controller has questioned the appropriateness of the entries since she thinks that they have not been recorded in accordance with generally accepted accounting principles.

1. An order for $61,500 was received from a customer on December 29, 2019 for products on hand. This order was shipped f.o.b. shipping point on January 9, 2020. The accountant made the following entry in 2019:

Accounts Receivable ……………………….. 61,500

Sales Revenue ………………………………. 61,500

2. Because of a “fire sale”, equipment that was obviously worth $200,000, was acquired at a bargain price of $155,000. The following entry was made:

Equipment …………………………………. 200,000

Cash ………………………. 155,000

Gain on Equipment …………….. 45,000

3. On January 1, the company president, the owner of the company, took a personal vacation trip to the Gaspé. The trip cost $ 3,000. The accountant recorded the entry as follows:

Travel Expense ............................................................................. 3,000

Accounts Payable ................................................................... 3,000

4. The company purchased on account a wastebasket on December 31 at a cost of $ 20. The accountant made the following entry:

Office Equipment ........................................................................... 20

Accounts Payable ................................................................... 20

In each situation above, identify the concept that has been violated, if any and why you think it has been violated. If a journal entry is incorrect, provide the correct journal entry.

Homespun Company manufactures pillows. For 2020​, the company expects fixed overhead costs of $120,000. Homespun uses​ machine-hours to allocate fixed overhead costs and anticipates 6,000 hours during the year to manufacture 24,000 pillows. During 2020​, Homespun manufactured 23,000 pillows and spent $116,000 on fixed overhead costs. Calculate the​ following:

a. The fixed overhead rate for 2020

b. The fixed overhead spending variance for 2020

c. The​ production-volume variance for

Case Summary

The SurveyMonkey case portrays the evolution of the company from its founding in 1999 through to 2014. SurveyMonkey was launched by Ryan Finley, a young computer science graduate from the University of Wisconsin-Madison, to address the dearth of easy-to-use, affordable online survey tools on the market. In 2009, Finley sold the company to Spectrum Equity and Bain Capital Ventures, having recognized the need for a partner to help the company achieve its full potential. David Goldberg, an entrepreneur and former Yahoo! Executive, took the helm as CEO and immediately put in place his plan to set the company on track to scale at a consistent and rapid pace of growth. Goldberg’s primary initiatives in the early days were to hire a strong management team, rebuild the entire technology platform, and expand internationally. As it made substantial progress on these fronts, SurveyMonkey completed several acquisitions and began to expand its feature set and product offerings to include SurveyMonkey Audience (panels of survey respondents) and survey templates, among others. The company completed an $800 million secondary financing raise in 2012 to provide liquidity to employees and investors in lieu of an IPO and charged forward on its efforts to transform its survey tool to a full-blown platform. Though SurveyMonkey had established itself as the dominant player in the direct-to-consumer market in 2013, it began building out an enterprise offering to compete against the other large players in the growing enterprise feedback management space. Having achieved tremendous growth in its 15-year history, the majority of which took place since the 2009 acquisition, as Goldberg and his team looked ahead to 2014, they faced the critical question of how to prioritize SurveyMonkey’s avenues for growth-international expansion, quality initiatives enterprise, platform growth-so as to best position the company to achieve its full potential.

Question: How should SurveyMonkey prioritize their avenues for growth-international expansion, quality initiatives enterprise, and platform growth so as to best position the company to achieve its full potential?

Please answer the question in 2-3 paragraphs min.

For the year ended Dec 31, 2020, King Inc. reported pretax accounting income of $800,000. Select information is listed below:

In 2020, the company started issuing stock options to its employees. The compensation expense related to stock options was $80,000. The compensation expense related to stock options is not deductible for tax purpose until the employees exercise the options in the future.

2) In 2020, the company purchased a piece of equipment with a cost of $500,000. For financial reporting purposes, the company used the straight-line method over a 5-year service life with no residual value expected. For tax purposes, the equipment was scheduled to be depreciated by $160,000, $140,000, $120,000, $50,000 and $30,000 in years 2020 through 2024, respectively.

3) During 2020 loss contingency accrued for financial reporting purpose was $45,000. The loss contingency was due to the pending patent lawsuit brought by its long-time competitor, Queen Inc. The payment for the lawsuit is expected to be paid in 2022.

4) In 2020, the company incurred $10,000 from municipal bonds. The interest earned on municipal bonds are exempted for tax purposes.

King Inc.’s income tax rate is 20%. At January 1, 2020, the deferred tax asset balance was $40,000 and the deferred tax liability was $5,000.

Required:

a) What is taxable income for 2020?

b) What s the ending balance of DTL on 12/31/2020?

c) What is the ending balance of DTA on 12/31/2020?

d) Prepare journal entries to record income taxes in 2020

e) Prepare 2020 income statement, beginning with"Income before income taxes". You need to reconcile current income tax expense with total income tax expense in this section.

You are the CEO of a Fortune 500 company. CNN informs you that in one hour, a videotape will be broadcast in which several of your company’s vice presidents will be heard making offensive comments about other employees, the company in general, and your leadership abilities. What do you do?

ZigZag provided an extract of the asset register as at the end of the current and prior financial year:
ASSETS CARRYING AMOUNTS
31 December 2020
R
31 December 2019
R
Land (1) 3 800 000 3 000 000
Office buildings (2) 1 900 000 1 370 000
Industrial buildings (3) 3 333 333 3 666 667
Machinery (4) 1 800 000 2 700 000
Additional information:
1. Land is vacant land and it is classified as investment property. The land was acquired on
1 April 2019 at R2 800 000. The fair value adjustments have been accounted for at the end of
the respective financial years.
2. The office building was acquired on 1 July 2019 for R1 400 000 and was revalued for the first
time on 31 December 2020 to its fair value of R1 900 000. The office buildings are depreciated
on the straight line basis over 20 years to its residual value of R200 000. During 2019,
management expected to use the asset up to the end of its economic life.
On 1 January 2020, management estimated the remaining useful life of the building to have
changed to 10 years and the residual value to be R500 000.
In December 2020 the management changed the intention and decided they were going to sell
the office building.
Office buildings have no capital allowances available.
3. Industrial buildings are depreciated over 12 years on the straight line basis. In terms of the
Income tax act, a section 13 allowance of 5% applies to the industrial buildings. The buildings
were bought on 1 January 2019, with the intention to keep the building, for an amount of
R4 000 000 paid in cash immediately with its residual value regarded as being insignificant.
4. Machinery is depreciated on a straight line basis at 20% per year to Rnil residual value. The
SARS allows a section 12C allowance of 40%/20%/20%/20% on machinery. The machinery had
a tax base of R1 800 000 on 31 December 2019 and R900 000 on 31 December 2020. No
additional machinery was acquired during FY2020.
5. ZigZag always pays their insurance in advance. At the end of FY2020 the balance for insurance
paid in advance amounted to R35 000 (2019: R25 000).
6. On 1 December 2020, Zamdela, a loyal customer, ordered transportation equipment from
ZigZag which will be delivered to him during December 2021. ZigZag received R500 000 from
Zamdela in cash when the order was placed.
7. The accounting profit before tax, which included dividends received of R40 000, amounted to
R3 200 000 for the year ended 31 December 2020. All above mentioned movements were taken
into account in arriving at this accounting profit.
8. The deferred tax asset balance as at 31 December 2019 was R390 150 due to an assessed
loss of R2 200 000 that existed at that time. ZigZag expected to make sufficient taxable profits
during 2020 and onwards to fully utilize assessed losses and other deductible temporary
differences.
 Office buildings are carried on the revaluation model using the net replacement method in
terms of IAS 16.
 Machinery is measured on the cost model in terms of IAS 16.
 Industrial buildings are measured on the cost model in terms of IAS 16
 All other items of property, plant and equipment are accounted for on the cost model in terms
of IAS 16.

 Depreciation and amortisation are accounted for on the straight-line method.
 Assume a normal tax rate of 28% for FY2020 (2019: 27%) and that 80% of capital gains are
taxable.
 There are no temporary differences other than those that are apparent from the given
information.

Required:
Calculate deferred tax balances for the year ended 31 December 2020

Define each of the following as direct or portfolio foreign investment.

     a. Nike (a U.S. company) builds new factories in Cambodia:     (Click to select)   Neither type of investment   Direct investment   Portfolio investment  .

     b. A U.S. hedge fund purchases 30 percent of the shares of a Brazilian paper manufacturer:     (Click to select)   Portfolio investment   Neither type of investment   Direct investment  .

     c. Mercedes-Benz (a German company) builds a manufacturing plant in Alabama:     (Click to select)   Neither type of investment   Direct investment   Portfolio investment  .

     d. Intel (a U.S. company) sets up a new call center in India:     (Click to select)   Portfolio investment   Neither type of investment   Direct investment  .

     e. A British chocolate maker buys a smaller U.S. rival:     (Click to select)   Direct investment   Portfolio investment   Neither type of investment  .

     f. Hilton Hotels (a U.S. company) builds a new resort in Hawaii:     (Click to select)   Portfolio investment   Neither type of investment   Direct investment  .