The following facts relate to Novak Corporation.

A. Compute income taxes payable for 2020.

B. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

C. Prepare the income tax expense section of the income statement for 2020, beginning with the line “Income before income taxes.” (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Discuss the various Schedule A Itemized Deductions, the Standard Deductions for each Filing Status, the Additional Standard Deduction, and those taxpayers eligible for the Qualified Business Income Deduction.

For Tax Years 2019 and 2020, taxpayers can claim medical and dental expenses that exceed 7.5% of AGI when they itemize on a Schedule A.

The citation for the new tax law is the Further Consolidated Appropriations Act, 2020 (Public Law 116-94), which states:

SEC. 103. REDUCTION IN MEDICAL EXPENSE DEDUCTION FLOOR.

(a) IN GENERAL.—Section 213(f) is amended to read as follows:
‘‘(f) TEMPORARY SPECIAL RULE.—In the case of taxable years beginning before January 1, 2021, subsection (a) shall be applied with respect to a taxpayer by substituting ‘7.5 percent’ for ‘10 percent’.’’...
(c) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years ending after December 31, 2018.

On January 3, 2018, Dart Co. purchased 500 shares of Mina Corp. ordinary shares for P36,000. On December 2, 2019, Dart received 500 stock rights from Mina. Each right entitles the holder to acquire one share of stock for P85. The market price of Mina’s stock was P100 a share immediately before the right were issued, and P90 a share immediately after the rights were issued. Dart sold its rights on December 31, 2020, for P10 a right. Dart’s gain from the sale of right is?

Cheyenne Inc. had the following balance sheet at December 31, 2019.

During 2020, the following occurred.

Prepare a statement of cash flows for 2020

Prepare an unclassified balance sheet as it would appear at December 31, 2020. (List Assets in order of liquidity.)

Compute two cash flow ratios

a.What are the market conditions leading to financial innovation?

b.List several products of financial innovation and explain which market condition led to those products.

Post an analysis of the role of innovation in business strategy development within a global context. Your analysis should include the following: A description of P&G’s innovation, including the underlying strategy and specific context for its current success An analysis of the impact of geographic location and surrounding business communities on innovation and strategy development As a global change agent, explain the importance of researching global implementation of innovative business ideas or strategies from the research literature. Be sure to include relevant scholarly examples of successful or unsuccessful global implementations and how they can further influence the understanding of innovation as a component of business strategy.

On January 1, 2007 Brown issued 10 million stock options that would permit key executives to buy 10 million shares of the Brown’s $1 par value common stock at an exercise price of $15. The options vest after 5 years and expire in 15 years. The fair value of these options on the grant date was estimated at $4 each.

During 2010 Brown Company reacquired 15 million common shares as follows:

       2/1/2010       3 million shares at $10 each

       4/15/2010     4 million shares at $20 each

       6/1/2010       8 million shares at $30 each

On January 1, 2012 the stock price was $32 per share, and half the executives exercised their options. On Feb 1, 2013 the stock price was $45 per share, and the other half of the executives exercised their options.

Assume that Brown reissues treasury shares to executives that exercise options, and that it is using the first-in first-out cost flow method.

Required:

1. Prepare the journal entry for compensation expense in 2007.

2. Prepare the journal entries to record the shares repurchase during 2010.

3. Prepare the journal entries to record the exercise of the options on 1/1/2012 and on 2/1/2013.

It is January 1st 2020, on the day before, December 31st 2019, Alamo Co. reported a net income
of 4,009,000 dollars. To this date the company is unlevered and its real EBITDA is constant.
The company acquired the year before (on January 1st 2019) a new plant for 36,000,000
dollars, that the fiscal law allowed to depreciate straight line either in 3 (Plan 1) or 6 years
(Plan 2). All other assets are fully depreciated. Today, the company announces a
recapitalization in which it will issue risky debt and retire equity for an amount of 65,000,000
dollars. The company then plans to keep a constant debt level. Before the announcement, the
unlevered equity return is 7.65%. Assume that the inflation rate is 2.5%, that the debt beta is
0, that the expected market return is 8.00%, that the risk free rate is 4.50% and that the tax
rate is 30%. Finally assume that the depreciation tax shield is as risky as the company’s debt.
a) What is the depreciation plan chosen by the firm? Why?
b) What is the return experienced by the shareholders immediately after the
recapitalization announcement (but before the recapitalization is carried out)?
c) What is the beta of levered equity?

The accounting profit before tax of Subang Ltd for the year ended 30 June 2020 was $320,000.

It included the following revenue and expense items:

Legal expenses 62 500

Interest expense 10 000

Bad debt expense 15 000

Depreciation expense – Plant & equipment 26 250

Entertainment Expense 2 500 Audit fee 40 000 Interest revenue 15 000 Rent revenue 10 000 Exempt income 37 500 Additional information: 1. Interest receivable at 30 June 2020 is $12,500 (2019: $15,000). Interest payable at 30 June 2020 is $500 (2019: $3,000). Interest is assessable on receipt and deductible when paid. 2. The company raised an accrual liability of $17 500 for audit work performed and not paid by 30 June 2020 (2019: $15,000). Fees for audit work are not deductible unless the audit work has been performed and paid. 3. Rent revenue relates to a contract where the annual rent is received in advance. The unearned revenue liability at 30 June 2020 is $10,000 (2019: $7,500). Rent is assessable when received. 4. Legal expenses include $25,000 related to capital transactions that are not deductible. 5. The bad debts expense relates to an account that has been written off. 6. Plant and equipment is as follows: 30 June 2020 30 June 2019 Plant & Equipment $175 000 $75 000 Accumulated depreciation 48 750 22 500 126 250 52 500 Question 1 is continued on the next page ACCY200 (MT) / Page 4 of 6 Question 1 continued 7. Tax depreciation for 30 June 2020 is $35,000. The tax written down value of plant and equipment at 30 June 2020 is $110,000 (2019: $45,000). 8. The deferred tax balances at 30 June 2019 are; deferred tax liability $6,750 and deferred tax asset $12,300. 9. The company tax rate is 30%. Required: a) Prepare the current tax worksheet and the journal entry to recognise the current tax as at 30 June 2020. b) Prepare the deferred tax worksheet and any necessary journal entries to adjust deferred tax accounts for 30 June 2020.