...After the controller of Stern Corporation had ascertained the changes in accounts receivable and the allowance for doubtful accounts in 1998, a similar analysis was made of property, plant, and equipment and accumulated depreciation accounts. Again the controller examined the December 31, 1997, balance sheet [see Exhibit 1 of Stern Corporation (A)]. Also reviewed were the following company transactions that were found to be applicable to these accounts: On January 2, 1998, one of the factory machines was sold for its book value, $3,866. This machine was recorded on the books at $31,233 with accumulated depreciation of $27,367. Tools were carried on the books at cost, and at the end of each year a physical inventory was taken to determine what tools still remained.The account was written down to the extent of the decrease in tools as ascertained by the year-end inventory. At the end of 1998, it was determined that there had been a decrease in the tool inventory amounting to $7,850. On March 1,1998, the company sold for $2,336 cash an automobile that was recorded on the books at a cost of $8,354 and had an accumulated depreciation of $5,180, giving a net book value of $3,174 as of January 1,1998. In this and other cases of the sale of long-lived assets during the year, the accumulated depreciation and depreciation expense items were both increased by an amount that reflected the depreciation chargeable for the months in 1998 in which the asset was held prior to the sale, at...
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...Individuel Case Study After the controller of Stern Corporation had ascertained the changes in accounts receivable and the allowance for doubtful accounts in 1998, a similar analysis was made of property, plant, and equipment and accumulated depreciation accounts. Again the controller examined the December 31, 1997, balance sheet [see Exhibit 1 of Stern Corporation (A)]. Also reviewed were the following company transactions that were found to be applicable to these accounts: 1. On January 2, 1998, one of the factory machines was sold for its book value, $3,866. This machine was recorded on the books at $31,233 with accumulated depreciation of $27,367. 2. Tools were carried on the books at cost, and at the end of each year a physical inventory was taken to determine what tools still remained. The account was written down to the extent of the decrease in tools as ascertained by the year-end inventory. At the end of 1998, it was determined that there had been a decrease in the tool inventory amounting to $7,850. 3. On March 1, 1998, the company sold for $2,336 cash an automobile that was recorded on the books at a cost of $8,354 and had an accumulated depreciation of $5,180, giving a net book value of $3,174 as of January 1, 1998. In this and other cases of the sale of long-lived assets during the year, the accumulated depreciation and depreciation expense items were both increased by an amount that reflected the depreciation chargeable for the months in 1998 in which...
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...REAL ISSUES & CASES MICHAEL C. KNAPP SEVENTH EDITION MAKE IT YOURS! SELECT JUST THE CASES YOU NEED Through Cengage Learning’s Make It Yours, you can — simply, quickly, and affordably — create a quality auditing text that is tailored to your course. • Pick your coverage and only pay for the cases you use. • Add cases from a prior edition of Knapp’s Contemporary Auditing. • Add your course materials and assignments. • Pick your own unique cover design. We recognize that not every program covers the same cases and topics in your auditing course. Chris Knapp wrote his case book for people to use either as a core e book or as a supplement to an existing book. If you would like to use a custom auditing case book or supplement the South-Western accounting book you are currently using, simply check the cases you want to include, indicate if there are other course materials you would like to add, and click submit. A Cengage Learning representative will contact you to review and confirm your order. G E T S T A R T E D Visit www.custom.cengage.com/makeityours/knapp7e to make your selections and provide details on anything else you would like to include. Prefer to use pen and paper? No problem. Fill out questions 1-4 and fax this form to 1.800.270.3310. A Custom Solutions editor will contact you within 2-3 business days to discuss the options you have selected. 1. Which of the following cases would you like to include? Section 1: Comprehensive...
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...Chapter 4--Overview of Auditor’s Legal Liability Liability to Clients-Common Law An auditor is in a contractual relationship with a client. If the auditor does not perform his or her side of the bargain according to contract terms the client can sue for breach of contract. A client may seek these remedies for breach of contract: (1) specific performance; (2) general monetary damages for losses incurred as a result of the breach; and (3) consequential damages that occur indirectly as a result of the breach. An accountant may also be sued by a client under tort law. A tort is a wrong committed which injures another person’s property, body, or reputation. A tort suit by a client is usually based on negligence or fraud. The elements of a tort action for negligence are as follows:1 A client may also sue an accountant for fraud. This tort is harder to prove than negligence because fraud requires scienter or an intent to deceive. Fraud contains these elements: A material fact is one that a reasonable person would consider important in deciding whether to act. Also, an accountant may be held liable for gross negligence by a client. Gross negligence does not require scienter but necessitates proof of reckless disregard of the truth or one’s duties. Gross negligence is referred to by some as constructive fraud. No legal question arises about a client’s right to sue (i.e., standing to sue) because the client and accountant are in privity. Privity refers to the existence of a direct...
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...maintain capital in the company Therefore earnings should always be judged against the capital used to produce these earnings Earnings can be easily increased simultaneously worsening the position of shareholders e.g. if more capital is poured into a company although the return on capital is 5% or less (even lower than long-term government bond) Thus it is clear for most people that any earnings figure can not alone be a reliable performance measure (still some companies use EPS !?) ! Following slides focus on explaining why also return on capital alone is often an unreliable performance measure 1 © Esa Mäkeläinen 12.3.1998 E-mail: Esa.Makelainen@iki.fi EVA is a registered trademark of Stern Stewart & Co. EVA vs. rate of return There are two very good reasons why EVA is much better than ROI (RONA, ROCE, ROIC) as a controlling tool and as a performance measure 1. Steering failure in ROI Increase in ROI is not necessarily good for shareholders i.e. maximizing ROI can not be set as a target. (Increase in ROI would be unambiguously good only in the companies where capital can be neither increased nor decreased -> however we leave in a world where both operations are easily executed in almost all companies) 2. EVA is more practical and understandable than ROI As an absolute and income statement -based measure EVA is quite easily explained to non-financial employees and furthermore the impacts of different day-to-day actions can be easily turned into EVA-figures since...
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...Case 7 1: Stern Corporation (B)* Note: This case is updated from the Twelfth Edition. Approach This is a straightforward problem, designed for use in connection with study of the text. I find it useful to put T-accounts on the board or on a Vugraph and post entries to them as they are given. The account titles given in the balance sheet should be used. The case assumes individual unit depreciation. It may be desirable to ask at some point what the entries would be if composite or group depreciation were used. Comments on Questions Question 1 1. Cash 3,866 Accumulated Depreciation, Factory Machinery 27,367 Factory Machinery 31,233 2. Tools Used (Expense) 7,850 Tools 7,850 (Note the contrast between depreciation and a direct write-off.) 3. (a) Depreciation Expense 278 Accumulated Depreciation, Automotive Equipment 278 (The additional depreciation is 1/6 x .20 x $8,354. Note that the half-year convention is not used. Note that if the depreciation incurred in 2006 is disregarded, the loss will be overstated.) (b) Cash 2,336 Accumulated Depreciation, Automotive Equipment 5,458 Loss on Sale of Other Assets 560 Automotive Equipment 8,354 (There can be a discussion of the proper showing of the loss on the income statement.) 4. Patent Amortization Expense 11,250 Patent 11,250 5. Cash 75 Accumulated Depreciation, Office Machines 1,027 Gain on Sale of Other Assets 75 Office Machines 1,027 ...
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...Report Outline Government regulation over business mergers and acquisitions Introduction 1. Should the government regulate mergers and acquisitions more carefully? 2. Purpose of the Study 3. Scope of Study 4. Method and Procedures Analysis 1. Positive opinions 2. Negative opinions 3. Government action Summary, Conclusion, and Recommendation 1. Summary 2. Conclusion 3. Recommendation Government regulation over business mergers and acquisitions Prepared for Anne Joiner English Professor Central Washington University Prepared by Diep Chu July 18, 2012 To: Senator Joseph Smith From: Diep Chu Date: July 18, 2012 Subject: Government regulation over business mergers and acquisitions I submit the accompanying report, authorized by Anne Joiner, English Professor at Central Washington University, Des Moines, on the research of mergers and acquisitions in market. Available literature and government Web sites were examined in order to answer the question: Should the government regulate mergers and acquisitions more carefully? The report employed secondary research using electronic sources of scholarly articles, government publications, and companies’ articles through the Internet due to the research time and funding limitation. All research was conducted in mid-July, 2012. This research project has been a fantastic experience for me when I get to know more details about the popular issue currently happen in our...
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... stepped on, feelings would get hurt and sacrifices would happen. The founding fathers didn’t start a revolution to make people happy, they started a revolution because they believed in the idea that everyone had the right to equality. They founded America on the belief that hard work will lead to prosperity in the land of opportunity. All the ideas we associate with America: capitalism, the free market, education, elections, these all came about because people wanted to have power over where their life took them. Being able to make decisions in your own interest: the founding fathers based America on that principal, and they structured the government so it would protect those interests. Today, this is not the case. Although it may appear that America has come a long way since the civil and women’s rights movement, increasing inequality and discrimination in the 21st century has created a democracy that no longer represents the interests of its constituents but its ruling elite. Despite people’s preconceptions that our society represents a shining beacon of equality and fairness, society today faces similar issues to the same one’s we did 50 to 100 years ago. Discrimination still represents a serious issue with regards to an astonishing array of things and staggering economic inequality has devalued the average American’s vote creating a government not based not on a democracy that represents a common...
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...Eastern Illinois University, Charleston, Illinois, USA Keywords Strategic alliances, Competitive advantage, Success Introduction Nike, the largest producer of athletic footwear in the world, does not manufacture a single shoe. Gallo, the largest wine company on earth, does not grow a single grape. Boeing, the pre-eminent aircraft manufacturer, makes little more than cockpits and wing bits (Quinn, 1995, p. 1). Abstract Strategic alliances can be effective ways to diffuse new technologies rapidly, to enter a new market, to bypass governmental restrictions expeditiously, and to learn quickly from the leading firms in a given field. However, strategic alliances are not simple or easy to create, develop, and support. Strategic alliances projects often fail because of tactical errors made by management. By using a well managed strategic alliances agreement, companies can gain in markets that would otherwise be uneconomical. Considerable time and energy must be put forth by all involved in order to create a successful alliance. It is essential that corporations enter into strategic alliances arrangements with a comprehensive plan outlining detailed expectations, requirements, and expected benefits. ``How can this be?'' you ask. These companies, like many other companies these days, have entered into strategic alliances with their suppliers to do much of their actual production and manufacturing for them. A strategic alliance is ``an agreement between firms to do business...
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...LEADERSHIP AND ETHICAL DECISIONS PERFORMED BY KENNETH LEWIS AND THE FED DURRING THE FINANCIAL CRISIS OF 2007-2008 November 29, 2010 Introduction The robust leadership decisions of both the Fed and Kenneth Lewis, CEO of Bank of America (B of A), were not only ethical and accurate, but could have simply saved our financial system as we know it. During the weekend of September 13-14, 2008 Kenneth Lewis met with CEO of Merrill Lynch (Merrill), John Thain, in order to try and rescue Merrill from a hasty bankruptcy that lurked around the corner. Lewis was thinking that it was the perfect opportunity to add the only thing that B of A lacked after recent acquisitions, a “Wall Street investment bank that underwrote and sold securities” (Pozen and Beresford, 2010). On December 5, 2008 B of A’s shareholders voted to approve the merger between the two (Pozen and Beresford, 2010). It wasn’t until days later that Lewis became progressively more concerned about the growing fourth quarter losses on Merrill’s books, from $5.38 billion on November 12 to $12 billion on December 14, one month later. By mid December Lewis began looking for a way out of the deal before the scheduled closing date in late January. Both the Fed and the U.S. Treasury Secretary, resisting that Lewis walk away, threatened to fire Lewis and replace the board at B of A if the merger didn’t take place. Lewis, afraid of legalities from not disclosing the losses to their shareholders before the vote, and the drop in...
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...Asset-Backed Securities The Securitization Process Prof. Ian Giddy Stern School of Business New York University Asset-Backed Securities q The basic idea q What’s needed? q The technique q Applications q Typical sequence Copyright ©2001 Ian H. Giddy globalsecuritization.com The Securitization Process3 Securitization of Assets Securitization is the transformation of an illiquid asset into a security. q For example, a group of consumer loans can be transformed into a publically-issued debt security. q A security is tradable, and therefore more liquid than the underlying loan or receivables. Securitization of assets can lower risk, add liquidity, and improve economic efficiency. q Sometimes,assets are worth more off the balance sheet than on it. q Copyright ©2001 Ian H. Giddy globalsecuritization.com The Securitization Process4 What is the Technique for Creating Asset-Backed Securities? A lender originates loans, such as to a homeowner or corporation. q The securitization structure is added. The bank or firm sells or assigns certain assets, such as consumer receivables, to a special purpose vehicle. q The structure is legally insulated from management q Credit enhancement and rating agency reviews q The SPV issues debt, dividing up the benefits (and risks) among investors on a pro-rata basis q Copyright ©2001 Ian H. Giddy globalsecuritization.com The Securitization Process5 Securitization: The Basic Structure SPONSORING COMPANY ACCOUNTS...
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...Eastern Illinois University, Charleston, Illinois, USA Keywords Strategic alliances, Competitive advantage, Success Introduction Nike, the largest producer of athletic footwear in the world, does not manufacture a single shoe. Gallo, the largest wine company on earth, does not grow a single grape. Boeing, the pre-eminent aircraft manufacturer, makes little more than cockpits and wing bits (Quinn, 1995, p. 1). Abstract Strategic alliances can be effective ways to diffuse new technologies rapidly, to enter a new market, to bypass governmental restrictions expeditiously, and to learn quickly from the leading firms in a given field. However, strategic alliances are not simple or easy to create, develop, and support. Strategic alliances projects often fail because of tactical errors made by management. By using a well managed strategic alliances agreement, companies can gain in markets that would otherwise be uneconomical. Considerable time and energy must be put forth by all involved in order to create a successful alliance. It is essential that corporations enter into strategic alliances arrangements with a comprehensive plan outlining detailed expectations, requirements, and expected benefits. ``How can this be?'' you ask. These companies, like many other companies these days, have entered into strategic alliances with their suppliers to do much of their actual production and manufacturing for them. A strategic alliance is ``an agreement between firms to do business...
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...Depreciation Accounting 1 Types of Long-Lived Assets • Tangible asset • Asset with physical substance • Property, plant, and equipment = fixed asset. • Intangible asset • Intellectual property. • No physical substance • Examples are patent rights, copyrights 2 Amortization • View capital asset as bundle of services • Similar to prepaid expenses, cost is expensed as company benefits from the services • • • • Land - no depreciation Plant and equipment - depreciation Natural resources - depletion Intangible assets - amortization 3 Depreciation Methods • • Straight line method • (original cost - residual value) /service life Accelerated methods • Declining balance methods • Sum of the years’ or years’ digits methods 4 Declining Balance Method • Depreciation = book value * depreciation rate. • Double declining balance method = book value * 2 * straight line rate. • Straight line rate = 1/(life of asset in years). 5 Impaired Assets • • • An asset for which its remaining benefits, as measured by the sum of future cash flows the asset’s use will generate, is less than its book value If entity expects to hold asset • Write asset down to fair value If entity expects to sell asset • Write asset down to lower of cost or fair value less cost of disposal. 6 Group Depreciation n Group depreciation • Treats all similar assets as a “pool” or group rather than calculating for each item separately. • No gain or...
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...Boeing’s Final Marketing Plan 1 Boeing’s Final Marketing Plan Silva B. Adeniyi Marketing Planning & Strategy – B6026 Professor Victor A. Oladapo August 15, 2011 Boeing’s Final Marketing Plan 2 Boeing’s Final Marketing Plan Executive Summary The executive summary is to give the reader an overview of the main points in the marketing plan (Rossiter, 2011). The Boeing Company, established by William Boeing, during World War 1 era. Navy Lieutenant Conrad Westervelt and Boeing became friend’s after watching the 1910 air races at Belmont Park, New York. On July 4, 1914. Boeing enrolled in Glenn Martin’s flying school and bought a plan of his own. A former shipyard was the first home of The Boeing Company, which was founded in 1916 in Seattle, Washington (Rumerman, n.d.). Today Boeing’s headquarters is in Chicago, IL. It is the commercial airplanes leading manufacturer and largest aerospace company in the world. There are two major divisions at Boeing: Defense, Space, and Security and Commercial Airplanes. A minor division at Boeing is Capital Corporation. Boeing’s Capital Corporation makes possible the delivery and sale of Boeing services and products by providing advice on leasing and financing solutions. Recommendations * In emerging markets become a first mover by promoting new Dreamliner 787 and exploit the growing air passenger traffic in China * To avoid costly manufacturing delays, create a team able to speak several...
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...Journal of Hospitality Marketing & Management ISSN: 1936-8623 (Print) 1936-8631 (Online) Journal homepage: http://www.tandfonline.com/loi/whmm20 Managing the Distribution Channel Relationship With E-Wholesalers: Hotel Operators' Perspective Eunha Myung , Lan Li & Billy Bai To cite this article: Eunha Myung , Lan Li & Billy Bai (2009) Managing the Distribution Channel Relationship With E-Wholesalers: Hotel Operators' Perspective, Journal of Hospitality Marketing & Management, 18:8, 811-828, DOI: 10.1080/19368620903235837 To link to this article: http://dx.doi.org/10.1080/19368620903235837 Published online: 09 Oct 2009. Submit your article to this journal Article views: 387 View related articles Citing articles: 3 View citing articles Full Terms & Conditions of access and use can be found at http://www.tandfonline.com/action/journalInformation?journalCode=whmm20 Download by: [Computing & Library Services, University of Huddersfield] Date: 16 December 2015, At: 08:17 Journal of Hospitality Marketing & Management, 18:811–828, 2009 Copyright © Taylor & Francis Group, LLC ISSN: 1936-8623 print/1936-8631 online DOI: 10.1080/19368620903235837 Managing the Distribution Channel Relationship With E-Wholesalers: Hotel Operators’ Perspective Downloaded by [Computing & Library Services, University of Huddersfield] at 08:17 16 December 2015 Journal 1936-8631 1936-8623 WHMM of Hospitality Marketing & Management, Vol. 18, No. 8, August 2009:...
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