MULTIPLE CHOICE (from a to c) WITH THE INFORMATION SHOWN ABOVE

A. Has your currency appreciated or depreciated against the dollar between March 10 and May 9, 2020? Choose from the answers above:

a. It has depreciated
b. It has stayed the same, has not changed in value
c. I have no idea
d. Other:

B. The Mushroom Kingdom currency, called Coin, has appreciated against the dollar in this period. Based on this information and your answer to the previous question, what should have happened with your currency regarding the Mushroom Kingdom Coin? Choose from the answers above:

a. Your currency must necessarily have appreciated against the Mushroom Kingdom Coin
b. Your currency must necessarily have depreciated against the Mushroom Kingdom Coin
c. We do not have enough information, it may have been appreciated, but it may also have depreciated
d. Other:

C. If interest rates in the United States rise and all other factors (inflation, interest rates in other countries, etc.) remain the same, will your currency appreciate or depreciate against the dollar? Choose from the answers above:

a. Will be appreciated
b. Will depreciate
c. Other:

D. Explain your answer to the previous question

E. Blue wants to expand its exports and since March 10 has been negotiating with beverage distributors in the country that has your currency. Is the evolution observed in the exchange rate in the last two months convenient or detrimental to Serrallés? (Note that his objective is to sell as many bottles as possible and that he always sells in dollars, he does not accept payments in another currency). Explain your answer

F. Imagine that tomorrow they will reach an agreement. However, in Blue they have a concern: they have never worked with this client, and sending the bottles before receiving payment is risky, but the client does not want to pay until they receive the order and verify that it is OK. What can they do?

You are the new accounting manager at the Barry Transport Company. Your CFO has asked you to provide input on the company's income tax position based on the following:

1)Pretax accounting income was $62 million and taxable income was $10 million for the year ended December 31, 2018.

2)The difference was due to three items:

A)Tax depreciation exceeds book depreciation by $50 million in 2018 for the business complex acquired that year. This amount is scheduled to be $80 million in 2019 and to reverse as ($80 million) and ($50 million) in 2020, and 2021, respectively.

B)Insurance of $10 million was paid in 2018 for 2019 coverage.

C)A $8 million loss contingency was accrued in 2018, to be paid in 2020.

3)No temporary differences existed at the beginning of 2018.

4)The tax rate is 40%.

Required:
1. Determine the amounts necessary to record income taxes for 2018 and prepare the appropriate journal entry.
2. Assume the enacted federal income tax law specifies that the tax rate will change from 40% to 35% in 2020. When scheduling the reversal of the depreciation difference, you were uncertain as to how to deal with the fact that the difference will continue to originate in 2019 before reversing the next two years. Upon consulting PricewaterhouseCoopers' Comperio database, you found:

.441 Depreciable and amortizable assets
Only the reversals of the temporary difference at the balance sheet date would be scheduled. Future originations are not considered in determining the reversal pattern of temporary differences for depreciable assets. FAS 109 [FASB ASC 740–Income Taxes] is silent as to how the balance sheet date temporary differences are deemed to reverse, but the FIFO pattern is intended.

You interpret that to mean that, when future taxable amounts are being scheduled, and a portion of a temporary difference has yet to originate, only the reversals of the temporary difference at the balance sheet date can be scheduled and multiplied by the tax rate that will be in effect when the difference reverses. Future originations (like the depreciation difference the second year) are not considered when determining the timing of the reversal. For the existing temporary difference, it is assumed that the difference will reverse the first year the difference begins reversing.

Determine the amounts necessary to record income taxes for 2018 and prepare the appropriate journal entry.

You are the new accounting manager at the Barry Transport Company. Your CFO has asked you to provide input on the company's income tax position based on the following:

Pretax accounting income was $75 million and taxable income was $13 million for the year ended December 31, 2018.

The difference was due to three items:

Tax depreciation exceeds book depreciation by $60 million in 2018 for the business complex acquired that year. This amount is scheduled to be $70 million in 2019 and to reverse as ($70 million) and ($60 million) in 2020, and 2021, respectively.

Insurance of $10 million was paid in 2018 for 2019 coverage.

A $8 million loss contingency was accrued in 2018, to be paid in 2020.

No temporary differences existed at the beginning of 2018.

The tax rate is 40%.

Required:
1. Determine the amounts necessary to record income taxes for 2018 and prepare the appropriate journal entry.
2. Assume the enacted federal income tax law specifies that the tax rate will change from 40% to 35% in 2020. When scheduling the reversal of the depreciation difference, you were uncertain as to how to deal with the fact that the difference will continue to originate in 2019 before reversing the next two years. Upon consulting PricewaterhouseCoopers' Comperio database, you found:

.441 Depreciable and amortizable assets
Only the reversals of the temporary difference at the balance sheet date would be scheduled. Future originations are not considered in determining the reversal pattern of temporary differences for depreciable assets. FAS 109 [FASB ASC 740–Income Taxes] is silent as to how the balance sheet date temporary differences are deemed to reverse, but the FIFO pattern is intended.

You interpret that to mean that, when future taxable amounts are being scheduled, and a portion of a temporary difference has yet to originate, only the reversals of the temporary difference at the balance sheet date can be scheduled and multiplied by the tax rate that will be in effect when the difference reverses. Future originations (like the depreciation difference the second year) are not considered when determining the timing of the reversal. For the existing temporary difference, it is assumed that the difference will reverse the first year the difference begins reversing.

Determine the amounts necessary to record income taxes for 2018 and prepare the appropriate journal entry.

You are the new accounting manager at the Barry Transport Company. Your CFO has asked you to provide input on the company's income tax position based on the following:

Pretax accounting income was $64 million and taxable income was $11 million for the year ended December 31, 2018.

The difference was due to three items:

Tax depreciation exceeds book depreciation by $50 million in 2018 for the business complex acquired that year. This amount is scheduled to be $70 million in 2019 and to reverse as ($60 million) and ($60 million) in 2020, and 2021, respectively.

Insurance of $9 million was paid in 2018 for 2019 coverage.

A $6 million loss contingency was accrued in 2018, to be paid in 2020.

No temporary differences existed at the beginning of 2018.

The tax rate is 40%.

Required:
1. Determine the amounts necessary to record income taxes for 2018 and prepare the appropriate journal entry.
2. Assume the enacted federal income tax law specifies that the tax rate will change from 40% to 35% in 2020. When scheduling the reversal of the depreciation difference, you were uncertain as to how to deal with the fact that the difference will continue to originate in 2019 before reversing the next two years. Upon consulting PricewaterhouseCoopers' Comperio database, you found:

.441 Depreciable and amortizable assets
Only the reversals of the temporary difference at the balance sheet date would be scheduled. Future originations are not considered in determining the reversal pattern of temporary differences for depreciable assets. FAS 109 [FASB ASC 740–Income Taxes] is silent as to how the balance sheet date temporary differences are deemed to reverse, but the FIFO pattern is intended.

You interpret that to mean that, when future taxable amounts are being scheduled, and a portion of a temporary difference has yet to originate, only the reversals of the temporary difference at the balance sheet date can be scheduled and multiplied by the tax rate that will be in effect when the difference reverses. Future originations (like the depreciation difference the second year) are not considered when determining the timing of the reversal. For the existing temporary difference, it is assumed that the difference will reverse the first year the difference begins reversing.

Determine the amounts necessary to record income taxes for 2018 and prepare the appropriate journal entry.

National Savings as it stands today is one of the primeval institutions in the country with a legacy of more than 140 years. It has the powers to formulate policies and execute various National Savings Schemes (NSS). So far, it has not only remained successful in promoting financial savings in the economy but has also generated requisite funds for the Government to finance the budgetary deficit and infrastructure projects. As a custodian of the nation’s savings, today the National Savings is the largest investment and financial institution in Pakistan with a portfolio of over Rs. 3.4 trillion and more than 7 million valued investors are being served through a large network of 376 branches nationwide controlled by 12 Regional Directorates of National Savings (RDNS) and 4 Zones. Following is the information of two national saving products:

Regular Income Certificates (RICs)
Keeping in view the monthly requirements of the general public, the Regular Income Certificates (RICs) with a maturity period of five years were launched on February 2, 1993. RICs are available in the denominations (par values) of: 50,000/-, Rs. 100,000/-, Rs. 500,000/-, Rs. 1,000,000/-, Rs.5,000,000/-, Rs.10,000,000/. Profit is paid on monthly basis started from the date of issue of certificates. RIC can be encashed any time after issuance by the investor subject to the deduction of service charges. If enchased before completion of 1, 2, 3 and 4 years from the date of issue: then 2 %,1.50%, 1%, and 0.50% service charges of the face value shall be deducted. There will no service charges after the completion of 4 years. Historical Rates Remained Applicable on Regular Income Certificates:
From To Coupon Rate (% per year)
01-Jan-19 30-June-19 12.00%
01-July-19 31-Oct-19 12.96%
01-Nov-19 31-Dec-19 10.92%
01-Jan-20 23-Apr-20 10.56%
24-Apr-20 Till Date 8.28%

Special Savings Certificates (SSCs)
SSCs with a (maturity period of three years) was launched on February 4, 1990 that offers a unique investment opportunity for small and medium savers to meet their periodic financial needs. SSCs are available in the denomination of 500/-, Rs.1000/-, Rs. 5,000/-, Rs. 10,000/-, Rs. 50,000/-, Rs. 100,000/-, Rs. 500,000/-, Rs. 1,000,000/- Profit is payable on the completion of each period of six months. SSCs is encashable by the investor at par any time after the date of purchase. However, no profit is payable if the encashment is made before completion of six months and no service charges shall be deducted for the encashment of these certificates. Historical Rates Remained Applicable on Special Saving Certificates:
From To Coupon Rate (% per year)
01-Jan-19 30-June-19 11.40%
01-July-19 31-Oct-19 12.70%
01-Nov-19 23-Apr-20 11.00%
24-Apr-20 Till Date 8.60%

The bonds can be purchased by depositing cash at the Issuing Office or by presenting a cheque/ draft/ pay-order. The Certificate shall be issued immediately against the cash payment. However, in case of deposit through cheque/ draft/ pay-order, the Certificate shall be issued with effect from the date of realization of the cheque/ draft/ pay-order after receiving the clearance advice.

1. Assuming that you are have 200,000 to invest and you will invest 50% in RIC and 50% in SSC and you plan to purchase only two bonds, which par value bonds will you purchase? (1 mark)

2. You purchased the bonds on 1st April 2019 and the bonds are issued at par value, calculate the yield to maturity (YTM) of both bonds? (hint: the bond’s market price is the par value)

3. Calculate the bond values 1 year after the issue on 1st April 2020, assuming that YTM is not constant and all new bonds are being issued at par.

4. Justify the bond values calculated in the previous part?

5. If the investor decided to encash both bonds after completion of the second year. What will be their cash flows?

6. Evaluate the relevance of the three types of risk for both bonds.

The multiple regression model is estimated in Excel and part of the output is provided below.

Question 8 (1 point)

Use the information from the ANOVA table to complete the following statement.

To test the overall significance of this estimated regression model, the hypotheses would state

there is    between attendance and the group of all explanatory variables, jointly.

there is    between attendance and the group of all explanatory variables, jointly.

The test statistic is calculated as

   /    =   ,

which follows an F distribution with    numerator and    denominator degrees of freedom. Based on the p-value of 0.272, we    the null hypothesis at a 5% level of significance, meaning that the relationship between attendance and the collective group of explanatory variables    statistically significant.

Word Bank:

85052151is not1.33no significant relationship3.39E+081.13E+0836.46E+09reject767980a significant relationshipfail to rejectis

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QUESTION 33

1. The level of frictional unemployment is determined by

   		the flows of people into and out of employment.
   		the duration of the spells of unemployment.
   		the level of excess demand.
   		technological changes

2 points   

QUESTION 34

1. Employment contracts for the majority of American workers take the form of

   		formal documents precisely specifying in advance the obligations of each party
   		oral agreements that can be legally enforced when necessary.
   		a broad set of informal understandings between each party.
   		collective bargaining agreements made between an employer and a union.

2 points   

QUESTION 35

1. Suppose that the compensating differential associated with working in a noisy workplace is

   $500 per year. This $500 payment can be interpreted as

   		the amount sufficient to attract any worker to the noisy environment.
   		the amount that the marginal worker is willing to pay for a quiet environment.
   		the minimum amount necessary to attract a worker to the noisy environment
   		the most that any worker would pay for a quiet work environment.

2 points   

QUESTION 36

1. Demand deficient unemployment results from

   		a general slowdown in business activity.
   		real wages being inflexible downward
   		changes in the skills required of workers.
   		Both a and b

Parker, Inc., acquires 70 percent of Sawyer Company for $420,000. The remaining 30 percent of Sawyer’s outstanding shares continue to trade at a collective value of $174,000. On the acquisition date, Sawyer has the following accounts:

The buildings have a 10-year remaining life. In addition, Sawyer holds a patent worth $140,000 that has a five-year remaining life but is not recorded on its financial records. At the end of the year, the two companies report the following balances:

1. Assume that the acquisition took place on January 1. What figures would appear in a consolidated income statement for this year?

2. Assume that the acquisition took place on April 1. Sawyer’s revenues and expenses occurred uniformly throughout the year. What amounts would appear in a consolidated income statement for this year?

Parker, Inc., acquires 70 percent of Sawyer Company for $420,000. The remaining 30 percent of Sawyer’s outstanding shares continue to trade at a collective value of $174,000. On the acquisition date, Sawyer has the following accounts:

The buildings have a 10-year remaining life. In addition, Sawyer holds a patent worth $140,000 that has a five-year remaining life but is not recorded on its financial records. At the end of the year, the two companies report the following balances:

1. Assume that the acquisition took place on January 1. What figures would appear in a consolidated income statement for this year?

2. Assume that the acquisition took place on April 1. Sawyer’s revenues and expenses occurred uniformly throughout the year. What amounts would appear in a consolidated income statement for this year?

Josephine worked part-time, in substantially the same position, for two nursing homes—St. Pats and West End Villa. She asked West End Villa for significant accommodations and provided a medical note indicating that she could not perform a large majority of her duties there. While investigating her accommodation request, West End Villa contacted St. Pats, asking for information on Josephine’s attendance and work restrictions. St Pats responded, and also sent them a copy of the medical note Josephine had previously provided to St. Pats indicating that she could perform all of the duties of her job without accommodation. Upon finding out about this unauthorized disclosure of her medical information, Josephine—a unionized employee—filed a grievance against St. Pats, seeking monetary damages for breach of her privacy. St. Pats responded that while the disclosure was not permitted under the collective agreement, the information it sent to West End Villa was innocuous since the medical note did not contain any actual diagnosis. In fact, it referred to an absence of medical restrictions.

Is the employer, St Pats, liable for breach of privacy in these circumstances?