...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
...Case Study 2: The Bear Minimum 1. Big Bear would not include the $500,000 in legal fees paid to Stipe, Berry, Black, and Mills LLP as apart of its minimum lease payments, but would include the $1,000,000 of legal fees paid to Goliath. This conclusion can be drawn from two separate parts of FASB Codification on Leases. According to ASC-840-10-25-5, “…minimum lease payments comprise the payments that the lessee is obligated to make or can be required to make during in connection with the leased property”. Clearly the $1,000,000 payment is required and in connection with the leased property since this payment is being made directly to Goliath who is the lessor and is needed to complete the arrangement. FASB expands is minimum lease payment requirements in ASC-840-10-25-6 including “…payments made before the beginning of the lease term…” Since the $1,000,000 is paid before the lease term this provision further confirms that the $1,000,000 would have to be included. Since the $500,000 doesn’t follow any of the requirements explained above, it is not included. 2. The penalty payment of $500,000 would be included as a minimum lease payment as proven by FASB Codification in ASC 840-10-25-6 which states that minimum lease payments include: “Any payment that the lessee must make or can be required to make upon failure to renew or extend the lease at the expiration of the lease term, whether or not the payment would constitute a purchase of the leased property. Note that the definition...
Words: 477 - Pages: 2
...Background Big Bear Power is a public utility with a strong financial position for the past several years. As a result of having a positive cash flow, Big Bear is in compliance with all of its debt covenants. Big Bear has entered a 10 year non-cancelable lease with Goliath Company for a combustion turbine. The lease is signed on December 15, 2010 and the right to use the turbine begins on January 1, 2011. Relevant Issues and Case Facts The case focuses on whether certain costs and provisions associated with the lease would be included in “minimum lease payments” under ASC 840 under leases. There are three specific provisions under question: legal fees paid in negotiating the lease contract, a possible penalty paid by Big Bear to Goliath in the event that Big Bear a “material adverse change” that leads to a default on its debt covenants, and increasing level rents equal to the increase in consumer price index. Provision 1: In negotiating the lease, Big Bear has paid $500,000 to it outside legal counsel. Big Bear is also required to pay $1 million in legal fees incurred by Goliath. Provision 2: A provision in the lease states that Big Bear must pay a penalty to Goliath if Big Bear’s bank declares a default under its primary credit arrangement. The provision is dependent upon whether or not there is a “material adverse change” in Big Bear’s financial condition. Big Bear believes that the likelihood of default is remote. Goliath and Big Bear’s bank have no relationship...
Words: 1019 - Pages: 5
...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: 1136 - Pages: 5
...The University of Oregon “The Bear Minimum” Case ACTG 352: Intermediate Accounting III October 9th, 2014 To: Big Bear Power Date: October 7, 2014 Re: The Bear Minimum Summary Big Bear Power, a public utility company, has entered into a 10-year non-cancelable agreement with Goliath Company to lease a turbine. The lease is effective on January 1, 2011. The purpose of this report is to provide Big Bear with insight in evaluating whether the costs or potential costs associated with the lease should be included in the “minimum lease payments” according to US GAAP Accounting Standards Codification. When assessing the minimum lease payments, we reviewed the legal costs incurred to Big Bear’s external legal counsel (Stripe, Berry, Mills, and Buck LLP) pertaining to the negotiation of the lease terms. We also examined the provision requiring Big Bear to pay a penalty if it were to default under its current credit arrangement with its bank, as well as the effect on monthly payments that are subject to an increase in the consumer price index calculation. Provision One First we will review the costs incurred during the negotiating of the lease terms. Big Bear is required to pay its external legal counsel $500,000 in legal costs. This amount should not be included in its minimum monthly payments because per accounting guidance 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...
Words: 1395 - Pages: 6
...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
...In the last two centuries, grizzly bears had been hunted and persecuted to extinction and mistaken as black bears. Grizzly bears are often portrayed as dangerous, voracious creatures who hunt and kill people, but they're nothing like that at all. In fact, they are not aggressive unless you’re the one causing a ruckus or being a threat around their cubs or food sources. Grizzly bears are quite intelligent, beautiful and unique creatures who have great memory, senses of hearing, and smell. But, since they are incorrectly portrayed as a threat, people are most likely to not be in favor of them. The FEDS are ready to delist grizzly bears and hunters are ready to make them trophies. David Suzuki, author of Grizzly Bear Trophy Hunt Is a Sport Like Dogfighting is one of many who oppose to killing grizzly bears. David Suzuki finds it inhumane to kill these animals for your own selfish and pleasurable means. On the contrary, Steven Rinella, author of The Problem with Protecting Grizzly Bears is in favor of killing grizzly bears. Due to the amount of money put into protecting these bears from harm's way, it's a waste of money. By reading both positions, it becomes apparent that it is inhumane to kill a grizzly bear as a trophy you hang...
Words: 712 - Pages: 3
...In the book Touching Spirit Bear, the main character is a boy named Cole Mathews. He is very aggressive towards other people and as a result has been to multiple juvenile detention centers and police stations. There was one situation where he robbed a hardware store, trashed it, then bragged openly about doing it because the police hadn't caught him. A boy named Peter turned him in and as a result, Cole beat up Peter to the point where he had to be hospitalized and later had speech issues. Cole went to yet another juvenile detention center where an officer visited him regularly and informed him about a program called Circle Justice where instead of locking the kid up, they help them “heal”. Cole was accepted and they decided to put him on an...
Words: 414 - Pages: 2
...someone/myself a tattoo 11. Build bIg muscles 12. Grow a full beard 13. Teach a weights class 14. Learn to dance like a pro 15. Go windsurfing. 16. Ride a jet ski. 17. Go water skiing. 18. Go water skiing barefoot. 19. Be a millionaire 20. Go deer hunting. 21.Go duck hunting. 22.Go alligator hunting. 23.Hunt grouse in Scotland. 24. Go bear hunting. 25. Go to Space 26. Land on the moon. 27. Find a alien life form. 28. Find a new galaxy 29. Time Travel 30. Learn parkour 31. Speak french 32. Speak Spanish 33. Speak dutch 34. Speak Italian 35. Speak Portroguese 36. Speak Chinese 37. Speak Japanese 38. Drive a car into a lake 39. Drive a car into a telephone pole 40. Drive a car into a building 41. Drive a car on water 42. Drive a flying car 43. Drive a car off a cliff 44. Drive a car into a car 45. Drive a car into a house 46. Build a house 47. Build a building 48. Build a car 49. Build a bike 50. Build a business 51. Build a Computer 52. Make the sickest phone ever 53. Build a teleporter 54. Revive a mouse 55. Revive a human 56. Revive a deer 57. Revive a bear 58. Revive a ferrit 59. Revive a dog 60. Revive a cat 61. Take a cross country road trip 62. Window shop at every store in the Mall of America 63. Go on all the rides at Disneyland 64. Complete a triathlon 65. Teach an adult how to read 66. Attend an event at the Olympics 67. Take a transatlantic cruise 68. Spend the night in a Medieval castle ...
Words: 608 - Pages: 3
...About one-third of Bigfoot sightings are concentrated in the North America, while Bigfoot advocates, postulate that Bigfoot is a worldwide phenomenon: Bigfoot researchers and critics agree that approximately 80% sightings are misidentification, as the reported size of Bigfoot approximates that of a bear standing on its hind legs, and bears have a high prevalence in regions said to be inhabited by Bigfoot. Bigfoot sightings or footprints are often demonstrably hoaxes as seen through this contemporary example. On July 9, 2008, Rick Dyer and Matthew Whitton posted a video on YouTube claiming that they had discovered the body of a deceased Sasquatch in northern Georgia forest. They received $50,000 from Tom Biscardi; Searching for Bigfoot, Inc. Popular news networks covered the story of the men's claims across the globe. The alleged Bigfoot body arrived in a block of ice in a freezer with the Searching for Bigfoot team. When the contents were thawed, it was discovered that the hair was fake, the head was hollow, and the feet were rubber. Subsequently, the discoverers...
Words: 518 - Pages: 3
...Cole is an average kid from Pittsburgh that love to have fun. All throughout his life his motto is “just keep on doing you”. He grew up in a suburban area with a ton of friends. Cole was very outgoing and he really liked talking to people and being around his friends. Most of the time he could care less about school. All he wanted to do was party and have the best time of his life. This all changed when he had the biggest scare of his life. During this journey will venture through Coles life and what happened that almost changed his life. The moment when Cole walked through the door of the high his whole life change. He was an innocent little kid going into 8th grade and like every other kid had no idea what to expect. In middle school he had good grades and didn’t do anything bad or get in trouble ever. He was one of the good students, always participating in class and willingly ready to learn every day. He had a ton of friends that were always hanging out together outside of school. Cole was very athletic and played football and baseball as long with the rest of his friends. In 8th grade every person goes through a change of some sort because of all the different surroundings and how much freedom they have. Cole never really had the freedom to do whatever he was always babied through everything. In the lower grades Cole always had someone to help him do everything and now there is no one to help you besides yourself. Cole initially liked like and thought it was so nice because...
Words: 1553 - Pages: 7
...threatening to remove grizzly bears from the Endangered Species list. While the grizzly bear population in the Greater Yellowstone Ecosystem has increased since the bears were added to the listing in 1975, the struggles to survive continue (U.S. Park Service). The Defenders of Wildlife agree that the government needs to keep protecting the grizzly bear because of the threats of human encounters, habitat availability and climate change. First, human encounters are a risk to the survival of grizzly bears. The National Park Service at Yellowstone reports that the management of grizzlies will not change within the park if these animals are removed from the list. Hunting will still not be allowed in the area. However, grizzly bears do not know the boundaries of the park. The states that surround the area could allow hunting of these animals during their regular seasons. As a result, the population of grizzly bears would decline. Next, habitats for grizzly bears are still fragile. The Greater Yellowstone Ecosystem is an ideal place for these bears to live and thrive, but outside the area there are many dangers. Humans continue...
Words: 480 - Pages: 2
...Bears may be large and intimidating, but do not pose a threat to humanity. This essay will go deep into the myths about bears to uncover the truth behind these myths. What are these myths? Bears for years have been portrayed as deadly, overwhelming beasts which attack on sight, but after years of research, is this true? Primarily, over the years the years the media and public have made many false stories about bloodthirsty bears. One outrageous myth is that if bears taste human food, they don't go back; yet, “bears prefer natural, wild food unless it is difficult to find and human food is too easy to get” (Rogders). This is proof that bears do not go out of their way for humans; they prefer natural food. In summary, bears are not blood thirsty creatures but intelligent animals that do not pose a threat to humans if handled appropriately....
Words: 483 - Pages: 2
...sensationalized then ever before in human history. As people become more disconnected with nature and animals, more and more people are becoming depressed through their hectic lives and often yearn to be reconnected to the natural world again. However, the bond between humans and the wild are connected through the lens of a camera. As Chris Palmer has mentioned “During primetime in September 2008, more than 30 million viewers tuned in to Animal Planet, which is now seen in 94 million households in the United States and more than 220 million internationally.”(Palmer. Pg 5). Larger and more expensive productions such as Arctic Tale gives audiences a newer cinematic experience to the wild habitat. The films overall journey follows Nanu the polar bear and ** the seal in their struggle to find food because of the effects from...
Words: 914 - Pages: 4
...[pic] TUTORIAL 1 A. Making Inferences Read the texts below and make some inferences. Complete the sentence with one inference. 1. A Harris poll indicated that Americans, on average, believed that there is a 50 percent chance that they will be seriously hurt in a car accident. In reality, the chance of this is about 5 percent. The average woman believes that she has a 40 percent chance of getting breast cancer. However, the chance of this happening is actually only one in ten, or ten percent. Women also believe that they have a 50 percent chance of having a heart attack, but the actual risk is just one in ten. The average man believes that he has about a 40 percent chance of getting prostate cancer, yet in reality the risk is also only one in ten. Although most people estimate their chance of getting HIV/AIDS to be about one in ten, the risk is actually about one in twenty, or 5 percent. Although the author did not specifically state the outcome of the poll but expects the reader to infer that………………………………………………………………………….. 2. During the National address focusing on civil rights, President John F. Kennedy acknowledged that the nation faced a moral crisis. He rejected the notion that the United States could be the land of the free “except for the Negroes.” Reversing his earlier reluctance to request civil right legislation, he announced that he would send Congress a major civil rights bill. The law would guarantee service to all Americans regardless of race in public...
Words: 938 - Pages: 4
