Question:

The issue of bonuses being paid to senior executives has come under media scrutiny as a result of the recent banking royal commission. The article "APRA urged to make CEO bonuses more transparent" by Sally Patten was published in the Australian Financial Review on 7/11/2019 (refer to the document titled Patten (2019)). A central theme in this article is that the Australian Prudential Regulatory Authority (APRA) should ensure that non-financial targets are able to measured appropriately if they are to be used to measure bonuses as part of a plan to impose restrictions on how short-term incentives are paid.

Refer to the article, Patten (2019), as well as other references, and answer the following questions:

1. Explain why APRA wants to impose restrictions on how short-term incentives are paid, referring to arguments which support the regulation of accounting as well as the bonus plan hypothesis of positive accounting theory (PAT);

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2. According to the article, "APRA is proposing to force companies to structure short-term incentives so that at least 50 per cent of senior executives' performance targets such as customer satisfaction, safety and compliance". Explain the purpose of this APRA proposal from the perspective of:

a. Agency problems; and

b. The Efficiency perspective of PAT

3. Explain the comment "If APRA wishes to push forward with its pay recommendations, it should at least ensure that non -financial measures are quantifiable, hence less easy to manipulate" from the opportunistic perspective of PAT.

A project has the following estimated data: Price = $52 per unit; variable costs = $34 per unit; xed costs = $23,500; required return =12 percent; initial investment = $30,000; life = three years. a. Ignoring the effect of taxes. what is the accounting break-even quantity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the cash break-even quantity? (Do not round intermediate calculations and round your answer to 2 decimal places. e.g., 32.16.) c. What is the financial breakeven quantity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What is the degree of operating leverage at the nancial break-even level of output? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) a Accounting break-even quantity _ a Cash break-even quantity _ a Financial breakeven quantity _ _ 4. Next let's assume that the Japanese resident uses his $ 1000 to purchase a computer from a store in the US and then brings it back to Japan. The transaction can be recorded by noting the following (for the US): (a) +$1.000 Financial account, $1.000 Capital account. (b) +$1.000 Financial account, -$1.000 Current account. (0) +$1.000 Current account, -$1.000 Financial account. (d) +$1.000 Financial account, $1.000 Financial account. (e) +$1.000 Capital account, -$1.000 Financial account. Question Completion Status: Moving to the next question prevents changes to this answer. Question 38 A third-party beneficiary is one which does not have privity of contract, but is known to the contracting parties and intended to benefit under the contract. has failed to establish legal standing before the court. may establish legal standing before the court after a contract has been consummated. O does not have privity of contract and is unknown to the contracting parties. Moving to the next question prevents changes to this answer. 20 888 F1 F2 20 FS FT A # % & LA 2 3 4 5 6 8 Q W E R T Y U A S D F G HQUESTION 1 Last week, Ali found Zidane's bag which contained some very important documents. Ali returned the bag to Zidane yesterday. Zidane was so grateful that he promised to pay Ali RM5000. Zidane changes his mind today and decides not to pay Ali. a) Can Zidane claim that there was no consideration for the promise as Ali had already found the bag before the promise was made? Give a reason to your answer. (5 Marks) b) List the all FIVE (5) factors that could vitiate a contract