Your client is a wealthy investor and property owner. Your client provides you with information (as detailed below) about various transactions that took place between 1 July 2019 and 30 June 2020.

1) Warehouse: On 30 April 1985 your client acquired a large parcel of vacant land at Rocklea, a suburb in Brisbane with a significant number of commercial buildings. The purchase price was $180,000 and your client incurred $2,000 in legal fees and $18,000 in transfer duty when purchasing the land. In April 2000 your client signed a contract for the construction of a large warehouse on the land. The final construction cost was $1,000,000. The warehouse is used to house your client’s extensive motor vehicle collection. Your client signs the contract to sell the warehouse for $2,200,000 on 1 June 2020. Your client receives the proceeds on 1 July 2020. At the time of sale, an independent valuation revealed the land component of the sale price was $1,200,000. Your client paid $80,000 to insure the warehouse building against flood and fire damage.

2) Boat: Your client owned a luxury motor cruiser that was moored at the Manly Yacht Club. Your client used the boat to go fishing over weekends and to cruise the waters of Moreton Bay. Your client purchased the vessel in late 2006 for $140,000 and sells the vessel on 1 June 2020 to a local boat broker for $90,000. During the period of ownership your client paid a total of $25,000 in weekly mooring fees to the Manly Yacht club and also incurred $20,000 in repairs on the vessel.

3) Dining Table: Your client acquires a large, hand crafted, English oak dining table for $8,000 in April 2001. The table is very old, having been constructed sometime during 1910 and was used by your client and his family in their formal dining room. Your client auctions the table on 2 April 2020 and it sells for a record price of $50,000. Your client pays $2,000 in auction fees. During your client’s period of ownership they paid $3,000 to insure the table against loss or damage.

4) Your client also has a capital loss carried forward from the 2017–2018 income year of $10,000.

You are required to: Calculate which amount(s), if any, must be returned as assessable income for the 2019–2020 income year. Show all your calculations and provide reasons for your answer, referencing relevant sections of the Income Tax Assessment Acts

Variable Costing Income Statement and Contribution Margin Analysis for a Service Company

The actual and planned data for Underwater University for the Fall term were as follows:

Registration, records, and marketing costs vary by the number of enrolled students, while instructional costs vary by the number of credit hours. Depreciation is a fixed cost.

a. Prepare a variable costing income statement showing the contribution margin and income from operations for the Fall term.

b. Prepare a contribution margin analysis report comparing planned with actual performance for the Fall term. If an amount is zero, enter "0".

1. In a 2015 report, Johnson discussed the relationship between mean annual temperature and the mortality rate for a type of prostate cancer in men. The subjects were residents of certain regions of Great Britain, Norway, and Finland. Run a correlation between these two variables. You will need the printout to answer a few questions.  

The Data:

Mortality Temperature

102.5    51.3

104.5    49.9

100.4    50

95.9    49.2

87       48.5

95      47.8

88.6    47.3

89.2     45.1

78.9    46.3

84.6    42.1

81.7    44.2

72.2    43.5

65.1    42.3

68.1    40.2

67.3    31.8

52.5    34

What is the Pearson Correlation Coefficient? 3 pts.

Is it significant? 3 pts

Is it a strong correlation? 2 pt.

1. In a 2015 report, Johnson discussed the relationship between mean annual temperature and the mortality rate for a type of prostate cancer in men. The subjects were residents of certain regions of Great Britain, Norway, and Finland. Run a correlation between these two variables. You will need the printout to answer a few questions.  

The Data:

Mortality Temperature

102.5    51.3

104.5    49.9

100.4    50

95.9    49.2

87       48.5

95      47.8

88.6    47.3

89.2     45.1

78.9    46.3

84.6    42.1

81.7    44.2

72.2    43.5

65.1    42.3

68.1    40.2

67.3    31.8

52.5    34

What is the Pearson Correlation Coefficient? 3 pts.

Is it significant? 3 pts

Is it a strong correlation? 2 pt.

Adam & Smith Ltd purchases a machine on 1/07/2019 for $450,000. Expected life is 6 years using straight-line method and no residual value. For tax purposes, ATO allows the company to depreciate over 5 years. The profit before tax of the company for the year ended at 30 June 2020 is $550,000. Tax rate is 25%. Required: a) What is the amount of the temporary difference? Does this give rise to a deferred tax asset or a deferred tax liability? Provide relevant journal entries that relates to the temporary difference at 30 June 2020. b) Determine the taxable profit and the taxes payable and provide relevant journal entries at 30 June 2015. c) Provide one example of temporary differences that create a deferred tax asset and one example of a deferred tax liability. (7 marks. Word limit for part c: minimum 120 to maximum 250 words)

Please provide unique answer from others.

Question 3 Harie Company has the following transactions related to non-current liabilities. On January 1, 2019, Harie Company issued 10% bonds with a par value of $1,000,000 due in 10 years. They were issued to yield 8% (i.e. the effective interest rate is 8%) and were callable at 102 at any date after January 1, 2020. Interest are payable semiannually on July 1 and January 1, starting from July 1, 2019.

Required:

(a) Compute the selling price of the bonds on January 1, 2019.

(b) Prepare a bond amortization schedule up to and including January 1, 2020.

(c) Prepare the journal entries to record the issuance of the bonds on January 1, 2019 and interest payment on July 1, 2019.

(Ignore any potential impact of the bonds’ callable nature on the selling price. Refer to the Appendices for Present Value tables and round your answer to the nearest dollar.)

Accounting for Dilutive securities and Earning per share.

On November 1, 2017, Larkspur Company adopted a stock-option plan that granted options to key executives to purchase 30,000 shares of the company’s $10 par value common stock. The options were granted on January 2, 2018, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $30, and the fair value option-pricing model determines the total compensation expense to be $450,000.

All of the options were exercised during the year 2020: 20,000 on January 3 when the market price was $69, and 10,000 on May 1 when the market price was $78 a share.

Prepare journal entries relating to the stock option plan for the years 2018, 2019, and 2020. Assume that the employee performs services equally in 2018 and 2019.

You own a construction company and have recently received a contract with the local school district to refurbish one of its elementary schools. You are given an up-front payment from the school district in the amount of $5 million. The contract terms extend from years 2018 to 2020. When would you recognize revenue for this payment?

• What method of accounting would you use for this construction project and why?
• What would be the benefits and challenges with your method selection?

Caroline is retired and receives income from a number of sources. the payments are from bonds that Caroline purchased over past years and disability insurance policy that Caroline purchased. Calculate her income

Distributions from qualified pension plan $5400

Interest on binds issued by City of Austin, Texas $2500

Social Security benefits $8200

Interest on US Treasury Bills $2300

Interest on bonds issued by Ford Motor Company $1900

Interest on bonds issued by City of Quebec, Canada $2750

Disability insurance $9500

Background Information Note the following:

• Acme Corporation is a publicly listed company

• ACME’s Fiscal year end is December 31

• In addition to the cash account being reconcile here; ACME has a separate Revolving Credit account.

  This is a revolving credit facility where interest is accrued on the average balance outstanding during the month. The interest amount is required to be paid on a monthly basis. The correct is amount calculated and taken from the account automatically by the bank.

• The facility has an annual interest rate of 4%

• Management has set-out in the Financial Statements that the average balance outstanding in this

  revolving credit facility is normally at around $ 150,000.

• The Audit Committee has also informed the Partner that the CRA audited ACME in the previous year

  and levied a penalty of $50,000 and has informed the Board that they plan continue their audit in the new year.

  Required

  Part 1

1. a) From the information provided in EXHIBIT A, perform and document a Bank Reconciliation. - 20 marks

2. b) From the Background info. provided above, identify potential errors and disclosure requirements - 5 marks

Part 2

1. a) Identify the financial assertions relating to the Cash account addressed by the Bank Reconciliation and explain how. – 5 marks

2. b) Identify what type of activity the Bank Reconciliation is. – 5 marks

3. c) Identify the 6 possible characteristics (of the activity above) and which apply to the Bank Rec. – 5 marks

BONUS
How would the Auditor test the identified characteristics. – 4 marks

EXHIBIT A