罗森 财政学 第七版(英文版) 配套习题及答案Answers to CHAPTER 5
罗森财政学第七版（英文版）Chap009
罗森财政学第七版（英文版）Chap009CHAPTER 9 – Social Insurance I:Social Security and Unemployment InsuranceMultiple-Choice Questions1. A pay-as-you-go system meansa) you pay for your dinner as you go to the table to eat.b) current working citizens pay for current retired citizens.c) there is no need for taxes since current workers pay for current retirees.d) retirees are paid from accounts that have accumulated with interest over theirworking lives.e) all of the above.2. Asymmetric information generally impliesa) information between parties is not equal.b) all parties are fully informed.c) information is costless.d) information is too costly to transmit.e) a and c.3. A fully funded plan requiresa) you to pay for your dinner as you go to the table to eat.b) current working citizens to pay for current retired citizens.c) no taxes since current workers pay for current retirees.d) retirees to be paid from accounts that have accumulated with interest over theirworking lives.e) all of the above.4. An actuarially fair return meansa) returns on investments are indexed to the stock market.b) returns on investments have to be positive.c) benefits received, on average, would be equal to the premiums paid.d) premiums for insurance are generally paid by the government.e) none of the above.5. When workers save less during their working lives due to the fact that they have beenpaying Social Security taxes, this is known asa) the Social Security effect.b) the wealth substitution effect.c) the bequest effect.d) the life cycle hypothesis.6. The Social Security earnings testa) applies only to workers between 65 and 69 years of age.b) was redesigned in the 1980s to include foreign workers.c) has a tax rate of no more than 16.9 percent.d) does all of the above.7. Social Security pension benefits area) subject to income taxes for those with certain income levels.b) nontaxable for all retirees.c) subject to state, but not federal, income taxes.d) subject to capital gains taxes.e) all of the above.8. The Social Security Administration has which program(s) to administer?a) disability paymentsb) health benefitsc) pensionsd) survivors' benefitse) all of the above9. The percentage of unemployed Americans that actually collects unemployment insurancebenefits isa) 9 percent.b) 18 percent.c) 25 percent.d) 33 percent.10. An earnings test as it relates to Social Security impliesa) benefits are reduced by some predetermined amount for those who have notreached normal retirement age.b) the amount of money earned during the working life of an individual determinesthe amount of benefits received.c) family earnings determine the amount of benefits received.d) all of the above.11. Social security taxes are projected to fall short of benefits starting ina) 2005.b) 2010.c) 2016.d) 2020.e) 2030.12. Social insurance can be justified on the grounds ofa) adverse selection.b) decision-making costs.c) income distribution.d) paternalism.e) all of the above.13. The retirement effect isa) when people retire later than they normally would have due to Social Security.b) when people decide not to retire at all because of problems with Social Security.c) when people retire earlier than they normally would have due to Social Security.d) when people save less for their retirement due to Social Security.e) none of the above.14. The gross replacement rate isa) the proportion of pretax earnings replaced by unemployment insurance.b) a rate of employment in key sectors of the economy.c) the percentage of each paycheck that is removed for unemployment insurance.d) the rate that tax receipts are used to cover tax expenditures.e) none of the above.15. A current worker may save more towards retirement so that he or she will have more toleave his or her children later. This altruistic motive is known as thea) altruism effect.b) bequest effect.c) income effect.d) savings effect.Discussion Questions1. Suppose in the market for labor that the labor supply curveis perfectly inelastic. Thiswould mean that the supply curve is vertical. Furthermore, suppose that demand is normal and downward sloping. Your textbook has explained that unemployment taxes are paid entirely by the employer (demanders). Who actually pays the tax in the scenario described above?2. Suppose that a fresh college grad gets a new job initially paying $20,000 a year. Theemployee gets a 3 percent raise annually. After 5 years of working, the employee quits and never works again. How much will this worker have earned over her brief working career? How much will she have paid in Social Security and Medicare taxes if the tax rate is 7.45 percent?3. Suppose that the ratio of retirees to working citizens is currently 1 to 5, meaning thatthere are 5 working people for every retiree. Suppose that in thirty years the ratio will change to 1 to 2. If benefits remain the same, what will happen to the tax rate assuming retirees are provided benefits in a pay-as-you-go system? How much would benefits decrease if the tax rate remained the same?4. A worker within the middle-income class is preparing to retire. In the year before heretired, his gross monthly earnings are $2,000. His Social Security benefits will be $1,200 per month. Before he retired, his income was subject to a tax of 25 percent. Find his before-tax and after-tax replacement rates.True/False/Uncertain Questions1. Having unemployment insurance available makes people work less.2. The percentage of retired older workers has decreaseddramatically since the introductionof Social Security.3. Social Security benefits have played an important role in the improved economic statusof the elderly over time.4. Unemployment taxes are collected from both employees and employers.5. A pay-as-you-go system of financing Social Security is not as good as a fully fundedsystem.6. A worker can begin receiving benefits as early as age 62.7. Social Security is used to redistribute income.8. Average indexed monthly earnings are derived from the worker’s earnings history anddetermine the primary insurance amount (PIA).9. Having a Social Security program makes people less inclined to save for their ownretirement.10. The gross replacement rate is typically 95% of pretax earnings.Essay Questions1. Work disincentives in the system of Social Security have seen the number of persons inthe program increase dramatically. What incentives could be put in place to reverse, or at least slow, this trend?2. Why should firms in industries with higher levels of turnover be required to pay more inunemployment insurance payments?3. Do you feel that when you retire there will still be Social Security? If so, do you feel thatbenefits will be at present levels or tax rates will have increased? Finally, has this discussion changed your plans regarding your own personal savings for your retirement?Answers to CHAPTER 9 - Social Insurance I:Social Security and Unemployment InsuranceAnswers to Multiple-Choice Questions1. b2. a3. d4. c5. b6. a7. a8. e9. d10. a11. c12. e13. c14. a15. bAnswers to Discussion Questions1. The suppliers of labor (employees) would be totally responsible for the paying the tax,despite the fact that the tax was levied on employers.2. The worker will have earned a total of approximately $106,182. She will have paidapproximately $7,910.59 in taxes.3. Initially, a worker paid for 20 percent of a retiree’s benefits. In the future, the sameworker would be responsible for paying for half of a current retiree’s benefits. If benefits remained the same, then each worker’s tax burden would increase by approximately30 percent of the cost of benefits. If tax rates remained the same, then benefits wouldneed to fall by approximately 60 percent.4. His before-tax replacement rate would be 1,200/2,000 = 0.6. His after-tax replacementrate would be 1,200/1,500 = 0.8.Answers to True/False/Uncertain Questions1. U2. F3. T4. F5. U6. T7. T8. T9. U10. FAnswers to Essay Questions1. Increasing the retirement age would see fewer people in the program. Other solutionsinclude removing the survivor’s benefits and introducing a more stringent wealth threshold that says that those persons with a certain wealth are not allowed to receive benefits.2. The employees in these industries are more likely to need unemployment benefits in thefuture.3. This is a personal question but, as recently as August 2004,the current chairman of theFederal Reserve, Alan Greenspan, has warned that benefits will need to be reduced for future recipients or that there will need to be increases in taxes. Many working adults today are changing their saving patterns because of this outlook.。
第七版答案(翻译-英译中结果)
内容第1章介绍 (1)第二章会计..........................................................在理想的条件7第三章财务报告的决策有用法 (68)第四章......................................................................有效的证券市场129第五章会计信息的价值相关性 (153)第六章决策有用性................................测量方法194第七章........................................................................测量应用237第8章有效的决策有用的契约方法 (285)第九章的分析冲突 (321)第十章高管薪酬 (371)第十一章盈余管理 (425)第十二章标准设置:经济问题 (487)第十三章标准设置:政治问题 (527)版权©2015年皮尔森加拿大公司。
第一章介绍1.1 这本书的目的1.2 一些历史的角度来看1.3 2007-2008年的市场崩盘1.4 有效的合同1.5 关于道德行为的说明1.6 基于规则的与基于原则的会计准则1.7 财务会计和报告信息的复杂性1.8 会计研究的作用1.9 信息不对称的重要性1.10财务会计理论的基本问题1.11监管作为对根本问题的反应1.12本书的组织结构1.12.1理想条件1.12.2逆向选择1.12.3道德风险1.12.4标准设定1.12.5标准设定过程1.13财务会计理论与会计实务的相关性学习目标及建议教学方法1. 这本书的概要我使用图1.1作为模板来描述这本书的大致轮廓。
由于学生们通常没有机会在第一节课上阅读第一章，所以我非常关注这一章的内容。
我讨论的要点是:•理想的会计环境。
在这里，基于现值的会计是很自然的。
我讨论了这种会计基础可行所需的理想条件，但没有详细讨论，因为这个主题在第2章有更深入的讨论。
罗森财政学第七版(英文版)配套习题及答案Chap002
Test Bank to accompany Rosen’s PublicFinance, Seventh Edition Chapter 2CHAPTER 2 - Tools of Positive AnalysisMultiple-Choice Questions1. Positive economicsa) does not depend on market interactions.b) only looks at the best parts of the economy.c) examines how the economy actually works (as opposed to how it should work).d) is very subjective.2. The Law of Demand statesa) that there is an inverse relationship between price and quantity demanded.b) that the judicial branch of government sets demand schedules.c) that laws can have no effect on market economies.d) none of the above.3. The function Y = f(X,Z) meansa) X multiplied by Y equals f.b) X + Y = Z.c) Y is a function of both X and Z.d) none of the above.4. If there is a function and one component is Y3, then there is a ____ in the function.a) square rootb) cubicc) cosined) circlee) all of the above5. Refer to Question 4 above. The equation containing Y3 would bea) linear.b) quadratic.c) a Nash equilibrium.d) inefficient.e) nonlinear.6. Marginal and average taxes area) calculated using the same methodology.b) not used in modern tax analysis.c) not calculated using the same methodology.d) all of the above.77. The slope of a regression line is calculated by dividinga) the intercept by the change in horizontal distance.b) the change in horizontal distance by the change in vertical distance.c) the change in horizontal distance by the intercept term.d) the change in vertical distance by the change in horizontal distance.e) none of the above.8. Unobserved influences on a regression are captured in thea) error term.b) parameters.c) regression line.d) significance term.e) regression coefficient.9. The following can be analyzed using econometrics:a) labor supply.b) market demand.c) tax-setting behavior.d) poverty.e) all of the above.10. Normative economicsa) does not depend on market interactions.b) only looks at the best parts of the economy.c) examines how the economy actually works (as opposed to how it should work).d) embodies value judgments.11. The Latin phrase ceteris paribus meansa) let the buyer beware.b) other things being the same.c) swim at your own risk.d) whatever will be will be.12. The substitution effecta) is when individuals consume more of one good and less of another.b) is associated with changes in relative prices.c) will have no effect if goods are unrelated.d) is all of the above.13. Self-selection bias affects empirical estimation bya) leading to samples that are not representative of the entire population.b) making estimators improved.c) increasing the accuracy of test results.d) doing none of the above.14. When different bundles of commodities give the same level of satisfaction, you area) said to be indifferent between the bundles.b) said to be confused.c) not able to make a decision.d) unhappy with any combination.e) none of the above.15. The marginal rate of substitution isa) the slope of the utility curve.b) the slope of the contract curve.c) the slope of the utility possibilities curve.d) none of the above.Discussion Questions1. Suppose tha t a competitive firm’s marginal cost of producing output q is given byMC=2+2q. Assume that the market price of the firm’s product is $13.a) What level of output will the firm produce?b) What is the firm’s producer surplus?2. Use the following function for elasticity: = -(1/s)(P/X), wheres is the slope of thedemand curve, P is the price, and X is the quantity demanded, tofind elasticity when demand is X d= 22-(1/4)P when the price of good Xis 20.3. Imagine that the demand for concert tickets can be characterized by the equation X d = 7 –P/5. The supply of tickets can be written as X d = -2 + P/5. Find the equilibrium price and quantity of concert tickets.True/False/Uncertain Questions1. Empirical analysis generally deals with theory and little data.2. Economists attempt, with moderate success, to perform controlled experiments makingpolicy analysis helpful.3. Regression coefficients are indicators of the impact of independent variables ondependent variables.4. Primary data sources include information gathered from interviews and experiments.5. Multiple regression analysis typically requires several computers.6. Econometrics is the statistical analysis of economic data.7. Theory is always necessary for empirical research.8. The demand for a good is not affected by the demand for arelated good.9. Equilibrium in the market is where supply is equal to demand.10. A model is a simplified description of some aspect of the economy.Essay Questions1. “S ince the social sciences are not like the natural sciences, experiments are a waste oftime.” Comment on the above statement.2. Discuss the concept in econometrics that states, “garbagein . . . garbage out.”3. It is possible that two different economists can examine the same situation, such asschool funding, and reach entirely different conclusions. Why is this so?。
罗森《财政学》期中考试卷(附答案)
注意：答案按题号顺序写在答题纸上，写在本试卷或草稿纸上一律不给分，考试时间120分钟，满分100分。
一、名词解释（15*1=15分）1．正常品 2．帕累托效率 3．契约曲线 4．边际转换率5．外部性 6．公共物品 7．免费搭车者 8．科斯定理9．庇古税 10．多数票规则 11．投票悖论 12．单峰偏好13．影子价格 14．消费者剩余 15．成本——收益分析二、单选题（20*1=20分）1．下列哪项不属于准实验研究的缺陷？（ ）A ．不能真实模仿处理组的随机分派B ．不是估计政府计划影响的可靠方法C ．能够应用的研究问题有限D ．面临如何将结果推广到其他背景和讨论的问题2．在财政学中，实证研究的一个重要目的是，估计政府政策与某种行为之间的（ ）。
A ．因果关系B ．相关关系C ．统计关系D ．回归关系3．在埃奇沃斯框图中的契约曲线上，所有消费者的（ ）都相等。
A ．帕累托效率B ．边际效用C ．边际替代率D ．边际转换率4．在生产可变的情况下，af af MRT =MRS 是帕累托效率的（ ）。
A ．充分条件B ．必要条件C ．充分必要条件D ．扩展条件5．（ ）告诉我们，竞争的经济会“自动地”实现有效的资源配置，无须任何集权性指导。
A ．政府机械论B ．科斯定理C ．第一福利定理D ．第二福利定理6．政府对产生外部正效应的经济主体进行补贴，带来了各种影响，下面说法错误的是（ ）A ．促进了社会整体福利水平的提高B ．降低了该企业的生产成本C ．降低了该企业的均衡产量D ．有效地纠正了外部性7．（ ）意味着一个人对某物品的消费并不妨碍其他任何人对它的消费。
A ．非干扰性B ．非拒绝性C ．非排他性D ．非竞争性8．在消费理论中，追求效用最大化的个人，使消费品A 对消费品B 的边际替代率等于二者的（ ）。
厦门大学本科课程《财政学》期中试卷＿＿学院＿＿系 年级 ＿＿专业主考教师： 冯俊诚 试卷类型：（A 卷）A．边际效用之比B．边际转换率C．相对效用D．相对价格9．第二福利定理指出，社会通过适当地安排（），然后让人们彼此自由地交易，就可以实现帕累托效率资源配置。
罗森 财政学 第七版(英文版) 配套习题及答案Chap002
CHAPTER 2 - Tools of Positive AnalysisMultiple-Choice Questions1. Positive economicsa) does not depend on market interactions.b) only looks at the best parts of the economy.c) examines how the economy actually works (as opposed to how it should work).d) is very subjective.2. The Law of Demand statesa) that there is an inverse relationship between price and quantity demanded.b) that the judicial branch of government sets demand schedules.c) that laws can have no effect on market economies.d) none of the above.3. The function Y = f(X,Z) meansa) X multiplied by Y equals f.b) X + Y = Z.c) Y is a function of both X and Z.d) none of the above.4. If there is a function and one component is Y3, then there is a ____ in the function.a) square rootb) cubicc) cosined) circlee) all of the above5. Refer to Question 4 above. The equation containing Y3 would bea) linear.b) quadratic.c) a Nash equilibrium.d) inefficient.e) nonlinear.6. Marginal and average taxes area) calculated using the same methodology.b) not used in modern tax analysis.c) not calculated using the same methodology.d) all of the above.7. The slope of a regression line is calculated by dividinga) the intercept by the change in horizontal distance.b) the change in horizontal distance by the change in vertical distance.c) the change in horizontal distance by the intercept term.d) the change in vertical distance by the change in horizontal distance.e) none of the above.8. Unobserved influences on a regression are captured in thea) error term.b) parameters.c) regression line.d) significance term.e) regression coefficient.9. The following can be analyzed using econometrics:a) labor supply.b) market demand.c) tax-setting behavior.d) poverty.e) all of the above.10. Normative economicsa) does not depend on market interactions.b) only looks at the best parts of the economy.c) examines how the economy actually works (as opposed to how it should work).d) embodies value judgments.11. The Latin phrase ceteris paribus meansa) let the buyer beware.b) other things being the same.c) swim at your own risk.d) whatever will be will be.12. The substitution effecta) is when individuals consume more of one good and less of another.b) is associated with changes in relative prices.c) will have no effect if goods are unrelated.d) is all of the above.13. Self-selection bias affects empirical estimation bya) leading to samples that are not representative of the entire population.b) making estimators improved.c) increasing the accuracy of test results.d) doing none of the above.14. When different bundles of commodities give the same level of satisfaction, you area) said to be indifferent between the bundles.b) said to be confused.c) not able to make a decision.d) unhappy with any combination.e) none of the above.15. The marginal rate of substitution isa) the slope of the utility curve.b) the slope of the contract curve.c) the slope of the utility possibilities curve.d) none of the above.Discussion Questions1. Suppose that a competitive firm’s marginal cost of producing output q is given byMC=2+2q. Assume that the market price of the firm’s product is $13.a) What level of output will the firm produce?b) What is the firm’s producer surplus?2. Use the following function for elasticity: = -(1/s)(P/X), where s is the slope of thedemand curve, P is the price, and X is the quantity demanded, to find elasticity when demand is X d= 22-(1/4)P when the price of good X is 20.3. Imagine that the demand for concert tickets can be characterized by the equation X d = 7 –P/5. The supply of tickets can be written as X d = -2 + P/5. Find the equilibrium price and quantity of concert tickets.True/False/Uncertain Questions1. Empirical analysis generally deals with theory and little data.2. Economists attempt, with moderate success, to perform controlled experiments makingpolicy analysis helpful.3. Regression coefficients are indicators of the impact of independent variables ondependent variables.4. Primary data sources include information gathered from interviews and experiments.5. Multiple regression analysis typically requires several computers.6. Econometrics is the statistical analysis of economic data.7. Theory is always necessary for empirical research.8. The demand for a good is not affected by the demand for a related good.9. Equilibrium in the market is where supply is equal to demand.10. A model is a simplified description of some aspect of the economy.Essay Questions1. “Since the social sciences are not like the natural sciences, experiments are a waste oftime.” Comment on the above statement.2. Discuss the concept in econometrics that states, “garbage in . . . garbage out.”3. It is possible that two different economists can examine the same situation, such asschool funding, and reach entirely different conclusions. Why is this so?。
财政学 哈维罗森 第七版 课后习题答案(英文)(2)
Chapter 7 – Income Redistribution: Conceptual Issues1. Utilitarianism suggests that social welfare is a function of individuals’ utilities. Whetherthe rich are vulgar is irrelevant, so this part of the statement is inconsistent with utilitarianism. O n the other hand, Stein’s assertion that inequality per se is unimportant is inconsistent with utilitarianism.2. a. To maximize W, set marginal utilities equal; the constraint is I s + I c = 100.So,400 - 2I s = 400 - 6I c.substituting I c = 100 - I s gives us 2I s = 6 (100 - I s ).Therefore, I s = 75, I c = 25.b.If only Charity matters, then give money to Charity until MU c = 0 (unless all themoney in the economy is exhausted first).So,400-6 I c = 0; hence, I c = 66.67.Giving any more money to Charity causes her marginal utility to become negative,which is not optimal. Note that we don’t care if the remaining money ($33.33) isgiven to Simon or not.If only Simon matters, then, proceeding as above, MU s. 0 if I s = 100; hence, givingall the money to Simon is optimal. (In fact, we would like to give him up to $200.)c.MU s = MU c for all levels of income. Hence, society is indifferent among alldistributions of income.3. The main conceptual problem with the poverty gap is that it doesn’t account fo r theincome effect on labor force participation rates. The poverty gap is calculated assuming there are no behavioral responses; e.g., that labor income would remain unchanged even after the income was transferred to the poor population, but economic theory predicts that this will not be so. In fact, if the poor household were given enough income to bring it out of poverty, we would believe that the household would work less as a result of receiving this transfer. This complicates the analysis, of course, because once the household works less, then it will generate less labor income, thus lowering its overall income. This means that the poverty gap actually understates the amount of money necessary to alleviate poverty in the United States. In addition, the poverty gap is based on the official poverty line, which is thought to be an ad-hoc measure of the true “needs”of a family.4. A day care center is an example of an in-kind compensation. The figure below is similarto Figure 8.2 in the text. The original budget line is G1 H1 If the employee received $5,000 cash, the budget line moves to G2 H2 . An employee who uses the day care center may not be $5,000 better off. The employee consumes at point A, but would be better off at point B, which represents consumption after a cash transfer of $5,000.5. a. This would increase the incomes of the providers of computer equipment and theindividuals who maintain the equipment. In the long run, this might also increasethe incomes of the students who use the equipment. Moreover, giving a laptop toall seventh graders (rather than poor seventh graders) may simply “crowd-out”computer transfers from parents to children. One could imagine that nowadaysmany children do have a computer at home, paid for by the parents. Thisgovernment transfer may simply result in less parental transfer to the child.b.Providing free after-school programs for children in impoverished families largelyacts as an in-kind transfer for poor, working households. The program is of littlevalue for unemployed households, as the alternative would be childcare at home.For those who are employed, and paying for childcare, this program provides analternative and effectively changes the after-tax, after-working-cost wage. Thisalso may affect work behavior on the extensive margin. The likely “losers” fromsuch a program are childcare providers, who see a reduction in demand for theirservices. In principle, this reduction in demand could lower the hourly childcarecost for all workers with children, though this effect is likely to be modest becausemost impoverished families do not have a very large labor force attachment and,thus, their effect on the childcare market as a whole is likely to be small.6. a. False. Society is indifferent between a util to each individual, not a dollar to eachindividual. Imagine that U L=I and U J=2I. Then each dollar given to Jonathanraises welfare more than the same dollar given to Lynne.b. True. The social welfare function assumes a cardinal interpretation of utility sothat comparisons across people are valid.c. False. Departures from complete equality raise social welfare to the extent thatthey raise the welfare of the person with the minimum level of utility. Forexample, with the utility functions U L=I and U J=2I, the social welfare functionW=min[U L,U J] would allocate twice as much income to Lynne than Jonathan.7. Initially the price of food was $2 and the price of other goods was $1. The black marketfor food stamps changes the price of food sold to $1. In Figure 7.2 of the textbook, as one moves to the “northwest” from point F, the segment will now have a slope (in absolute value) of 1 rather than 2. The black market may make the individual better off if the best point on her budget constraint AFD was initially at the corner solution of point F, and the black market certainly does not make her worse off. It is important to note that the black market does not always make the recipient better off. If the (absolute value) of the marginal rate of substitution (MRS) were between 1 and 2, the indifference curve would not “cut” into the new part of the budget constraint with the black market.If the MRS were less than (or equal to) 1 in absolute value, the person would be made better off and would reduce food consumption by selling the food stamps on the black market.Food StampGuarantee Food8. Pareto efficient redistribution is a reallocation of income that increases (or does notdecrease) the utility of all consumers. With these two consumers, Marsha’s utility increases as Sherry’s utility increases. Thus, it may be possible to reallocate income from Marsha to Sherry and raise both of their utility. With Sherry’s initial utility function of U S=100Y S1/2, her utility with $100 of income is U S=100($100)1/2, or U S=1,000. With Marsha’s initial utility function of U M=100Y M1/2+0.8U S, her utility with $100 of income is U M=100($100)1/2+0.8(1,000), or U M=1,800. If the social welfare function is additive, then initial welfare is W=U S+U M=1,000+1,800=2,800. If $36 is reallocated from Marsha to Sherry, then Sherry’s income is now $136 and Marsha’s is now $64. With Sherry’s utility function, her utility with $136 of income is U S=100($136)1/2, or U S=1,166.190.With Marsha’s utility function, her utility with $64 of income is U M=100($64)1/2+0.8(1,166.190), or U M=800+932.952=1,732.952. In this case, Sherry’s utility increases from 1,000 to 1,166.190, while Marsha’s utility falls from 1,800 to 1,732.952. Social welfare increases with this redistribution, going from 2,800 to 2,899.142. Thus, this redistribution increases social welfare, but is not Pareto efficient redistribution.Chapter 8 – Expenditure Programs for the Poor1. a. Note that the figure below shows the correct shape of the budget constraint, butthe numbers themselves are outdated. With a wage rate of $10 per hour,Elizabeth earns $100. Because the deduction in California is $225, none of herearnings are counted against the $645 welfare benefit. Thus, her total income is$745 (=$100+$645).b.The actual welfare benefits collected by a person equals B=G-t(Earnings-D),where B=actual benefits, G=welfare grant, t=tax rate on earned income, andD=standard deduction. Thus, (Earnings-D) is the net earnings that are taxed awayin the form of reduced benefits. When benefits equal zero (B=0), the expressionbecomes 0=G-t(Earnings-D), which collapses to: Earnings=G/t+D. This is knownas the “breakeven formula.” In the California context here, the expressionbecomes Earnings=$645/0.5 + 225, or Earnings=$1,515. With a wage rate of $10per hour, this corresponds to 151.5 hours of work per month.c.The diagram shows the correct shape of the budget constraint, but the “577” figureshould be r eplaced with “645” and the “9” hours should be replaced with “22.5”.d.The diagram above shows one possibility – in this case, Elizabeth is both workingand on welfare – but she collects a reduced welfare benefit in this case.2. One could gather data on the earnings of those in the program, as well as earnings datafrom nonparticipants. Regress the earnings variable on demographic variables and other factors that determine earnings (such as education and experience), and a variable that indicates whether the individual participated in the training program. Factors that affect local employment conditions, such as unemployment levels, may help explain earnings, but they may also explain participation in the program. The econometric strategy should be chosen carefully to account for this.3. If the quantity of leisure consumed by X appears as an argument in the utility function ofY, then X’s consumption of leisure creates an externality. If the externality is negative(i.e., Y likes X to work), then a wage subsidy of X might induce him to work the efficientnumber of hours. Alternatively, a workfare program might achieve the same goal by simply forcing X to work. However, to the extent that the feasible quantity of labor supply is determined less through market incentives now, workfare would be less efficient.4. He participates in the public housing program as long as P1P2ca cef.5. As illustrated below, the budget constraint with food stamps has a “notch” in it, similar tothe analysis of Medicaid in Figure 8.9 of the textbook. At the notch, the marginal tax rate is greater than 100%. One key difference from the figure in the textbook is that the marginal tax rate on earned income for Medicaid is 0% until the “Medicaid notch,” while the marginal tax rate on earned income for food stamps is 24% until the “food stamp notch.” The reason the food stamp notch exists at all is that there is a “gross income test,” where a recipient is ineligible if income is higher than the limit. The characterization in the Rosen textbook on page 189 that “at some point near the poverty line, food stamps worth about $1,250 are suddenly lost” implicitly assumes that childcare costs are quite high. This is likely to be true for many households. In the year 2004, this monthly (annual) gross income limit was $1,994 per month ($23,928 per year) for a family of four, while the monthly guarantee was $471 ($5,652 per year). Assuming the family had earnings at the limit of $1,994 of earnings during the month, and after applying a 20% earnings deduction and a $134 monthly standard deduction, the household would receive a monthly (annual) benefit of $32 ($384). We arrive at this number using the equation B=G-t(E-.2E-D)=471-.3(.8*1994-134)=$471-$438.36=$32.64, which is then rounded down to $32. In this case, B=actual benefits received, G=food stamp guarantee, t=tax rate, E=earnings, and D=standard deduction. Increasing annualearnings by $1 from $23,928 to $23,929 would reduce food stamp benefits from $384 to $0; hence the “food stamp notch.” This notch would be even higher if the household qualified for a childcare deduction, child support deduction, or shelter deduction. The childcare deduction ranges between $175 and $200 per child per month. Assuming this family of four consisted of a mother and three children, each with $175 of monthly childcare costs, then B=G-t(E-.2E-D-C)=471-.3(.8*1994-134-525)=$471-$280.86=$190.14, which is then rounded down to $190. The modification here is that C=childcare costs. This amount corresponds to an annual food stamp benefit of $2,280. Figure 8.5 below draws the budget constraint using annual levels for the food stamp program, using 2004 rules and assumes no childcare expenses.6. For an individual who is not working while on welfare, in this case the highestindifference curve touches the budget constraint on the right vertical axis. Note that the marginal rate of substitution (MRS) does not necessarily equal the after-tax wage rate at the time endowment – rather, it is possible that the person would want to consume more leisure than the time endowment but is obviously constrained from doing so.Leisure$23,928Leisure7.In all cases, the demand curve for housing slopes downward. a. If the price of low income housing gets bid up but there is no increase in the stock of housing, then the supply curve is perfectly inelastic, e.g., vertical.Q 0Q HOUSINGFIGURE 8.7a – Demand curve shiftsb.If there is no increase in the price of housing, but there is an increase in the stockof housing, then the supply curve is perfectly elastic, e.g., horizontal.Q 0Q HOUSINGFIGURE 8.7b – Demand curve shifts Q 1c.If there is an increase in both the price and quantity of housing, then the supplycurve slopes upward.According to Sinai and Waldfogel, there is partial crowding out, consistent with case cabove. Although the underlying housing stock itself is probably quite inelastic in the short-run, the number of rental homes can be more elastic as (potential) landlords convert vacation homes or vacant homes into rental units.8. a.When Eleanor’s hours (earnings) go from 0 to 1,000 ($0 to $8,000), she qualifiesfor an additional earned income tax credit (EITC) worth $3,200 (=0.4*8,000).Thus, her income goes up from $0 to $11,200. Note to instructors – thedistinction between earnings and income may cause confusion in the students’answers. b.When Eleanor’s hours (earnings) go from 1,000 to 1,500 ($8,000 to $12,000), shequalifies for the maximum EITC (according to Figure 8.8 in the textbook). Shereceives the full EITC when her earnings exceed $10,510, at which time the creditequals $4,204 (=0.4*$10,510). The earnings between $10,510 and $12,000 face neither a subsidy nor phase-out from the EITC. Thus, her income goes up from $11,200 to $16,204.c. When Eleanor’s hours (earnings) go from 1,500 to 2,000 ($12,000 to $16,000),she moves into the range where the EITC is phased out. According to Figure 8.8 Q 0Q HOUSINGFIGURE 8.7c – Demand curve shifts outward,Q 1in the textbook, she receives the maximum subsidy of $4,204 until her earningsexceed $14,730. For the marginal earnings between $14,730 and $16,000, theEITC is reduced at a 21.06% tax rate. Thus, her EITC falls by $267.46 from$4,204 to $3,936.54 (=4,204-0.2106*(16,000-14,730)). Her income rises from$16,204 to $19,936.54.Chapter 9 – Social Insurance I: Social Security and Unemployment Insurance1. With adverse selection, insurance contracts with more comprehensive coverage arechosen by people with higher unobserved accident probabilities. To make up for the fact that a benefit is more likely to be paid to such individuals, the insurer charges a higher premium per unit of insurance coverage.2. There are many possible implications of a voluntary Social Security system. Onepossibility is that people would save less for retirement, betting that society would not put up with having great numbers of elderly poor. Part of the effect of the Friedman program, then, would depend on the government's credibility when it promises not to bail out people who do not save enough to survive during retirement.3. Use the basic formula for balance in a pay-as-you-go social security system:t =(N b/N w)*(B/w).Call 1990 year 1 and 2050 year 2. Thent1 = .267*(B/w)1t2 = .458*(B/w)2It follows that to keep (B/w)1=(B/w)2 we require t2/t1=.458/.267=1.71. That is, tax rates would have to increase by 71 percent. Similarly, to keep the initial tax rate constant, we would require (B/w)2/(B/w)1=.267/.458=0.58. Benefits would have to fall almost by half.4. If Social Security benefits are partially taxed for those who have other income over acertain level, then there is an implicit means test in receiving full, untaxed benefits.However, there is no explicit means test for eligibility for the program. Everyone receives benefits, though some recipients must pay some tax on them. Thus, the two statements are somewhat inconsistent with each other.5. Austen’s quote seems like it could relate adverse selection, but perhaps more likely, tomoral hazard. The q uote “If you observe, people always live forever when there is any annuity to be paid them” in a sense sounds like they act differently (e.g., better diet, more exercise, etc.) when an annuity is to be paid –the idea of moral hazard. In contrast, adverse selection suggests that people who expect to live a long time to be the ones who purchase annuities. A recent paper by Finkelstein and Poterba (NBER working paper, December 2000) found that “mortality patterns are consistent with models of asymmetric inf ormation” and that annuity “insurance markets may be characterized by adverse selection.”6. Equation (9.1) relates taxes paid into the Social Security system to the dependency ratioand the replacement ratio, that is, t=(N b/ N w)*(B/w). If the goal of public policy is to maintain a constant level of benefits, B, rather than a constant replacement ratio, (B/w), then taxes may not need to be raised. If there is wage growth (through productivity), then it is possible to maintain B at a constant level, even if the dependency ratio is growing.By rearranging the equation, we can see that B=t*w*(N b/ N w)-1. That is, increases in wage rates (the second term) offset increases in the dependency ratio (the third term).Thus, constant benefits do not necessarily imply higher tax rates.7. The statement about how the different rates of return in the stock market and governmentbond market affect the solvency of the trust fund is false. If the trust fund buys stocks, someone else has to buy the government bonds that it was holding. So, there is no new saving and no new capacity to take care of future retirees.8. Diamond and Gruber’s calculations suggest that the additional year of work (and delayedretirement) lowers the present discounted value of expected Social Security wealth by $4,833. If the adjustment were actuarially fair, Social Security wealth would neither rise nor fall. Since wealth falls, the adjustment is actuarially unfair.9. For those who argue that the scheme for financing Social Security is unfair becausepeople with low earnings are taxed at a higher rate than those with high earnings, the key issue is that the cumulative payroll tax of 12.4 percent is capped for each person, after which the payroll tax is zero (this ignores the 2.9 percent uncapped Medicare tax, however). The earnings ceiling in 2004 is $87,900. Hence, Social Security payroll taxes as a share of earnings fall after the ceiling is passed – thus, the Social Security payroll tax may be thought of as regressive. The opponents to this view note that the above analysis only focuses on taxes paid, not benefits received. As shown in Table 9.3, Social Security redistributes from high earners to low earners, and the formula for the primary insurance amount offers extremely high replacement rates to very low earners, and much lower replacement rates to high earners. Thus, the net tax payment(taxes minus benefits) is likely to be progressive, not regressive. One critical assumption in this kind of analysis is how one computes lifetime benefits –e.g., do we assume that low earners and high earners live the same number of years?10. Let G stand for the individual’s gross earnings. The question assumes that the personfaces a marginal tax rate of 15% and a payroll tax of 7.45%. Thus, the person’s after-tax earnings (denoted by N) are N=(1-t earn-t payroll)G, or N=(1-0.15-0.0745)G, or N=0.7755G.It is assumed that the gross unemployment benefits, U, are equal to 50 percent of before-tax earnings, or U=0.5G. Net unemployment benefits, B, take out income taxes, so B=(1-t earn)U=(1-t earn)0.5G=(1-0.15)0.5G=0.425G. The percentage of the individual’s after-tax income that is replaced by UI is therefore equal to B/N, or 0.425G/0.7755G, which is approximately 54.8%.Unemployment benefits are about 55% of the individual’s previous after-tax income. The effects of unemployment insurance on unemployment area matter of considerable debate. While the high replacement rates from UI may increasethe duration of unemployment, the longer search time may reduce recurrence of unemployment by allowing time for a worker to find a better job match. Empiricalstudies seem to show that the hazard rate into employment spikes up around the time that benefits run out – perhaps suggesting that job matches are not really improving.Chapter 10 – Social Insurance II: Health Care1. The quotation contains several serious errors. First, concern with health care costs doesnot mean that health care is not a “good.” Economists do not care about the cost of health care per se. Rather, the issue is whether there are distortions in the market that lead to more than an efficient amount being consumed. Second, it makes a lot of difference how money is spent. One can create employment by hiring people to dig ditches and then fill them up, but this produces nothing useful in the way of goods and services. Thus, employment in the health care sector is not desirable in itself. It is desirable to the extent that it is associated with the production of an efficient quantity of health care services.2. a. Those who have a relatively high probability of needing the insurance are the oneswho are most likely to buy it. This raises the premium, which in turn, leads toselection by people who have an even higher probability of using it. The cyclecontinues until the price is so high that virtually no one purchases the policy.b.Employer-provided health insurance is deductible to the employer and not taxed tothe employee.c.Because of the tax subsidy, individuals may purchase more than the efficientamount of health insurance. That is, they “over-insure.” An interesting exampleof how the tax system leads to overinsurance is given in a recent Wall StreetJournal (January 19, 2004) article by Martin Feldstein. He gives an example oftwo different California Blue Cross health plans – identical in all respects exceptfor the deductible and annual premiums. The low-deductible plan (the “generous”plan) has a deductible of $500 per family member, up to a maximum of two andan annual premium of $8,460. Thus, the maximum out-of-pocket expense is$1,000. The high-deductible plan (the “less generous” plan) has a deductible of$2,500 per family member, up to a maximum of two, and an annual premium of$3,936. Thus, the maximum out-of-pocket expense is $5,000. Note that thepremium savings of $4,524 actually exceeds the maximum incremental deductiblepayment of $4,000 (which would only occur if the family had very high healthexpenses). In principle, the high deductible plan is unambiguously better. But thetraditional tax rules could lead an employer to choose the low deductible policy.If the employee faced a marginal tax rate of 45% (the sum of federal, state, andpayroll tax rates), then if the $4,524 premium saving was turned into taxablesalary, the individual’s net income would only rise by $2,488. Thus, families withhigh expected medical expenses do better with the “generous” plan, even though itis more costly in terms of premiums.3. a. D d=4.22–(0.044)(50)=2 visits per year.Total expenditure =(2)(50)=$100b.Now the individual pays only $5 per visit.D d = 4.22 – (0.044)(5) = 4 visits, with out-of-pocket costs of $20.Insurance company pays ($45)(4) = $180Total expenditure = $200, double its previous level.4. Examining Figure 10.1, we can see why health care costs increased for the state ofTennessee. As insurance coverage increases, this lowers the cost of medical expenses for those who were previously did not have insurance, which increases the overall amount of medical services they consume. Before receiving insurance, these people demand M o units of medical services, and the amount they pay is represented by the area OP o aM o.But after receiving insurance coverage, they demand M1amounts of medical services, paying only OjhM1, while their insurance pays jP o bh. The increase in insurance payments is sizable for two reasons – first, by providing coverage, it pays for the majority of the already sizable medical expenses incurred by this group, and second, the introduction of insurance makes the group consume even more medical services. In short, if the people who designed the Tennessee program had realized that the demand curve for medical services is downward sloping, they would not have been surprised at the consequences of their program.To explain why HMOs have been unable to contain long-run health care costs, it is necessary to consider the effect of technology on health care costs in the long-term. The inherent problem is that the market for medical care places a large premium on using the latest and most-developed medicines and machinery for treating patients. These technologies tend to be expensive. Hence, while introducing HMOs can lead to a once and for all decrease in the rate of change in health care costs, there is nothing that an HMO can do to lower the cost of continually providing the latest in medical treatments. 5. The goal of making the Medicare prescription drug benefit a one-time, permanentdecision is to reduce the adverse selection problem (no te: the current “Medigap”program operates in this manner to some extent – a senior citizen has choice over all 10 of the Medigap plans for only a short period of time after they turn 65, after which they may be denied based on their health). Imagine a cohort of people turning age 65 and becoming eligible for the Medicare drug benefit. If the decision to enter (or exit) could be made every year, then healthy senior citizens would have a strong incentive to wait until they became unhealthy and needed drugs, and then enter the prescription drug program (presumably resulting in economic losses for the program). Similarly, when people who were collecting the prescription drug benefit became healthy, they would have a strong incentive to “opt-out” of the prog ram. By making the decision opt-in at the beginning or not at all, the healthy younger seniors are likely initially cross-subsidizing the older seniors. Note that this “opt-in at the beginning” works because bad health and older age are positively correlated with each other. If, for example, younger seniors used more drugs (and perhaps older seniors used more inpatient care, etc.), then older seniors could simply stop paying annual premiums and give up their option of being in the program. If this scenario held empirically, this would exacerbate the adverse selection problem and the opt-in scenario would not completely solve the adverse selection problem.6. The budget constraint initially has units of Medigap on the x-axis, and other goods on they-axis. Given initial prices of $1 per unit for each good, and $30,000 of income, the budget constraint has a slope of -1, and the intercepts on both axes are at 30,000 units. It is assumed that the initial utility maximizing bundle consumes 5,000 units of Medigap, hence the indifference curve is tangent at (5000,25000). All of this is illustrated in the figure below.Medigapefficiency units30,000 5,000After the “minimum Medigap” mandate, the consumer can either choose 0 units of Medigap or 8,000 or more units of Medigap. Thus, part of the budget constraint is eliminated (though the overall shape remains the same as before). After the mandate, the point (0,30000) is available, as well as all of the points to the southeast of the point (8000,22000). Clearly, the person’s utility must fall since the preferred choice, (5000,25000) is no longer available. If the person attains a higher level of utility as (0,30000) compared with (8000,22000), the person chooses to not purchase Medigap. In this case, the marginal rate of substitution is no longer equal to the price ratio. This is illustrated below.Medigapefficiency units30,000 5,000 8,000。
罗森 财政学 第七版(英文版) 配套习题及答案Chap004
CHAPTER 4 - Public GoodsMultiple-Choice Questions1. Public goods are characterized bya) nonrivalness.b) excludability.c) the sum of the MRSs equaling MRT.d) all of the above.2. Market mechanisms are unlikely to providea) prices.b) nonrival goods efficiently.c) supply and demand.d) none of the above.3. A pure private good isa) nonrival in consumption and subject to exclusion.b) rival in consumption and subject to exclusion.c) rival in consumption and not subject to exclusion.d) all of the above.4. Commodity egalitarianism refers to commodities thata) are important for most consumers.b) are too dangerous for most consumers.c) should be made available to all consumers.d) are good ideas but never produced.e) are produced in bulk.5. Charging individual prices that are based on consumers’ willingness to pay isa) government price supports.b) will pricing.c) second tier pricing.d) price discrimination.6. Equilibrium for public goods is characterized bya) MSB = MSB.b) MRS = MRT.c) MRS = MRS = MRS=…=MRS = MRT.d) MC = MB.e) MRS – MRT = MSB.7. Summing demand curves horizontally sends market ______________ to individuals,while summing vertically sends market ______________ to individuals.a) price; priceb) quantity; quantityc) quantity; priced) price; quantity8. Public goods can bea) provided privately.b) provided publicly.c) subject to free rider problems.d) all of the above.9. A ________ is a person who wants to enjoy the benefits of a public good withoutcontributing his or her marginal benefit to the cost of financing the amount made.a) free riderb) politicianc) price makerd) price optimizer10. Congestible public goodsa) are nonrival in consumption.b) can not be priced in the market.c) are rival in consumption.d) are never provided by the private sector.11. A private good isa) nonrival in consumption.b) subject to free rider problems.c) subject to exclusion.d) not subject to exclusion.e) none of the above.12. When those that do not contribute to the costs of a public good are denied use, this is acase ofa) exclusion.b) being nonrival.c) price discrimination.d) infeasibility.e) all of the above.13. Which of the following is a public good?a) public defenseb) public televisionc) a libraryd) schoolse) all of the above14. Pure private goods are supplied througha) the market.b) government taxes.c) merit pricing.d) none of the above.15. School vouchers area) provided by the government.b) provided by private organizations.c) public funds to be used for private tuition.d) all of the above.Discussion Questions1. Suppose there are two individuals with identical demand curves characterized by theequation Q = (33/2) – (P/2). What is market demand if these demand curves are added horizontally? Vertically?2. Redo problem 10 of Chapter 4 in your textbook. Assume now that the marginal cost ofgetting snow plowed is now $24.3. Use the answer you found when adding market demand curves vertically in Question 1above to find the market equilibrium quantity if the market supply is constant at 10.4. Suppose you are given the following demand curves: Q = 32 – P and Q = 16 – (P/2).Add these two demand curves vertically and find the market demand curve.5. Suppose there is a public good that has market supply characterized by the equation X =(P/3) – (32/3). Suppose further that market demand for this good can be characterized by the equation X = 25 –P. Find the equilibrium quantity of the public good that will be supplied.True/False/Uncertain Questions1. The free rider problem causes less than optimal production of a public good.2. Pure private goods are nonrival in consumption.3. Most goods that are nonexcludable are pure public goods.4. Vertical summation of demand curves yield results equivalent to those of horizontalsummation.5. Increasing the quantity of a pure public good can be done at zero cost.6. Demand curves for pure public goods satisfy the law of demand.7. Pure public goods involve positive externalities.8. Increases in spending on education will lead to an increase in student performance.9. Privatization means taking services that are supplied by the government and turning themover to the private sector for provision.10. Private goods are always provided by the private sector.Essay Questions1. You have read that the free rider problem affects equilibrium in a public good context.Explain how this situation can be modeled as a prisoner’s dilemma game.2. Discuss and contrast the advantages and disadvantages of public highways versus tollroads.3. Some economists believe that public schools would improve if they were subjected tocompetition. Discuss the pros and cons of this idea.。
国际会计第七版英文版课后答案(第九章)
Chapter 9International Financial Statement AnalysisDiscussion Questions1. a. Business strategy analysisDifficulties in cross-border business strategy analysis: Identifying key profit drivers and business risk in two or more countries can be daunting. Business and legal environments and corporate objectives vary around the world. Many risks (such as regulatory risk, foreign exchange risk, and credit risk) need to be evaluated and brought together coherently. In some countries, sources of information are limited and may not be accurate.b. Accounting analysisDifficulties in accounting analysis: Two issues are important here. The first is cross-country variation in accounting measurement quality, disclosure quality, and audit quality. National characteristics that cause this variation include required and generally accepted practices, monitoring and enforcement, and extent in managerial discretion in financial reporting. The second issue concerns the difficulty in obtaining information needed to conduct accounting analysis. The level of credibility and rigor of financial reporting in Anglo-American countries generally is much higher than that found elsewhere. In fact, financial reporting quality can be surprisingly low in both developed and emerging-market countries.c. Financial analysis (ratio analysis and cash flow analysis)Difficulties in financial analysis: Extensive evidence reveals substantial cross-country differences in profitability, leverage, and other financial statement ratios and amounts that result from both accounting and non-accounting factors. Differences in financial statement items caused by national differences in accounting principles can be significant, and unpredictable in amount. Even after financial statement amounts are made reasonably comparable, interpretation of those amounts must consider cross-country differences in economic, competitive, and other conditions.d. Prospective analysis (forecasting and valuation)Difficulties in prospective analysis: Exchange rate fluctuations, accounting differences, different business practices and customs, capital market differences, and many other factors have major effects on international forecasting and valuation. Application of price multiples in a cross-border setting requires that the determinants of each multiple, and reasons why multiples vary across firms, be thoroughly understood. National differences in accounting principles are one source of cross-country variations in these ratios.Finally, all four stages of business analysis may be affected by:i. information access,ii. timeliness of informationiii. foreign currency issuesiv. differences in financial statement formatsv. language and terminology barriers.2. Here we will consider the information needs of investors, creditors, regulators, and competitors.Investors have high information needs at all stages of business analysis. They need to be able to accurately assess the merits of the company’s business strategy, the quality of its accounting, the company’s financial strength, and its future prospects. Since each step in the business analysis process builds on its predecessors, each step is critical in its turn. It can’t be said that any one step is more or less important than the others.Creditors need to go through much the same analysis, but are advantaged in that through direct contact with the companies they often have more extensive and detailed information than do investors. The goal of analysis is also often somewhat different. Many investors, hoping that their shares will increase in value, are interested in prospective analysis. The creditor’s interest is more often limited to being sure (with a margin of safety) that the loan will be repaid. For the creditor, the accounting analysis, financial analysis, and forecasting, all are important; valuation is less so. Regulators have much different interests. Since regulators have no direct interest in the future earnings of the companies they regulate, a prospective analysis (in most cases) is of limited value to them. However, if regulators need to be aware of the financial strength of the companies they regulate, they will need to conduct accounting analysis and (in many cases) financial analysis, particularly when assessing how much of an economic burden can be imposed on companies resulting from a particular regulation.Competitors are intensely interested in finding out as much about a company as possible. Business strategy analysis of one’s competitors is an important part of formulating one’s own business strategy, especially in terms of assessing strengths and weaknesses. Accounting and financial analysis also can uncover strengths and weaknesses. Prospective analysis may be important if a merger or acquisition is contemplated.3. Information accessibility is a major condition for an efficient capital market, that is, information must be rapidly analyzed and made available to investors capable of acting on it. In the United States and other broadly-based financial markets, a whole industry specializing in information analysis and dissemination has developed. Similar investment analysis services in many non-U.S. capital markets are at an earlier stage of development.4. Investment analysis almost always involves paired comparisons, even if the benchmark alternative is to do nothing. In evaluating the risk and return characteristics of a non-domestic company differences in accounting measures of risk and return are often due as much to differences in measurement rules between countries as they are to real economic differences. Corporate transparency compounds the problem by depriving analysts of information necessary to adjust for national measurement differences. Many analysts consider the disclosure issue to be even more important than measurement differences.5. One way of coping with GAAP differences is to restate foreign accounting measures to an internationally recognized set of principles or the reporting framework of the investor’s home country. An alternative tack is to develop a detailed understanding of accounting practices in the investee’s country.Students will definitely disagree on this one. Eventually some will offer a compromise: use the former coping mechanism if the investee company is being compared with a firm in the investor’s home country and adopt a “multiple principles capability” when comparing the investee company to another company in the same country. Another tack would be to examine who is making the market for the investee’s shares. If local investors are making th e market, one should not ignore local norms. However, if investors in the investor’s country are making the market; e.g., U.S. institutional investors, then restatement to the investor’s home country GAAP makes sense.6. Prospective analysis invo lves forecasting a firm’s future cash flows and then valuing those cash flows. As future cash flow estimates are based on accounting measurements, differences in measurement rules between countries complicate this effort. The range of accounting choicesavailable abroad add to this complexity. However, measurement differences are only one of the variables that complicates prospective analysis, Differences in environmental variables such as rates of inflation, sovereign risk, business practices, and institutions complicate both forecasting and valuation. Different institutions include financial norms, tax regimes and market enforcement mechanisms. In terms of valuation, while P/E multiples may be popular in one country, discounted dividends may be more popular in another. Even if two countries employ the same valuation framework, differences in investment horizons and methods of calculating discount rates/cost of capital will vary.7. Translation of foreign financial statements for the convenience of domestic readers is fundamentally distinct from the translation of branch or subsidiary accounts for purposes of consolidation. In the latter case, translation involves a remeasurement process. In most countries, foreign accounts first are restated to the accounting principles of the parent country prior to restatement to parent currency. Convenience translations merely involve a restatement process in the sense that foreign accounts are multiplied by a constant to change the currency of denomination fro m domestic currency to the currency of the reader’s domicile.8. Rules of thumb can vary substantially from one country to another due to both accounting and non-accounting factors. Japan provides a striking example. Many Japanese companies are members of large trading groups (keiretsu) with large commercial banks at their core. Keiretsu often postpone interest and principal payments, so that long-term debt in Japan works more like equity in the United States. Short-term debt is attractive to Japanese companies because short-term obligations typically have lower interest rates than long-term obligations, and normally are renewed or “rolled over” rather than repaid. Thus, debt has a much different nature and purposein Japan than in the United States.The acid test ratio specifically involves cash, marketable securities and receivables as the numerator in the equation, and current liabilities as the denominator. But what counts as current liabilities versus long-term debt (or how long-term debt is viewed) is very different in Japan than in the U.S. In Japan, high short-term debt is less likely to indicate a lack of liquidity, for the reasons stated above. Banks often are willing to renew these loans because it allows them to adjust their interest rates to changing market conditions. Thus, short-term debt works like long-term debt elsewhere, and Japanese companies can operate successfully with a quick ratio at a level that would be entirely unacceptable in the United States. Note, however, that banking practices in Japan are changing rapidly, and the tolerance in Japan for high levels of debt financing may well decrease in the future.9. Important recommendations include the following:•Be aware that national differences in accounting measurement rules c an add “noise” to reported performance comparisons. The reader should be prepared to unwind accounting differences where necessary.•Use a structured approach, such as the one presented in this chapter, to ensure that all relevant factors are considered.•Cash flow-related measures are less affected by accounting principle differences than are earnings-based measures, thus making them potentially valuable in international analysis.•Audit quality varies dramatically across countries. Become familiar with the level of audit quality in a particular country before reaching conclusions using financialstatements prepared by companies in that country.•Corporate transparency also varies dramatically across countries. Be sure to assess accurately the quality of financial disclosures before reaching conclusions based on them.•Above all, appreciate that measurement and disclosure practices are environmentally based. Appreciation for institutional differences will greatly aid in proper interpretation of accounting based performance and risk measures.10. The following list describes in general fashion what probable effect the Dutch translation practice would have on selected financial ratios in comparison with the temporal method. The analysis assumes that the original financial statements of the two companies are identical in all respects save for the currency translation method used. Inventories are assumed to be carried at cost._________________________________ _______________________________________________ Devaluation ___ R evaluationCurrent ratio (liquidity) decrease increaseInv. At mkt goes downInv at mkt goes upDebt ratio (solvency) increase decreaseLoss goes in ATA so eq. smallerGain in ata eq lrg.Fixed asset turnover (efficiency) increase decreaseNet sales/assets assets smaller so inc.A ssets larger so dec.Return on assets (profitability) increase decreaseloss not in incomeGain not in incomeAs can be seen, the current rate method can have a significant effect on key financial indicators. Accordingly, security analysts must be careful to distinguish between the currency in which a foreign account is denominated and the currency in which it is measured.11. The attest function is what gives credibility to the financial statements. If this function is important in the domestic case, it is even more important internationally where statement readers are separated from the companies they are interested in not only by physical distance but also by cultural distance.12. Internal control is an activity performed by a firm’s int ernal auditors that helps to assure that management’s policies and procedures are being carried out effectively, that financial transactions are being properly reported both internally and externally and that the assets of the firm are safeguarded. Intern al control is relied upon by a firm’s external auditors in determining to what extent their work should replicate the work of the internal auditor. The role of the internal auditor has become even more important in assuring the reliability of management’s financial representations owing to the large number of financial scandals that has rocked the U.S. and other financial markets during the start of this decade. Recent legislation in the U.S., which is increasingly being emulated elsewhere, has made management responsible for assuring that their system of internal controls are not only in place but are working well. This has beennecessary to reduce investor uncertainty regarding the quality and reliability of a firm’s published financial accounts.In the absence of a strong system of internal controls, investors will adopt a more passive approach to investing as opposed to relying on firm-specific information. This involves taking a mutual fund approach to investing which attempts to diversify away information risk, although at the cost of lesser performance.Exercises1. The trend of dividends from a U.S. dollar perspective can be ascertained by translating the peso dividend stream using the $/P exchange rate prevailing at the beginning of the time series or the end. Use of the ending exchange rate provides the following trend data:20X6 ________ 20X7 ________ 20X8 ______Net income (P) 8,500 10,800 15,900Dividends (P mill’s)2,550 3,240 4.770Dividends ($000) 850 1,080 1,590Percentage change --- 27.1% 47.2%2.How the statement of cash flows appearing in Exhibit 9.5 was derived:Beg. Bal. DR. CR. End. Bal.Cash 2,400 3.990New fixed assets 8,500 (3) 2,695 (2) 555 10,640ST $ payable 500 500LT debt 4,800 (3) 1,584 6,384Capital stock 3,818 3,818Retained earnings 1,782 (1) 250 2,030Translation adjustment 1,898Sources Usesof ofFunds FundsSources:Net income (1) 250Depreciation (2) 555Increase in LT debt (3) 1,584Translation adjustment (4) 1,898Uses of funds:Increase in fixed assets (3) 2,6954,287 2,695Net increase in cash 1,5924,287 4,2873. Consolidated Funds Statement(figures appearing in parentheses denote changes due primarily to translation effects) Sources:Net income 250Depreciation 555Increase in LT debt 1,584 (1,584)Translation adjustment 1,898 (1,898)less intercompany payable 138Uses of funds:Increase in fixed assets 2,695 (2,695)Net increase in cash 1,590 (924) The $924 translation effect is that part of the $1,898 gain on the translation of net worth which is related to the translation of cash. It is derived as follows.a. Opening cash of 24,000 krona translated at .10 =$2,400Opening cash retranslated at 12/31 at .133 = 3,192Gain 792b. 6,000 krona increase in cash during the yearinitially translated at .111 =$6666,000 krona retranslated at 12/31 at .133 = 798Gain 132Total translation gain applicable to cash 9244. Yes, Infosys added value for its shareholders as its EVA was a positive RPE 1,540. Operating income more than covered the company’s cost of debt and equity.5. Debit: Cost of goods sold ¥250,000,000Taxes payable 87,500,000Credit Inventories ¥250,000,000Tax expense 87,500,0006. a.20X6 20X7 20X8Sales revenue (£) 23,500 28,650 33,160Sales revenue ($) 49,350 63,030 53,056b. Percentage change 20X7/20X6 20X8/20X7Pounds 21.9% 15.7%Dollars 27.8% -15.8%The two time series do not move in parallel fashion because of changes in exchange rates used to perform the convenience translations.c. This problem can be minimized by translating the time series using the 20X6 exchange rate or by using the 20X8 exchange rate. Trend analysis can also be performed in the local currency.7. a. ROE (per Swedish GAAP) = 4,709/88,338 = 5.3%ROE (per U.S. GAAP) = 3,127/84,761 = 3.7%b. Some students will favor using the ROE based on Swedish GAAP, especially if Volvo’sperformance is being compared with that of another company in Sweden. Others willfavor basing their performance assessment on ROE per U.S. GAAP, especially if Volvois being compared to a U.S. counterpart. The latter at least minimizes the apples tooranges issue. It is not clear which viewpoint is correct, and this question should provoke good discussion of the value of restated accounting numbers.c. Even if students all agreed that an ROE based on U.S. GAAP were preferable, the user ofthis information should take into account all institutional considerations, such asdifferences in tax laws, financial norms and business practices that affect all ratios in the Swedish business environment. In the absence of such analysis, restated ratios are likely to be misinterpreted.8. Assessing reasons for P/E ratio trends and cross-country comparisons is difficult. Thetext discusses two studies that have analyzed differences in P/E ratios between Japan and the United States in the late 1980s. The studies differ greatly in their explanations of the(then) much higher Japanese P/E ratios, and neither study claims to explain more than apart of the difference. Part but not all of the reasons were attributable to accountingmeasurement differences. We suspect that differences in institutional factors probablyexert the dominant reason for observed differences internationally.9. Students answers will naturally vary. However, they should recognize that audit practiceare influenced as much by differences in social, economic and political environments as are measurement standards. They should also recognize that standard setting is as mucha political process as it is a process of logic or sound principles.10. Judging from information provided in Exhibit 9-22, liability cases vary far more bycountry than by auditor – with 35 cases in the U,.S., over twice as many as in the nexthighest country (the U.K., with 17). No audit firms had cases in every country, and thetotal number for each auditor is relatively similar, ranging from 11 (Arthur Andersen) to18 (KPMG). The country where liability cases were least frequent was the Netherlands,with only one case.Why? Laws and regulations in the Anglo-American countries, including the UnitedStates, stress investor protection. This places more liability on the auditor and makes iteasier for companies or shareholders to bring or prove a suit. In response to the threat of litigation, auditors are probably more careful in the United States, and more willing tosubject themselves to strict regulations.Implications? It is reasonable to argue that financial reporting quality is positivelycorrelated with frequency of audit litigation. For example, the patterns of auditorlitigation shown in the table above are consistent with the relatively high financialreporting quality found in the U.S., the U.K., Australia and Canada.11. Student opinions are likely to vary on this one as well. Some will argue for opinionscoined by private professional bodies. Others, in light of Enron, et. al., will opt for more legal opinions. In the end, students should conclude that enforcement mechanisms arealso very important. Recent U.S. indictments of company officers for accountingviolations as well as mandated prison terms is unprecedented. Together with increasing recourse to the courts by aggrieved investors, the imbalance between an auditor’sresponsibility and authority is being redressed.12. Reasonable criteria for judging the merits of a database for company research include(but are not limited to):-coverage (number of companies, countries, years of data).-amount of information for each company (number of financial, market-based measures per company).-reliability, ease of use, language translations, search features.-cost (a re only some of the data “freely available?”).-access and links to other Web sites provided?Case 9-1Sandvik1.a. There are several advantages that accrue to Swedish firms employing the system of special reserves. First, political dividends accrue to firms that align their goals with those of the government. Second, there are tax advantages as expenses recognized in establishing a reserve are tax deductible. Third, the use of reserving allows companies to manage their earnings. Disadvantages include the risk of reducing a company’s reporting credibility with the international investing community. This, in turn, may limit the company’s external financing flexibility.2. The government benefits from the reserving system in that it has ally in maintaining full employment. That is to say, its macroeconomic tool kit is expanded in that it yet another vehicle for managing the economy in addition to monetary and fiscal policy.3. The use of reserves makes it difficult for statement readers who are unfamiliar with Swedish reporting practices to assess the risk and return attributes of the firm. For example, it will not be clear to what extent observed differences in financial ratios between a Swedishcompany and a non-Swedish company are due to accounting differences as opposed to real economic differences in the attributes being measured.4. The use of reserves had a dampening effect on Sandvik’s reported earnings.5. The entries used to increase the reserves can be determined by examining the change in Untaxed Reserves in the balance sheet as well as examining the relevant notes to the financial statements. The entries were:Depreciation expense 172Excess depreciation reserve 172Other expenses 13Other untaxed reserves 136. With reserves Without reservesROS 3,731/15,242 3,731 + 185(1-.03)/15,242= 24.5% = 25.7%ROA 3,731 + 1 + 633 3,731 + 1 + 633 + 185(38,142 + 22,286)/ 2 [(38,142 – 185) + (22,286 + 85)] /2= 14.4% = 15.1%Case 9-2Continental A.G.Students will first gravitate to the notes to the financial statements dealing with Special Reserves and Provisions. Their instincts are correct. The problem facing an external analyst is that it is difficult to determine which of the reserve and provision items are legitimate and which are not. It turns out that two important keys to this case are to be found in footnotes 21 and 22. Focusing on the consolidated figures, we see that Continental is using entries under Other operating income and Other operating expenses to smooth reported earnings. The following analysis backs out 1) Credit to income from the reversal of provisions, 2) Credit to income from the reduction of the general bad debt reserve, and 3) Credit to income from the reversal of special reserves appearing in note 21 and Allocation to special reserves under note 22.Adjustments:19X9Operating income DM68,029Provisions DM33,559General B/D Reserve 2,014Special reserve 32,456Special reserves 1,278Operating income 1,27820X0Operating income DM57,237Provisions DM17,312General B/D Reserves 1,101Special Reserves 38,824Special Reserves 168Operating income 168To determine the net overstatement on an after-tax basis, the students should attempt to approximate Continental’s effective tax rate. Information to do this are contained in footnote 24 and Continental’s income statement.Effective Taxes: 19X9 20X0Income tax 141,476 59,884Income after tax 227,838 93,435Income before tax 369,314 153,319Effective rate: 141,476/369,314 59,884/153,319= 39% = 39%Reduction in taxes:66,751 X .39 57,069 X .39= 26,033 = 22,257Net overstatement:66,751 57,069-26,033 -22,25740,718 34,812This overstatement, as a percentage of reported consolidated earnings, was 18% for 19X9and 37% for 20X0. Dietrich and Marissa have cau se to pay Continental’s CFO a visit.。
国际会计第七版英文版课后答案(第九章)
Chapter 9International Financial Statement AnalysisDiscussion Questions1. a. Business strategy analysisDifficulties in cross-border business strategy analysis: Identifying key profit drivers and business risk in two or more countries can be daunting. Business and legal environments and corporate objectives vary around the world. Many risks (such as regulatory risk, foreign exchange risk, and credit risk) need to be evaluated and brought together coherently. In some countries, sources of information are limited and may not be accurate.b. Accounting analysisDifficulties in accounting analysis: Two issues are important here. The first is cross-country variation in accounting measurement quality, disclosure quality, and audit quality. National characteristics that cause this variation include required and generally accepted practices, monitoring and enforcement, and extent in managerial discretion in financial reporting. The second issue concerns the difficulty in obtaining information needed to conduct accounting analysis. The level of credibility and rigor of financial reporting in Anglo-American countries generally is much higher than that found elsewhere. In fact, financial reporting quality can be surprisingly low in both developed and emerging-market countries.c. Financial analysis (ratio analysis and cash flow analysis)Difficulties in financial analysis: Extensive evidence reveals substantial cross-country differences in profitability, leverage, and other financial statement ratios and amounts that result from both accounting and non-accounting factors. Differences in financial statement items caused by national differences in accounting principles can be significant, and unpredictable in amount. Even after financial statement amounts are made reasonably comparable, interpretation of those amounts must consider cross-country differences in economic, competitive, and other conditions.d. Prospective analysis (forecasting and valuation)Difficulties in prospective analysis: Exchange rate fluctuations, accounting differences, different business practices and customs, capital market differences, and many other factors have major effects on international forecasting and valuation. Application of price multiples in a cross-border setting requires that the determinants of each multiple, and reasons why multiples vary across firms, be thoroughly understood. National differences in accounting principles are one source of cross-country variations in these ratios.Finally, all four stages of business analysis may be affected by:i. information access,ii. timeliness of informationiii. foreign currency issuesiv. differences in financial statement formatsv. language and terminology barriers.2. Here we will consider the information needs of investors, creditors, regulators, and competitors.Investors have high information needs at all stages of business analysis. They need to be able to accurately assess the merits of the company’s business strategy, the quality of its accounting, the company’s financial strength, and its future prospects. Since each step in the business analysis process builds on its predecessors, each step is critical in its turn. It can’t be said that any one step is more or less important than the others.Creditors need to go through much the same analysis, but are advantaged in that through direct contact with the companies they often have more extensive and detailed information than do investors. The goal of analysis is also often somewhat different. Many investors, hoping that their shares will increase in value, are interested in prospective analysis. The creditor’s interest is more often limited to being sure (with a margin of safety) that the loan will be repaid. For the creditor, the accounting analysis, financial analysis, and forecasting, all are important; valuation is less so. Regulators have much different interests. Since regulators have no direct interest in the future earnings of the companies they regulate, a prospective analysis (in most cases) is of limited value to them. However, if regulators need to be aware of the financial strength of the companies they regulate, they will need to conduct accounting analysis and (in many cases) financial analysis, particularly when assessing how much of an economic burden can be imposed on companies resulting from a particular regulation.Competitors are intensely interested in finding out as much about a company as possible. Business strategy analysis of one’s competitors is an important part of formulating one’s own business strategy, especially in terms of assessing strengths and weaknesses. Accounting and financial analysis also can uncover strengths and weaknesses. Prospective analysis may be important if a merger or acquisition is contemplated.3. Information accessibility is a major condition for an efficient capital market, that is, information must be rapidly analyzed and made available to investors capable of acting on it. In the United States and other broadly-based financial markets, a whole industry specializing in information analysis and dissemination has developed. Similar investment analysis services in many non-U.S. capital markets are at an earlier stage of development.4. Investment analysis almost always involves paired comparisons, even if the benchmark alternative is to do nothing. In evaluating the risk and return characteristics of a non-domestic company differences in accounting measures of risk and return are often due as much to differences in measurement rules between countries as they are to real economic differences. Corporate transparency compounds the problem by depriving analysts of information necessary to adjust for national measurement differences. Many analysts consider the disclosure issue to be even more important than measurement differences.5. One way of coping with GAAP differences is to restate foreign accounting measures to an internationally recognized set of principles or the reporting framework of the investor’s home country. An alternative tack is to develop a detailed understanding of accounting practices in the investee’s country.Students will definitely disagree on this one. Eventually some will offer a compromise: use the former coping mechanism if the investee company is being compared with a firm in the investor’s home country and adopt a “multiple principles capability” when comparing the investee company to another company in the same country. Another tack would be to examine who is making the market for the investee’s shares. If local investors are making th e market, one should not ignore local norms. However, if investors in the investor’s country are making the market; e.g., U.S. institutional investors, then restatement to the investor’s home country GAAP makes sense.6. Prospective analysis invo lves forecasting a firm’s future cash flows and then valuing those cash flows. As future cash flow estimates are based on accounting measurements, differences in measurement rules between countries complicate this effort. The range of accounting choicesavailable abroad add to this complexity. However, measurement differences are only one of the variables that complicates prospective analysis, Differences in environmental variables such as rates of inflation, sovereign risk, business practices, and institutions complicate both forecasting and valuation. Different institutions include financial norms, tax regimes and market enforcement mechanisms. In terms of valuation, while P/E multiples may be popular in one country, discounted dividends may be more popular in another. Even if two countries employ the same valuation framework, differences in investment horizons and methods of calculating discount rates/cost of capital will vary.7. Translation of foreign financial statements for the convenience of domestic readers is fundamentally distinct from the translation of branch or subsidiary accounts for purposes of consolidation. In the latter case, translation involves a remeasurement process. In most countries, foreign accounts first are restated to the accounting principles of the parent country prior to restatement to parent currency. Convenience translations merely involve a restatement process in the sense that foreign accounts are multiplied by a constant to change the currency of denomination fro m domestic currency to the currency of the reader’s domicile.8. Rules of thumb can vary substantially from one country to another due to both accounting and non-accounting factors. Japan provides a striking example. Many Japanese companies are members of large trading groups (keiretsu) with large commercial banks at their core. Keiretsu often postpone interest and principal payments, so that long-term debt in Japan works more like equity in the United States. Short-term debt is attractive to Japanese companies because short-term obligations typically have lower interest rates than long-term obligations, and normally are renewed or “rolled over” rather than repaid. Thus, debt has a much different nature and purposein Japan than in the United States.The acid test ratio specifically involves cash, marketable securities and receivables as the numerator in the equation, and current liabilities as the denominator. But what counts as current liabilities versus long-term debt (or how long-term debt is viewed) is very different in Japan than in the U.S. In Japan, high short-term debt is less likely to indicate a lack of liquidity, for the reasons stated above. Banks often are willing to renew these loans because it allows them to adjust their interest rates to changing market conditions. Thus, short-term debt works like long-term debt elsewhere, and Japanese companies can operate successfully with a quick ratio at a level that would be entirely unacceptable in the United States. Note, however, that banking practices in Japan are changing rapidly, and the tolerance in Japan for high levels of debt financing may well decrease in the future.9. Important recommendations include the following:∙Be aware that national differences in accounting measurement rules c an add “noise” to reported performance comparisons. The reader should be prepared to unwind accounting differences where necessary.∙Use a structured approach, such as the one presented in this chapter, to ensure that all relevant factors are considered.∙Cash flow-related measures are less affected by accounting principle differences than are earnings-based measures, thus making them potentially valuable in international analysis.∙Audit quality varies dramatically across countries. Become familiar with the level of audit quality in a particular country before reaching conclusions using financialstatements prepared by companies in that country.∙Corporate transparency also varies dramatically across countries. Be sure to assess accurately the quality of financial disclosures before reaching conclusions based on them.Above all, appreciate that measurement and disclosure practices are environmentally based. Appreciation for institutional differences will greatly aid in proper interpretation of accounting based performance and risk measures.10. The following list describes in general fashion what probable effect the Dutch translation practice would have on selected financial ratios in comparison with the temporal method. The analysis assumes that the original financial statements of the two companies are identical in all respects save for the currency translation method used. Inventories are assumed to be carried at cost._________________________________ _______________________________________________ Devaluation ___ R evaluationCurrent ratio (liquidity) decrease increaseInv. At mkt goes downInv at mkt goes upDebt ratio (solvency) increase decreaseLoss goes in ATA so eq. smallerGain in ata eq lrg.Fixed asset turnover (efficiency) increase decreaseNet sales/assets assets smaller so inc.A ssets larger so dec.Return on assets (profitability) increase decreaseloss not in incomeGain not in incomeAs can be seen, the current rate method can have a significant effect on key financial indicators. Accordingly, security analysts must be careful to distinguish between the currency in which a foreign account is denominated and the currency in which it is measured.11. The attest function is what gives credibility to the financial statements. If this function is important in the domestic case, it is even more important internationally where statement readers are separated from the companies they are interested in not only by physical distance but also by cultural distance.12. Internal control is an activity performed by a firm’s int ernal auditors that helps to assure that management’s policies and procedures are being carried out effectively, that financial transactions are being properly reported both internally and externally and that the assets of the firm are safeguarded. Intern al control is relied upon by a firm’s external auditors in determining to what extent their work should replicate the work of the internal auditor. The role of the internal auditor has become even more important in assuring the reliability of management’s financial representations owing to the large number of financial scandals that has rocked the U.S. and other financial markets during the start of this decade. Recent legislation in the U.S., which is increasingly being emulated elsewhere, has made management responsible for assuring that their system of internal controls are not only in place but are working well. This has beennecessary to reduce investor uncertainty regarding the quality and reliability of a firm’s published financial accounts.In the absence of a strong system of internal controls, investors will adopt a more passive approach to investing as opposed to relying on firm-specific information. This involves taking a mutual fund approach to investing which attempts to diversify away information risk, although at the cost of lesser performance.Exercises1. The trend of dividends from a U.S. dollar perspective can be ascertained by translating the peso dividend stream using the $/P exchange rate prevailing at the beginning of the time series or the end. Use of the ending exchange rate provides the following trend data:20X6 ________ 20X7 ________ 20X8 ______Net income (P) 8,500 10,800 15,900Dividends (P mill’s)2,550 3,240 4.770Dividends ($000) 850 1,080 1,590Percentage change --- 27.1% 47.2%2.How the statement of cash flows appearing in Exhibit 9.5 was derived:Beg. Bal. DR. CR. End. Bal.Cash 2,400 3.990New fixed assets 8,500 (3) 2,695 (2) 555 10,640ST $ payable 500 500LT debt 4,800 (3) 1,584 6,384Capital stock 3,818 3,818Retained earnings 1,782 (1) 250 2,030Translation adjustment 1,898Sources Usesof ofFunds FundsSources:Net income (1) 250Depreciation (2) 555Increase in LT debt (3) 1,584Translation adjustment (4) 1,898Uses of funds:Increase in fixed assets (3) 2,6954,287 2,695Net increase in cash 1,5924,287 4,2873. Consolidated Funds Statement(figures appearing in parentheses denote changes due primarily to translation effects) Sources:Net income 250Depreciation 555Increase in LT debt 1,584 (1,584)Translation adjustment 1,898 (1,898)less intercompany payable 138Uses of funds:Increase in fixed assets 2,695 (2,695)Net increase in cash 1,590 (924) The $924 translation effect is that part of the $1,898 gain on the translation of net worth which is related to the translation of cash. It is derived as follows.a. Opening cash of 24,000 krona translated at .10 =$2,400Opening cash retranslated at 12/31 at .133 = 3,192Gain 792b. 6,000 krona increase in cash during the yearinitially translated at .111 =$6666,000 krona retranslated at 12/31 at .133 = 798Gain 132Total translation gain applicable to cash 9244. Yes, Infosys added value for its shareholders as its EVA was a positive RPE 1,540. Operating income more than covered the company’s cost of debt and equity.5. Debit: Cost of goods sold ¥250,000,000Taxes payable 87,500,000Credit Inventories ¥250,000,000Tax expense 87,500,0006. a.20X6 20X7 20X8Sales revenue (£) 23,500 28,650 33,160Sales revenue ($) 49,350 63,030 53,056b. Percentage change 20X7/20X6 20X8/20X7Pounds 21.9% 15.7%Dollars 27.8% -15.8%The two time series do not move in parallel fashion because of changes in exchange rates used to perform the convenience translations.c. This problem can be minimized by translating the time series using the 20X6 exchange rate or by using the 20X8 exchange rate. Trend analysis can also be performed in the local currency.7. a. ROE (per Swedish GAAP) = 4,709/88,338 = 5.3%ROE (per U.S. GAAP) = 3,127/84,761 = 3.7%b. Some students will favor using the ROE based on Swedish GAAP, especially if Volvo’sperformance is being compared with that of another company in Sweden. Others willfavor basing their performance assessment on ROE per U.S. GAAP, especially if Volvois being compared to a U.S. counterpart. The latter at least minimizes the apples tooranges issue. It is not clear which viewpoint is correct, and this question should provoke good discussion of the value of restated accounting numbers.c. Even if students all agreed that an ROE based on U.S. GAAP were preferable, the user ofthis information should take into account all institutional considerations, such asdifferences in tax laws, financial norms and business practices that affect all ratios in the Swedish business environment. In the absence of such analysis, restated ratios are likely to be misinterpreted.8. Assessing reasons for P/E ratio trends and cross-country comparisons is difficult. Thetext discusses two studies that have analyzed differences in P/E ratios between Japan and the United States in the late 1980s. The studies differ greatly in their explanations of the(then) much higher Japanese P/E ratios, and neither study claims to explain more than apart of the difference. Part but not all of the reasons were attributable to accountingmeasurement differences. We suspect that differences in institutional factors probablyexert the dominant reason for observed differences internationally.9. Students answers will naturally vary. However, they should recognize that audit practiceare influenced as much by differences in social, economic and political environments as are measurement standards. They should also recognize that standard setting is as mucha political process as it is a process of logic or sound principles.10. Judging from information provided in Exhibit 9-22, liability cases vary far more bycountry than by auditor – with 35 cases in the U,.S., over twice as many as in the nexthighest country (the U.K., with 17). No audit firms had cases in every country, and thetotal number for each auditor is relatively similar, ranging from 11 (Arthur Andersen) to18 (KPMG). The country where liability cases were least frequent was the Netherlands,with only one case.Why? Laws and regulations in the Anglo-American countries, including the UnitedStates, stress investor protection. This places more liability on the auditor and makes iteasier for companies or shareholders to bring or prove a suit. In response to the threat of litigation, auditors are probably more careful in the United States, and more willing tosubject themselves to strict regulations.Implications? It is reasonable to argue that financial reporting quality is positivelycorrelated with frequency of audit litigation. For example, the patterns of auditorlitigation shown in the table above are consistent with the relatively high financialreporting quality found in the U.S., the U.K., Australia and Canada.11. Student opinions are likely to vary on this one as well. Some will argue for opinionscoined by private professional bodies. Others, in light of Enron, et. al., will opt for more legal opinions. In the end, students should conclude that enforcement mechanisms arealso very important. Recent U.S. indictments of company officers for accountingviolations as well as mandated prison terms is unprecedented. Together with increasing recourse to the courts by aggrieved investors, the imbalance between an auditor’sresponsibility and authority is being redressed.12. Reasonable criteria for judging the merits of a database for company research include(but are not limited to):-coverage (number of companies, countries, years of data).-amount of information for each company (number of financial, market-based measures per company).-reliability, ease of use, language translations, search features.-cost (a re only some of the data “freely available?”).-access and links to other Web sites provided?Case 9-1Sandvik1.a. There are several advantages that accrue to Swedish firms employing the system of special reserves. First, political dividends accrue to firms that align their goals with those of the government. Second, there are tax advantages as expenses recognized in establishing a reserve are tax deductible. Third, the use of reserving allows companies to manage their earnings. Disadvantages include the risk of reducing a company’s reporting credibility with the international investing community. This, in turn, may limit the company’s external financing flexibility.2. The government benefits from the reserving system in that it has ally in maintaining full employment. That is to say, its macroeconomic tool kit is expanded in that it yet another vehicle for managing the economy in addition to monetary and fiscal policy.3. The use of reserves makes it difficult for statement readers who are unfamiliar with Swedish reporting practices to assess the risk and return attributes of the firm. For example, it will not be clear to what extent observed differences in financial ratios between a Swedishcompany and a non-Swedish company are due to accounting differences as opposed to real economic differences in the attributes being measured.4. The use of reserves had a dampening effect on Sandvik’s reported earnings.5. The entries used to increase the reserves can be determined by examining the change in Untaxed Reserves in the balance sheet as well as examining the relevant notes to the financial statements. The entries were:Depreciation expense 172Excess depreciation reserve 172Other expenses 13Other untaxed reserves 136. With reserves Without reservesROS 3,731/15,242 3,731 + 185(1-.03)/15,242= 24.5% = 25.7%ROA 3,731 + 1 + 633 3,731 + 1 + 633 + 185(38,142 + 22,286)/ 2 [(38,142 – 185) + (22,286 + 85)] /2= 14.4% = 15.1%Case 9-2Continental A.G.Students will first gravitate to the notes to the financial statements dealing with Special Reserves and Provisions. Their instincts are correct. The problem facing an external analyst is that it is difficult to determine which of the reserve and provision items are legitimate and which are not. It turns out that two important keys to this case are to be found in footnotes 21 and 22. Focusing on the consolidated figures, we see that Continental is using entries under Other operating income and Other operating expenses to smooth reported earnings. The following analysis backs out 1) Credit to income from the reversal of provisions, 2) Credit to income from the reduction of the general bad debt reserve, and 3) Credit to income from the reversal of special reserves appearing in note 21 and Allocation to special reserves under note 22.Adjustments:19X9Operating income DM68,029Provisions DM33,559General B/D Reserve 2,014Special reserve 32,456Special reserves 1,278Operating income 1,27820X0Operating income DM57,237Provisions DM17,312General B/D Reserves 1,101Special Reserves 38,824Special Reserves 168Operating income 168To determine the net overstatement on an after-tax basis, the students should attempt to approximate Continental’s effective tax rate. Information to do this are contained in footnote 24 and Continental’s income statement.Effective Taxes: 19X9 20X0Income tax 141,476 59,884Income after tax 227,838 93,435Income before tax 369,314 153,319Effective rate: 141,476/369,314 59,884/153,319= 39% = 39%Reduction in taxes:66,751 X .39 57,069 X .39= 26,033 = 22,257Net overstatement:66,751 57,069-26,033 -22,25740,718 34,812This overstatement, as a percentage of reported consolidated earnings, was 18% for 19X9and 37% for 20X0. Dietrich and Marissa have cau se to pay Continental’s CFO a visit.。
财政学_哈维罗森_第七版_课后习题答案
第一章P.164.a.政府对经济的影响增加了。
如果政府规模是由其直接支出来衡量，这项法规不会直接导致政府支出的增加。
然而，这可能会导致较高的遵从成本，并在“规制预算”中得到体现。
b.这项法律可能不会增加政府支出，但遵从这些管制的高昂代价将会增加管制预算。
c.很难说政府对经济的影响是增加了还是减少了，因为难以确定这一现象是反映了政府规模的扩大还是缩小。
一种可能是，GDP保持不变，而政府对商品和服务的购买减少；另一种可能是，政府对商品和服务的购买增加，但增长的比率低于GDP同期增加的比率。
同时还应考虑同期联邦政府的信贷、规制活动以及州和地方的预算等。
d.政府对经济的影响总体上可能并不改变。
如果联邦减少向州和地方政府的补助，联邦预算将要缩减。
然而，如果州和地方政府通过增加税收来抵消这一影响，把各级政府作为一个整体来看，其规模并不会以想象的幅度缩减。
第二章P.327.利用相关软件可以得出结论：赤字和利率之间存在着微弱的负相关关系。
但仅仅5年的数据得到的检验结果并不可靠。
因为货币政策、经济活动的水平等因素都会影响利率。
第三章P.494.a.当社会福利函数为W= UL+UA时，社会无差异曲线是斜率为-1的直线。
就整个社会而言，两人的效用对社会福利的边际贡献是相等的，即社会对二者的效用同等重视。
b. 当社会福利函数为W= UL+2UA时，社会无差异曲线是斜率为-2的直线。
这表明，与利维亚相比，社会两倍重视于奥古斯塔斯的效用。
c．结合效用可能性边界与社会无差异曲线，该种社会福利函数下的两种可能的最优解如下图所示。
ULUL8.当马克的收入的边际效用等于朱迪收入的边际效用时，社会福利最大化。
对已知条件中的两个效用函数求一阶导数，使MU M=MU J，则最大化条件为I J=4I M，因为固定收入是300美元，这意味着马克应该有60美元，朱迪应该有240美元，此时社会福利达到最大化。
10.a.错误。
帕累托效率的必要条件是，两种商品的边际替代率要等于其边际转换率。
罗森 财政学 第七版(英文版) 配套习题及答案Chap012
CHAPTER 12 - Taxation and Income DistributionMultiple-Choice Questions1. Statutory incidence of a tax deals witha) the amount of revenue left over after taxes.b) the amount of taxes paid after accounting for inflation.c) the person(s) legally responsible for paying the tax.d) the amount of tax revenue generated after a tax is imposed.e) none of the above.2. Taxesa) are mandatory payments.b) are necessary for financing government expenditures.c) do not directly relate to the benefit of government goods and services received.d) are all of the above.3. General equilibrium refers toa) examining markets without specific information.b) finding equilibrium from general information.c) pricing goods at their shadow price.d) all of the above.e) none of the above.4. A demand curve that is perfectly inelastic isa) horizontal.b) vertical.c) at a 45 degree angle.d) parallel to the X-axis.5. In 2002, the top 1% of all income earners paid _________ percent of federal taxes.a) 1.0b) 4.1c) 20.6d) 24.9e) 33.36. A tax on suppliers will cause the supply curve to shifta) up.b) down.c) right.d) left.e) in none of the above directions.7. A monopoly has ______ seller(s) in the market.a) 0b) 1c) 3d) manye) all of the above8. An ad valorem tax isa) given as a proportion of the price.b) Latin for “buyer beware.”c) identical to a unit tax.d) computed using the “inverse taxation rule.”9. An industry where the capital-labor ratio is relatively high is characterized asa) capital intensive.b) labor intensive.c) income intensive.d) market intensive.e) none of the above.10. Demand for cigarettes isa) relatively elastic.b) relatively inelastic.c) constant over time.d) greater among wealthier people.11. When marginal tax rates are constant,a) the change in taxes paid is the same as the change in income.b) the change in taxes paid is greater than the change in income.c) the change in taxes paid is less than the change in income.d) there are no taxes.e) none of the above.12. The tax-induced difference between the price paid by consumers and the price receivedby producers isa) the tax difference.b) the tax wedge.c) the statutory incidence.d) the supply side effect.e) the substitution effect.13. An oligopoly has ______ sellers in the market.a) 0b) 1c) 3d) manye) all of the above14. A tax on consumers will cause the demand curve to shifta) right.b) left.c) up.d) down.e) in none of the above directions.15. Partial equilibrium isa) exactly like general equilibrium.b) studying only the supply side of the market.c) studying individual markets.d) examining the demand side of the market.Discussion Questions1. Consider a monopolist who has a total cost curve of: TC=7X+(1/2)X2. The marketdemand equation is X d=386-(1/2)P.a) What are the equilibrium quantity, equilibrium price, and profits in this market?b) Suppose that a unit tax of $1 is placed on the monopolist. What happens to theequilibrium quantity, equilibrium price, and profits? How much tax revenue doesthe government generate?c) Suppose that the same unit tax of $1 is placed on consumers. What happens tothe equilibrium quantity, equilibrium price, and profits? How much tax revenuedoes the government generate?d) What can be said about the taxes?2. Refer to Figure 12.2 in your textbook. Suppose the original before-tax demand curve isX d = 49 – P/2. Suppose further that supply is X = P/2 – 1. Now suppose a $3 unit tax is imposed on consumers.a) What is the before-tax equilibrium price and quantity?b) What is the after-tax equilibrium quantity?c) How much tax revenue is raised?3. From Question 2 above, calculate the economic incidence incurred by producers and theeconomic incidence incurred by consumers.4. Suppose that demand is perfectly elastic. Supply is normal and upward sloping. What isthe economic incidence of a unit tax placed on suppliers?5. Suppose there is a market that has market demand characterized as X = 30 –P/3.Suppose further that market supply can be written as X = P/2 – 2.a) Find the equilibrium price and quantity in this market.b) If a unit tax of $16 is imposed on good X, what are the equilibrium price, quantity,and tax revenue in the market?c) Suppose an ad valorem tax of 30 percent is imposed on good X. The after-taxdemand equation would be X = 30 –P/2. Now find the equilibrium price,quantity, and tax revenue in the market.d) What can be said about the amount of tax revenue generated under each taxingscheme, and why?True/False/Uncertain Questions1. A unit tax is a fixed amount per unit of a commodity sold.2. Regressive tax systems are bad.3. In a general equilibrium model, a tax on a single factor in its use only in a particularsector can affect returns to all factors in all sectors.4. Due to capitalization, the burden of future taxes may be borne by current owners of aninelastically-supplied, durable commodity such as land.5. Even with a tax, the price that consumers pay will be higher than what producers receive.6. Ad valorem taxes create tax wedges just like unit taxes.7. After a price change, the substitution effect will be the same as the income effect.8. Marginal tax rates supply reliable measures of tax progressiveness.9. Unit taxes cause shifts, while ad valorem taxes cause pivots.10. A lump sum tax is one for which the individual’s liability does not depend on behavior. Essay Questions1. In the press, there has been a considerable amount of attention given to the notion ofcorporations being taxed. Explain how it is that a tax on a business could be borne entirely by consumers.2. Why is it the case that a commodity tax on goods like food and shelter is sometimes seenas being regressive?3. What types of goods might have demand curves that are vertical, and why?Answers to CHAPTER 12 - Taxation and Income DistributionAnswers to Multiple-Choice Questions1. c2. a3. e4. b5. d6. d7. b8. a9. a10. b11. e12. b13. c14. b15. cAnswers to Discussion Questions1. a) X* = 153, P* = $466, π = $58522.5b) X* = 152.8, P* = $466.4, π = $58,369.6, Tax Rev. = $152.8c) X* = 152.8, P* = $465.4, π = $58,369.6, Tax Rev. = $152.8d) The tax revenue generated is the same, whether it is levied on the buyers or sellers.2. a) Setting before-tax demand equal to supply gives X* = 24, with P* = $50.b) The after-tax demand curve is now P = 95 –2X. Setting the after-tax demandcurve equal to supply gives X* = 23 ¼.c) Tax revenue is the after-tax equilibrium quantity multiplied by the tax rate.Therefore, 3(23 ¼) = 69 ¾.3. The after-tax consumer price is now $51.5. The after-tax producer price is now $48.5.The before-tax price was $50. The economic incidence for consumers is 1.5(23.25) = $34.875. For producers, it is 1.5(23.25) = $34.875.4. The economic incidence of the tax is paid entirely by the suppliers.5. a) Setting supply equal to demand and solving yields P* = $38.4 and X* = 17.2.b) The after-tax demand curve is now P = 74 –3X. Setting after-tax demand equal tosupply yields X* = 14, P* = $32 for suppliers, and P* = $48 for consumers. Tax revenue is $224.c) Setting the given after-tax demand equal to supply yields P* = $32 for suppliersand P* = $48 for consumers. Tax revenue is $224.d) The tax revenue and prices are the same using either taxing scheme.Answers to True/False/Uncertain Questions1. T2. U3. T4. T5. F6. T7. U8. F9. T10. TAnswers to Essay Questions1. Elasticities play a key role in determining exactly how much of a tax is borne byconsumers and producers.2. Items like food and shelter require a larger percentage of discretionary income for thosein the lower income brackets than for those in higher brackets.3. A demand curve that is vertical is one that is perfectly inelastic. This means that changesin the price do not affect the quantity demanded. Examples of this are certain medical supplies and, to a lesser extent, cigarettes, which have demand curves that are nearly inelastic.。
罗森 财政学 第七版(英文版) 配套习题及答案Chap008
CHAPTER 8 – Expenditure Programs for the Poor Multiple-Choice Questions1. The Earned Income Tax Credit (EITC)a) provides more income to those people on welfare.b) is a tax on low income workers.c) provides additional tax credits to low income workers.d) is a tax break for the wealthiest Americans.e) was eliminated by the Bush administration.2. The switch from AFDC to TANF took place ina) 1937.b) 1986.c) 1996.d) 1998.e) 2003.3. Social Security Income(SSI) is available for all, excepta) aged.b) immigrants.c) blind.d) disabled.4. A dollar reduction in benefits as a result of a dollar income from working is aa) 50% tax rate.b) 75% tax rate.c) 0% tax rate.d) 100% tax rate.5. Who is eligible to receive food stamps?a) poor families without childrenb) childless single menc) childless single womend) all of the abovee) a and c6. Voucher programs for housinga) provide rent vouchers for existing housing stock.b) are under utilized with a surplus of housing stock.c) provide down payment assistance to purchase homes.d) are known as Section 8.e) do none of the above.7. The Head Start programa) has been successful in fostering better levels of school attainment.b) began in 1965.c) provides preschool activities for 4 and 5 year old disadvantaged students.d) does all of the above.e) does none of the above.8. Enrollment in the Medicaid programa) is designed for those persons 65 years of age and older.b) has increased due to expanded eligibility.c) covers all medical expenses that a poor person may incur.d) requires a substantial co-payment that has not been helpful to poor families.9. Federal job training programsa) help provide job market skills to those in poverty.b) have been overwhelmingly effective in helping those in poverty.c) cost very little money per person participating.d) do all of the above.e) do none of the above.10. The group comprising the highest percentage of the poor isa) the disabled.b) elderly.c) male heads of households.d) children.11. The U nited States’ official measure of poverty is measured bya) only cash income.b) cash income and capital gains.c) only in-kind income.d) the imputed value of rent payments.12. Which is the largest cash transfer program for the poor?a) TANFb) Medicarec) SSId) Medicaide) Section 813. Under TANF, the time limit for receiving benefits during a lifetime isa) 12 years.b) 13 weeks.c) 60 months.d) 5 months.e) unlimited.14. Which group is not provided aid by Medicaid?a) elderlyb) blindc) disabledd) poore) none of the above15. All of the following are in-kind benefit programs, excepta) food stamps.b) Medicaid.c) energy assistance.d) SSI.Discussion Questions1. Consider a negative income tax. As discussed in your textbook, under the negativeincome tax, each person is entitled to a grant of G dollars per month. For every dollar the person earns, the grant is reduced by t dollars.a) Suppose G = 200 and t = 0.40. Consider an individual whose hourly wage is $10.There are 30 days in a month (so T is 720). Sketch the budget constraint beforeand after the introduction of a negative income tax.2. This question is similar to Question 1 of Chapter 8 in your textbook. In New York, awelfare recipient can earn $90 per month without having her benefits reduced. Beyond $90, benefits are reduced by 57 cents for every dollar of earnings. Consider Jackie, a resident of New York, who can earn $10 per hour. If she does not work at all, she is eligible for welfare benefits of $577.a) If she works 10 hours, how much are her work earnings, how much is her welfarebenefits, and how much is her total income?b) After Jackie works a certain number of hours, she does not receive any benefits atall. What is that number of hours?3. Suppose in a certain city the demand for low-cost housing can be characterized by theequation Q = 165 – P/2, where Q is housing measured in square feet. Further, suppose that supply is characterized by the equation: Q = P/2 – 1.a) How much consumer surplus is there?b) Suppose that a grant is given so that the supply of housing is increased. Thisincrease changes the supply curve to Q = P/2. How much does consumer surpluschange because of the grant?4. Return to Question 3 above. Suppose that the government feels that the grant is notenough and, in addition, imposes a price ceiling of $125. What will happen to consumer surplus? What are the drawbacks?5. A needy family consisting of a mother and three children currently receives cash benefitsthat average $12 per day. The mother of this family is allowed to earn an average of $4 per day before her benefits begin to decline. After that, for each dollar earned, cash benefits decline by 67 cents for each dollar earned. Assume that she can find work at $4 per hour.a) How many hours will she have to work per day before her benefits are eliminated? True/False/Uncertain Questions1. Under TANF, at least 50% of single mother recipients and 90% of two-parent familiesmust be working or in work preparation programs.2. Poor people who participate in job training programs are more successful in leavingpoverty.3. In 1990, 29% of the United States’ population was in poverty.4. Increasing the wage rate will cause people to work more.5. Crowding out can occur when public insurance crowds out private insurance.6. In 2002, 20.7% of blacks were classified as being in poverty.7. Medicaid is the most expensive program that the government runs that provides benefitsto the poor.8. The majority of government programs designed to help poor families consists of directcash payments.9. Workfare requires able-bodied individuals to participate in work-related activities inorder to receive transfer payments.10. Only about a quarter of the population eligible for housing subsidies actually receivesthem.Essay Questions1. Over the years, there have been many programs designed to help the poor. One of themore popular ones has been the Earned Income Tax Credit (EITC). What makes this program so popular?2. What are some of the drawbacks, as you see them, to a program like Workfare?3. One of the changes in the welfare system of the United States that occurred in 1996 was amove to block grants for states. What advantage(s) might a block grant system allow?Answers to CHAPTER 8 – Expenditure Programs for the PoorAnswers to Multiple-Choice Questions1. c2. c3. b4. d5. d6. a7. d8. b9. a10. d11. a12. a13. c14. a15. dAnswers to Discussion Questions1.Consumption 200 670 7200 Wage=$10 720 Hours2. a) If Jackie works 10 hours at $10 per hour, she will have earned $100 fromworking. She gets to earn $90 before her benefits are reduced. She earned $10over that limit, so her benefits will be reduced to 577 – (0.57 * 10) = 571.3. Shewill have received in total $671.3.b) She would need to work 110.228 hours before benefits are completely eliminated.3. a) Setting supply equal to demand gives that Q* = 82 and P* = 166. Therefore,consumer surplus is (1/2)(164)(82) = 6,724.b) Setting the new supply curve equal to the original demand curve gives Q* = 82.5with P* = 165. Now consumer surplus is (1/2)(165)(82.5) = 6,806.25.4. Under the price ceiling scheme, consumer surplus is now found by 80(62.5) +(1/2)(125(62.5) = 8,906.25. The drawback is that there is a shortage now, as Q* supplied is only 62.5 instead of 82.5. Cash benefits decline by $0.67 per dollar earned after she earns $4. Benefits decline$.067 * $4 = $2.68 per hour worked after her first hour. Given that it would take 5.4776 hours, then her cash benefits will be eliminated.Answers to True/False/Uncertain Questions1. T2. U3. F4. U5. T6. T7. T8. F9. T10. TAnswers to Essay Questions1. Unlike other programs, participants in EITC are working and contributing to society.The skills and contacts made through working helps in the efforts to keep these people from slipping further into poverty.2. Workfare requires a good deal of monitoring to ensure that participants are gaining skills.In addition, there have to be jobs available, which may not be the case. Some participants do not have the necessary education required for certain jobs and first need to concentrate on increasing their human capital regarding education.3. Since participants in different states face varying needs to help them escape poverty, anational program may be too restricting, and local control can design a program more suitable to their constituents.。
国际会计第七版英文版课后答案(第十一章)
Chapter 11Financial Risk ManagementDiscussion Questions1.Enterprise risk management assesses individual risks in the context of a firm’s business strategy. Risksare viewed from a portfolio perspective with risks of various business functions, e.g., FX risk, interest rate risk, political risk and the like, being coordinated by a senior financial manager responsible for keeping top management apprised of critical risks that could interfere with the accomplishment of a firm’sstrategic objectives and devising risk optimization strategies. The variables that management accountants must track include factors both external and internal to the firm and varies from company to company.2.Market risk refers to the risk of loss due to unexpected changes in the prices of currencies, interest rates,commodities, and equities. It is not confined to price changes. Market risk also includes liquidity risk, market discontinuities, credit risk, regulatory risk, tax risk, and accounting risk. An example of a foreign exchange risk is a situation where an exporter invoices a credit sale to a foreign importer in foreign currency and foreign currency devalues prior to payment.3.An FX risk management program includes the following processes:a.Forecasting the expected movement in the relation between the yuan and your domesticcurrency.b.Measuring on a periodic basis your firm’s exposure to fluctuations in the value of the yuan.c.Designing protection strategies that will minimize losses should the yuan revalue.d.Establishing internal controls to measure your performance in hedging the risk of loss fromchanges in the value of the yuan.4.Translation exposure measures the impact of exchange rate changes on the domestic currency equivalentsof a firm s foreign currency assets and liabilities. It is primarily concerned with currency restatement.Transaction exposure measures the cash flow impact of fluctuating currency values on the settlement of commercial transactions denominated in foreign currencies. Transaction exposure is concerned with acurrency conversion (exchange) process. Economic exposure attempts to measure the impact of changing exchange rates on the future revenues, costs, and sales volume of a multinational entity. It is concerned with the temporal effects of exchange rate changes.Although FAS No. 52 attempts to mitigate concern with translation gains and losses (accounting exposure), it does not totally eliminate it. Companies choosing the U.S. dollar as their functional currency will still use the temporal translation method and report translation gains and losses in period income. Companies designating the local currency as the functional currency will find their asset exposures increased as inventories and fixed assets are translated using current exchange rates. While such translation gains and losses bypass income, the adverse effects of currency fluctuations on a company’s consolidated equity will still exist. This is especially likely where loan covenant and other contractual provisions specify minimum debt-to-equity ratios. This suggests that the issue of accounting versus economic exposure is far from settled.5.The chapter lists 10 specific methods to reduce a firm’s exposure to foreign exchange risk in adevaluation-prone country. These techniques, and possible cost-benefit trade-offs, are summarized in the following table.Methods Trade-Offsa. Minimize cash balances in a. Reduced exposure versusdevaluation-prone country higher business andfinancial risk due to possible "cash-outs."b. Remitting excess cash back b. Same as item a.to the parent company.c. Accelerate the collection c. Reduced exposure versusof local currency receivables possible reduction in salesd. Defer payment of local d. Reduced exposure versuscurrency payables impaired local credit ratinge. Speed up payment of e. Reduced exposure versusforeign currency payables foregone earnings on arelatively cheap creditsourcef. Invest local currency cash f. Reduced exposure versusbalances in inventories and higher transaction costsother assets less prone to and possible mis-devaluation loss allocation of corporateresourcesg. Invest in strong currency g. Reduced exposure versusforeign assets higher transaction costsand possible governmentinterference (e.g.exchange controls)h. Raise selling prices h. Reduced exposure versuspotential erosion ofmarket sharei. Invoice exports in hard i. Reduced exposure versuscurrencies possible reduction insales abroadj. Currency swaps j. Reduced translationexposure versus increasedtransaction exposure ifparent assesses theexposed affiliate aninterest charge in hardcurrency6. A multicurrency transactions exposure report differs from a multicurrency translation exposure report in anumber of ways. First, the transactions exposure report has a cash flow orientation instead of a static balance sheet orientation. It includes off balance sheet items that are executory in nature. Finally, a multicurrency transaction exposure report has a local currency orientation, whereas a multicurrency translation exposure report has a parent currency orientation.7.Derivative instruments are formal agreements that transfer financial risk from one party to another. Thevalue of a derivative is derived from its reference to a basic underlying instrument or variable such as a foreign currency receivable or a quantum of foreign exchange. Thus the value of a forward exchange contract is related to the change in the foreign exchange rate times the notional amount being hedged. An important accounting issue is whether derivatives should receive the same accounting treatment as the basic instruments to which they relate. Specifically, should a derivative instrument hedging a foreign currency asset appear in the financial statements as a foreign currency liability? If so, should its valuation base be identical to basic instruments? Do cash flows associated with derivative instruments have thesame economic meaning as those associated with basic instruments? How should gains and losses associated with derivative instruments be reflected in the income statement? Can and should risks attaching to these financial instruments be recognized and measured?8.Student responses should proceed along the following lines. Pele Corporation, a Brazilian firm, hasborrowed a certain sum of British pounds at 9 percent and is worried that the pound will appreciate relative to the real prior to maturity. To hedge this currency risk, it arranges with a bank to swap the pounds borrowed for an equivalent amount of reals for 3 years bearing the same rate of interest. During the 3-year period, it will make periodic interest payments to the bank in reals, and in return, receive periodic interest payments in pounds. At the end of the 3-year period, it will re-exchange the real principal for pounds at the original exchange rate.9. A futures contract is a commitment to purchase or deliver a specified quantity of a financial instrument orforeign currency at a future date at a price set when the contract is made. It differs from a forward contract in several respects. A futures contract is standardized in terms of size and delivery date whereas a forward contract is tailored to a customer’s needs. Futures contracts are freely traded on organized exchanges. In contrast, there is no secondary market for forward contracts as they are private agreements between two parties. Futures contracts are carried at market values with gains or losses taken immediately to income, whereas profits on a forward contract are realized only at the delivery date. Finally, a party to a futures contract must meet periodic margin requirements. In a forward contract, margins are set once, on the date of the initial transaction.10.Fair value hedges are hedges of a firm’s foreign currency assets and liabilities and firm fore ign currencycommitments. Cash flow hedges are hedges of forecasted transactions such as a future sale or purchase.Net investment hedges are hedges of an exposed balance sheet asset or liability position. For qualifying fair value hedges, all changes in the fair value of the derivative and the underlying item that is being hedged are recognized in earnings. For qualifying cash flow hedges, the change in the fair value of the derivative is recognized in Other Comprehensive Income and recognized in earnings when the hedged cash flows affect earnings. For qualifying hedges of a net investment, changes in the fair value of the derivative are recorded in comprehensive income11.In theory, the term highly effective means that gains or losses on hedging instruments should be shouldexactly offset gains or losses on the item being hedged. In practice, it means that gains or losses on the derivative substantially offset the changes in the value or cash flow of the hedged item. Measurement of this attribute is important. If a hedging instrument does not meet the highly effective test, the hedge is terminated and deferred gains or losses on the derivative are recognized immediately in current earnings.This, in turn, introduces volatility into a firm’s reporte d earnings.12.The notion of an opportunity cost refers to the return associated with your next best opportunity. In thearea of FX risk management, it entails comparing a given risk management strategy with an appropriate standard of comparison. This provides an objective means of assessing the effectiveness of a given risk reduction program. For example, when FX risk management programs are centralized at corporate headquarters, appropriate benchmarks against which to compare the success of corporate risk protection would be programs that local managers could have implemented on their own.Exercises1.Students usually gloss over diagrams without thinking them through. This exercise forces them to thinkthrough each step of the diagram and allows them to better internalize the risk management cycle.Responses might follow the following pattern: Step 1 involves operationalizing a firms strategies intoquantifiable objectives and then identifying developments both external and internal risks that could affect the achievement of these objectives. These risks are measured by the firm’s accountants and quantified in terms of their potential impact on the firm. For example, the firm may have as its strategic objective an increase of 5% of market share in a given country per year given assumptions about the rate of economic growth in that country. The chance that this growth rate may fall short of 5% and the impact of this shortfall for projected sales in that country would be quantified. Response formulation would involve identifying protection strategies to minimize the hit to sales of projected GNP shortfalls such as promotion campaigns to maintain sales or use of alternative sourcing venues to lower sales prices. This strategy would be implemented if projected GNP started to slow beyond a certain cutoff point. The impact of this protection strategy would then be quantified in terms of actual sales relative to forecast sales taking into account the costs of protection. The information contained in risk management performance reports would then be communicated to top management who would be in a position to reaffirm or alter strategic objectives and/or risk identification processes.2.Foreign exchange risk a devaluation of the foreign currency in which an account receivable wasdenominated would cause the domestic currency cash flows to decrease. This would cause current assets to decrease. Alternatively, a revaluation of the foreign currency would cause the account receivable and current assets to increase. Interest rate risk an increase in market rates of interest would cause the price ofa short-term fixed-rate debt instrument being held as a marketable security to decrease. This, in turn,would cause current assets to decrease. A decrease in interest rates would have the opposite effect.Commodity price risk an increase in the price of copper would cause the cost of copper purchases and the resultant unexpired cost of inventories in the current asset section of the balance sheet to increase. A fall in copper prices would have the opposite effect. Equity price risk a fall in stock prices would depress the carrying value of marketable securities (current assets), and conversely.3.The purpose of this exercise is to force students to look at manager ial accounting issues from the user’sperspective. Students may suggest additional information sources with respect to inflation differentials, balance of trade and balance of payments statistics, international monetary reserves, forward exchange quotations, the behavior of related currencies, and interest rate differentials. We recommend that this exercise be assigned to small groups to encourage teamwork. At the time this exercise was prepared, professional forecasters were predicting a rate of 10.5 ecrus to theU.S. dollar.Some groups may contend that exchange markets are efficient and that exchange rate changes are simply random events. Again, they must be prepared to convince management of their case, or at a minimum, identify the consequences of not attempting exchange rate forecasts.4. Current rate Current/Noncurrent Monetary/nonmonetaryExposed assets(PHP):Cash 500,000 500,000 500,000Accounts receivable 1,000,000 1,000,000 1,000,000 Inventories(LCM) 900,000 900,000Fixed assets 1,100,000 -- --Total 3,500,000 2,400,000 1,500,000 Exposed liabilities:Short-term payables 400,000 400,000 400,000Long-term debt 800,000 --- 800,000Total 1,200,000 400,000 1,200,000Positive/(negative) exposure 2,300,000 2,000,000 300,000 Positive exposure X $0.03 $69,000 $60,000 $9,000Positive exposure X $0.02 46,000 40,000 6,000 FX gain/(loss) $(23,000) $(20,000) $(3,000)5.ILS $ £$ EquivalentExposed Assets:Cash & due from banks 100,000 50,000 (40,000) 20,000Loans 200,000 ---- ---- 100,000Fixed assets ---- 30,000 ---- 30,000Exposed Liabilities:Deposits 40,000 ---- 15,000 50,000Owners equity ---- 100,000 ---- 100,000Net exposed assets 260,000 (20,000) (55,000) NIL(liabilities)ILS $ £$ EquivalentExposed Assets:Cash & due from banks 100,000 50,000 (40,000) 20,000Loans 200,000 ---- ---- 100,000Fixed assets ---- 30,000 ---- 30,000Exposed Liabilities:Deposits 40,000 ---- 15,000 50,000Owners equity ---- 100,000 ---- 100,000Net exposed assets 260,000 (20,000) (55,000) NIL(liabilities)6.Trial Balance BeforeILS $ £$ EquivalentCash & due from banks 100,000 50,000 (40,000) 20,000Loans 200,000 ---- ---- 100,000Fixed assets ---- 30,000 ---- 30,000Deposits 40,000 ---- 15,000 50,000 Owners equity ---- 100,000 ---- 100,000Trial Balance After(£/$/ILS = 1/2/8)ILS $ £$ EquivalentCash & due from banks 100,000 50,000 (40,000) (5,000)Loans 200,000 ---- ---- 50,000Fixed assets ---- 30,000 ---- 30,000Deposits 40,000 ---- 15,000 40,000 Owners equity ---- 100,000 ---- 100,000Translation loss $(65,000)7. One recommendation might be to reduce positive exposures by engaging in balance sheet hedging, that is, by remitting excess cash back to the corporate parent, reducing the affiliate bank’s outstanding loans, or increasing its deposits in Israeli shekels.. The trade-offs here are potentially negative effects on operations, such as not satisfying loan demand against hedging translation gains and losses. Another option is to increase the pricing of bank services in Israel to provide a profit margin that can offset any FX losses. Again, the effects of such actions on competitive positioning could far exceed the benefits of hedging. A third option is to buy a forward or currency swap to hedge the exposure. Trade-offs include the out-of-pocket cost of the exchange contract versus the reported losses avoided.1.If the U.S. dollar is the functional currency, the translation gain upon consolidation is aggregated with thetransaction loss on the foreign currency borrowing and disclosed as one line item in the consolidated income statement. This figure is determined as follows:Translation gain = Positive exposure X change in exchange rate= NZD3,000,000 x $.10= $300,000Transaction loss =NZD loan balance X change in exchange rate= NZD1,000,000 x $.10= $ (100,000)Aggregate exchange adjustment = $300,000 + $ (100,000)= $200,000If the New Zealand dollar is the functional currency, the translation gain upon consolidation bypasses income and appears as a separate component in consolidated equity. It is offset by the translation loss on the New Zealand dollar borrowing.9.4/1 CD (¥32,500,000 ÷ ¥120) $250,000Cash $250,000(Purchase of CD)Chips (¥32,500,000 ÷ ¥120) $270,833Cash (¥3,250,000 ÷ ¥120) $ 27,083A/P (¥29,250,000 ÷ ¥120) 243,750(To record credit purchase)7/1 CD (¥30,000,000 ÷ [¥120 - ¥110]) $ 22,727FX gain $ 22,727(To record gain on CD investment)Purchases (¥29,250,000 ÷ [¥120 - ¥110]) 22,159Accts. Payable 22,159(To record increase in purchases and related liability accounts owing to yen appreciation) 7/1 Cash (¥30,000,000 ÷ ¥110) $278,182Interest income (¥30,000,000 X .08 X ¼) ÷ ¥110] $ 5,455CD 272,727(To record maturation of CD)Interest expense [(¥29,250,000 x.08 x 3/12) ÷ ¥110) 5,318Accts. payable (¥29,250,000 ÷ ¥110) 265,909Cash 271,227(To record settlement of purchase transaction)10. Journal entries:6/1 CHF Contract receivable $133,333Deferred premium 3,334$ Contract payable $136,667(To record contract with the foreign currency dealer to exchange $136,667 for CHF 166,667)6/30 CHF Contract receivable 1,667Transaction gain 1,667(To record transaction gain from increased dollar equivalent of forward contract receivable; $.81 - $.80 x SWF 166,667)6/30 Premium expense 1,111Deferred premium 1,111(To amortize deferred premium for 1 month)9/1 SWCHF Contract receivable 3,333Transaction gain 3,333(To record additional transaction gain by adjusting forward contract to the new current rate; $.83 - $.81 x CHF 166,667)9/1 Premium expense 2,223Deferred premium 2,223(Amortization of deferred premium balance)9/1 $ Contract payable 136,667Cash 136,667 Foreign currency 138,333CHF Contract receivable 138,333(To record delivery of $136,667 to foreign currency dealer in exchange for CHF166,667 with a dollar equivalent of $138,334 (=CHF166,667 x $.83). The Swiss francs will, in turn be used to pay for the chocolate supplies).11. Calculations:If the premium on the forward contract is considered an operating expense, and the conditions for hedge treatment are met, i.e., management designates the forward contract as a hedge, documents its risk management objective and strategy, identifies the hedging instrument, the item being hedged and the risk exposure, and that the forward is effective both prospectively and retrospectively in hedging the risk, the gain on the forward can be offset against the loss on the payable as follows:Amount paid to settle the account payable on the purchase $138,333Less Transaction gain on forward contract (5,000)Cost of purchase $133,333The $133,000 is what was originally anticipated, CHF166.667 X $0.80 = $133,333.12. Journal entries:The call option is intended to hedge an uncertain cash flow. Accordingly, gains or losses on the hedging instrument would bedisclosed in comprehensive income and reclassified into earnings in the period the sale actually takes place.June 1 Premium expense $28,125Cash $28,125($.018 X CHF 62,500 X 25)August 31 Cash $40,625Comprehensive income $40,625[($.416 - $.39) X CHF 62,500 X 25]Case 11-1Exposure Identification1. Infosys appears to have several exposures as enumerated below.Foreign Exchange RiskPage Value-Drivers88 Revenues/Selling and administrative expenses89 Cash flows from interest/dividend income96 Revenue recognition/LT leases97 Operating income/foreign currency transactions/FA98 Marketing/Overseas staff expenses99 Derivative values100 Lease obligations101 Investment returns102 Segment revenues/expenses103 Dividends to ADS holders142 Penalties on export obligations149 Valuing intangibles150 Export revenuesCommodity Price RiskPage Value-Drivers98 Power and fuel expenses145 Brand valuation147/48 Current cost disclosures149 Value of intangiblesEquity Price RiskPage Value Drivers87 Share capital98 Diluted eps100 Stock option compensation expense103 Convertible preferreds145 Cost of capital151 Economic value-addedInterest Rate RiskPage Value Drivers88 Interest expense89 Cash flows from security investments/interest income97 Gratuity/Superannuation/Provident obligations143 Employee compensation145 Cost of capital149 Value of intangibles.151 Economic value-addedInformation on the company’s risk management policies are contained on pages 108-109 of their annual report which were not reproduced in Chapter 1. We include the relevant information here. Infosys derives its revenues from 51 countries of which 78 percent were denominated in US dollars. To minimize both transaction and translation risk the company:1.Tries to match expenses in local currency with receipts in the same currency.es forward exchange contracts to cover apportion of outstanding receivables.3.Denominates contracts in non-US and non-EU regions in internationally tradable currencies to minimizeexposures to local currencies that may have non-tradability risks.Case 11-2Value At Risk: What Are Our Options?Students should be asked to play the role of the consultant, and will find it to be a contentious issue. Suggested remedies that have merit are:1. The FASB should permit deferral accounting for rolling options which would take the derivative gain or loss on each option to equity until the anticipated event occurs, as opposed to taking it immediately to income. This, however, might encourage companies to game the system, so students should also suggest ways to keep this from happening.2. Another tack would be to adhere to generally accepted accounting principles and record the gain or loss on the derivative in current income as it is marked to market, but to disclose which transactions were undertaken for hedge purposes. Management could also game the system here as speculative activities could be disclosed as hedge activities.3. Another option that students might suggest is to revert back to the earlier U.S. practice of keeping the option off balance sheet and providing supplementary disclosure of mark-to-market accounting. This might be confusing to lay readers, but it would enable analysts to better understand the components of reported earnings.It is clear from the annual report clipping that management will ignore accounting pronouncements when it is in their interest to do so. Analysts must be alert to situations where management departs from GAAP to better reflect the economics of what transpired as opposed to doing so to manage earnings.精品文档，知识共享！！！。
罗森财政学第七版（英文版）配套习题及答案Chap005
罗森财政学第七版（英⽂版）配套习题及答案Chap005 CHAPTER 5 - ExternalitiesMultiple-Choice Questions1. Reducing output from the privately optimal level to the socially optimal level willa) cause a loss of consumption to consumers.b) reduce marginal damages.c) reduce the production costs.d) cause all of the above.2. Marginal damages are hard to measure becausea) they can be generated from multiple sources.b) they are hard to graph.c) they happen over time.d) no one cares about them.3. In Figure 5.4, if the marginal damages line did not originate at 0,a) it would mean that marginal damages did not exist.b) there is no way to find MSC.c) MSC would not originate at the same intercept as MPC.d) then all of the above.4. Externalities can be positive becausea) marginal damages do not last over time.b) utility can be impacted positively as well as negatively.c) there is no concept for marginal benefit.d) positive externalities are subsidies.5. Refer to the graphs below. Which graph(s) represent(s) an externality?a) graph Ab) graphs A and Bc) graph Bd) neither graph A nor graph BA B6. Refer to Figure 5.7 in the textbook. What does it mean if all firms have to reduce to a point2*)*(XZa) Firm X will reduce more than optimal.b) Firm Z will reduce less than optimal.c) The new point is between X* and Z*.d) All of the above.7. The Coase theorem has problems becausea) generally, bargaining costs are not zero.b) individuals are not concerned with others.c) markets always exist.d) all of the above.8. Pollution rights may be traded ifa) polluters try to hide pollution.b) administrators are uncertain about Pigouvian taxes.c) there is no market for pollution.d) pollution is harmless.9. Externalities can be produced by ____________, as well as ____________.a) individuals; firmsb) market prices; market incomesc) oceans; streamsd) none of the above10. A Pigouvian tax corrects fora) market congestion.b) market losses.c) inefficient sales.d) low market prices.11. Which of the following is correct?a) SMC = PMC - MDb) MPB = MSB + MEBc) SMC = PMC + MDd) MSC = MPBe) MSB =MSC + MPB12. Marginal benefits are downward sloping whena) there are no total benefits.b) the slope of the marginal benefits curve is negative.c) total benefits are increasing at a decreasing rate.d) marginal costs are upward sloping.13. A Pigouvian subsidya) can not exist with externalities.b) is the same thing as a Pigouvian tax.c) is measured in terms of Pigouvian dollars.d) moves production to the socially optimal level of output.14. As a general rule, zero pollution is not socially desirable becausea) there would be no production.b) the Environmental Protection Agency (EPA) needs to have something to do.c) no pollution would lead to global warming.d) all of the above.15. Externalities require government intervention whena) violence will result between disputing parties.b) there are only a few sellers in the market.c) property rights are not clearly established.d) the government imposes sales taxes.e) all of the above.16. Which method helps in obtaining the socially optimal level of output?a) Pigouvian taxesb) regulationc) property rights and bargainingd) all of the above17. Marginal damagesa) must always be considered in social marginal costs.b) must not be considered in social marginal costs.c) must sometimes be considered in social marginal costs.d) have nothing to do with social marginal costs.Discussion Questions1. Suppose the factory Afro-Puffs Inc. produces wigs. As a by-product of this wigproduction, they also produce dangerous emissions of toxic gases (as a result of the strong glue used to hold the hair in place). The De-Lite car factory, down the road, experiences a negative externality from this production process. Suppose that the supply curve (private marginal costs) for the wig factory is X=(2/5)P- 2, and it faces a market demand of X d=15 - P/2. The marginal damages caused by the production of wigs can be written as X=P – 1/2.a. Find the equilibrium price and quantity in the market for wigs.b. Find the socially optimal level of wigs and the corresponding price.c. How much should the wig factory be taxed per wig?2. A steel factory has the right to discharge waste into a river. The waste reduces thenumber of fish, causing damage for swimmers. Let X denote the quantity of waste dumped. The marginal damage, denoted MD, is given by the equation MD = 2 + 5X.The marginal benefit (MB) of dumping waste is given by the equation MB = 34 – 3X.a. Calculate the efficient quantity of waste.b. What is the efficient fee, in dollars per unit of waste, that would cause the firm todump only an efficient quantity of waste?c. What would be the quantity dumped if the firm did not care about the fishery?3. The private marginal benefit for commodity X is given by 15 – X, where X is the numberof units consumed. The private marginal cost of producing X is constant at 10. In the absence of any government intervention, how much X is produced? What is the gain to society involved in moving from the inefficient to the efficient level of production?4. Consider the case of two farmers, Tony and Hakim, depicted in the figure below. Bothuse DDT (a chemical pesticide) for their crops. The use of DDT causes an externality for swimmers down river from the farms.a. Show the amount of pesticides used if each uses the privately optimal level ofpesticides.b. Show the amount of pesticides used if they are socially concerned.c. Why is a reduction back to X H = H T not socially desired?5. Redo discussion question 10, part a, from Chapter 5 in your book. Suppose emissions arelimited to 25 units per year instead of 50. How does your answer change?True/False/Uncertain Questions1. Externalities always work themselves out.2. Negative externalities cause loss of welfare not transmitted by market factors.3. Externalities can be positive, as well as negative.4. A subsidy for pollution not produced can induce producers to pollute at the efficient level.5. Pollution rights can be traded and are always efficient.6. Regulation helps to correct for externalities.7. Any commodity market has the potential to have an externality.8. Market-oriented solutions to externalities rarely work.9. For market efficiency, MSC must be equated to MSB.10. College education is an example of a positive externality.T H X X SMC(PMC+MB)PMCMB HMB/MCPesticidesMB TEssay Questions1. How do social conventions help in alleviating externalities without government intervention?2. How do you feel the U.S. has fared in its attempt to impose market forces to correct externalities?3. List and discuss three problems that might arise when using the Coase theorem.。
罗森财政学复习资料(双语版)
罗森财政学复习资料（双语版）Unified budget:The document which itemizes all the federal government’s expenditures and revenues.统一预算：联邦政府在一种文件中将其支出逐项列出的文件Regulatory budget: an annual statement of the costs imposed on the economy by government regulations管制预算：政府管制对经济产生的成本Entitlement programs: programs whose expenditures are determined by the number of people who qualify ,rather than preset budget allocations.公民权利性计划：（是指有关社会保障、公共福利计划、农产品价格维持等法律规定受益人和收益数额的政府支出项目）项目的成本不是由固定的美元数额来决定，而是由符合条件的人的数量决定。
Substitution effect :the tendency of an individual to consume more of one good and less of another because of a decrease in the price of the former relative to the latter.替代效应：是指一种商品价格的变化所引起的使消费者调整该种商品和其他商品需求量比例的效应。
Income effect : the effect of a price change the quantity demanded due exclusively to the fact that the consmer’s income has changed收入效应：收入效应指由商品的价格变动所引起的实际收入水平变动，进而由实际收入水平变动所引起的商品需求量的变动。
国际会计第七版英文版课后答案(第六章)
Chapter 6Foreign Currency TranslationDiscussion Questions Solutions1.Foreign currency translation is the process of restating a foreign account balance from onecurrency to another. Foreign currency conversion is the process of physically exchanging onecurrency for another.2.In the foreign exchange spot market, currencies bought and sold must be delivered immediately,normally within 2 business days. Thus a Singaporean tourist buying U.S. dollars at the airportbefore boarding a plane for New York would hand over Singapore dollars and immediatelyreceive the equivalent amount in U.S. dollars. The forward market handles agreements toexchange a fixed amount of one currency for another on an agreed date in the future. Forexample, a French manufacturer exporting goods invoiced in euros to a Japanese importer on 60- day credit terms would buy a forward contract to sell yen for euros 2 months in the future.Transactions in the swap market involve the simultaneous purchase (or sale) of one currency in the spot market and the sale (or purchase) of the same currency in the forward market. Thus, a Canadian investor wishing to take advantage of higher interest rates on 6-month Treasury bills in the United States would buy U.S. dollars with Canadian dollars in the spot market and invest in the United States. To guard against a fall in the value of the U.S. dollar before maturity (when the U.S. dollar proceeds are converted back to Canadian dollars), the Canadian investor would simultaneously enter into a forward contract to sell U.S. dollars for Canadian dollars 6 months in the future at today s forward exchange rate.3.The question refers to alternative exchange rates that are used to translate foreign financialstatements. The current rate is the exchange rate at the financial statement date. It issometimes called the year-end or closing rate. The historical rate is the exchange rate at the time of the underlying transaction. The average rate is the average of various exchange rates during a fiscal period. Since the average rate normally is used to translate income statement items, it isoften weighted to reflect any seasonal changes in the volume of transactions during the period.Translation gains and losses do not occur if exchange rates do not change. However, if exchange rates change, the use of current and average rates causes translation gains and losses.These do not occur when the historical rate is used because the same (constant) rate is used each period.4. In this example, the Mexican Affiliate s Canadian dollar loan is denominated in Canadian dollars.However, because the Mexican affiliate’s functional currency is U.S. dollars, the peso equivalent of the Canadian dollar borrowing would be remeasured in U.S. dollars prior to consolidation. If the Mexican affiliate’s functional currency were the peso, the Canadian dollar loan would beremeasured in pesos before being translated to U.S. dollars.5. A transaction gain or loss occurs when a foreign currency transaction, e.g., a foreign currencyborrowing, is settled at a different exchange rate than that which prevailed when the transaction was originally incurred. In this case there is an exchange of one currency for another. Atranslation gain or loss, on the other hand, is simply the result of a restatement process. There isno physical exchange of currencies involved.6. It is not possible to combine, add, or subtract accounting measurements expressed in differentcurrencies; thus, it is necessary to translate those accounts that are measured or denominated in a foreign currency into a single reporting currency. Foreign currency translation can involverestatement or remeasurement. In restatement, the local (functional) currency is kept as the unit of measure; that is, the translation process multiplies the financial results and relationships in the local currency accounts by a constant, the current rate. In contrast, remeasurement translateslocal currency results as if the underlying transactions had taken place in the reporting(functional) currency of the parent company; for example, it changes the unit of measure of aforeign subsidiary from its local (foreign) currency to the U.S. dollar.7. Major advantages and limitations of each of the major translation methods follow.Current Rate MethodAdvantages:a. Retains the initial relationships in the foreign currency statements.b. Simple to apply.Limitations:a. Violates the basic purpose of consolidation, which is to present the results of a parent and its subsidiaries as if they were a single entity.b. Inconsistent with historical cost.c. Presumes that all local assets and liabilities are subject to exchange risk.d. While stockholders equity adjustments shield an MNC s bottom line from translation gains and losses, such adjustments could distort certain financial ratios and be confusing.Current-noncurrent MethodAdvantages:a. Distortions in translated gross margins are reduced as inventories and translated at the current rate.b. Reported earnings are shielded from the distorting effects of currency fluctuations as excess translation gains are deferred and used to offset future translation losses.Limitations:a. Uses balance sheet classification as basis for translation.b. Assumes all current assets are exposed to exchange risk regardless of their form.c. Assumes long-term debt is sheltered from exchange rate risk.Monetary-nonmonetary MethodAdvantages:a. Reflects changes in domestic currency equivalent of long-term debt on a timely basis. Limitations:a. Assumes that only monetary assets and liabilities are subject to exchange rate risk.b. Exchange rate changes distort profit margins as sales transacted at current prices are matched against cost of sales measured at historical prices.c. Uses balance sheet classification as basis for translation.d. Nonmonetary items stated at current market values are translated at historical rates.Temporal MethodAdvantages:a. Theoretically valid: compatible with any accounting measurement method.b. Has the effect of translating foreign subsidiaries operations as if they were originally transacted in the home currency, which is desirable for foreign operations that are extensions of the parent’s activities. Limitation:a. A company increases its earnings volatility by recognizing translation gains and losses currently.In arguing for one translation method over another, your students should eventually realize that, in the present state of the art, there is probably no one translation method that is appropriate for all circumstances in which translations occur and for all purposes thattranslation serves. It is probably more fruitful to have students identify circumstances in which they think one translation method is more appropriate than another.8.The current rate method is appropriate when the foreign entity being consolidated is largelyindependent of the parent company. Conditions which would justify this methodology is when the foreign affiliate tends to generate and expend cash flows in the local currency, sells a product locally so that its selling price is largely insulated from exchange rate changes, incurs expenses locally, finances its self locally and does not have very many transactions with the parentcompany. In contrast, the temporal method seems appropriate in those instances when theforeign affiliate’s operations are integrally related to the parent company. Conditions whichwould justify use of the temporal method are when the foreign affiliate transacts business in the parent currency and remits such cash flows to the parent company, sells a product largely in the parent country and whose selling price is sensitive to exchange rate changes, sources its factorinputs from the parent company, receives most of its financing from the parent and has a largetwo way flow of transactions with it.9.The history of foreign currency translation in the United States suggests that the development ofaccounting principles does not depend on theoretical considerations so much as on political, institutional, and economic influences that affect accounting standard setting. It may be morerealistic to recognize that theoretically sound solutions are impossible as long as policyprescriptions are evaluated on practical grounds. Without specific choice criteria derived from investor decision models, it is fruitless to argue the conceptual merits of competing accounting treatments. It is far more productive to admit that foreign currency translation choices are simply arbitrary.Readers of consolidated financial statements should know that the foreign currency translation method used is one of several alternatives, and this should be disclosed. This approach is more open and reduces the chance that readers will draw misleading inferences.10.Foreign inflation, in particular, the differential rate of inflation between the country in which asubsidiary is located and the country of its parent determines foreign exchange rates. Theserates, in turn, are used to translate foreign currency balances to parent currency.11.In the United Kingdom, financial statements of affiliates domiciled in hyperinflationaryenvironments must first be adjusted to current price levels and then translated using the current rate; in the United States, the temporal method would be employed. The second part of thisquestion is designed to get students from abroad to find out what companies in their homecountries are doing and thereby be in a position to share their new found knowledge with theirclassmates. They need simply get on the internet and read the footnotes of a major multinational company in their home country.12.Under FAS No. 52, the parent currency is designated as the functional currency for an affiliate,whose operations are considered to be an integral part of the parent company’s operations.Accordingly, anything that affects consolidated earnings, including foreign currency translation gains and losses, is relevant to parent company shareholders and is included in reported earnings.In contrast, when a foreign affiliate s operations are independent of the parent s, the localcurrency is designated as its functional currency. Since the focus is on the affiliate s localperformance, translation gains and losses that arise solely from consolidation are irrelevant and, therefore, are not included in consolidated income.Exercises Solutions1.¥250,000,000 X .008557 = $2,139,250.¥250,000,000 ÷ ¥116.86 = $2, 139,312The difference is due to rounding.2.Since £1 = US$1.9590 and €1 = US$1.3256, £1 = US$1.9590/US$1.3256 = €1.4778.Alternatively, €1 = US$1.3256/US$1.9590 = £.6767.3.Single Transaction Perspective:4/1 Purchases (¥32,500,000/¥116.91) $277,992Cash $27,800A/P(¥32,500,000 - ¥3,250,000)/¥116.91 250,192(Credit purchase)7/1 Purchases[(¥29,250,000/¥116.91) – (¥29,250,000/¥115.47) 3,120A/P 3,120(To record increase in purchases due to yen appreciation)7/1 Interest expense(¥29,250,000 X .08 X 3/12)/¥115.47 5,066A/P(¥29,250,000/¥115.47) 253,312Cash 258,378(To record settlement)Two Transactions Perspective:4/1 Purchases $277,992Cash $27,800A/P 250,1927/1 Transaction loss 3,120A/P 3,1207/1 Interest expense 5,066A/P 253,312Cash 258,3784. a. MXN 1,750,000/MXN10.3 = C$169,903.b. The Canadian dollar equivalent of the Mexican inventory account would not change if the functional currencywas the Canadian dollar as the temporal method translates inventory, a nonmonetary asset, at the exchange rate that preserves its original measurement basis. Since inventory is being carried at its net realizable value, it would be translated at the current rate. Had inventory been carried at historical cosuld have been translated at the historical rate or MXN3,750,000/MXN9.3 = C$403,226.5. Baht is the functional currency:B 2,500,000/20 years = B 125,000B 125,000/B37 = 3,378B 5,000,000/20 years = B 250,000B 250,000/B37 = 6,757U.S. dollar is the functional currency:B 2,500,000/20 years = B 125,000B 125,000/B40 = 3,125B 5,000,000/20 years = B 250,000B 250,000/B38 = 6,579Total depreciation $ 9,7046. If the euro is the German subsidiary’s functional currency, its accounts would be t ranslated into Australian dollarsusing the current rate method. In this case the translation gain of AUD4,545,455 would appear in consolidated equity.Thus the only item affecting current income would be the transaction loss(loss on an unsettled transaction) ofAUD1,514,515 on the euro borrowing.If the Australian dollar is deemed to be the functional currency, then the transaction loss andtranslation gain would both appear in reported earnings as follows:AUD(1,514,515) transaction lossAUD4,545,455 translation gainAUD3,030,940 net foreign exchange gain7.U.S. Dollar U.S. Dollar U.S. DollarBefore CNY After CNY After CNYAppreciation Appreciation DepreciationCNY Balance Sheet ($.12=CNY1) ($.15 = CNY1) ($0.09 = CNY1)Assets Amount Current Monetary Current MonetaryNoncurrent Nonmonetary Noncurrent NonmonetaryCash NT5,000 $600 $ 750 $ 750 $ 450 $ 450Accts. Receivable 14,000 1,680 2,100 2,100 1,260 1,260Inventories(cost=24,000) 22,000 2,640 3,300 2,640 1,980 2,640Fixed assets, net 39,000 4,680 4,680 4,680 4,680 4,680Total CNY 80,000 $9,600 $10,830 $10,170 $8,370 $9,030Liabilities & Owners EquityAccts. Payable CNY21,000 $2,520 $ 3,150 $ 3,150 $1,890 $1,890Long-term debt 27,000 3,240 3,240 4,050 3,240 2,430Stockholders equity 32,000 3,840 4,440 2,970 3,240 4,710Total CNY 80,000 $9,600 $10,830 $10,170 $8,370 $9,030Accounting exposure CNY20,000 (29,000) 20,000 (29,000)Translation gain (loss) US$ 600 (870) (600) 8708.U.S. Dollar U.S. Dollar U.S. DollarBefore CNY After CNY After CNYAppreciation Appreciation DepreciationCNY Balance Sheet ($.12=CNY1) ($.15 = CNY1) ($.09 = CNY1)Assets Amount Temporal Current Temporal CurrentCash CNY5,000 $ 600 $ 750 $ 750 $ 450 $ 450Accts. Receivable 14,000 1,680 2,100 2,100 1,260 1,260Inventories(cost=24,000) 22,000 2,640 3,300 3,300 1,980 1,980Fixed assets, net 39,000 3,600 3,600 5,850 3,600 3,510Total CNY 80,000 $8,520 $9,750 $12,000 $11,700 $7,200Liabilities & Owners EquityAccts. Payable CNY21,000 $2,520 $3,150 $3,150 $1,890 $1,890Long-term debt 27,000 3,240 4,050 4,050 2,430 2,430Stockholders equity 32,000 2,760 2,550 4,800 7,380 2,880Total NT$ 80,000 $8,520 $9,750 $12,000 $11,700 $7,200Accounting exposure NT$ (7,000) 32,000 (7,000) 32,000Translation gain (loss) US$ (210) 960 210 (960)c. Students will quickly discover that each translation method has its advantages and disadvantages. After some discussion, the question of translation objectives will arise. Currency translation objectives are based on how foreign operations are viewed. If foreign operations are considered extensions of the parent, a case can be made for a historical rate method: current-noncurrent, monetary-nonmonetary, or temporal. If foreign operations are viewed from a local company perspective, a case can be made for the current rate method. Given the complexity of multinational business activities, one could argue that a single translation method will not serve all purposes for which translations are done. As long as the objectives of foreign currency translation differ among specific reporting entities, a practical solution is to insist on full disclosure of the translation procedures used so that users have a basis for reconciling any differences that exist.9.Company A (Country A)(Reporting Currency = Apeso)Beginning of Year End of YearAssets: Exchange Rate Translated Exchange Rate TranslatedApeso 100 Apeso 100 Apeso 100Bol 100 Apeso 1 = Bol 1.25 Apeso 80 Apeso 1 = Bol 2 Apeso 50Apeso 180 Apeso 150Translation loss = A$ 30Company B (Country B)(Reporting Currency = Bol)Beginning of Year End of YearAssets: Exchange Rate Translated Exchange Rate TranslatedApeso 100 Apeso 1 = Bol 1.25 Bol 125 Apeso 1 = Bol 2 Bol 200Bol 100 Bol 100 Bol 100Bol 225 Bol 300Translation gain = Bol 75b. This exercise demonstrates the effect of the reporting currency on foreign currency translation results when the current rate method is used. Both companies are in seemingly identical situations, yet one reports a translation loss while the other reports a translation gain. One company reports shrinking assets while the other reports increasing assets. Nothing has actually happened but an exchange rate change. Also, despite a stronger Apeso, Company A reports a loss. Conversely, the Bol weakened, yet Company B reports a gain. It appears that a strengthening currency is not always good news, nor is a weakening currency always bad news.If the intention is to repatriate the funds invested in the foreign country (Country B from Company A’s perspective, Country A from Company B’s perspective), the scenario makes sense. After all, CompanyA will be repatriating fewer Apesos than originally invested and CompanyB will be repatriating moreB ol’s than originally invested. Fluctuating exchange rates have changed each company s command over a foreign currency. Assuming the company intends to repatriate the currency, it makes sense toinclude the respective gain or loss in income for the current year. On the other hand it can be argued that the gain or loss should be excluded from income if the company intends to keep the foreign assets invested permanently..10.Translation RateLocal Currency is Dollar isFunctional Currency Functional CurrencyCash Current CurrentMarketable securities (cost)Current Historical aAccounts receivable Current CurrentInventory (market) Current CurrentEquipment Current HistoricalAccumulated depreciation Current HistoricalPrepaid expenses Current HistoricalGoodwill Current HistoricalAccounts payable Current CurrentDue to parent (denominated in dollars) Current CurrentBonds payable Current CurrentIncome taxes payable Current CurrentDeferred income taxes Current CurrentCommon stock Historical HistoricalPremium on common stock Historical HistoricalRetained Earnings Balancing Residual Balancing ResidualSales Average AveragePurchases Average AverageCost of Sales Average HistoricalGeneral and administrative expenses Average AverageSelling expenses Average HistoricalDepreciation Average HistoricalAmortization of goodwill Average HistoricalIncome tax expense Average AverageInter-company interest expense Average Average__________________________________________________________________________________________________________________________a Fixed income securities intended to be held to maturity.11. a. Before riyal depreciation:Cash SAR 60,000,000 ÷ SAR3.75 = $ 16,000,000Inventory 120,000,000 ÷ SAR3.75 = 32,000,000Fixed Assets 750,000,000 ÷ SAR3.75 = 200,000,000Total $248,000,000After riyal depreciation:Cash SAR 60,000,000 ÷ SAR4.125 = $ 14,545,455Inventory 120,000,000 ÷ SAR3.75 = 32,000,000Fixed Assets 750,000,000 ÷ SAR3.75 = 200,000,000Total $246,545,455Translation loss $(1,454,455)b.The translation loss has no effect on MSC’s cash flows as it is the result of a restatement process.c.On a pre-tax basis, an analyst would back out the translation gain from reported earnings and add it to consolidatedequity. However, in addition inventory and fixed assets would be translated at the current rate, as opposed to thehistorical rate, and the resulting translation loss would also be taken to consolidated equity. This would result in a different earnings number as well as asset measures.Before riyal depreciation:Cash SAR 60,000,000 ÷ SAR3.75 = $ 16,000,000Inventory 120,000,000 ÷ SAR3.75 = 32,000,000Fixed Assets 750,000,000 ÷ SAR3.75 = 200,000,000Total $248,000,000After riyal depreciation:Cash SAR 60,000,000 ÷ SAR4.125 = $ 14,545,455Inventory 120,000,000 ÷ SAR4.125 = 29,090,909Fixed Assets 750,000,000 ÷ SAR4.125 = 181,818,182Total $225,454,546Translation adjustnment reflected in equity $(22,545,454)Students could also be probed and asked how the adjusted numbers would impact certain ratios such as ROA or ROE, Debt to Equity, and asset turnover.12. a. The currency effects in the first and third paragraphs have an impact on Alcan’s cash flows. IN the firstparagraph, echange rate changes affect Alcan’s future revenues and costs and directly affect cash receipts andpayments. The third paragraph involves settling foreign currency transactions at a different echange rate than when the transaction were entered into.b.Alcan appears to be employing the monetary-nonmonetary method.c. Many analysts back out translation gains and losses from reported earnings as these are largely non-cash itemsthat simply result from a restatement process. This would especially be the case if Alcan were being compared to a company employing the current rate method. Disregarding translation gains and losses would have the following effect on reported earnings:20X5 20X4 20X3With translation G/L $129m $258m $64mTranslation G/L (86) (153) (326)Without Translation G/L $215m $411m $390mThe impact on the pattern of earnings would change significantly. The year to year changes in earnings both before and after abstracting from currency translation effects are:20X5/20X3 20X5/20X4 20X4/20X3With translation G/L 102% -50% 303%Without Translation G/L 45% -48% 5%Case 6-1 Regents CorporationThe nature of Regents’s operation is such that choice of an appropriate functional currency is ultimately a judgement call. Students can argue for either currency and should be evaluated on the strength of their analysis. A major lesson of this case is that the functional currency choice is important since the currency designation dictates which translation method, (current or temporal) is ultimately used. The financial statement effects can be very different. Thus it is important for a reader of financial statements to understand how the differing measurement options affect the balance sheet and income statement and be prepared to adjust from one framework to the other, even if only crudely.TEMPORAL METHOD(U.S. DOLLAR IS THE FUNCTIONAL CURRENCY)Balance Sheet Accounts, 12/31/X7 Foreign Currency Exchange Rate Dollar EquivalentCash £ 1,060 1.80 $ 1,908Accounts receivable 2,890 1.90 5,491Inventory 3,040 1.78 5,411Fixed assets 4,400 1.70 7,480 Accumulated depreciation (420) 1.70 (714)Patent ----- -----Total £10,970 $19,576Accounts payable £ 1,610 1.80 $ 2,898Due to parent 1,800 1.80 3,240Long-term debt 4,500 1.80 8,100Deferred taxes 80 1.80 144Common stock 1,500 1.70 2,550Retained earnings 1,480 residual 2,644£10,970 $19,576Income Statement, 12/31/X8 Foreign Currency Exchange Rate Dollar Equivalent Sales £ 16,700 1.86 $ 31,062Cost of sales a (11,300) (20,706)General and administrative (1,600) 1.86 (2,976) Depreciation (280) 1.70 (476)(20) 1.82 (36)Interest (480) 1.86 (893) Transaction gain 125 1.86 233Aggregate translation adjustment b (368)Taxes:Current (670) 1.86 (1,246 )Deferred (40) 1.86 (74)Net income £ 2,435 $ 4,520Retained earnings, 12/31X7 1,480 2,644Dividends (300) 1.86 (558)Retained earnings, 12/31X8 £ 3,615 $ 6,606a Beginning inventory £ 3,040 1.78 $ 5,411 Purchases 11,690 1.86 21,743Ending inventory 3,430 1.88 6,448 Cost of Sales £ 11,300 $20,706b Aggregate translation adjustment:1. Monetary assets, 12/31/X7 £ 3,950Monetary liabilities, 12/31/X7 7,990(£ 4,040) x (1.90 - 1.80) = ($404)2. Change in negative exposure:12/31/X7 (£ 4,040)12/31/X8 (2,565 )£ 1,475Composition of decrease:Sources of monetary items:Net income £2,435Depreciation 300 £2,735Uses of monetary items:Inventory increase £(390)Addition to fixed assets (500)Purchase of patent (70)Dividends (300 ) (1,260 )£1,4753. Sources of monetary items x difference in year-end rate and rate used to translate income statement =£2,345 x (1.90 - 1.86) = $94300 x (1.90 – 1.86) = 12 $1094. Uses of monetary items x difference in year-end rate and rate used to translate those items =£(390) x (1.90 – 1.86) = $(15)(300) x (1.90 - 1.86) = (12)(500) x (1.90 - 1.82) = (40)(70) x (1.90 - 1.82) = (6 ) (73)Aggregate translation adjustment = ($404)109(73 )($368)Balance Sheet, 12/31/X8 Foreign Currency Exchange Rate Dollar EquivalentCash £ 1,150 1.90 $2,185 Accounts receivable 3,100 1.90 5,890 Inventory 3,430 1.88 6,448Fixed assets a 4,900 8,390 Accumulated depreciation b (720) (1,226)Patent 70 1.82 127Total £11,930 $21,814 Accounts payable £ 1,385 1.90 $ 2,632Due to parent 1,310 1.90 2,489Long-term debt 4,000 1.90 7,600 Deferred taxes 120 1.90 228 Common stock 1,500 1.70 2,550 Retained earnings 3,615 6,309Total £11,930 $21,814___________________________________________________________________________a Original assets £ 4,400 1.70 $ 7,480New assets 500 1.82 910$ 8,390b Original assets £ 700 1.70New assets 20 1.82 36$ 1,226 CURRENT RATE METHOD(LOCAL CURRENCY IS THE FUNCTIONAL CURRENCY)Balance Sheet Accounts, 12/31/X7 Foreign Currency Exchange Rate Dollar Equivalent Cash £ 1,060 1.80 $ 1,908 Accounts receivable 2,890 1.80 5,202 Inventory 3,040 1.80 5,472Fixed assets 4,400 1.80 7,920 Accumulated depreciation (420) 1.80 (756)Patent --- ---Total £10,970 $19,746Accounts payable £ 1,610 1.80 $ 2,898Due to parent 1,800 1.80 3,240Long-term debt 4,500 1.80 8,100Deferred taxes 80 1.80 144Common stock 1,500 1.70 2,550Retained earnings 1,480 2,355 Cumulative translation adjustment --- 459(given)Total £ 10,970 $19,746Income Statement, 12/31/X8 Foreign Currency Exchange Rate Dollar Equivalent Sales £16,700 1.86 $31,062Cost of sales (11,300) 1.86 (21,018)General and administrative (1,600) 1.86 (2,976) Depreciation (300) 1.86 (558)Interest (480) 1.86 (893) Transaction gain 125 1.86 232Taxes:Current (670) 1.86 (1,246)Deferred (40) 1.86 (74)Net income £ 2,435 $ 4,529Retained earnings, 12/31X7 1,480 2,355Dividends (300) 1.86 (558)Retained earnings, 12/31X8 £ 3,615 $ 6,326Balance Sheet, 12/31/X8 Foreign Currency Exchange Rate Dollar EquivalentCash £ 1,150 1.90 $ 2,185Accounts receivable 3,100 1.90 5,890Inventory 3,430 1.90 6,517Fixed assets 4,900 1.90 9,310Accumulated depreciation (720) 1.90 (1,368)Patent 70 1.90 133Total £ 11,930 $22,667Accounts payable £ 1,385 1.90 $ 2,632Due to parent 1,310 1.90 2,489Long-term debt 4,000 1.90 7,600Deferred taxes 120 1.90 228Common stock 1,500 1.70 2,550Retained earnings 3,615 6,326Cumulative translation adj. ----- 842aTotal £11,930 $22,667a Cumulative translation adjustment:1. Net exposed assets, 12/31/X7, x change in current rate = £2.980 x (1.90 - 1.80) = $2982. Change in net assets x difference between year-end and average rate = £2.135 x (1.90 - 1.86) = 853. Cumulative translation adjustment 12/31/X7 4594. Cumulative translation adjustment, 12/31/X8 $842。
国际会计第七版英文版课后答案(第九章).doc
Chapter 9International Financial Statement AnalysisDiscussion Questions1. a. Business strategy analysisDifficulties in cross-border business strategy analysis: Identifying key profit drivers and business risk in two or more countries can be daunting. Business and legal environments and corporate objectives vary around the world. Many risks (such as regulatory risk, foreign exchange risk, and credit risk) need to be evaluated and brought together coherently. In some countries, sources of information are limited and may not be accurate.b.Accounting analysisDifficulties in accounting analysis: Two issues are important here. The first is cross-country variation in accounting measurement quality, disclosure quality, and audit quality. National characteristics that cause this variation include required and generally accepted practices, monitoring and enforcement, and extent in managerial discretion in financial reporting. The second issue concerns the difficulty in obtaining information needed to conduct accounting analysis. The level of credibility and rigor of financial reporting in Anglo-American countries generally is much higher than that found elsewhere. In fact, financial reporting quality can be surprisingly low in both developed and emerging-market countries.c.Financial analysis (ratio analysis and cash flow analysis)Difficulties in financial analysis: Extensive evidence reveals substantial cross-countiy differences in profitability, leverage, and other financial statement ratios and amounts that result from both accounting and non-accounting factors. Differences in financial statement items caused by national differences in accounting principles can be significant, and unpredictable in amount. Even after financial statement amounts are made reasonably comparable, interpretation of those amounts must consider cross-country differences in economic, competitive, and other conditions.d.Prospective analysis (forecasting and valuation)Difficulties in prospective analysis: Exchange rate fluctuations, accounting differences, different business practices and customs, capital market differences, and many other factors have major effects on international forecasting and valuation. Application of price multiples in a cross-border setting requires that the determinants of each multiple, and reasons why multiples vary across firms, be thoroughly understood. National differences in accounting principles are one source of cross-country variations in these ratios.Finally, all four stages of business analysis may be affected by:rmation access,ii.timeliness of informationiii.foreign currency issuesiv.differences in financial statement formatsnguage and terminology barriers.2.Here we will consider the information needs of investors, creditors, regulators, and competitors.Investors have high information needs at all stages of business analysis. They need to be able to accurately assess the merits of the company's business strategy, the quality of its accounting, the company's financial strength, and its future prospects. Since each step in the business analysis process builds on its predecessors, each step is critical in its turn. It can't be said that any one step is more or less important than the others.Creditors need to go through much the same analysis, but are advantaged in that through direct contact with the companies they often have more extensive and detailed information than do investors. The goal of analysis is also often somewhat different. Many investors, hoping that their shares will increase in value, are interested in prospective analysis. The creditor's interest is more often limited to being sure (with a margin of safety) that the loan will be repaid. For the creditor, the accounting analysis, financial analysis, and forecasting, all are important; valuation is less so. Regulators have much different interests. Since regulators have no direct interest in the future earnings of the companies they regulate, a prospective analysis (in most cases) is of limited value to them. However, if regulators need to be aware of the financial strength of the companies they regulate, they will need to conduct accounting analysis and (in many cases) financial analysis, particularly when assessing how much of an economic burden can be imposed on companies resulting from a particular regulation.Competitors are intensely interested in finding out as much about a company as possible. Business strategy analysis of one's competitors is an important part of formulating one's own business strategy, especially in terms of assessing strengths and weaknesses. Accounting and financial analysis also can uncover strengths and weaknesses. Prospective analysis may be important if a merger or acquisition is contemplated.rmation accessibility is a major condition for an efficient capital market, that is, infonnation must be rapidly analyzed and made available to investors capable of acting on it. In the United States and other broadly-based financial markets, a whole industry specializing in infonnation analysis and dissemination has developed. Similar investment analysis services in many non-U.S. capital markets are at an earlier stage of development.4.Investment analysis almost always involves paired comparisons, even if the benchmark alternative is to do nothing. In evaluating the risk and return characteristics of a non-domestic company differences in accounting measures of risk and return are often due as much to differences in measurement rules between countries as they are to real economic differences. Corporate transparency compounds the problem by depriving analysts of information necessary to adjust for national measurement differences. Many analysts consider the disclosure issue to be even more important than measurement differences.5.One way of coping with GAAP differences is to restate foreign accounting measures to an internationally recognized set of principles or the reporting framework of the investor's home country. An alternative tack is to develop a detailed understanding of accounting practices in the investee's country.Students will definitely disagree on this one. Eventually some will offer a compromise: use the former coping mechanism if the investee company is being compared with a firm in the investor s home country and adopt a "multiple principles capability^ when comparing the investee company to another company in the same countiy. Another tack would be to examine who is making the market for the investee's shares. If local investors are making the market, one should not ignore local norms. However, if investors in the investor's country are making the market; e.g・，U.S- institutional investors, then restatement to the investor's home country GAAP makes sense.6.Prospective analysis involves forecasting a firm's future cash Hows and then valuing those cash flows. As future cash flow estimates are based on accounting measurements, differences in measurement rules between countries complicate this effort. The range of accounting choicesavailable abroad add to this complexity. However, measurement differences are only one of the variables that complicates prospective analysis, Differences in environmental variables such as rates of inflation, sovereign risk, business practices, and institutions complicate both forecasting and valuation. Different institutions include financial norms, tax regimes and market enforcement mechanisms. In terms of valuation, while P/E multiples may be popular in one country, discounted dividends may be more popular in another. Even if two countries employ the same valuation framework, differences in investment horizons and methods of calculating discount rates/cost of capital will vary.7.Translation of foreign financial statements for the convenience of domestic readers is fundamentally distinct from the translation of branch or subsidiary accounts for purposes of consolidation. In the latter case, translation involves a remeasurement process. In most countries, foreign accounts first are restated to the accounting principles of the parent country prior to restatement to parent currency. Convenience translations merely involve a restatement process in the sense that foreign accounts are multiplied by a constant to change the currency of denomination from domestic currency to the currency of the reader's domicile.8.Rules of thumb can vary substantially from one country to another due to both accounting and non-accounting factors. Japan provides a striking example. Many Japanese companies are members of large trading groups (keiretsu) with large commercial banks at their core. Keiretsu often postpone interest and principal payments, so that long-term debt in Japan works more like equity in the United States. Short-term debt is attractive to Japanese companies because shortterm obligations typically have lower interest rates than long-term obligations, and normally are renewed or “rolled ovef' rather than repaid. Thus, debt has a much different nature and purpose in Japan than in the United States.The acid test ratio specifically involves cash, marketable securities and receivables as the numerator in the equation, and current liabilities as the denominator But what counts as cuiTent liabilities versus long-term debt (or how long-tenn debt is viewed) is very different in Japan than in the U.S. In Japan, high short-term debt is less likely to indicate a lack of liquidity, for the reasons stated above. Banks often are willing to renew these loans because it allows them to adjust their interest rates to changing market conditions. Thus, short-term debt works like long-term debt elsewhere, and Japanese companies can operate successfully with a quick ratio at a level that would be entirely unacceptable in the United States. Note, however, that banking practices in Japan are changing rapidly, and the tolerance in Japan for high levels of debt financing may well decrease in the future.9.Important recommendations include the following:•Be aware that national differences in accounting measurement rules can add "noise” to reported performance comparisons. The reader should be prepared to unwind accounting differences where necessary.•Use a structured approach, such as the one presented in this chapter, to ensure that all relevant factors are considered.•Cash flow-related measures are less affected by accounting principle differences than are earnings-based measures, thus making them potentially valuable in international analysis.•Audit quality varies dramatically across countries. Become familiar with the level of audit quality in a particular country before reaching conclusions using financial statementsprepared by companies in that country.•Corporate transparency also varies dramatically across countries. Be sure to assess accurately the quality of financial disclosures before reaching conclusions based on them.• Above all, appreciate that measurement and disclosure practices are environmentally based.Appreciation for institutional differences will greatly aid in proper interpretation ofaccounting based performance and risk measures.10.The following list describes in general fashion what probable effect the Dutch translation practice would have on selected financial ratios in comparison with the temporal method. The analysis assumes that the original financial statements of the two companies are identical in all respects save for the currency translation method used. Inventories are assumed to be carried at cost..Devaluation Revaluation Current ratio (liquidity) decrease increaseInv. At mkt goes downInv at mkt goes upDebt ratio (solvency) increase decreaseLoss goes in ATA so eq. smallerGain in ata eq Irg.Fixed asset turnover (efficiency) increase decrease Net sales/assets assetssmaller so inc.Assets larger so dec.Return on assets (profitability) increase decrease loss not in incomeGain not in incomeAs can be seen, the current rate method can have a significant effect on key financial indicators. Accordingly, security analysts must be careful to distinguish between the currency in which a foreign account is denominated and the currency in which it is measured.11.The attest function is what gives credibility to the financial statements. If this function is important in the domestic case, it is even more important internationally where statement readers are separated from the companies they are interested in not only by physical distance but also by cultural distance.12.Internal control is an activity performed by a firm's internal auditors that helps to assure that management^ policies and procedures are being earned out effectively, that financial transactions are being properly reported both internally and externally and that the assets of the firm are safeguarded. Internal control is relied upon by a firm's external auditors in determining to what extent their work should replicate the work of the internal auditor. The role of the internal auditor has become even more important in assuring the reliability of management's financial representations owing to the large number of financial scandals that has rocked the U.S. and other financial markets during the start of this decade. Recent legislation in the U.S., which is increasingly being emulated elsewhere, has made management responsible for assuring that their system of internal controls are not only in place but are working well. This has beennecessary to reduce investor uncertainty regarding the quality and reliability of a firm's published financial accounts.In the absence ol a strong system ol internal controls, investors will adopt a more passive approach to investing as opposed to relying on firm-specific information. This involves taking a mutual fund approach to investing which attempts to diversify away information risk, although at the cost of lesser performance.Exercises1. The trend of dividends from a U.S. dollar perspective can be ascertained by translating the peso dividend stream using the $/P exchange rate prevailing at the beginning of the time series or the end. Use of the ending exchange rate provides the following trend data:_________________ 20X6_ Net income (P) 8,500 Dividends (P milfs)2,550 Dividends ($000) 850 Percentage change -・- 20X7—10,8003,2401,08027.1%20X8一15,9004.7701,59047.2%Beg. Bal. DR. CR. End. Bal.Cash 2,400 3.990 New fixed assets 8,500 (3) 2,695 (2)555 10,640 ST $ payable 500 500 LT debt 4,800 (3) 1,584 6,384 Capital stock 3,818 3,818 Retained earnings 1,782 (1)250 2,030 Translation adjustment 1,898 2. How the statement of cash flows appearing in Exhibit 9.5 was derived:Sourcesof Funds Uses of FundsSources:Net incomeDepreciationIncrease in LT debtTranslation adjustment Uses of funds:Increase in fixed assets Net increase in cash\7123 4z(.z(\z(x/(\4,2874.287(3) 2,6952,6951,5924.28720X6 20X7 20X83. Consolidated Funds Statement(figures appearing in parentheses denote changes due primarily to translation effects) Sources:Net income 250Depreciation555Increase in LT debt 1,584 (1,584) Translation adjustment 1,898 (1,898)less intercompany payable 138Uses of funds:Increase in fixed assets 2,695 (2,695) Net increase in cash 1.590 (924)The $924 translation effect is that part of the $ 1,898 gain on the translation of net worth which is related to the translation of cash. It is derived as follows. a. Opening cash of 24,000 krona translated at .10=$2,400 Opening cash retranslated at 12/31 at .133 = 3,192Gain 792b. 6,000 krona increase in cash during the yearinitially translated at • 111=$666 6,000 krona retranslated at 12/31 at .133 = 798 GainB2 Total translation gain applicable to cash9244. Yes, Infosys added value for its shareholders as its EVA was a positive RPE 1,540. Operating income more than covered the company's cost of debt and equity.5. Debit:Cost of goods sold ¥250,000,000Taxes payable87,500,000CreditInventories ¥250,000,000Tax expense87,500,0006. a.The two time series do not move in parallel fashion because of changes in exchange rates used toperform the convenience translations.c. This problem can be minimized by translating the time series using the 20X6 exchange rate or by using the 20X8 exchange rate. Trend analysis can also be performed in the local currency. 7. a. ROE (per Swedish GAAP) = 4,709/88,338 = 5.3%ROE (per U.S. GAAP) = 3,127/84,761 = 3.7% b.Some students will favor using the ROE based on Swedish GAAP, especially if Volvo's performance is being compared with that of another company in Sweden. Others willfavor basing their performance assessment on ROE per U.S. GAAP, especially if Volvo is being compared to a U.S. counterpart. The latter at least minimizes the apples to oranges issue. It is not clear which viewpoint is correct, and this question should provoke good discussion of the value of restated accounting numbers.c.Even if students all agreed that an ROE based on U.S. GAAP were preferable, the user of this information should take into account all institutional considerations, such asdifferences in tax laws, financial norms and business practices that affect all ratios in the Swedish business environment. In the absence of such analysis, restated ratios are likely to be misinterpreted.8.Assessing reasons for P/E ratio trends and cross-country comparisons is difficult. The text discusses two studies that have analyzed differences in P/E ratios between Japan and the United States in the late 1980s. The studies differ greatly in their explanations of the (then) much higher Japanese P/E ratios, and neither study claims to explain more than a part of the difference. Part but not all of the reasons were attributable to accounting measurement differences. We suspect that differences in institutional factors probably exert the dominant reason for observed differences internationally.9.Students answers will naturally vary. However, they should recognize that audit practice are influenced as much by differences in social, economic and political environments as are measurement standards. They should also recognize that standard setting is as much a political process as it is a process of logic or sound principles.Sales revenue ($) 49,350 63,030 53,056b. Percentage change20X7/20X620X8/20X7Pounds 21.9% 15.7%Dollars27.8%-15.8%Sales revenue (£)23,50028,650 33,16010.Judging from information provided in Exhibit 9-22, liability cases vary far more bycountry than by auditor 一with 35 cases in the U,.S., over twice as many as in the nexthighest country (the U.K., with 17). No audit firms had cases in every country, and thetotal number for each auditor is relatively similar, ranging from 11 (Arthur Andersen) to18 (KPMG). The country where liability cases were least frequent was the Netherlands,with only one case.Why? Laws and regulations in the Anglo-American countries, including the United States, stress investor protection. This places more liability on the auditor and makes it easier for companies or shareholders to bring or prove a suit. In response to the threat of litigation,auditors are probably more careful in the United States, and more willing to subjectthemselves to strict regulations.Implications? It is reasonable to argue that financial reporting quality is positivelycorrelated with frequency of audit litigation. For example, the patterns of auditor litigation shown in the table above are consistent with the relatively high financial reporting quality found in the U.S., the U.K., Australia and Canada.11.Student opinions are likely to vary on this one as well. Some will argue for opinionscoined by private professional bodies. Others, in light of Enron, et. aL, will opt for morelegal opinions. In the end, students should conclude that enforcement mechanisms arealso very important. Recent U.S. indictments of company officers for accountingviolations as well as mandated prison terms is unprecedented. Together with increasingrecourse to the courts by aggrieved investors, the imbalance between an auditorsresponsibility and authority is being redressed.12.Reasonable criteria forjudging the merits of a database for company research include (butare not limited to):-coverage (number of companies, countries, years of data).-amount of information for each company (number of financial, market-based measuresper company).-reliability, ease of use, language translations, search features.-cost (are only some of the data “freely available?”).-access and links to other Web sites provided?Case 9-1SandvikLa. There are several advantages that accrue to Swedish firms employing the system of special reserves. First, political dividends accrue to firms that align their goals with those of the government. Second, there are tax advantages as expenses recognized in establishing a reserve are tax deductible. Third, the use of reserving allows companies to manage their earnings. Disadvantages include the risk of reducing a company's reporting credibility with the international investing community. This, in turn, may limit the company's external financing flexibility.2.The government benefits from the reserving system in that it has ally in maintaining full employment. That is to say, its macroeconomic tool kit is expanded in that it yet another vehicle for managing the economy in addition to monetary and fiscal policy.3.The use of reserves makes it difficult for statement readers who are unfamiliar with Swedish reporting practices to assess the risk and return attributes of the firm. For example, it will not be clear to what extent observed differences in financial ratios between a Swedish6.With reserves ROS 3,731/15,242= 24.5%Without reserves 3,731 + 185(1・.03)/15,242= 25.7%Operating incomeProvisionsGeneral B/D ReserveSpecial reserve Special reservesOperating income DM68,029DM33,559 2,01432,4561,2781,278company and a non-Swedish company are due to accounting differences as opposed to real economic differences in the attributes being measured.4.The use of reserves had a dampening effect on Sandvik's reported earnings.5.The entries used to increase the reserves can be determined by examining the change in Untaxed Reserves in the balance sheet as well as examining the relevant notes lo the financial statements. The entries were:Depreciation expense 172Excess depreciation reserve 172Other expenses 13Other untaxed reserves 13ROA 3,731 + 1 +633 3,731 + 1 +633 + 185(38J42 + 22,286)/ 2 [(38,142 - 185) + (22,286 + 85)J /2=14.4% = 15.1%Case 9-2Continental A.G.Students will first gravitate to the notes to the financial statements dealing with Special Reserves and Provisions. Their instincts are correct. The problem facing an external analyst is that it is difficult to determine which of the reserve and provision items are legitimate and which are not. It turns out that two important keys to this case are to be found in footnotes 21 and 22. Focusing on the consolidated figures, we see that Continental is using entries under Other operating income and Other operating expenses to smooth reported earnings. The following analysis backs out 1) Credit to income from the reversal of provisions, 2) Credit to income from the reduction of the general bad debt reserve, and 3) Credit to income from the reversal of special reserves appearing in note 21 and Allocation to special reserves under note 22.Adjustments:19X9Operating incomeProvisionsGeneral B/D Reserves Special Reserves Special ReservesOperating incomeDM57,237DM17,3121,10138,82416816866J51 X.39 =26,03357,069 X .39=22,25766J51 -26,033 40,71820X0To determine the net overstatement on an after-tax basis, the students should attempt toapproximate Continentafs effective tax rate. Information to do this are contained in footnote 24 and ContinentaFs income statement.Net overstatement:57,069-22,257 34,812This overstatement, as a percentage of reported consolidated earnings, was 18% for 19X9 and 37% for 20X0. Dietrich and Marissa have cause to pay Continental^ CFO a visit.Income tax141,476 59,884 Income after tax 227,838 93,435 Income before tax 369,314153,319 Effective rate:141,476/369,31459,884/153,319= 39%= 39%Effective Taxes: 19X9 20X0 Reduction in taxes:。
财政学(第七版)习题参考答案(学生用)
财政学(第七版)习题参考答案(学生用)第一章财政概念和财政职能复习与思考1.学习财政学为什么要从政府与市场的关系说起？答：在市场经济体制下，市场是一种资源配置系统，政府也是一种资源配置系统，二者共同构成社会资源配置体系。
而财政是一种政府的经济行为，是一种政府配置资源的经济活动，所以明确政府与市场的关系是学习财政学和研究财政问题的基本理论前提。
不明确政府与市场的关系，就难以说明为什么有市场配置还要有政府配置，政府配置有什么特殊作用，政府配置的规模多大为宜，政府采取什么方式配置资源等。
什么是市场？完整的市场系统是由家庭、企业和政府三个相对独立的主体组成的。
在市场经济下，政府构成市场系统的一个主体，这是毋庸置疑的。
比如，政府为市场提供诸如基础实施、教育和社会保障之类的公共物品和准公共物品，同时从市场采购大量的投入品和办公用品。
但政府又是一个公共服务和政治权力机构，具有与市场不同的运行机制，因而在市场中又具有特殊功能和特殊的地位，可以通过法律、行政和经济等衡。
市场是一种结构精巧而且具有效率的商品交易机制，这已经为经济发达国家几百年的经济发展史所证实，而且为各种经济学说所论证和肯定。
亚当·斯密将市场规律形容为“看不见的手”，认为不需要任何组织以任何方式的干预，市场就可以自动地达到供给与需求的均衡，而且宣称当每个人在追求私人利益的同时，就会被这只手牵动着去实现社会福利。
马克思同样赞叹市场机制的效率，并将价格规律提升为价值规律，认为商品的价值是由生产商品的社会必要劳动时间决定的，而价格围绕价值上下波动来调节生产和流通，并促进技术进步和经济发展，马克思同时也指出了市场波动是导致经济危机的可能性因素。
福利经济学的代表人物——意大利的经济学家帕累托，提出了一个在学习西方经济学和学习财政学时经常提到的帕累托经济效率标准，又称为帕累托最优状态。
简而言之，帕累托最优状态是指这样一种状态：任何一种改变都不可能使一个人的境况变好而又不使别人的境况变坏。
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Answers to CHAPTER 5 - Externalities
Answers to Multiple-Choice Questions
1. d
2. a
3. c
4. b
5. c
6. d
7. a
8. b
9. a
10. d
11. c
12. b
13. d
14. a
15. c
16. d
17. a
Answers to Discussion Questions
1. a. Set PMC equal to demand and solve for P and X. X= 50/9, P = 170/9.
b. Find SMC by adding PMC to MD. Set SMC equal to demand and solve for P and
X. X = 49/11, P = 232/11.
c. At X = 49/11, subtract PMC from SMC. Tax = 109/22.
2. a. Set MD = MB and solve for X. X= 32/6.
b. Insert 32/6 into either MD or MB. Fee = 86/3.
c. Set MB equal to zero and solve for X. X = 34/3.
3. Without intervention, optimal will be where PMB = 0. X = 15. The efficient level is X =
5. The area beneath the PMB is gained. Gain = 25.
4. a)
b)
c) Not socially optimal.
5. Put 25 into demand equation. P = 7.5.
SMC(PMC+MB)
PMC
MB H
MB/MC
Pesticides
MB T
1
1H T X X = SMC(PMC+MB)
PMC
MB H
MB/MC
Pesticides
MB T
1
1H T X X = *H X *T X
Answers to True/False/Uncertain Questions
1. F
2. T
3. T
4. T
5. U
6. T
7. U
8. F
9. T
10. U (Depends on the amount of time spent partying.)
Answers to Essay Questions
1. Social conventions help in alleviating externalities without government intervention by
teaching others to make some form of compensation for damages caused.
2. Market forces have been effective in areas like the environment, when applied correctly.
They have not worked as well in the area of medical services, for example.
3. Bargaining costs are generally not zero. Identifying damages is difficult. There is
generally some amount of asymmetric information.。