Shark Ltd was running a financial business that involved two departments: one department insured risky loans, while the other department lent money. In September 2002, Shark Ltd received a report from its financial adviser that noted that its insurance departments may suffer a huge loss due to rising claims. The report was correct and Shark Ltd ended up paying a number of claims worth $10 million. In February 2003, Shark Ltd registered Safe Pty Ltd. The new company was a wholly owned subsidiary of Shark Ltd. (see Corporations Act for definition). Shark transferred its insurance department to the new company. The new company was running its business from premises leased from Shark Ltd.
Often, the board of directors of Shark Ltd were heard bragging that now they could access all the funds and profits of the new company, Safe Pty Ltd., without being responsible for any of its liabilities. Safe Pty Ltd had a policy to pay monthly dividends to Shark Ltd.
Shark Ltd also appointed all the directors of Safe Pty Ltd. In fact, two of the directors of Shark Ltd (Sam and Jack) were appointed as the only directors of Safe Pty Ltd. Shark Ltd usually devised the policies of Safe Pty Ltd and Sam and Jack implemented these policies. Shark Ltd also provided the initial capital needed for the business run by Safe Pty Ltd. to proceed. The employees in Safe Pty Ltd were allowed to use some of the financial records held by Shark Ltd to assess whether or not they should accept or deny an insurance application.
In 2009, the market suffered huge losses and as a result of this downturn a number of insurance claims were made. However, Safe Pty Ltd had insufficient money to cover all these claims and consequently, the company went under liquidation.
The policy holders would like to know if they can take action against Shark Ltd.
Questions 25 thru 20 refer to Theresa Kearney Corporation whose Income Statement showed Net Income [for book purposes] Before Taxes of $20,000. The tax rate is 25%. [Consider each question as a stand-alone scenario] 25] 25] 27] 29] If Depreciation Expense for tax purposes is $4,000 higher than what was used for book purposes, the entry to record taxes is : A] Income Tax Expense...4,000 Income Tax Payable......4,000 B] Income Tax Expense ..... 4,000 Deferred Tax Asset.......1,000 Income Tax Payable ...... 5,000 C] Di Income Tax Expense ..... 5,000 Income Tax Payable.........5,000 Income Tax Expense ..... 5,000 Deferred Tax Liability.......1,000 Income Tax Payable.........4,000 If book Revenues [correctly] excluded $4,000 of cash collected related to ng year, the entry to record taxes is: Revenue that will be earned in a followi A] Income Tax Expense...5,000 Income Tax Payable......5,000 0] Income Tax Expense ..... 5,000 Income Tax Payable.........6,000 B] Income Tax Expense ..... 5,000 Deferred Tax Asset.......1,000 Income Tax Payable ...... B, 000 Di Income Tax Expense ..... 5,000 Deferred Tax Liability.......2,000 Income Tax Payable.........4,000 If book Revenues included 84,000 that will not be taxable until a following year, the entry to record taxes is: A] Income Tax Expense...4,000 Income Tax Payable ..... 4,000 0] Income Tax Expense ..... 5,000 Income Tax Payable.........5,000 B] Income Tax Expense....4,000 Deferred Tax Asset......1,000 Income Tax Payable ...... 5,000 D] Income Tax Expense ..... 5,000 Deferred Tax Liability.......1,000 Income Tax Payable.........4,000 If the Expenses include 54,000 of items that are permanently deductible for tax purposes, the entry to record taxes Is : A] Income Tax Expense...4,000 0] Income Tax Expense ..... 5,000 Income Tax Payable ..... 4,000 Income Tax Payable.........5,000 B] Income Tax Expense....4,000 D] Income Tax Expense ..... 5,000 Deferred Tax Asset......1,000 Income Tax Payable ...... 5,000 Deferred Tax Liability ..... 1,000 Income Tax Payable.........4,000 Cross hedge ( Part 1 & 2) Part 1 (Warming up) It is the end of May 1997. A cottonseed meal producer in Georgia would have the information about the acreage committed to cotton, and his expected production of cottonseed meal is 1,000 tons. On May 28, 1997, cottonseed meal is trading at the price of $197 per ton in Atlanta. The producer expects cottonseed meal prices to be much lower by the end of October 1997. To protect himself against the falling price, the cottonseed meal crusher decides to cross hedge using soybean meal futures. The May 28 soybean meal futures closing price is $280.30 per ton (CBOT; 1 contract = 100 tons of soybean meal). (Caution: it is not soybeans futures.) The producer decides to place the cross hedge on May 28, 1997. To place the cross hedge, he needs to determine the number of soybean meal futures contracts necessary to offset 1,000 tons of cottonseed meal. The cottonseed meal producer knows the following information. The correlation between the price changes of cottonseed meal and soybeans meal (p) = 0.84. The standard deviation of the price change of cottonseed meal (Oas) = $7.2. The standard deviation of the price change of soybean meal (OAF) = $6.0. Question) Find out the optimal hedge ratio. Question) Compute the optimal number of futures contract. Question) Compute the measure of hedging effectiveness.Required information [The following information applies to the questions displayed below.] Henrich is a single taxpayer. In 2020, his taxable income is $450,000. What is his income tax and net investment income tax liability in each of the following alternative scenarios? Use Tax Rate Schedule, Dividends and Capital Gains Tax Rates for reference. (Do not round intermediate calculations. Leave no answer blank. Enter zero if applicable.) a. All of his income is salary from his employer. X Answer is not complete. Amount Income tax $ 132,295 Net investment income tax Total tax liability $ 132,295Required information {The following information applies to the questions displayed below] Henrich is a single taxpayer. In 2020, his taxable income is $450,000. What is his income tax and net investment income tax liability in each of the following alternative scenarios? Use Tax Rate Schedule, Dividends and Capital Gains Tax Rates for reference. {Do not round intermediate calculations. Leave no answer blank. Enter zero if applicable.) b. His $450,000 of taxable income includes $2,000 of longterm capital gain that is taxed at preferential rates. Income tax Net investment income tax Total tax liability 55 E] QUESTION 11 If neither party has performed its obligations under a contract when a frustrating event occurs, they are both left Where they were before the contract was formed. 0 True 0 False QUESTION 12 Leslie offered to pay Murray $100 a day to show her dog in an upcoming three-day competition. Murray accepted and showed the young male dog, winning best of breed during each day's competition. Leslie paid Murray $300. What is the present status of their contractual arrangement? O a. The payment of the settlement ended the contract. 0 b. The contract terminated by agreement of the parties. O c. The contract has been terminated by performance. 0 d. The termination of the competition frustrated the contract. QUESTION 13 In which situation might a court be inclined to grant an injunction? Q a. where the contract contains a promise not to engage in specied activities 0 b. where thc court wishes to force a party to complete thcir performancc of the contract 0 c. where the plaintiff is undeserving of damages C) d. where the plaintiff does not have "clean hands"
