ECO 372 FINAL EXAM 1. Consider if the government instituted a 10% income tax surcharge. In terms of the AS/AD model this change should have a. shifted the AD curve to the left b. shifted the AD curve to the right c. made the AD curve flatter d. made AD curve steeper 2. If the depreciation of a country’s currency increases it aggregate expenditures by 20, the AD curve will a. shift right by more than 20 b. shift right by less than 20 c. shift right by exactly 20 d. not shift at all 3. Suppose that consumer spending is expected to decrease in the near future.
The rich will pay more than the poor in absolute terms, but the burden of the tax will be no greater on the rich than it is on the poor. For example, a household earning 20 000 euros may pay 10% tax to the government, totalling 2 000 euros. A rich household in the same country pays 10% on its income of 200 000 euros, totalling 20 000 euros in taxes. There is a difference in total value but the proportional burden is the same on the rich household as it is on the poor household. A regressive tax in one in which the percentage decreases as the taxpayers’ income rises.
John Bogle, founder of the Vanguard mutual fund family and father of the index fund, and Warren Buffett, likely the most successful investor of the 20th century, both speak out against high turnover in investment portfolios as an activity that serves only to reduce the returns assets can generate. Mr. Buffett places patience high on his list of qualities that make an investor successful. He is noted for saying that he only buys stocks that he would be satisfied holding if he knew that the stock market was going to be closed for the next ten years. Buffett says that ‐ “I often make more money when I am snoozing than when I am
Let us suppose that the income tax rate for all Americans, regardless of the total income, is 20%. This would mean that someone who makes $10,000 would pay $2,000 dollars in taxes; someone who makes $100,000 would pay $20,000 to the federal government. By default, somebody who makes more money than someone else will pay more money in taxes. The concept of the ratio is meant to be used as a scale; not everyone can pay a fixed amount of money so the ratio takes a percentage of ones income to make it fair for everyone. The amount of money taxed is the same compared to the total income for everyone; hence the definition of a ratio.
However, if we increase the penalty and keep the same level of effectiveness of tax audits, taxpayers who have high income are more honest than those with lower incomes. This result is quite logical; for a low income, even if we increase the punishment, its effect on disposable income of the taxpayer fraud is minimal. Generally, in morocco, based on experts’ confirmation from tax department, the effectiveness of fiscal control is less than 80%, so regarding our theoretical result, tax fraud increases with income. Which mean that the Moroccan government should focus their effort on big companies in order to reduce the effect of tax fraud. However, among the latest legislative decisions of Moroccan government is the decrease of tax rate from 30% to 10% for very small companies.
For financial reporting purposes, the two most popular methods of accelerated depreciation are the declining balance method and the sum-of-the-years’ digits method. For tax purposes, the allowable methods of accelerated depreciation depend on the tax law that the taxpayer is subject to. In the United States, the two currently allowable depreciation methods for tax purposes are both accelerated depreciation methods (ACRS and MACRS). As a simple example, a company buys a generator that costs $1,000 that is expected to last for 10 years. Under the most simple form of depreciation, the company might allocate $100 of the cost of the generator to its expenses every year, until the $1000 capital expense has been "used up."
Hence, the relevant corporate tax rate has to be the effective tax rate and not the statutory tax rate. DeAngelo and Masulis cite the findings of Corcoran2 and Holland and Myers3 based on the time series of effective tax rates, that firms use more debt during inflationary periods. This is because inflation increases the corporate tax rate due to the decrease in the real value of deductions that are based on historical book value. Similarly, Fame4 and Gonedes5 also give indirect evidence on the tax effects of inflation on historical costs. Based on the theoretical hypothesis of DeAngelo and Masulis, the following hypothesis is framed to test the relationship between corporate
Overpayment on acquisition. It is finding by IFRS that the 1, 2, 5 and 6 in the above list are not conceptually part of goodwill, but rather to measurement errors. The two components are regard as part of goodwill are 3 and 4, defined by Johnson and Petrone(p.296) as ‘gonging concern goodwill’ and ‘combination goodwill’. Which two are contribute to the ‘core goodwill’ that IASB referred to determine the way account to goodwill. A journal titled ‘acquisition premium and cost sharing analysis’ on ’International Tax Review’ is finding that Goodwill accounting is specific on analysis of the purchase consideration allocation, allocate acquisition consideration to assets and liabilities acquired.
They should reduce their debt due to high debt to equity ratio and capitalize on their increased market share. Humbolt and Morin should lead the way for Pan Europa since their proposed plans have a large potential return. 1. Using NPV, conduct a straight financial analysis of the investment alternatives and rank the projects. Which NPV of the three should be used?
As stated by US. GAAP, which also showed in exhibit 7, “Revenue and gains are not recognized until realized, realizable or earned.” In our opinion, only when B&L satisfies the three criteria above can the company record an increase in revenue. Now, we are going to explain in details. First of all, by “realized”, it means that entities have the claims to cash or in other words, it is promised to collect money. However, in this case, “B&L has to increase the credit limits of 11 of its distributors and at least one case the limit was increased by more than 100%...placed many of 1 BUSI 610 Case#1