QUESTION 66

1. The Legal List is for

   		investment advisers
   		corporate accounts
   		fiduciaries
   		municipal finance professionals

1 points   

QUESTION 67

1. Which of the following establishes the U.S. Treasury Department as the regulator for anti-money-laundering programs?

   		SDN
   		The Bank Secrecy Act
   		None of the provided answers are correct
   		OFAC

1 points   

QUESTION 68

1. The Federal Reserve Board is responsible for which of the following?

   		Setting Regulation T
   		All provided answers are corrects
   		Printing currency
   		Easing the money supply

1 points   

QUESTION 69

1. Which of the following is rated by most securities rating services?

   		Investment risk
   		Quality
   		Market risk
   		Quantity

1 points   

QUESTION 70

1. An investor owns the following investments:

   50 New York 5-percent general obligation bonds maturing in 2020 and rated AA

   50 Florida University 6.25-percent revenue bonds maturing in 2021 and rated AA

   50 Nevada Turnpike 5.75-percent revenue bonds maturing in 2020 and rated AA

   What type of diversification does this represent?

   		Quantity
   		Maturity
   		Geographical
   		Quality

Jamee is a resident taxpayer. For the year ended 30 June 2020 he received:

Gross salary of $82,000 from which PAYG of $20,100 had been withheld.

Net interest of $745 after TFN withholding tax of $715 had been withheld.

In September 2019 Jamee received $1,100 as his share in the winnings from a punters club with his work colleagues.

In January 2020 he received a holiday valued at $3,400 from his employer for achieving the highest sales in the previous year.

In June 2020, Jamee’s employer announced that he would be giving Jamee a pay rise effective from 1 April 2020. He is therefore to receive backpay of $2,000 of which $1,000 will be paid on 27June 2020 and the remaining $1,000 will be paid on 4 July 2020.

Dividend of $12,000 deposited to his bank account in May 2020 in respect of a 70% franked Australian dividend (company tax rate 30%).

Interest on a term deposit with a Swedish bank of $3,600 (10% withholding tax had been deducted). Advise Jamee how each payment would be treated, provide relevant section, case law and other supporting evidence. Calculate Jamee’s assessable income for the current year ended 30 June 2020.

NOELLA Consultants Inc. has had a defined benefit pension plan since January 1, 2014.

The following represents beginning balances as at January 1, 2019:

Market value of Plan Asset $2,008,900; Defined Benefit Obligation $2,340,000; AOCI: Gain of $65,000

Additional Information is as follows:

Current Service cost is $221,000 for 2019 and $215,200 for 2020.

Company Funding/Contribution is $200,400 for 2019 and $212,700 for 2020. Funding is made on December 31 of each year.

Actual return on assets is $115,600 for 2019 and $117,400 for 2020.

There are payments made to retired employees equal to $63,900 in 2019 and for $90,300 in 2020.

Increase in obligation of $123,500 due to Past service cost from plan amendment dated December 31, 2019.

There is an increase in obligation for $64,510 due to changes in Actuarial assumptions at Dec 31, 2020.

The discount/interest rate is 6% for both years.

Required:

1. Prepare a spreadsheet to determine all the pension items for both 2019 and 2020.
2. Prepare the required journal entries for both 2019 and 2020.
3. Prepare a partial balance sheet and a partial income statement for both 2019 and 2020.
4. Prepare the notes to the financial statements for 2019 only.

Note: You can use either the textbook approach or the alternative approach as we discussed in class.

URGENT!!!
Jamee is a resident tax payer. For the year ended 30 June 2020 he recived:

- Gross salary of $82,000 from which PAYG of 20,100 had been withheld.

- Net interest of $745 afterTFN with holding tax of $715 had been withheld.

- In September 2019, Jamee received $1,100 as his share in winnings from a punters club with his work colleagues.

- In Jan 2020,he received a holiday valued at $3,400 from his employer for achieving the highest sale in the previous year.

- In June 2020, Jamee’s employer announced that he would be giving Jamee a pay rise effective from 1 April 2020. He is therefore to receive backpay of $2000 of which $1000 will be paid on 27 June 2020 and the remaining of $1000 will be paid on 4 july 2020.

-Dividend of $12,000 deposited to his bank account in May 2020 in respect of 70% franked Australian dividend. ( company tax rate 30%).

- Interest on term deposit with a Swedish bank  of $3,600 (10% withholding tax had been deducted).

a. Advise Jamee how each payment would be treated, provide relevant section, case law and other supporting evidence.

b. Calculate Jamee’s assemble income for the current year ended 30 June, 2020.

On January 2, 20X8, Johnson Company acquired a 100% interest in the capital stock of Perth Company for $3,100,000. Any excess cost over book value is attributable to a patent with a 10-year remaining life. At the date of acquisition, Perth's balance sheet contained the following information(in Foreign Currency Units, FCU): Cash 40,000 Receivables 150,000 Inventories 500,000 Equipment 1,500,000 Payables 200,000 Capital stock 600,000 Retained earnings 1,390,000 Perth's income statement for 20X8 is as follows(in Foreign Currency Units, FCU): Sales revenue 1,010,000 Cost of goods sold 590,000 Operating expenses 120,000 Depreciation expense 200,000 Income tax expense 40,000 The balance sheet of Perth at December 31, 20X8, is as follows(in Foreign Currency Units, FCU): Cash 180,000 Receivables 210,000 Inventories 520,000 Equipment 1,300,000 Payables 180,000 Capital stock 600,000 Retained earnings 1,430,000 Perth declared and paid a dividend of 20,000 FCU on October 1, 20X8. Spot rates at various dates for 20X8 follow: January 2: 1 FCU = $1.50 October 1: 1 FCU = $1.60 December 31: 1 FCU = $1.70 Weighted average: 1 FCU = $1.55 Assume Perth's revenues, purchases, operating expenses, depreciation expense, and income taxes were incurred evenly throughout 20X8. Refer to the above information. Assuming Perth's local currency is the functional currency, what is the amount of the adjustment that results from converting Perth's trial balance into U.S. dollars at December 31, 20X8?

Established in 1891 in Eindhoven, the Netherlands, Koninklijke Philips NV is one of the world’s oldest multinational companies. The company began making lighting products and over time diversified into a range of businesses that included domestic appliances, consumer electronics, and health care products. From the beginning, the small Dutch domestic market created pressures for Philips to look to foreign markets for growth.

By the start of World War II, Philips already had a global presence. During the war, the Netherlands was occupied by Germany. By necessity, the company’s national organizations in countries such as Australia, Brazil, Canada, United Kingdom, and the United States gained considerable autonomy during this period. After the war, a structure based on strong national organizations remained in place. Each was in essence a self-contained entity responsible for much of its own manufacturing, marketing, and sales.

Most R&D activities, however, were centralized at Philips’ Eindhoven headquarters. Reflecting this, several product divisions were created. Based in Eindhoven, the product divisions developed technologies and products, which were then made and sold by the different national organizations. During this period, the career track of most senior managers at Philips involved significant postings in various national organizations around the world (a career development practice often seen still in multinational corporations).

For several decades this organizational arrangement worked well. It allowed Philips to customize its product offerings, sales, and marketing efforts to the conditions that existed in different national markets. By the 1970s, however, flaws were appearing in the approach. The structure involved significant duplication of activities around the world, particularly in manufacturing. When trade barriers were high, this did not matter so much, but the significance of its effect became important when trade barriers started to fall and competitors came into the marketplace. These competitors included Sony and Matsushita from Japan, General Electric from the United States, and Samsung from South Korea. They gained market share by serving increasingly global markets from centralized production facilities, where they could achieve lower costs.

Philips’ response was to try to tilt the balance of power in its structure away from national organizations and toward product divisions. International production centers were established under the direction of the product divisions. The national organizations, however, remained responsible for local marketing and sales, and they often maintained control over some local production facilities. One problem Philips faced in trying to change its structure at this time was that most senior managers had come up through the national organizations. Consequently, they were loyal to them and tended to protect their autonomy.

Despite several reorganization efforts, the national organizations remained a strong influence

at Philips until not too long ago. Former CEO Cor Boonstra famously described the company’s organizational structure as a “plate of spaghetti” and asked how Philips could compete when the company had 350 subsidiaries around the world and significant duplication of manufacturing and marketing efforts across nations.

Boonstra instituted a radical reorganization. He replaced the company’s 21 product divisions with just 7 global business divisions, making them responsible for global product development, production, and marketing. The heads of the divisions reported directly to him, while the national organizations reported to the divisions. The national organizations remained responsible for local sales and local marketing efforts, but after this reorganization they finally lost their historic sway on the company.

Philips, however, continued to underperform its global rivals. By 2008, Gerard Kleisterlee, who succeeded Boonstra as CEO in 2001, decided Philips was still not sufficiently focused on global markets. He reorganized yet again, this time around just three global divisions: health care, lighting, and consumer lifestyle (which included the company’s electronics businesses). These are also the three divisions that are in place under the most recent CEO, Frans van Houten, who became the CEO of Philips in 2011.

The three divisions are responsible for product strategy, global marketing, and shifting of production to low-cost locations (or outsourcing production). The divisions also took over some sales responsibilities, particularly dealing with global retail chains such as Walmart, Tesco, and Carrefour. To accommodate national differences, however, some sales and marketing activities remained located at the national organizations.

QUESTION: Describe how, without setting up any new subsidiaries or changing where any of the subsidiaries were headquartered or how they operated, the company might have transferred profits from subsidiaries in high tax jurisdictions to those in low tax jurisdictions in order to reduce the total amount of tax it had to pay to all of the various host countries where its 350 subsidiaries were located.

Established in 1891 in Eindhoven, the Netherlands, Koninklijke Philips NV is one of the world’s oldest multinational companies. The company began making lighting products and over time diversified into a range of businesses that included domestic appliances, consumer electronics, and health care products. From the beginning, the small Dutch domestic market created pressures for Philips to look to foreign markets for growth.

By the start of World War II, Philips already had a global presence. During the war, the Netherlands was occupied by Germany. By necessity, the company’s national organizations in countries such as Australia, Brazil, Canada, United Kingdom, and the United States gained considerable autonomy during this period. After the war, a structure based on strong national organizations remained in place. Each was in essence a self-contained entity responsible for much of its own manufacturing, marketing, and sales.

Most R&D activities, however, were centralized at Philips’ Eindhoven headquarters. Reflecting this, several product divisions were created. Based in Eindhoven, the product divisions developed technologies and products, which were then made and sold by the different national organizations. During this period, the career track of most senior managers at Philips involved significant postings in various national organizations around the world (a career development practice often seen still in multinational corporations).

For several decades this organizational arrangement worked well. It allowed Philips to customize its product offerings, sales, and marketing efforts to the conditions that existed in different national markets. By the 1970s, however, flaws were appearing in the approach. The structure involved significant duplication of activities around the world, particularly in manufacturing. When trade barriers were high, this did not matter so much, but the significance of its effect became important when trade barriers started to fall and competitors came into the marketplace. These competitors included Sony and Matsushita from Japan, General Electric from the United States, and Samsung from South Korea. They gained market share by serving increasingly global markets from centralized production facilities, where they could achieve lower costs.

Philips’ response was to try to tilt the balance of power in its structure away from national organizations and toward product divisions. International production centers were established under the direction of the product divisions. The national organizations, however, remained responsible for local marketing and sales, and they often maintained control over some local production facilities. One problem Philips faced in trying to change its structure at this time was that most senior managers had come up through the national organizations. Consequently, they were loyal to them and tended to protect their autonomy.

Despite several reorganization efforts, the national organizations remained a strong influence

at Philips until not too long ago. Former CEO Cor Boonstra famously described the company’s organizational structure as a “plate of spaghetti” and asked how Philips could compete when the company had 350 subsidiaries around the world and significant duplication of manufacturing and marketing efforts across nations.

Boonstra instituted a radical reorganization. He replaced the company’s 21 product divisions with just 7 global business divisions, making them responsible for global product development, production, and marketing. The heads of the divisions reported directly to him, while the national organizations reported to the divisions. The national organizations remained responsible for local sales and local marketing efforts, but after this reorganization they finally lost their historic sway on the company.

Philips, however, continued to underperform its global rivals. By 2008, Gerard Kleisterlee, who succeeded Boonstra as CEO in 2001, decided Philips was still not sufficiently focused on global markets. He reorganized yet again, this time around just three global divisions: health care, lighting, and consumer lifestyle (which included the company’s electronics businesses). These are also the three divisions that are in place under the most recent CEO, Frans van Houten, who became the CEO of Philips in 2011.

The three divisions are responsible for product strategy, global marketing, and shifting of production to low-cost locations (or outsourcing production). The divisions also took over some sales responsibilities, particularly dealing with global retail chains such as Walmart, Tesco, and Carrefour. To accommodate national differences, however, some sales and marketing activities remained located at the national organizations.

QUESTION: Describe how, without setting up any new subsidiaries or changing where any of the subsidiaries were headquartered or how they operated, the company might have transferred profits from subsidiaries in high tax jurisdictions to those in low tax jurisdictions in order to reduce the total amount of tax it had to pay to all of the various host countries where its 350 subsidiaries were located

Your company's CEO is concerned that the large, mature business is falling behind in its level of innovation and organizational learning. He would like to promote increased intrapreneurship and has asked for ideas. Prove two viable suggestions you would give the CEO.

Abacab Company's shares are listed on the New Market Stock Exchange, which allows the use of either international financial reporting standards (IFRS) or U.S. GAAP. On Jan 1, Year 1, Abacab Company acquired a building at a cost of $10 million. The building has a 20-yr. useful life and no residual value and is depreciated on a straight-line basis. On January 1, Year 3, the company hired an appraiser who determines the fair value of the building (net of any accumulated depreciation) to be $12 million.

IAS16, "Property, plant, and equipment," requires assets to be initially measured at cost. Subsequent to initial recognition, assets may be carried either at cost less accumulated depreciation and any impairment losses (the cost model) or at a revalued amount equal to fair value at the date of the revaluation less any subsequent accumulated depreciation and impairment losses (the revaluation model). If a firm chooses to use the revaluation model, the counterpart to the revaluation of the asset is recorded as an increase in Accumulated Other Comprehensive Income (stockholders' equity). Subsequent depreciation is based on the revalued amount less any residual value.
(U.S.GAAP) required items of property, plant, and equipment to be initially measured at cost. U.S.GAAP does not allow property, plant, and equipment to be revalued above original cost at subsequent balance sheet dates. The cost of property, plant, and equipment must be depreciated on a systematic basis over its useful life. Subsequent to initial recognition, assets must be carried at cost less accumulated depreciation and any impairment loss.

a) Determine the amount of depreciation expense recognized in Year 2, Year 3, and Year 4 under (a) the revaluation model of IAS 16 and (b) U.S. GAAP.
b) Determine the book value of the building under the two different sets of accounting rules at January 2, Year 3; December 31, Year 3; and December 31, Year 4.
C) summarize the difference in net income and in stockholders’ equity over the 20-year life of the building using the 2 different sets of accounting rules.