...Case 8-4 The Bear Minimum Provision 1 According to 840-10-25-5 (b) it seems that the legal fees being paid by Big Bear for Goliath Co. would be excluded from the minimum lease payment. Reading further in 840-10-25-6 (e) it says “Fees that are paid by the lessee to the owners of the special-purpose entity for structuring the lease transaction. Such fees shall be included as part of minimum lease payments” so you would include these fees paid by Big Bear for the structuring the lease. In the Intermediate Accounting SIXTH EDITION p.832 under the Executory Costs “These expenditures simply are expensed by the lessee as incurred” So, for the legal fees paid by Big Bear to Stripe, Berry, Mills and Buck LLP they should be expense when incurred and not included in the minimum lease payments. So, the legals fees that were paid for Goliath Co. for the structuring of the lease would be included in the minimum lease payments but the fees paid to Stripe, Berry, Mills and Buck LLP by Big Bear for its own legal fees would not be. ASC 840-10-25-5 For a lessee, minimum lease payments comprise the payments that the lessee is obligated to make or can be required to make in connection with the leased property, excluding both of the following: a. Contingent rentals b. Any guarantee by the lessee of the lessor's debt and the lessee's obligation to pay (apart from the rental payments) executory costs such as insurance, maintenance, and taxes in connection with the leased property...
Words: 353 - Pages: 2
...Brown was reviewing the performance of some models of stuffed animals tested for sales during 1992. Every time Julia’s on the trip, she would buy some stuffed animals for testing. Fifty was the minimum amount the manufacturers require. Based on Julia’s years of buying experience, the tested result would give Julia a clear estimation about how many new stuffed animals she needed to order. Figure 1 in below shows the timeline of how Julia buys the toys for the company: 1992 January 1993 December 1994 50 of Each Tested for sale: Evaluation Test Results then Order Estimated Number of Bear, Pig, Bear, Pig, & Raccoon & Buy Test Toys for 1994 Christmas & Raccoon for Christmas Season Figure 1: Timeline of how Julia buys the toys for the company Decision Problem During last year, three stuffed animals were tested for sale, including a bear, a pig, and a raccoon. The result shown there were 10 out of 50 bears, 4 out of 50 pigs, and 32 out of 50 raccoons sold. Julia was faced with a decision to make about whether she should import the toys from Germany or but the toys domestically, and if the toys were to be imported, how many of bears, pigs, and raccoons she should buy for the Christmas season of 1993. Analysis of the Industry and the Company Looking at the toy business, there was an intensified competition between different...
Words: 987 - Pages: 4
...amnesty program, but it’s contingent on voluntarily resgister on prospective basis. If they didn’t file the paper work, they still may subject to $60 million. No legal reduction on the liability yet. Code: gain contingency, derecognition of liability extinguish405-40-1 On June 15, 2012 Memo 2: Talking about 37 million dollars It’s not an operating lease. Session 8: In-Class Discussion Case #2 - Bear Minimum Provision 3: 25-4 This guidance addresses what constitutes minimum lease payments under the minimum-lease-payments criterion in paragraph 840-10-25-1(d) from the perspective of the lessee and the lessor. Lease payments that depend on a factor directly related to the future use of the leased property, such as machine hours of use or sales volume during the lease term, are contingent rentals and, accordingly, are excluded from minimum lease payments in their entirety. (Example 6 [see paragraph 840-10-55-38] illustrates this guidance.) However, lease payments that depend on an existing index or rate, such as the consumer price index or the prime interest rate, shall be included in minimum lease payments based on the index or rate existing at lease inception; any increases or decreases in lease payments that result from subsequent changes in the index or rate are contingent rentals and thus affect the determination of income as accruable. (Example 7 [see paragraph 840-10-55-39] illustrates this guidance.) ASC FASB: 1. Earned 2. Received 3. Realizable SEC:...
Words: 348 - Pages: 2
... FCL: Full Container Load It is a term of ocean freight; it suggests that the container used for transportation is exclusively utilized by one importer/ exporter. It can also imply that the supplier has packaged and loaded the goods into a container provided by a forwarder before delivering to the cargo terminal. It does not necessarily mean that the container will be utilized to its maximum capacity. HQ: High cube container With this type of container you gain the advantage of an added foot as compared to a standard container. EXW: Ex Works The seller only bears charges up till his own factory, office or storage floor. All risk and costs from that point onwards; including the transportation, shipment, insurance and commission; is borne by the buyer. The only responsibility of the seller is to make sure that the goods are available on the seller’s premises on time. MOQ1: Minimum Order Quantity The bare minimum amount that has to be requested for the...
Words: 515 - Pages: 3
...with exercise price X1 and sell one put with exercise price X2. The profit equation is ( = Max(0, X1 – ST) – P1 – Max(0, X2 – ST) + P2 If ST < X1 < X2 ( = X1 – ST – P1 – X2 + ST + P2 = X1 – X2 – (P1 – P2) Recall from Chapter 3 that the difference between exercise prices is less than the difference between premiums. Since X1 < X2 and P1 < P2, the above profit is negative. If X1 < ST < X2 ( = – P1 – X2 + ST + P2 This figure increases dollar for dollar with ST. The breakeven is found by setting the profit to zero, – P1 – X2 + ST* + P2 = 0 and solving for ST* ST* = X2 + (P1 – P2) If X1 < X2 ( ST ( = – P1 + P2 Since P2 > P1, this figure is positive. The minimum profit occurs in the first profit range, ST < X1 < X2 and equals X1 – X2 – (P1 – P2). The maximum profit occurs in the third profit range, X1 < X2 < ST and equals – P1 + P2. 2. (Straddle) A straddle is a strategy based on the expectation that the market will have high volatility. If, however, everyone else in the market believes that the market will have high volatility, then the prices of the call and put will reflect the higher volatility, which will result in breakeven points further away from the current stock price. A straddle is most likely to be successful when the investor believes that the market will be more volatile than the everyone else in the market believes, and the investor’s expectations are more accurate. 3. (Box...
Words: 3227 - Pages: 13
...Kamran Burki Build-A-Bear Case – Lease a. Companies lease assets rather than by them because the company might need the asset for only a short period of time. The company might also not want to report an asset or liability or the company simply might not have enough cash to buy the asset. In addition, the company also might have difficulty getting a loan to finance the purchase. b. An operating lease is very similar to a rental agreement. The company does not have ownership of the asset and all the risk and benefits of ownership stay with the lessor. The lessor only transfers the right to use the asset. A lease is considered a capital lease if it meets the following rules: 1) lease life must be greater than 75% of the life of the asset 2) transfer of ownership at the end of the lease term 3) bargain purchase at end of lease term 4) present value of minimum lease payments exceeds 90% of the FMV of the asset A direct financing lease is is defined as a lease where the present value of the lease payments is equal to the cost of the asset. The lessor does not report a gain/loss at the beginning of the lease, but earns interest revenues. A sales type lease is a lease where the present value of the lease payments is greater than the cost of the asset. The lessor records a profit at the beginning of the lease and also earns interest revenue. c. As discussed above, all leases are not the same. Hence, the need to distinguish between different types...
Words: 711 - Pages: 3
...Bear Stearns Forensic Accounting Case 1. Identify key dates concerning financial accounting and/or disclosure issues for Bear Stearns during the critical March 2008 time period before bailout by JP Morgan Chase. * March 10, 2008 The Alt-A residential mortgage-backed securities issued by a Bear Stearns affiliate was downgraded. This increased the risks of mortgage-backed securities. Two Bear Stearns hedge funds now bankrupted and were leveraged up to $60 of debt for each $1 of equity. This increased BS’ financial burden. RaboBank Group informed Bear Stearns that it would not renew a $500 million loan coming due later that week and unlikely to renew a $2 billion loan scheduled to expire the following week. BS will seek short-term debt to meet current liability so it will have more current liabilities and decrease BS’s liquidity. Bear Stearns’ shares dropped as much as 14% in the course of the day, finally closing at $62.30, and a decline of more than 11 percent. It decreased its value and might influence its goodwill. The annual cost of a 5-year Bear Stearns’ CDS ballooned more than 37% to $626,000 per $10 million. This increased BS’s expense and decreased its net income. * March 11, 2008 ING Groep NV was pulling about $500 million in financing. Adage Capital Management pulled some of its money from Bear Stearns’ prime-brokerage division. BS’ capital decreased and solvency. It might not meet its current liability needs. * March 12, 2008 Bear...
Words: 1839 - Pages: 8
...Customer Submitted Case Studies Case Study: Functional Overview on Letter of Credit Author: Deepak Seeruwani, Consultant Contributors: Naveen Rangineni, Consultant Skill Level Rating for this Case Study: Intermediate About Oracle Customer Submitted Case Studies Oracle Customer Submitted Case Studies are intended as learning tools and for sharing information or knowledge related to a complex event, process, procedure, or to a series of related events. Each case study is written based upon the experience that the writer/s encountered. Customers should not interpret or use information in these case studies as solutions or recommendations without first contacting Oracle Support. Each Case Study contains a skill level rating. The rating provides an indication of what skill level the reader should have as it relates to the information in the case study. Ratings are: • Expert: significant experience with the subject matter • Intermediate: some experience with the subject matter • Beginner: little experience with the subject matter Case Study Abstract This case study will provide a practical guide to letters of credit and as there is no functionality as of now to use Letter of Credit as a means of payment which is increasingly being used, a workaround in Oracle Payables to handle payments through Letters of Credit. Within its limitations it is hoped that: • This paper will serve as a basic tool in understanding letters of credit and ...
Words: 2882 - Pages: 12
.............. 3 WHAT ARE THE GENERAL BENEFITS RTW / MGNREGA ..................................................................... 4 HOW IS THE PROGRAM FINANCED? .................................................................................................. 4 Financing pattern ............................................................................................................................... 4 Release of funds ................................................................................................................................. 4 Comparison : RTW/MGNREGA Vs other government based employment schemes ........................ 5 Impact of RIGHT TO WORK / MGNREGA ........................................................................................... 5 Increase in GDP .................................................................................................................................. 5 Effect on Inflation .............................................................................................................................. 6 Recommendations ............................................................................................................................. 7 REFERENCES ....................................................................................................................................... 8 2 INDIAN INSTITUTE OF MANAGEMENT - KOZHIKODE INTRODUCTION :...
Words: 2277 - Pages: 10
...Look at basis for tax purposes, not FMV FMV is important for substantial economic effect Defining Entities I. History a. Corp used to be 4 factor analysis. Now check-the-box to opt in unless default in. i. Asked: Corporate resemblance test no longer relevant II. Classifying Partnerships for Tax Purposes a. Two or more members: pship or corporation 7701-2(a) i. Default = partnership 7701-3(b)(1)(i) 1. Applies to LLCs 2. To opt out of default Check-the-box 3. Look to state law; If state law corp = corp for tax 7701-2(b) b. One Member: Corp or DRE 7701-2(a) i. Default = Disregarded entity 7701-3(b)(1)(ii) 1. If state law corp = corp for tax 7701-2(b) 2. SMLLC can’t be Pship = DRE III. Reclassification a. 7701-3(g) Election to Convert PS to Corp for Tax i. No tax ii. Deemed contribution of pship assets to corp, followed by liquidation b. PTPs: taxed as corporations i. PTP – publicly traded partnership. 7704 c. Election to Convert Corp to PS i. Deemed liquidation and trigger tax at that time d. Add member to single member corp of LLC and subject to PS tax rules e. Lose member and become single member, then DRE...
Words: 2456 - Pages: 10
...Acting as an advocate to the University, the Student Body and the community. • Promoting activities that benefit the Student Body. • Increasing the accessibility of the Student Senate to the Student Body. • Acting as a communications conduit between the Student Body and the University. • Provide insight to the President of the University or Campus Director on the condition of the Student Body. • Providing for facilities enhancement for the Student Body. • Promoting and sustaining activities and operations that benefit the Professional Organizations and Student Clubs on campus. Section 3 The Student Senate officers are granted authority and rights to govern the Student Body by the students via annual elections. Section 4 The President of the University or Campus Director shall not construe the tenets set forth in this Constitution to restrict or interfere with the authority of the University, its faculty, or its administration to act on matters relating to their assigned responsibilities. Article II Section 1 Any person registered at CTUCS as a student shall be a member of the Student Body. Section 2 The Student Senate shall consist of the following members: President, Vice-President, Treasurer, Secretary, and additionally a...
Words: 5455 - Pages: 22
...Microeconomics (PGP – I) Answer Keys for Problem Set IV 1. In 1996, US Congress raised the minimum wage from $4.25 per hour to $5.15 per hour, and then raised it again in 2007. Some people suggested that a government subsidy could help employers finance the higher wage. Suppose the supply of low-skilled labor is given by LS = 10w, where L is the quantity of low-skilled labor (in millions of persons employed each year), and w is the wage rate (in dollars per hour). The demand for labor is given by LD = 80 – 10w. (a) What will be the free-market wage rate and employment level? Suppose the government sets a minimum wage of $5 per hour. How many people would then be employed? (b) Suppose that instead of a minimum wage, the government pays a subsidy of $1 per hour for each employee. What will the total level of employment be now? What will the equilibrium wage rate be? Answer. (a) In a free-market equilibrium, LS = LD. Solving yields w = $4 and LS = LD = 40. If the minimum wage is $5, then LS = 50 and LD = 30. The number of people employed will be given by the labor demand, so employers will hire only 30 million workers. w S 8 LS 5 4 LD 30 40 50 80 L 1 (b) Let ws denote the wage received by the sellers (i.e., the employees), and wb the wage paid by the buyers (the firms). The new equilibrium occurs where the vertical difference between the supply and demand curves is $1 (the amount of the subsidy). This point can be found where LD (wb) = LS (ws), and ws – wb...
Words: 3259 - Pages: 14
...SOLUTIONS TO TEXT PROBLEMS: Chapter 6 Quick Quizzes 1. A price ceiling is a legal maximum on the price at which a good can be sold. Examples of price ceilings include rent control, price controls on gasoline in the 1970s, and price ceilings on water during a drought. A price floor is a legal minimum on the price at which a good can be sold. Examples of price floors include the minimum wage and farm-support prices. A price ceiling leads to a shortage, if the ceiling is binding, because suppliers won’t produce enough goods to meet demand unless the price is allowed to rise above the ceiling. A price floor leads to a surplus, if the floor is binding, because suppliers produce more goods than are demanded unless the price is allowed to fall below the floor. 2. With no tax, as shown in Figure 1, the demand curve is D1 and the supply curve is S. The equilibrium price is P1 and the equilibrium quantity is Q1. If the tax is imposed on car buyers, the demand curve shifts down by the amount of the tax ($1000) to D2. The downward shift in the demand curve leads to a decline in the equilibrium price to P2 (the amount received by sellers from buyers) and a decline in the equilibrium quantity to Q2. The price received by sellers declines by P1 – P2, shown in the figure as ( PS. Buyers pay a total of P2 + $1,000, an increase in what they pay of P2 + $1,000 - P1, shown in the figure as ( PB. [pic] Figure 1 If the tax is imposed on car sellers, as shown in Figure...
Words: 13046 - Pages: 53
...Gun Control Darrell Welch ENG/102 March 30, 2014 Michele Barth Gun Control Research Essay Rough Draft It is Friday afternoon on January 4, 2013, when Donnie Herman received a disturbing call from his wife Melinda stating a man was ringing their door bell and trying to get in the front door of their home. “Get the kids and hide” Donnie told his wife; Melinda gathered the 9 year old twins quickly and headed to the attic crawl space. Armed with her cell phone and the .38 caliber revolver Donnie had recently taught her how to use. Melinda hears the man break through the front door and rummage downstairs. Donnie meanwhile is calling 911 as his family cowers in the attic crawl space fearing for their lives as they attempt to hide from the intruder. The 32 year old male finds Melinda, the twins and at the same time looking down the barrel of the .38 caliber revolver, Melinda fires! Donnie says to the 911 Operator, “She’s shooting him, she’s shooting him, shoot him again” (Reese, 2014). 5 bullets hit their intended target, striking the would-be intruder in the face and neck, Paul Slater is heard screaming by the 911 Operator as he is hit by the .38 caliber rounds. Paul Slater makes his way out of the house to his SUV, trying to escape. When the police arrived they found the intruder in the neighbor’s yard after wrecking his SUV. The people of Walton County, Georgia have hailed this mother and wife a hero, a well prepared woman that was able to defend her children, herself and their...
Words: 1893 - Pages: 8
...INTRODUCTION DEFINITIONS Contract for service EMPLOYERS & MANUFACTURERS ASSOCIATION (NORTHERN) INC 159 Khyber Pass Road Grafton, Auckland New Zealand. Private Bag 92066 Auckland 1030. Contract of service MEANING OF EMPLOYEE TESTS Control Integration Fundamental or economic reality test Independence Intention APPLICATION OF LAW BEST PRACTICE CHART OF DIFFERENCES APPENDICES: IRD CHECKLISTS Appendix 1: Control test checklist Appendix 2: Integration test checklist AdviceLine For telephone advice and assistance, call or email the EMA AdviceLine and talk to one of our employer advisors: 09 367 0909 or 0800 800 362 AdviceLine@ema.co.nz Appendix 3: Independent test checklist Appendix 4: Intention test checklist Appendix 5: Economic reality test checklist Appendix 6: Employee Checklist 2 2 3 3 3 3 4 5 5 5 6 6 6 7 8 9 9 11 12 13 14 14 A-Z of Employing is available to EMA members only, via email, or online at www.emadvice.co.nz Contact AdviceLine to obtain your password. AdviceLine is open 8am – 8pm Monday to Friday (excluding public holidays) Contracts for Services OVERVIEW 1 2 3 A contract for service contrasts with a contract of service. An employee is a person under a contract of service and a contractor is a person who enters into a contract for service. The concern with the correct classification of a relationship is usually over whether a person has been prevented from accessing rights and protections available only to employees. The Employment Relations Act 2000...
Words: 4676 - Pages: 19
