Consider the following transactions that take place in 2021. A rancher in Alberta takes $100 worth of inputs to produce animal skin, which she sells to a tanner in Ontario for $700. The tanner produces leather and sells it to a shoemaker in Portugal for $1200. The shoemaker in Portugal produces shoes and sells it to a boutique owner in British Columbia for $2000. The boutique owner in British Columbia sells the shoes for $4000 to its customers. a. What is the change in Canadian GDP as a result of these transactions? For each transaction, explain why it is included or excluded from Canadian GDP. b. Show that the value-added approach and the expenditure approach lead to the same GDP contribution. c. Using this example, explain why GDP is also a measure of a country’s income.

Consider the following transactions that take place in 2021. A rancher in Alberta takes $100 worth of inputs to produce animal skin, which she sells to a tanner in Ontario for $700. The tanner produces leather and sells it to a shoemaker in Portugal for $1200. The shoemaker in Portugal produces shoes and sells it to a boutique owner in British Columbia for $2000. The boutique owner in British Columbia sells the shoes for $4000 to its customers. a. What is the change in Canadian GDP as a result of these transactions? For each transaction, explain why it is included or excluded from Canadian GDP. b. Show that the value-added approach and the expenditure approach lead to the same GDP contribution. c. Using this example, explain why GDP is also a measure of a country’s income.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter16: Tax Research

Section: Chapter Questions

Problem 64DNC

See similar textbooks

Similar questions

- "Jack's T-Shirt Emporioum" produces novelty T-Shirts, with the primary equipment being a screen print machine. a "Jack's" generates $60,000 a year in profit. - Jack (the owner) feels that he could increase sales if he had a new machine with advanced capabilities (e.g. embroidery), so he purchases a new machine for $30,000 (cash). Jack estimates this machine to have an effective useful life of 5 years, and $5,000 residual (salvage) value, so Depreciable Value = $25,000. The new machine will depreciate over 5 years at $5,000 / year. o In this years financial statements, Jack reflects the purchase as a $5,000 expense, thus reducing his profit to $55,000. o Jack will show a $5,000 expense for Machine Purchase over the following 4 years. %3D Quiz#5: In the “Jack's" example, what amount will be recorded in the Cash Flow Statement related to this machine purchase?
A refinisher of antiques named Constance has been so successful with her small business that she is planning to expand her shop. She is going to start enlarging her shop by purchasing the following equipment.(a) What would be the net cost to Constance to obtain this equipment? Assume that she can trade the old equipment in for 15% of its original cost. Assume there has been no inflation in equipment prices. (b) Suggest a green engineering approach to constance for disposing of the solvents and lacquers used in her business.
Handy Ltd is a glove manufacturer in Melbourne. The managers decide to obtain an automated machine worth $1,000,000. As a result of obtaining such a machine, there will be a $100,000 reduction in total expense. The managers are considering the following options: Option 1: Purchase the machine with existing cash at the business bank account, assuming Handy Ltd has sufficient cash at bank. Option 2: The owner contributes the machine to the business. The managers have provided you with following information prior to obtaining the machine: Sales revenue $500,000 $100,000 $400,000 $900,000 $1,500,000 $1,900,000 Net profit Total current liabilities Total liabilities Total current assets Total assets Required: Calculate the Debt (to assets) Ratio, Current Ratio and Net Profit Margin after obtaining the machine if either Option 1 or Option 2 is taken. Option 1 Option 2 Debt (to assets) Ratio Current Ratio Net Profit Margin Handy Ltd has an existing loan agreement with Hilltop Bank, which…
Assume that a person's income directly affects their purchasing power for a particular product. We have a customer named John who has a per capita income of $35,102 that is looking to buy a new car. If the current US population is 335,707,897, the current per capita income is $40,363, and total new car sales in 2022 were $1,131,009,556,950; what would John's per capita spend be for a new car, assuming his income directly affects the amount he can spend?
In the late 1990s, car leasing was very popular in the United States. A customer would lease a car from the manufacturer for a set term, usually two years, and then have the option of keeping the car. If the customer decided to keep the car, the customer would pay a price to the manufacturer, the “residual value,” computed as 60% of the new car price. The manufacturer would then sell the returned cars at auction. In 1999, manufacturers lost an average of $480 on each returned car (the auction price was, on average, $480 less than the residual value).
Lorenzo, the owner of a local poster shop, comes to you for help. While his shop has been breaking even for the past two years, it has not been able to generate a profit. For him to keep the shop open, he needs to earn at least $12,000 in operating income next year. You agree to help Lorenzo and ask him for some current information about his products' selling price and costs. You tell him you will work through some possible scenarios that might involve changing his sales price to generate the number of units sold needed to reach his target profit. Lorenzo shares the following information with you as you ponder different scenarios to help your client. Selling price $7.50 Cost for paper, per unit $0.70 Cost for printing, per unit $1.10 Cost for film, per unit $0.60 Staff salaries $48,000.00 Other operating costs $12,120.00 Using Lorenzo's data and proper Excel formulas, first, plan to get an understanding of Lorenzo's financial situation based on breakeven. Then look at…
A dairy owner is deciding whether or not to invest in new milk machines. The cost of the machines is $100,000. If she purchases the machines, the dairy will earn $30,000 in the first year, $50,000 in the second year, and $60,000 in year 3. What is the NPV of the investment? (Rounded to the nearest whole dollar)
Because of a job change, Seth Armstrong has just relocated to the southeastern United States. He sold his furniture before he moved, so he’s now shopping for new furnishings. At a local furniture store, he’s found an assortment of couches, chairs, tables, and beds that he thinks would look great in his new two-bedroom apartment; the total cost for everything is $6,400. Because of moving costs, Seth is a bit short of cash right now, so he’s decided to take out an installment loan for $6,400 to pay for the furniture. The furniture store offers to lend him the money for 48 months at an add-on interest rate of 6.5 percent. The credit union at Seth’s firm also offers to lend him the money—they’ll give him the loan at an interest rate of 6 percent simple, but only for a term of 24 months. Compute the monthly payments for both of the loan offers. Determine the APR for both loans. Which is more important: low payments or a low APR? Explain.
Because of a job change, Seth Armstrong has just relocated to the southeastern United States. He sold his furniture before he moved, so he's now shopping for new furnishings. At a local furniture store, he's found an assortment of couches, chairs, tables, and beds that he thinks would look great in his new two-bedroom apartment; the total cost for everything is $6,400. Because of moving costs, Seth is a bit short of cash right now, so he's decided to take out an installment loan for $6,400 to pay for the furniture. The furniture store offers to lend him the money for 48 months at an add-on interest rate of 6.5 percent. The credit union at Seth's firm also offers to lend him the money - they'll give him the loan at an interest rate of 10 percent simple, but only for a term of 24 months. Compute the monthly payments for the loan from the furniture store. Round the answer to the nearest cent. $ per month Compute the monthly payments for the loan from the credit union. Round the…
Travel Ltd provides tourism services to both local and foreign tourists in New Zealand. On 1 January 2019, it purchased a piece of land in Mt Eden, Auckland for constructing its permanent office building. The cost of the land was $2,500,000. Because land price was increasing in Auckland, Travel Ltd management believed that the revalued amount of land would provide more useful information to its investors and banks than cost; therefore, they adopted the revaluation model of NZ IAS 16 for land. On 30 June 2019, the company revalued the land to $3,000,000. Land price experienced only a moderate increase in the year ended 30 June 2020. On this date, the company revalued the land upward to $3,100,000. The company’s balance date is 30 June. There was no land revaluation surplus at the beginning of the year ended 30 June 2019. Required 1.Prepare the journal entries required to record the revaluation adjustment for the years ended 30 June 2019 and 30 June 2020. 2.Briefly explain how the…
Robert is the owner of a herring roe farm in Southeast Alaska. He spends $12,000 on a marketing strategy to expand his product in Japan. The initiative results in an additional $23,000 in profits. Robert is happy to see the additional profits, but what ROI should he report to his shareholders?
Suppose that you have been given a summer job as an intern at Issac Aircams, a company that man- ufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately owned, has approached a bank for a loan to help it finance its growth. The bank requires financial statements before approving such a loan. You have been asked to help prepare the financial statements and were given the following list of costs: Depreciation on salespersons’ cars. Rent on equipment used in the factory. Lubricants used for machine maintenance. Salaries of personnel who work in the finished goods warehouse. Soap and paper towels used by factory workers at the end of a shift. Factory supervisors’ salaries. Heat, water, and power consumed in the factory. Materials used for boxing products for shipment overseas. (Units are not normally boxed.) Advertising costs. Workers’ compensation insurance for factory employees. Depreciation on…