Needed

At A3M Ltd equipment is depreciated at 25% p.a. straight-line for accounting purposes, but the allowable rate for taxation is 20% p.a. The tax rate is 30%.

Equipment costed $640 000 on 1 July 2013. Assuming that no equipment is purchased or sold during the years ended 30 June 2016.

Required

a) the accounting expense and tax deduction for each year ending 2014 to 2018.

b) the impact of depreciation on the calculation of current tax expense for 2017 and 2018.

c) the effect on the deferred tax asset account for 2016, 2017 and 2018.

Brief Exercise 105

The records for Bosch Co. show this data for 2018:

Zimmer Biomet Corporation in Warsaw Indiana produces orthopedic devices (artificial hips, knees, and shoulders). The WACC at the end of 2017 when the corporate tax rate was 35%, was 8.73%. President Trump’s new tax plan lowers the corporate tax rate to 21% in 2018. Zimmer Biomet’s Board of Directors has decided that the want to keep the WACC the same in 2018 by changing the Debt to Equity ratio. Assume: Rd = 0.08, Re = 0.13, and the original debt to equity ratio (in 2017) was 0.5. What does the new, 2018, Debt to Equity ratio need to be?

. Judd, Inc., owns 5% of Cosby Corporation. During the calendar year 2018, Cosby had net earnings of $300,000 and paid dividends of $30,000. Judd paid $2,000,000 for Crosby in 2018. At the end of the year the fair value of Crosby was $1,750,000. Please provide the journal entries for Judd related to these events.

part 2

Judd, Inc., owns 35% of Cosby Corporation (Judd has significant influence). During the calendar year 2018, Cosby had net earnings of $300,000 and paid dividends of $30,000. Please provide the journal entries related to these events.

5. Boateng Wholesale Ltd. is based in Accra, Ghana. Its sales, cost of goods

sold, and inventory amounts for 2018 and 2019 are shown below. (Currency in

Ghanaian cedi, GH₵) (20%)

2018 2019

Sales revenue                             GH₵ 200,000                 GH₵ 180,000

Cost of goods sold                           100,000                       91,000

Beginning inventory                          29,000                       21,000

Ending inventory                               21,000                              5,000

Instructions:

1. Determine the inventory turnover and resident period for 2018 and 2019.
2. Give your evaluation on the changes in the amount of Boateng’s inventory, the inventory turnover and resident period, and the amount of sales across the two years.

A company purchased a patent on January 1, 2018, for $2,500,000. The patent's legal life is 20 years but the company estimates that the patent's useful life will only be 5 years from the date of acquisition. On June 30, 2018, the company paid legal costs of $135,000 in successfully defending the patent in an infringement suit.

Prepare the journal entry to amortize the patent at year end on December 31, 2018. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

On January 1, 2018, the Allegheny Corporation purchased machinery for $148,000. The estimated service life of the machinery is 10 years and the estimated residual value is $16,000. The machine is expected to produce 400,000 units during its life.

Required:
Calculate depreciation for 2018 and 2019 using each of the following methods.

1. Straight line.
2. Sum-of-the-years'-digits.
3. Double-declining balance.
4. One hundred fifty percent declining balance.
5. Units of production (units produced in 2018, 48,000; units produced in 2019, 43,000).

On December 31, 2017, Berclair Inc. had 440 million shares of common stock and 8 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purchased 36 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2018. Six million treasury shares were sold on October 1. Net income for the year ended December 31, 2018, was $750 million.

Numerator/Denoiminator=Earning per shares

Cascade Company was started on January 1, 2018, when it acquired $155,000 cash from the owners. During 2018, the company earned cash revenues of $97,900 and incurred cash expenses of $66,100. The company also paid cash distributions of $9,500.

Required

Prepare a 2018 income statement, capital statement (statement of changes in equity), balance sheet, and statement of cash flows under each of the following assumptions. (Consider each assumption separately.)

Cascade is a corporation. It issued 10,000 shares of $9 par common stock for $155,000 cash to start the business.

Cascade Company was started on January 1, 2018, when it acquired $156,000 cash from the owners. During 2018, the company earned cash revenues of $80,300 and incurred cash expenses of $67,500. The company also paid cash distributions of $5,500.

Required

Prepare a 2018 income statement, capital statement (statement of changes in equity), balance sheet, and statement of cash flows under each of the following assumptions. (Consider each assumption separately.)

Cascade is a sole proprietorship owned by Carl Cascade.

A) Prepare a Balance Sheet

B) Prepare a Statement of Cash Flows