Actg Case #3

In: Business and Management

Submitted By kbush9
Words 374
Pages 2
Question 1
Jim Beatty’s claim that no impairment is needed because the overall investment portfolio of public equity securities is in an unrealized gain position is invalid. According to ASC 320-10-35-20, in determining whether an investment is impaired, impairment should be assessed at the individual security level. Instead of assessing the impairment of the portfolio as a whole, Jim Beatty needs to check for impairment of individual securities. However, this also means that the company can evaluate the aggregate investment in Wells Fargo altogether, rather than just the stock that is in a loss position.

Question 2
In determining whether these investments are other-than-temporarily impaired, the company should consider the following (SAB 111):
• The amount of the loss and the length of time that the investment has been in a loss position.
• The financial condition and near-term prospects of the issuer, including any changes or events that could affect the operations of the issuer.
• The investor’s intent and ability to hold an investment until fair value recovers.

Question 3
Kraft Foods and Sanofi-Aventis: The company should record other-than-temporary impairments for Kraft Foods and Sanofi-Aventis because these investments have had a fair value below cost for 24 and 30 months and the amount of the losses are large. The gross loss for Sanofi-Aventis increased during 2013. Although the gross loss for Kraft Foods decreased during 2013, it remains in a loss position and should be considered impaired.
U.S. Bancorp and Swiss Re: The company should record other-than-temporary impairments for U.S. Bancorp and Swiss Re because the gross loss for each investment is large and these investments have been in a loss position for 21 and 27 months. Although there has been an increase in the per share market price of common stock for these companies, the fair…...

Similar Documents

Case 3

...Case 3 Southwest Airlines business-level strategy was cost leadership. They have employed numerous ways to reduce cost while still providing great service for their loyal customers. The best evidence of this strategy was the decision to use one type of aircraft which cut out expenses such as maintenance, tools, and parts to name a few. The implementation of blended winglets and the use of EcoPower engine wash, which saved the company millions, were also good indicators of a cost leadership strategy. Southwest Airlines has the capability to operate at a high profit margin. The company’s high profit margin of 4% is a direct result of the business-level strategy. Southwest Airlines was able to successfully lower costs in all the right places, and as a result, had the highest profit margin of all the airlines. Not only did they have the highest profit margin, but they also had the highest ROA of 1.2%, nearly double the closest competitor. Southwest Airlines competitive advantage is their ability to make a profit and successfully lower costs which is directly related to their cost leadership strategy. Southwest’s net income has increased each year from $484 million in 2005 to $499 million in 2006 and $645 million in 2007, they are also the only company besides JetBlue with a positive profit margin in 2008. Southwest is able to provide a low price flights, while maintaining low costs, and exceptional customer service in a presence of strong competitive forces. These...

Words: 260 - Pages: 2

Case 3

...Case Problem Set 3: Problem 1: Young Professional magazine was developed for a target audience of recent college graduates who are in their first 10 years in a business/professional career. In its two years of publication the magazine has been fairly successful. Now the publisher is interested in expanding the magazine’s advertising base. Potential advertisers continually ask about the demographics and interests of subscribers to Young Professional. To collect this information the magazine has commissioned a survey to develop a profile of its subscribers. The survey results will be used to help the magazine choose articles of interest and provide advertisers with a profile of subscribers. As a new employee of the magazine, you have been asked to help analyze the survey results. Some of the survey questions follow: 1. What is your age? 2. Are you: Male___________ Female___________ 3. Do you plan on making any real estate purchases in the next two years? Yes _____ No _______ 4. What is the approximate total value of financial investments, exclusive of your home, owned by you or members of your household? 5. How many stock/bond/mutual fund transactions have you made in the past year? 6. Do you have broadband access at your home? Yes ______ No_________ 7. Please indicate your annual household income last year. 8. Do you have children? Yes _______ No__________ The file titled “Professional” has the responses to these questions.......

Words: 741 - Pages: 3

Case 3

...valor agregado el acercamiento al cliente o conocimiento del cliente. La utilización de esta información en la implementación de políticas de fidelización, entre otras, le permitirá al proveedor brindar un proceso mucho más ágil pues las “cookies” personalizan la búsqueda y la navegación del usuario. Conocer los hábitos de compra de los clientes permite al proveedor ofrecer una mejor calidad en su servicio en la medida que reduce costos de transacción enfocando sus servicios en el pago de ciertos productos (lo que genera más rentabilidad en lugar de todos y que no exista mucho movimiento de transacciones), es decir, especializando la ubicación geográfica; generar utilidades a través de publicidad y aprovechamiento de herramientas de CRM. 3. Las principales preocupaciones que tienen los consumidores frente a la utilización de pagos electrónicos y m-commerce están enfocadas en la seguridad del cliente. Dado que este tipo de transacciones se mueve en un mundo intangible y es a través de una red virtual, la confianza de este tipo de transacciones disminuye, sobre todo por la posibilidad de intermediación o intercepción por parte de otras personas. Dentro de las mayores preocupaciones se pueden nombrar medios de pago inseguros, violaciones de privacidad (robo de usuarios y cuentas), utilización de cuentas y datos para otros fines, entre otros....

Words: 385 - Pages: 2

Case 3

...Legal Case Study: A Ouestion of Futllity-Baby K, 832 F. Supp. 1993). 1022(E.D.Va. the In this case, infant girl wasborn with the congenitalmalformation anencephaly which left only her brain stem functioning.This limited function allowed for a conshe tinuation of respirationbut the infant was permanendy unconscious; could not see,or interact with her environment.At birth the physiciansand an institutional ethics committee advisedthe mother that the use of a ventilator that had been put wasfutile and should be withdrawn.The mother into placeawaitinga firm diagnosis the resistedthese recommendationsand, becauseof the disagreement, hospital attempted to have the baby transferredto another hospital.'Whenno comprehensive d to a nursing home. the hospital would acceptthe transfer, infant was m the following the transfer, infant wasreadmittedto the hosoccasions On several pital and given ventilatory support.Although the hospital attempted to resistthese The court deterst provide the services. the courts held that they admissions, mined that to refuse care to the infant would be in violation of the Emergency Medical Treatment and Active Labor Act (EMTALA), a federal statuteconcerning the child abuse, Americans with DisabilitiesAct (ADA), the Rehabilitation Act of 7973, end parental decision-making rights as guaranteed by the Fourteenth Amendment to the Constitution. 1. How would you resolvethis dilemma? to is resources it reasonable require the hospitalto provide 2 . In a time of......

Words: 394 - Pages: 2

Case 3

...Case 3-51 Pages 115 -117 1. Why might Koss management have placed so much trust in Sachdeva, along with minimal supervision and monitoring? Koss management might have placed so much trust in Sachdeva because she was is such a high position. She worked in the company as Vice President, when you are that high on the totem pole, you are given trust that you know what you are doing and that you want what is best for the company. Companies don’t hand out positions to people that have no clue as to what they are doing as well as someone that they believe will ruin the company. The same thing goes along with having minimal supervision and monitoring. She was a Vice President, someone that was supposed to be trusted, someone who was a leader, someone who was supposed to set an example. It just goes to show you that it is not always the person on the bottom of chain that needs to be watched. It is easier for higher up management and owners to sneak money away than the one who have minimal access to records and bank statements. 2. What was Grant Thornton’s obligation to uncover the fraud? Grant Thornton was Koss’s internal auditor. An internal auditor is defined as “An independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance......

Words: 1196 - Pages: 5


...Case 1: Deloitte and Touche Case “The Bear Minimum” Due Date: Wednesday, April 9th, 2014, beginning of class You may prepare the solution to this case in groups of up to 4 people. Your solution to this case must be typed. Please include your names on a cover sheet to the assignment. Students must submit one case solution per group. I suggest that you each bring a copy of your solution to class to use during class discussion of the case. The purpose of this case is for you to work on your research skills as they relate to financial accounting issues. This means you will read accounting standards and apply them to a particular situation. While this is particularly useful for those who plan to take the CPA exam, it is generally useful for everyone as it forces you to work on your ability to generate logical arguments to unstructured situations as well as learn to use research to support your arguments. This case focuses the application of research to lease accounting. For this assignment, I will provide you with direct guidance as to what authoritative literature you need to examine. Your job is to apply that literature to the setting in the case. As a note for those taking the CPA exam, you will be required to search for this information and then apply it. I am taking out the search component by providing you the applicable literature. Applicable Literature from Accounting Standards Codification (ASC): • ASC 840 (Broad Transactions --- Leases) o ASC 840-10 (Leases: Overall)......

Words: 751 - Pages: 4

Case #3

...Case%Study%#3% HCM%4550% % Big%Bend%Medical%Center%has%a%diversified%facility%similar%to%many%care%centers% around%the%US,%with%a%majority%of%resources%utilized%by%the%hospital%through%inpatient%care.% Big%Bends%outpatient%facility%is%the%second%largest%revenue%stream%in%the%organization% followed%by%their%dialysis%center%which%is%fractionally%profitable.%The%dilemmas%faced%by%Big% Bend%on%how%to%allocate%the%costs%of%expanding%the%current%outpatient%facility%while% building%a%new%dialysis%center%in%a%more%profitable%area%are%complex.%The%solution%for% proper%cost%allocation%must%incorporate%both%strong%business%and%ethical%considerations% before%a%decision%can%be%made.%This%report%serves%as%a%discussion%of%alternative%allocation% methods%and%the%determination%of%a%suitable%and%mutually%beneficial%cost%structure%before% proceeding%with%the%expansion.% The%original%allocation%process%primarily%focuses%on%square%footage%and%disregards% profitability%or%revenue%generation%for%the%unexpanded%facility.%The%outpatient%center% generates%a%much%larger%revenue%stream.%Both%facilities%are%charged%$15%per%square%foot% even%though%the%outpatient%center%holds%80%%of%the%facilities%square%footage.%The%postM expansion%initial%allocation%of%costs%provides%an%expansion%of%the%outpatient%center%by% 20,000%square%feet,%while%the%new%dialysis%centers%size%remains%constant%at%20,000%square% feet.%The%initial%allocation%for%the%new%dialysis%facility%also%increases%square%footage%cost%by% 5%%while%...

Words: 457 - Pages: 2

Case 3 patient-centred care, broadly categorised as care experience, clinical and operational benefits. Studies show that when healthcare administrators, providers, patients and families work in partnership, the quality and safety of health care rises, costs decrease, and provider and patient satisfaction increase.9 28 30- A study by Stone33 (cited in Charmel and Frampton 200834) examined data for inpatient units at two similar hospitals in the US over five years. One hospital introduced an extensive program of patient-centred practices, and the other continued their usual practices. The study found that the patient-centred inpatient unit consistently demonstrated a shorter average length of stay; a statistically significantly lower cost per case; a shift in emphasis from the use of higher cost staff to lower cost staff; and higher than average overall patient satisfaction scores. Similarly, Iacono35 found that patient satisfaction rates in 12 hospitals using the Planetree method (see Section 2.5) increased after implementing the patient-centred approach. Other benefits associated with patient-centred care include decreased mortality,36 decreased emergency department return visits, fewer medication errors, lower infection rates,37 higher functional status,38 improved clinical care,39 and improved liability claims experience.34 In the care of patients with chronic conditions, studies indicate that patient-centred approaches can improve disease management; increase both patient and...

Words: 1901 - Pages: 8

Case 3

...Logan Armbruster September 17, 2014 Business 481 Case 3.1 1. Did New London treat Susette Kelo and her neighbors fairly? Assuming that the proposed development would help to revitalize New London, is it just for the city to appropriate private property around Fort Trumbull? a. I believe that New London treated Kelo and her neighbors as fair as they could. The proposed development would hope to attract new development, which would help revitalize the community and bring in tax revenue. I believe it’s just for the city to appropriate private property around Fort Trumbull because of their power of eminent domain. 2. Are towns such as New London and Salina pursuing wise, beneficial, and progressive social policies, or are their actions socially harmful and biased against ordinary working people and small-business owners? a. I believe that New London and Salina are pursuing progressive social policies but their actions are socially harmful to the homeowners of the areas that they are taking over with their eminent domain right. 3. Do you believe that eminent domain is a morally legitimate right of government? Explain why or why not. a. I believe that eminent domain is a morally legitimate right of government. I feel this way because you are being compensated for your loss of property with either money or land or both. If the area where your home is located is potentially a prime area that could bring in new development and revitalize a......

Words: 547 - Pages: 3

Actg 351 Case 2

...Case #2 Murong Feng, Duy Do, TJ Fritzgerald, Hayden Jacobs 2/13/15 Question 1 Given the facts provided for Eagle in Italy, the building is not impaired under IFRS as of December 31, 2010. The carrying value is 1,100,000, and undiscounted future cash flows are 1,150,000. The carrying value is less than undiscounted future cash flows. According to IAS36 paragraph 12, “in assessing whether there is any indication that an asset may be impaired, an entity shall consider, as a minimum, the following indications: (d) the carrying amount of the net assets of the entity is more than its market capitalization.” Thus, there is not any impairment on the building under IFRS. Question 2 Given the facts provided for Eagle in Italy, the building is impaired under U.S. GAAP as of December 31, 2010. Under ACS 360-35-17, “An impairment loss shall be recognized only if the carrying amount of a long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset” In the case, the carrying value is 1,100,000, and the fair value is 850,000. The carrying value is more than its fair value, an impairment should be recognized. However, it is recoverable since its carrying value is less than undiscounted future cash flows. In ASC 360-35-17 “An impairment loss shall be measured as the amount by which the carrying......

Words: 1345 - Pages: 6

Actg 351 Case

...ACTG 351 Columbia On-Line Networks Case Due: Wednesday, January 22 (at the beginning of class). Also, please be prepared to discuss the case and your solution in class on this date. Required: Refer to the current, relevant accounting guidance to answer the questions on page 2 of the case. Groups: For this case, you will work in groups of two to four students. I will let you pick your group if you prefer, but will assign you to a group otherwise. Please be sure to reference the applicable professional guidance listed below to support your positions. Your discussion should be typed, double-spaced (quoting guidance can be single spaced) and no more than 4 pages in length. Applicable Professional Pronouncements:  ASC 605-25: Revenue Recognition: Multiple-Element Arrangements  ASC 605-10-S99: SEC Materials (Inconsequential or Perfunctory) Instructions for accessing the FASB Codification database: 1. Go to 2. User ID: AAA52999 3. Password: BbJ5LMm 4. Click on link to FASB Accounting Standards Codification (from American Accounting Association webpage) 5. Search on 605-25 (or access via topical drop down menu) Columbia On-Line Networks TOPIC 1: Revenue Recognition In conjunction with interim audit procedures for our client, Columbia On-Line Networks (the Company), the Company’s controller provided the audit engagement team with the following information regarding a significant sales......

Words: 794 - Pages: 4

Case 3

...Acc 600 CASE 3 Presented below are four independent situations which you as a Manager Trainee employed with Your Company have been asked to evaluate. Evaluate each situation based on what each requires. To receive a promotion depends upon how your respond. Situation One Your Company makes 45,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct material $16.00 Direct labor 20.00 Variable manufacturing overhead 5.00 Fixed manufacturing overhead 23.00 Unit product cost $64.00 An outside supplier has offered to sell the company all of these parts it needs for $53.00 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $275,000 per year. If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $16.00 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products. Required: a. How much of the unit product cost of $64.00 is relevant in the decision of whether to make or buy the part? Relevant cost per unit $ Direct materials-$16.00 Direct labor-......

Words: 1722 - Pages: 7

Case 3

...will reduce the chance of oil leaks, spills, and also explosions. Not only will it affect the community and the public, but also the stakeholders reputation and public pressure and criticism that they have to further deal with. 2. Compare the risk that BP, Exxon, and the fracking industry continue to face in providing adequate supply of energy? The main risks that each company will face are leaks, spills, and explosions happening. Other than those main 3, they also have to deal with reputation of customers and people who buy their oil. For instance, a loyal BP customer found out about the oil spill harming the ocean, now he will probably switch to Shell oil because their gas isn’t harming the environment. Also, both deal with political and financial risk. Activist groups will bring pressure on them. For example the National Resource Defense Council. Lastly, financial risk all the money you spend trying to repair and clean up oil spills, you could’ve avoided that and the money could’ve went to a better cause. 3. How can ethical leadership help the oil and gas industry to manage risk? Ethical leadership and help risk management by helping the environmental risk with organizations such as the IPIECA. Having a trustworthy organization that can stand up and speak for your problems would be highly beneficial by gaining trust from the public back again. Also, taking responsibility on both high and lower level positions of the issue will help manage risk too....

Words: 295 - Pages: 2

Case 3

...Case 3: DuPont Analysis: Playing the Numbers Game! “Numbers! I need to see numbers!” exclaimed Andrew in response to comments made by the assistant vice-president of Finance, Jack Brown. Andrew Sullivan, the President and Chief Executive Officer of Plastichem Inc., had been instrumental in significantly increasing the company's size during his first five years in office. He spearheaded some successful marketing campaigns and revamped the production facilities by adopting the latest technology in injection molding. He also implemented various cost-cutting measures and introduced performance plans to boost efficiency. Foremen and supervisors were offered stock option incentives, and bonuses were tied to earnings per share (EPS) growth. Plastichem Inc., a medium-sized plastic molding company, was founded in 1990 and was located in Midland, Michigan. The company supplied molded plastic products to various processing industries as well as end-users. It enjoyed a fairly diversified base of customers ranging from automobile and home products manufacturers to the federal government. After an initial period of sluggish growth, the firm's revenues and profits had almost quadrupled. Most of the increase had been achieved under the leadership of Andrew Sullivan. The plastics business offered potential for high profit margins and as a result it attracted many competitors. Despite the fierce competition, Plastichem's stock, which traded in the over-the-counter market, had tripled in......

Words: 4515 - Pages: 19

Case 3

...116.223/F435/W13/F435All4Feb12.html Problem #2: (Winter 2013) Salvage value = $28,000 tax basis = $19,000 tax rate = 30%. Presented and discussed in class on Feb. 12, 2013: Problem 3: (Winter 2013) Salvage Value = $84,000 tax basis $92,000 tax rate = 30% Presented and discussed in class on Feb. 12, 2013: Problem #4: (Spring 2014) Machine costs $50,000 now Depreciation over a 5-year MACRS life Three years from now, we will sell this machine for $11,000. What will be the ATSV of the machine in three years? 34% Presented and discussed in May 7, 2014, class: Problem #5: (From Quiz #3-B, Fall 2014) initial cost = $10,417,000.00 expected salvage value in 10 years= $3,260,000 marginal tax rate = 34% 15-year MACRS depreciation Problem #6: (From class on Nov. 4, 2014, when preparing for HW#5) Old Machine: marginal tax rate = 34% if sold now, salvage value = $4,000 net book value or tax basis = $2,100 if sold in 4 years, salvage value = $2,500 If kept, then depreciation will be: time depr(old) 1 $300 2 $200 3 $150 4 $100 Presented and discussed in Nov. 4, 2014, class:

Words: 264 - Pages: 2