Problem 2: (Revised 6.3) Magazine Advertising: In a study of revenue from advertising, data were collected for 41 magazines list as follows. The variables observed are number of pages of advertising and advertising revenue. The names of the magazines are listed as:

Here is the code help you to paste data into your R:

data6<-'Adv Revenue
25 50
15 49.7
20 34
17 30.7
23 27
17 26.3
14 24.6
22 16.9
12 16.7
15 14.6
8 13.8
7 13.2
9 13.1
12 10.6
1 8.8
6 8.7
12 8.5
9 8.3
7 8.2
9 8.2
7 7.3
1 7
77 6.6
13 6.2
5 5.8
7 5.1
13 4.1
4 3.9
6 3.9
3 3.5
6 3.3
4 3
3 2.5
3 2.3
5 2.3
4 1.8
4 1.5
3 1.3
3 1.3
4 1
2 0.3
'
data6n<-read.table(textConnection(object=data6),
header=TRUE,
sep="",
stringsAsFactors = FALSE)

a. You should not be surprised by the presence of a large number of outliers because the magazines are highly heterogeneous and it is unrealistic to expect a single relationship to connect all of them. Find outliers and high leverage points. Delete the outliers and obtain an acceptable regression equation that relates advertising revenue to advertising pages.

b. For the deleted data, check the homogeneity of the variance. Choose an appropriate transformation of the data and fit the model to the transformed data. Evaluate the fit.

Hong Kong Taxation

River Co is a company incorporated and carrying on business in Hong Kong. River Co is principally engaged in the sales of luxury silk clothing through approximately 100 department stores. The procurement staff of River Co liaise with overseas suppliers in different countries and source new suppliers by going to trade exhibitions around the world. The procurement staff would preliminarily negotiate the purchase contracts with suppliers in the countries where the exhibitions are held, or the suppliers are located. However, the procurement team must seek advice from an in-house lawyer in Hong Kong and further negotiate the terms and conclude the purchase contracts with the overseas suppliers via exchange of emails after they return to Hong Kong. To facilitate the sales activities in the PRC market, River Co has sent its staff to have meetings with distributors in the Mainland to negotiate and conclude the sales contracts. Sales in Hong Kong market are however all made by River Co’s sales team in Hong Kong. River Co is also engaged in the business of investment holding in overseas subsidiaries. In view of the increasing trend for the demand of intra group financing and treasury services from its overseas subsidiaries, and with the profits tax concession granted under the relevant provisions of the IRO for these activities in recent years, the management of River Co plans to set up a treasury management function in 2020. Alternatively, River Co may establish an entity in Hong Kong specifically and exclusively for conducting corporate treasury activities for its overseas subsidiaries, on the basis that the entity can enjoy the profits tax concession.

Required:

(a) For River Co, explain the chargeability of its profits from sales made in the Hong Kong and Mainland markets. In particular, whether the Hong Kong and Mainland sales profits should be subject to, or exempt from, Hong Kong profits tax with reference to relevant provisions and case laws.

(b) By reference to the information about the sales made in the Hong Kong and Mainland markets, discuss the general deducibility of related expense, whether there are any major potential offshore tax risks, and any major potential non-tax risks.

(c) In the contexts of the relevant IRO provisions, explain advantages of being a ‘qualifying corporate treasury center’ (QCTC) and whether it is appropriate for River Co to apply for QCTC status.

Liability Transactions

The following items were selected from among the transactions completed by Sherwood Co. during the current year:

Required:

1. Journalize the transactions. If an amount box does not require an entry, leave it blank. Assume a 360-day year. If required, round to one decimal place. Don't round the intermediate calculations.

For a compound transaction, accounts should be listed largest to smallest.

2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year: (a) product warranty cost, $17,700; (b) interest on the nine remaining notes owed to Greenwood Co.

Prepare journal entries to record the following merchandising transactions of Zhang's, which uses the perpetual inventory system and the gross method. (Hint: It will help to identify each receivable and payable; for example, record the purchase on July 1 in Accounts Payable—Turner.)

• General Journal
• General Ledger
• Trial Balance
• Schedule of Receivables
• Schedule of Payables
• Income Statement
• Impact on Income

River Co is a company incorporated and carrying on business in Hong Kong. River Co is principally engaged in the sales of luxury silk clothing through approximately 100 department stores. The staff of River Co liaise with overseas suppliers in different countries and source new suppliers by going to trade exhibitions around the world. The procurement staff would preliminarily negotiate the purchase contracts with suppliers in the countries where the exhibitions are held, or the suppliers are located. However, the procurement team must seek advice from an in-house lawyer in Hong Kong and further negotiate the terms and conclude the purchase contracts with the overseas suppliers via the exchange of emails after they return to Hong Kong. To facilitate the sales activities in the PRC market, River Co has sent its staff to have meetings with distributors in the Mainland to negotiate and conclude the sales contracts. Sales in the Hong Kong market are however all made by River Co’s sales team in Hong Kong.

River Co is also engaged in the business of investment holding in overseas subsidiaries. In view of the increasing trend for the demand of intragroup financing and treasury services from its overseas subsidiaries, and with the profits tax concession granted under the relevant provisions of the IRO for these activities in recent years, the management of River Co plans to set up a treasury management function in 2020. Alternatively, River Co may establish an entity in Hong Kong specifically and exclusively for conducting corporate treasury activities for its overseas subsidiaries, on the basis that the entity can enjoy the profits tax concession.

Required:

(a) For River Co, explain the charge ability of its profits from sales made in the Hong Kong and Mainland markets. In particular, whether the Hong Kong and Mainland sales profits should be subject to, or exempt from, Hong Kong profits tax with reference to relevant provisions and case laws.

(b) By reference to the information about the sales made in the Hong Kong and Mainland markets, discuss the general deducibility of related expense, whether there are any major potential offshore tax risks and any major potential non-tax risks.

(c) In the contexts of the relevant IRO provisions, explain the advantages of being a ‘qualifying corporate treasury centre’ (QCTC) and whether it is appropriate for River Co to apply for QCTC status.

The following were selected from among the transactions completed by Babcock Company during November of the current year:

Required:

X

Journal

Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles.

Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

ACCOUNTING EQUATION

I don't know to do ii) for letter a, as well as letter d, e and the EC . Can you help?

The combustion of carbon monoxide is represented by the equation below:

CO(g) + ½O 2 (g) → CO 2 (g)

(a) (i) Determine the value of the standard enthalpy change, ΔH o rxn, for the combustion of CO(g) at
298 K using the following information. (3 pts)

C(s) + ½O 2 (g) → CO(g) ΔH o 298 = -110. 5 kJ mol -1
C(s) + O 2 (g) → CO 2 (g) ΔH o 298 = -393.5 kJ mol -1

(ii) Which is larger, the total bond dissociation energy of the reactants or the total bond
dissociation energy of the products? Explain. (2 pts)

(b) Determine the value of the standard entropy change, ΔS o rxn , for the combustion of CO(g) at 298
K using the information in the following table. (3 pts)
Substance S o 298(J mol -1 K -1 )
CO(g) 197.7
CO 2 (g) 213.7
O 2 (g) 205.1

(c) i) Determine the standard free energy change, ΔG o rxn , for the reaction at 298 K. Include units with
your answer. (3 pts)

ii) Is the reaction spontaneous under standard conditions at 298 K? Justify your answer. (2 pts)

(d) Calculate the value of the equilibrium constant, K eq , for the reaction at 298 K. (3 pts)

(e) Assume ∆H o and ∆S o for the reaction are independent of temperature.
(i) Explain why there is a temperature above 298 K at which the algebraic sign of the value of
∆G o changes. (2 pts)

(ii) Theoretically, the best yield of CO 2 should be achieved at low temperatures or high
pressures. Explain each. (hint: apply Le Chatelier’s principle) (2 pts)

EC a) Write a net ionic equation for: Lithium metal is strongly heated in nitrogen gas. (2 pts)

b) Predict the sign of ΔS° for the reaction at 25°C. Justify your prediction. (1 pt)