Other Economics Answers

Interim Financial reporting IAS 34 is an old standard that has been in operation for a long time.It is one of the easiest standards to understand. The owner Director of Big Mama Ltd has however no understanding

Big Mama is a manufacturing entity with a 31 December year end The entity had an assessed

loss of N$200 000 for the year ended 31 December 2020. No deferred tax asset has been

recognized for the loss. Big Mama reports on 30 June 2021 on the interim results for the 6 months

then ended. For the first 6 months of the 2020 financial year the company earned N$500 000 and

expects to earn N$600 000 in the remaining 6 months. Assume a tax rate of 32% is applicable in

the Namibian jurisdiction in which Big Mama operates.

3.1 Prepare a Memo to the Director explaining to him the key tax implications of

IAS 34: Interim Financial reporting. In the Memo Calculate the income tax expense to be reported in the interim report for the six Months ended 30 June 2021 in compliance with IAS 34.

The CEO of Allied Products considers R20 000 to be a minimum cash balance for operating purposes. As can be seen from the I/S and B/S below, only R15 000 in cash was available at the end of 2010. Since the company reported a large net income for the year, and also issued bonds and sold long-term investments, the sharp decline in cash is puzzling to the CEO.

2.1 Use the I/S, B/S and attached CFS Spreadsheet to draw up a cash flow statement (CFS) for Allied Products for the year 2010. (22)

Note the following:

− Some of the CFS entries are already calculated and entered on the spreadsheet and must therefore just be transferred to the CFS

− Net cash provided by operating activities (R x 103) = 21 − Net cash used in investing activities (R x 103)= -106

− Net cash used in financing activities (R x 103)= 67

2.2 Briefly explain why the loss on the sale of equipment is recorded as a positive value (R6) and the gain on the sale of long-term (LT) investments is negative (-R20) respectively. (4)

1.2 In 2020, New Horizons Ltd (a hardware retail company) sold 20 000 units of its product and reported net sales of R3 600 000. New Horizons purchased the 20 000 units of its product from its manufacturer in 2020 at an average cost of R400 per unit. Operating expenses (excluding depreciation) for New Horizons Ltd in 2020 were R300 000 and depreciation expense was R150 000. New Horizons had R2 500 000 in debt outstanding throughout all of 2010. This debt carried an average interest rate of 9 percent. Finally, New Horizons’s tax rate was 40 percent. New Horizons’ fiscal year runs from January 1 through December 31. Given this information, construct New Horizons’ 2020 income statement.

2.4 Write a proposal to the Minister of Trade and Industrialisation on how she can empower the youth that are currently street vendors to become big entrepreneurs. Concentrate more on the types of products she should concentrate on and what she should practically do to assist them to grow in their businesses. (8 marks

Discuss the advantages of the command economic system over the capitalist economic system. 

19 Analyzing You are organizing a lemonade stand for

a club's fund-raising event. You have recruited

volunteers to work in the booth. The club will provide:

tables, tableclothes, and two large signs. You have

paid $150 to rent the space for your booth. You have

ordered 1,000 lemons for $200-enough for 1,000

cups of lemonade, which you will sell for a $1.00 per

cup. The vendor can deliver more as you need them,

but you can't return those you've already accepted.

You have purchased 2,000 paper cups for $100.

Miscellaneous items cost an additional $100.

E

Na

(b)      Ten students got the following percentage of marks in Economics and Statistics.

Apply KARL PEARSON’S method Calculate the coefficient of correlation.

1.    Given the utility function of the form: U (x, y) = 4x² + 3xy + 6y²: maximize utility subject to the budget constraint: x + y = 56. Then find the utility maximizing level of output x and y?

Assume a wheat producing farmer engaging in selling its product under perfect competition market faces cost functions as TC= Q3 -2Q2 +8Q and Average revenue of the farmer is given as Birr 8. Having this information, A. Determine the optimal level of output and price in the short run. B. Calculate the economic profit (loss) the farmer will obtain (incur) C. What will be the minimum price level the farmer gets to continue in wheat production?