Brocklin Ltd (BL) is a retailer with a December 31 year end. The comptroller at BL has recently resigned, and you were hired to assist the senior accountant to prepare the required 20X3 year-end adjustments. Your work is pretty much complete, except for the income tax journal entries that remain to be prepared. You have summarized the relevant information as follows:
1) Income before income taxes amounts to $310,000 for 20X3.
2) At the end of 20X2, BL had a loss carryforward of $80,000. On 31 December 20X2, management considered that it was more probable than not that future taxable income would be sufficient to take advantage of this loss.
3) During 20X3, BL received intercorporate dividends totaling $70,000 which are not taxable.
4) At the beginning of 20X3, the undepreciated capital cost amounted to $950,000 and the carrying value of capital assets was $1,200,000. The amortization expense and capital cost allowance deduction amount respectively to $200,000 and $230,000 for 20X3. There were no acquisitions or disposals of fixed assets in 20X3.
5) In 20X3, the company incurred entertainment costs of $40,000 out of which 50 % is not deductible for tax purposes.
6) BL has introduced a defined benefit pension plan in 20X3. The total costs related to this plan amount to $160,000 for 20X3 and are detailed as follows: Service cost: $150,000; Net interest: $10,000; Remeasurements: $0. The amount deductible for tax purposes corresponds to the contributions of $100,000 made by BL to the plan in 20X3.
7) At the beginning of 20X2, BL signed an operating lease (as a lessee). Annual payments made under this lease contract are $100,000 and are totally deductible for tax purposes. When BL signed this contract, the lessor required an additional lump sum payment of $40,000 which was immediately deductible for tax purposes. For accounting purposes, BL considered this amount as a prepaid rent, and amortizes it over a period of four years. A prepaid rent of $30,000 was reported on the balance sheet at 31 December 20X2.
8) BL made income tax instalments of $60,000 in 20X3. The company also received a tax refund of $20,000 in relation to its tax loss of 20X2. Indeed, part of this loss was carried back to recover income taxes paid in previous years.
9) The tax rate was 30 % in 20X2. On 30 November 20X3, it increased to 35 % and this rate applied to 20X3 fiscal year. On 15 January, government announced another increase in corporate tax rates applicable from 1 January 20X4. As a consequence, BL's tax rate increased to 40 %.
Required
1) Prepare the journal entries to record the income tax expense for 20X3.
2) Prepare the lower part of the income statement for 20X3 that will show the current and future portions of the income tax expense.
3) Provide a partial balance sheet as of 31December 20X3 that will present the accounts and amounts related to income taxes.
4) Provide a partial cash flow statement for 20X3 that will present the accounts and amounts related to income taxes.
5) Prepare the effective tax rate required disclosures for 20X3. Provide this note using percentages.
Question 6 1 pts Rob owns Solar Panels Corporation, He uses Solarl's funds to pay his personal expenses, creates Thermal Power Inc. to engage in the same business as Solar, transfers Solar's assets to Thermal, and petitions Solar into bankruptcy. This most likely warrants O a bonus to Rob for financial maneuvers. O a discharge for Solar in bankruptcy. O a pierce of the corporate veil. O a review of Thermal's articles of incorporation.1. Which one of the following pairs is mismatched? a. Bayesian -- prior probability b. bootstrap = sample with replacement C. Bayesian -- credible interval d. Bayesian -- posterior probability e. Monte Carlo - data simulation f. random variables -- Pearson correlation g. permutation -- sample with replacement h. none of the above 2. Which among the alternatives below, best describes the x, y data in the graph. a, strong negative correlation b. a nonlinear relationship C. no correlation present d. weak positive correlation e. strong positive comelation f. weak negative correlation g. none of the above 3. Which of the following is true about the bivariate normal probability distribution? a. it's a univariate probability distribution b, it's identical to the normal distribution c. it's an assumption of Pearson r method d. it's an assumption of Spearman r method 4. In testing Pearson r for statistical significance, we use the a. non-central F distribution b. Normal distribution c. chi-square distribution d. t-distribution e. bivariate normal distribution 5. Which of the following influences the statistical power of a correlation test a. sample size b. sidedness of test c. alpha d. the chosen, correlation method e. all of the above25. Consider a bivariate data set. We have: N, Mean, SD for both x and for y. With only these descriptive statistics, Pearson r a. can be calculated if N is large b. can be roughly estimated c. can be calculated d. cannot be calculated e. none of the above 26. Note that this is "an empirical question" that can be probed by a call to a power function from package "pwr". How will using a one-sided statistical test of correlation, rather than a two-sided test, impact statistical power, all other factors being equal? a. it will not influence statistical power b. it will increase statistical power c. it depends on alpha d. it depends on the size of r e. it depends on sample size f. it will decrease statistical power g. it depends on the desired level of significance h. none of the above 27. It is common for Pearson correlation to be statistically significant when a. sample size is large b. each variable is a "random variable" c. the Pearson assumptions are not met d. the data were measured with great error e. sample size is small f. the data are not bivariately normal 4. the Pearson assumptions are met h. the data are nonlinear i. none of the above 28. Reflecting modern statistical thought, which of the following is the proper way for correlation to be reported in a paper submitted to a peer-review scientific journal. a. p = 0.072, r = 0.55 b. r 0.05 d. r = 0.55, p = 0.072 e. none of the aboveGuidance to the Debt Manager and Transparency to Stakeholders The debt management strategy (DMS) guides the government's financing choices, set out in the annual borrowing plan (ABP); and for all but the poorest or most fragile countries, a key component of the ABP will be the issuance of domestic securities. The targets of the DMS for the main portfolio risk indicators are an important guide to developing the issuance plan, i.e. the mix, size, and timing of the securities to be issued to meet the gross borrowing requirement implied by the annual budget. Conversely, market constraints on the design of the issuance plan will inform the periodic review and update of the DMS. The debt manager as issuer of government securities must therefore juggle many variables: Objectives for the liability portfolio as expressed in the DMS; . The need to meet the government's financing requirement, taking account also of its profile across the year; The trade-offs between cost and risk implied by different instrument choices interacting with the trade-off expressed in the DMS; The structure of demand, and investors' preferences as evidenced by the yield curve; and The importance of developing the domestic market. Central to these decisions is building liquidity in government securities. The issuer benefits from greater investor demand and potential cost-savings. Investors benefit from reduced risk, and the ability to build a portfolio with the desired cost-risk characteristics. The wider market benefits from the great transparency of prices and yields, and the associated yield curve that is essential to pricing and the hedging of market risk. Developing Secondary Market Liquidity Building liquidity has often proved a challenge. Many domestic government debt markets in EMEs have grown impressively; but performance in the primary market has greatly outstripped that in the secondary market, which has often remained illiquid, with low turnover and little price transparency. Liquidity often suffers from a narrow range of investors and too many small (and therefore illiquid) bonds, which fragment the market. Even where the government is able to issue long-maturity bonds, they are often held by long- term saving institutions that are interested only in holding the bond to maturity to match
