1.The 2020 Q2 unemployment rate in New Zealand was 4.0%. This represented 110,000 unemployed individuals. If the working-age population (adult, civilian, non-institutionalized) was 3,980,000, calculate the labor force participation rate.

2.The 2020 Q2 unemployment rate in New Zealand was 4.0%. This represented 110,000 unemployed individuals. If the working-age population (adult, civilian, non-institutionalized) was 3,980,000, calculate the number of employed individuals.

3.Between July and September of 2018, New Zealand's real disposable income increased from 61.3 billion NZD to 61.9 billion NZD. During that same period, New Zealand's real consumption increased from 38.9 billion NZD to 39.2 billion NZD.Calculate the MPC for New Zealand

Below is the net income of Blue Instrument Co., a private corporation, computed under the three inventory methods using a periodic system.

(Ignore tax considerations.)

(a) Assume that in 2021 Blue decided to change from the FIFO method to the average-cost method of pricing inventories. Prepare the journal entry necessary for the change that took place during 2021, and show net income reported for 2018, 2019, 2020, and 2021.

(b) Assume that in 2021 Blue, which had been using the LIFO method since incorporation in 2018, changed to the FIFO method of pricing inventories. Prepare the journal entry necessary to record the change in 2021 and show net income reported for 2018, 2019, 2020, and 2021.

On 1 July, 2018 Bundoora Ltd acquires 25 per cent of the issued capital of Preston Ltd for a cash consideration of $150,000.

At the date of acquisition, the share capital and retained earnings of Preston Ltd are as follows: Share capital $120,000 and Retained earnings $480,000 (Total Shareholders’ equity $600,000).

Additional information:

• For the year ending 30 June, 2019 Preston Ltd records an after tax profit of $50,000 from which it pays a dividend of $30,000.

• For the year ending 30 June, 2020 Preston Ltd records an after tax loss of $30,000. On 30 June 2020, Preston Ltd declares dividends of $10,000.

• Bundoora Ltd has a number of subsidiaries.

Required:

1. Prepare the journal entries using both the cost and equity methods of accounting in context of parent entity for the investment in Preston Ltd for each of the years ended 30 June 2019 to 2020.                                                                               

Suppose on 31-Dec-2019 you entered into a forward contract to buy one share of stock XYZ for delivery price = L = $50 with delivery date 31-Dec-2020.  You enter t and S(t) into your formula for V(S,t) to figure out today’s value of the contract.  Now suppose you learn to your surprise that interest rates are not constant; they can change in an uncertain way over the time period from today to 31-Dec-2020.

[A]  Assume that today’s stock price and the interest rates that prevail today have not changed.   Will the forward price that you compute today (for delivery date 31-Dec-2020) change because of your revised view that future interest rates are uncertain?

[B]  Will V(S,t), the value of the forward contract, change?  Why or why not?

2. This problem asks you to work through the partial equilibrium analysis of some scenarios involving trade, consumer and producer welfare, and government tariff revenue. (a) Assume that the US does not participate in the international trade of kumquats (a small, citrus fruit) and therefore the kumquats market in the US clears domestically. Use a digram to show how the price (pa) and quantity (qa) traded are determined, and identify consumers’ surplus and producers’ surplus. (b) Assume that now the US opens to international trade to kumquats. The world price of kumquats is lower than the autarky price in the US, prior to trade (pW < pa). Will the US become an importer or an exporter of kumquats? Draw a diagram of the US market consistent with this assumption and discuss the welfare implications for each side of the market. Identify areas representing the welfare change. Is the US better or worse off, as a whole? (c) Redo (b), on a new diagram, but now under the assumption that the world price is higher than US’s autarky one (pW > pa). (d) Go back to the pW < pa case. The US government is considering a tariff on kumquats. Use a diagram for the equilibrium in world markets (hint: MD and XS*) to show the consequences of such a tariff for: i) the volume of international trade, ii) the price in the US market, iii) the price in the World market. Assume that the US is large relative to the rest of the world, when it comes to the demand for kumquats. (e) Redo (d), on a new diagram, under the assumption that the US is small relative to the rest of the world, when it comes to the demand for kumquats. (f) Go back to the large US case. Use a digram for the foreign/RoW market to show which side of the market is better-off and which is worse-off with the US tariff in place. Identify key areas representing welfare changes. (g) Use either a diagram for the US market or for world markets to show that the US can be, overall, better off with an unilateral tariff on kumquats, assuming that the governments in kumquat-exporting countries do not react to this policy. Be sure to identify the tariff revenue that gets collected by the US government. (h) The US is an importer of kumquats and the US government does impose the tariff we previously analyzed. On the other hand, the US is a big exporter of high-tech medical devices. How could foreigns governments react to the US tariff, in order to improve their terms of trade with respect to the US? How would US consumers and producers of medical devices feel about that reaction?

Fresh Ltd. (Fresh) manufactures organic fruit drinks and its year end is December 31, 2020. You are an audit manager of Lea & Bettiol CPAs and are currently planning the audit of Fresh. You attended the planning meeting with the audit engagement partner and CFO last week and made the following notes:

Notes of planning meeting for Fresh

Fresh’s sales have been strong and the company is forecasting revenue of $40 million this year, which is a 25% increase over the prior year. During the year, the company invested significantly in its beverage production process at its factory to ensure it can keep up with the product demand. It also spent $4 million updating, repairing and replacing most of the machinery used in its production process. Because of the significant demand, the company also expanded the number of warehouses it uses to store inventory. It now utilises 15 warehouses; some are owned by Fresh and some are rented from third parties. There will be inventory counts taking place at all 15 of these sites at the year end.

A new accounting general ledger was introduced at the beginning of the year, with the old and new systems being run in parallel for a period of two months. In addition, Fresh spent $1.3 million on developing a new brand of protein drinks. The company started this process in July 2020 and is close to launching their new product into the market.

As a result of the increase in revenue, Fresh recently recruited a new credit manager to collect outstanding receivables. The CFO is sure the new manager will be successful and so he does not think Fresh needs to continue to maintain a general allowance for doubtful accounts and so he has not booked one for 2020.

The CFO stated that there was a problem in the mixing of raw materials within the production process which resulted in a large batch of drinks tasting different. A number of these products were sold; but due to complaints by customers, no further sales of these beverages have been made. No adjustment has been made to the valuation of the damaged inventory, which will still be held at a cost of $1 million at the year end.

As in previous years, the management of Fresh is due to be paid a significant annual bonus based on the value of year-end total assets.

Required:

(a) Using the notes provided, identify and explain SEVEN audit risks

(b) If the auditor determines the engagement is high risk- what does this mean for detection risk and materiality?

(b) Assuming the auditor determines the inventory is overvalued, what would be the impact, if any, on the audit report?

(c) What type of audit procedure would provide the auditor the best evidence for the existence of the inventory? (1 Mark)

In 2019, Lila Done Ltd explored two different areas of interest and spent $340,000 for Area X and $260,000 for Area Y. The results of exploration and evaluation (E&E) activities suggested that Areas X and Y may contain mineral reserves, so the company acquired leases over these two areas. The leases cost $300,000 for each area.

In 2020, Lila Done Ltd commenced a drilling program to evaluate Areas X and Y. Two exploratory wells were drilled in Area X and one in Area Y at a cost of $240 ,000 each. The two wells drilled in Area X indicated that the company had discovered economically recoverable reserves. Management was uncertain about the likelihood of finding economically recoverable reserves for the well in Area Y. Therefore, Lila Done Ltd decided to continue E&E activities in Area Y. After incurring costs of $120 ,000 to confirm the technical feasibility and commercial viability of extracting the mineral resources, development of Area X commenced.

In 2021, to evaluate the area of interest further, three more wells were drilled in Area X. Of these, two were dry. Each well costs $250 ,000. The successful wells in Area X were developed for a total cost of $600,000. After further dry wells costing $150 ,000 were drilled in Area Y, management concluded that Area Y did not contain any commercially viable quantities of mineral resources, so it was abandoned. Assume that the company's financial year starts on 1 January and closes on 31 December.

REQUIRED

Determine what amounts would be recognised as an expense (in the profit or loss) versus capitalised as an asset, in relation to each area of interest for each financial year assuming Lila DoneLtd capitalises successful E&E costs on an area of interest basis (i.e., expenses dry holes).

In recent years, Concord Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below. Machine Acquired Cost Salvage Value Useful Life (in years) Depreciation Method 1 Jan. 1, 2020 $ 96,600 $ 14,000 8 Straight-line 2 July 1, 2021 88,500 12,000 5 Declining-balance 3 Nov. 1, 2021 92,500 8,500 6 Units-of-activity For the declining-balance method, Concord Company uses the double-declining rate. For the units-of-activity method, total machine hours are expected to be 28,000. Actual hours of use in the first 3 years were 2021, 800; 2022, 4,300; and 2023, 6,300. Compute the amount of accumulated depreciation on each machine at December 31, 2023. For Bus #3, calculate depreciable cost per mile under units-of-activity method. Depreciable cost $enter depreciable cost per mile in dollars 3 per mile Accumulated depreciation MACHINE 1 $enter the amount of accumulated depreciation in dollars MACHINE 2 $enter the amount of accumulated depreciation in dollars MACHINE 3 $enter the amount of accumulated depreciation in dollars (Round answer to 2 decimal places, e.g. 0.50.)

On July 1, 2022, Pina Colada Corp. invested $740,160 in a mine estimated to have 771,000 tons of ore of uniform grade. During the last 6 months of 2022, 104,000 tons of ore were mined. (a1) Calculate depletion cost per unit. (Round answer to 2 decimal places, e.g. 0.50.) Depletion cost per unit $enter depletion cost per unit amount in dollar (Round answer to 2 decimal places, e.g. 0.50.)