ACCT5907 INTERNATIONAL FINANCIAL STATEMENT ANALYSIS
Mid-semester Test 2 2012 Sem 1 (Solutions to Analysis Questions (section B) and comments)
General comments (1) Both the analysis questions were taken from the lecture examples, additional exercise, workbook exercises and practice test. Students who had worked through these materials were competent in handling the mid-term test. Students who believe that they did not perform as well as they had expected should going through the lecture materials and workbook more thoroughly before the final exam. You may also want to work through the mid-term 2 to identify the gaps in your understanding. It is important to focus on the topics that you have not achieved an adequate mark. Please see the
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The current statutory tax rate is 30%. Income tax expense for the year ended 31 December 2011 was $169,774. You found out that carrying amounts of the assets and liabilities as at 31 December 2011 are equal to their tax bases except for the following items. These items originate from the same tax jurisdiction. 1. Gross property, plant and equipment is $850,000. Accounting depreciation is $255,000 and tax depreciation is $102,000. 2. Development cost of $300,000 was incurred during the year. It is depreciated over five years for accounting purposes. It is allowed for tax purposes when cash is paid. 3. Interest received in advance $45,000. Interest is taxed on an accrual basis. 4. A long-term loan was secured for $90,000. Interest is charged on 12% per year and is payable at the end of the year. Only cash interest is tax deductible. 5. A provision for restructuring of $40,000 was made in 2011. Restructuring costs are tax deductible when the company incurs the cost. Required (i) Calculate the deferred tax liability (asset) reported by the company as at 31 Dec 2011. Show the carrying amounts and tax bases for the assets or liabilities used in your computation. (15 marks) (ii) You believe that the tax rate will go up to 33% in the near future. You plan to adjust for the higher tax rate in Watts’ 2011 financial statements. Describe four expected
If you work this problem as a group assignment, each group member should be prepared to
2.) Answer the following questions based on a reading of the above document and material from your textbook.
Wells Fargo shows a much higher profitability ratio than Samsung, with over 8X that of Samsung. This is to be expected as services are typically more profitable than hardware sales which operate on leaner margins. Wells Fargo also outperforms Samsung significantly on return on sales with over 25X better performance. This again is attributable to better margins on services than hardware. Wells Fargo has a much stronger return on equity than Samsung with a Dupont ratio over 5X higher than Samsung's. Samsung has a stronger financial leverage ratio than Wells Fargo with almost 20% lower ratio for Samsung. Samsung also has a much lower total asset turnover than Wells Fargo. This is attributable to the quick turnover of assets in the manufacturing industry compared to the slow turnover of assets in the financial services sector.
Use the following information for questions 13-16. You are looking at purchasing a widget producing machine that will cost $11 million which will be salvageable in 9 years for $3 million. The machine will increase revenues by $7.5 million per year and will fall into the 30% CCA bracket. You can lease the machine for $2.75 million per year. Your pre-tax cost of debt is 8.5%. Your corporate tax rate is 35%.
This assignment is intended to ensure you understand some of the basic terms used in this course.
This study guide prepares you for the Final Examination you complete in the last week of the course. It contains practice questions, which are related to each week’s objectives. Highlight the correct response, and then refer to the answer key at the end of this Study Guide to check your answers.
2) In 2013, Firm A paid $50,000 cash to purchase a tangible business asset. In 2013 and 2014, it deducted $3,140 and $7,200 depreciation with respect to the asset. Firm A’s marginal tax rate in both years was 35 percent. Compute Firm A’s adjusted basis in the asset at the end of each year. (part b)
Each study analysis will be 1,000-1,250 words and submitted in one document. As with the assignments in Topics 1-3, this should connect to your identified practice problem of
This study guide will prepare you for the Final Examination you will complete in Week Five. It contains practice questions, which are related to each week’s objectives. In addition, refer to each week’s readings and your student guide as study references for the Final Examination.
Assignment - AFF2491 Company Reporting Semester 1 2013 This assessment task is designed to test a student’s achievement of objectives 1, 2, 3 and 4 (refer to AFF2491 Unit Guide). It is an individual assessment task. This assignment must be handed in for successful completion of this unit. It will contribute 15% towards the final mark in this unit. The assignment consists of: Part B (7 Marks) Accounting for income tax Part C (8 Marks) Consolidation This assignment is due on Friday 10 May 2013 by 5:00pm (Week 9). Students are required to submit a hard copy in the assignment box located at Level 3, Building H, Caulfield Campus.
These amounts of tax savings should be added to the incremental cost savings for each year to come up with the total cash inflows. The present value of all these cash inflows and outflows can be calculated by discounting them at 12.19%. This rate is calculated by assuming that the purchasing power parity holds in this scenario. The company can do the feasibility analysis by looking at both from the subsidiary’s and parent’s perspective by assuming that the purchasing power parity holds. Hence, this rate can be regarded as opportunity cost of investment because it is the second best alternative for the company for investment purposes.
This assignment has a maximum total of 100 marks and is worth 10% of your total grade for this course. You should complete it after completing your course work for Units 1 through 5. Answer each question clearly and concisely.
b) Determine the carrying amount and tax base of the plant at year end. Prepare the
CFA Institute is the premier association for investment professionals around the world, with over 95,000 members in 134 countries. Since 1963 the organization has developed and administered the renowned Chartered Financial Analyst® Program. With a rich history of leading the investment profession, CFA Institute has set the highest standards in ethics, education, and professional excellence within the global investment community, and is the foremost authority on investment profession conduct and practice. Each book in the CFA Institute Investment Series is geared toward industry practitioners, along with graduate-level finance
This paper consists of three questions, which are all included in the total assessment of the exam paper by the following indicative weighting: