You are informed that there is empirical evidence that developed countries have much higher rates of COVID-19 infection than developing countries. A researcher informs you that this is a very strong and significant evidence on the negative causal relationship between economic development and infection rates. a- Do you agree that this reflects a negative relation between economic development and infection rates? Explain. (hint: negative is referring to the direction of the relation or the slope if you were to graph it). [2.5 marks]

b- Do you agree that this evidence is significant? Explain [2.5 marks]

c- Do you agree that this is a causal relation? Support your answer by providing a reason

Given your answers to the empirical section of this problem set (the new policies are Fed cuts rate to zero, launches more bond purchases in historic moves to fight coronavirus), what should we expect to see with aggregate output in the U.S.? With unemployment? Inflation? Illustrate your answers using a graph.

Describe how the U.S. economy would go back to its medium run equilibrium once COVID-19 is controlled. Illustrate your answer using a graph

Given their performance record and based on empirical rule what would be the upper bound of the range of sales values that contains 68% of the monthly sales?

Tod Brooker, a registered company auditor, has completed the audit of the financial report of Mayfair Ltd for the year ended 30 June 2018. Mike also audited the financial report for Mayfair for the previous financial year. He drafted the following report for 30 June 2015:

We have audited the statement of financial position, income statement, statement of cash flows and statement of changes in equity for Mayfair Ltd as of 30 June 2018. Our audit was made in accordance with an applicable financial reporting framework. In our opinion, the above-mentioned financial statements are accurately and fairly presented in accordance with generally accepted accounting principles in effect at 30 June 2018.

Tod Brooker, CA

20 August 2018

Other information:

During the year, Mayfair changed its method of accounting for long-term construction contracts. It properly reflected the effects of the change in the current year's financial statements and restated the previous year's statements. Tod is satisfied with Mayfair's justification for making the change. The change is discussed in Note 20 to the financial statements.

Tod was unable to perform normal accounts receivable confirmation procedures, but he used alternative procedures to satisfy himself as to the validity of the receivables.

Mayfair is the defendant in a litigation case, of which the outcome is highly uncertain. If the case is settled in favour of the plaintiff, Mayfair will be required to pay a substantial amount of cash that may require the sale of certain non-current assets. The litigation and possible effects have been properly disclosed in Note 22 to the financial statements.

Required

(a) Consider all the above facts and the pertinent requirements of ASA 700 (ISA 700), and then rewrite the auditor's report in an acceptable and complete format, incorporating any necessary departures from an unmodified report.

(b) Identify any items included in the 'Other information' section that would not affect the auditor's report. Explain why this is the case.

Mr Lee, an Information Technology senior executive from mainland China, was under an employment contract in Malaysia with MSC Sdn Bhd since 1 November 2014. Since then,his pattern of stay until he left Malaysia permanently on 31 December 2019 was as follows:

Period of stay                                                             Place of stay

01 November 2014 to 31 December 2015                  In Malaysia

01 January 2016 to 31 August 2016                           In New Zealand, staying with his uncle

01 September 2016 to 19 September 2016                 In HK visiting mother who was seriously ill

20 September 2016 to 03 February 2017                   In Malaysia

04 February 2017 to 31 August 2017                         In France to undertake a company project

01 September 2017 to 17 November 2018                 In Malaysia

18 November 2018 to 30 November 2018                 In China (13 days) for a vacation

01 December 2018 to 31 December 2019                  In Malaysia

Required:

(a)     Determine the residence status of Mr Lee for Years of Assessments 2014 to 2019 under the Income Tax Act (ITA) 1967.

(Your answer should state the relevant legislation under the ITA 1967)

P/S: EXAMPLE ANSWER (a) WILL BE LIKE THIS .

(b)     Distinguish the requirements between Sections 7(1)(b) and 7(1B) of the ITA 1967.

Laporte Engineering Company leased a machine on January 1, 2017, under a contract calling for four annual payments of $20,000 on December 31, 2017 through 2020. The machine becomes the property of the lessee after the fourth payment. The machine was predicted to have a service life of six years and no residual value, and the interest rate available to Laporte Engineering was 12% on the day the lease was signed. The machine was delivered on January 10, 2017, and was immediately placed in service.

Required:
1. Determine the initial net liability created by the lease and the cost of the leased asset.
2. Prepare a table showing the calculation of the amount of interest expense allocated to each year the lease is in effect and the carrying amount of the liability at the end of each of those years. (Enter all the amounts as positive values. Do not round intermediate calculations. Round your answers to nearest whole dollar.)

3. Prepare the entry to record the leasing of the machine.
- Record signing of lease agreement.

4. Prepare entries that would be made on December 31, 2018, to record the annual depreciation on a straight-line basis, and the recording of the lease payment. Also show how the machine and the lease liability should appear on the December 31, 2018, balance sheet. (Do not round intermediate calculations. Round the final answers to nearest whole dollar. Enter all amounts as positive values.)

1.Record the depreciation on leased machinery.

2.Record the annual lease payment.

The September 30, 2018 balance sheet of ABC Corporation disclosed the following information relating to its receivables:

ABC prepares quarterly financial statements. The following occurred during the fourth quarter of 2018:

1. During the 4th quarter, ABC had credit sales of $2,600,000 and collections on accounts receivable (general) of $2,300,000. Uncollectible accounts totaling $19,000 were written off, and a $2,600 accounts receivable previously written off was collected (not included in the $2,300,000 of cash collections reported above.)

2. On November 1, ABC assigned $300,000 of accounts receivable to Quicken Finance on a non-notification basis. Quicken advanced ABC cash proceeds for 85% of the accounts assigned, less a finance fee of $5,000, in exchange for an interest-bearing note. The note incurs interest at 1% per month on the outstanding loan balance. Cash collections from these assigned accounts are to be remitted monthly to Quicken Finance and include accrued interest (i.e. the cash collected each month must be used to repay both principal and interest on the note.)

3. On December 31, 2018, ABC estimates 5% of total accounts receivable and accounts receivable assigned to be uncollectible.  

a) Determine how much Interest Expense ABC would report on their quarterly income statement for the period 10/1 - 12/31/18 from the assigning transaction:

The following is the ending balances of accounts at June 30, 2018 for Excell Company.

Additional information:

1. The short-term investments account includes $37,000 in U.S. treasury bills purchased in May. The bills mature in July.
2. The accounts receivable account consists of the following:

3. The notes payable account consists of two notes of $69,000 each. One note is due on September 30, 2018, and the other is due on November 30, 2019.
4. The mortgage payable is payable in semiannual installments of $6,400 each plus interest. The next payment is due on October 31, 2018. Interest has been properly accrued and is included in accrued expenses.
5. Nine hundred thousand shares of no par common stock are authorized, of which 580,000 shares have been issued and are outstanding.
6. The land account includes $69,000 representing the cost of the land on which the company's office building resides. The remaining $44,000 is the cost of land that the company is holding for investment purposes.

Required:
Prepare a classified balance sheet for the Excell Company at June 30, 2018. (Amounts to be deducted should be indicated by a minus sign.)

Sun Microsystems is a leading supplier of computer-related products, including servers, workstations, storage devices, and network switches. In 2009, Sun Microsystems was acquired by Oracle Corporation.

In the letter to stockholders as part of the 2001 annual report, President and CEO Scott G. McNealy offered the following remarks:

Fiscal 2001 was clearly a mixed bag for Sun, the industry, and the economy as a whole. Still, we finished with revenue growth of 16 percent—and that's significant. We believe it's a good indication that Sun continued to pull away from the pack and gain market share. For that, we owe a debt of gratitude to our employees worldwide, who aggressively brought costs down—even as they continued to bring exciting new products to market.

The statement would not appear to be telling you enough. For example, McNealy says the year was a mixed bag with revenue growth of 16 percent. But what about earnings? You can delve further by examining the income statement in Exhibit 4. Also, for additional analysis of other factors, consolidated balance sheet(s) are presented in Exhibit 5.

Exhibit 1

Exhibit 2

Part A

Referring to Exhibit 1, compute the annual percentage change in net income per common share-diluted (second numerical line from the bottom) for 1998–1999, 1999–2000, and 2000–2001.

Rate of change, 1998 to 1999:

Rate of change, 1999 to 2000:

Rate of change, 2000 to 2001:

Part B

Also in Exhibit 1, compute net income/net revenue (sales) for each of the four years. Begin with 1998.

1998 Profit Margin:

1999 Profit Margin:

2000 Profit Margin:

2001 Profit Margin:

Part C

Compute return on stockholders’ equity for 2000 and 2001 using data from Exhibits 1 and 2.

2000 Return on Stockholders' Equity:

2001 Return on Stockholders' Equity:

Part D

Analyze your results to Question 2 more completely by computing ratios 1, 2a, 2b, and 3b (all from this chapter) for 2000 and 2001. Actually, the answer to ratio 1 can be found as part of the answer to question 2, but it is helpful to look at it again.

Part E

The average stock prices for each of the four years shown in Exhibit 1 were as follows:

1998          11¼

1999          16¾

2000          28½

2001          9½

Compute the price/earnings (P/E) ratio for each year. That is, take the stock price shown above and divide by net income per common stock-dilution from Exhibit 1.

1998 P/E Ratio:

1999 P/E Ratio:

2000 P/E Ratio:

2001 P/E Ratio:

Problem 9-5A At December 31, 2017, Grand Company reported the following as plant assets. Land $ 3,770,000 Buildings $27,290,000 Less: Accumulated depreciation—buildings 12,170,000 15,120,000 Equipment 48,020,000 Less: Accumulated depreciation—equipment 4,550,000 43,470,000 Total plant assets $62,360,000 During 2018, the following selected cash transactions occurred. April 1 Purchased land for $2,190,000. May 1 Sold equipment that cost $900,000 when purchased on January 1, 2014. The equipment was sold for $540,000. June 1 Sold land purchased on June 1, 2008 for $1,540,000. The land cost $394,000. July 1 Purchased equipment for $2,530,000. Dec. 31 Retired equipment that cost $491,000 when purchased on December 31, 2008. The company received no proceeds related to salvage. Journalize the above transactions. The company uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 50-year life and no salvage value. The equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit (To record depreciation) May 1 (To record sale of equipment) (To record depreciation) (To record retirement of equipment) Show List of Accounts Link to Text Link to Text Link to Text Record adjusting entries for depreciation for 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit (To record building depreciation) (To record equipment depreciation) Show List of Accounts Link to Text Link to Text Link to Text Prepare the plant assets section of Grand’s balance sheet at December 31, 2018. (List Plant Assets in order of Land, Buildings and Equipment.) GRAND COMPANY Balance Sheet (Partial) $ $ : : $