The Economic Downturn Hits J.C. Penney’s Hard
April 5, 2012 by LuAnn Bean
Filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting, Uncategorized
About 600 employees were laid off at the corporate headquarters of J.C. Penney this week. Under the leadership of the new CEO, Ron Johnson, one of its three call centers in Pittsburgh, PA, will also be closed later this year, which eliminates 300 more jobs.
Questions:
1. What type of business is J.C. Penney? Research the company. How old is it and what characterizes its financial situation over the last 5 years?
2. If the 600 employees that were laid off make up 14% of the staff at corporate headquarters, how many employees did corporate headquarters have before the cuts?
3. What are some of the strategic plans that the new CEO has announced? Explain the logic of each in terms of helping the bottom line.
Source:
Clifford, S. (2012). J.C. Penney Cuts Headquarters Staff. The New York Times, April 5 (Retrievable online at http://www.nytimes.com/2012/04/06/business/jc-penney-cuts-headquarters-staff.html?ref=business)
Copyright Infringement?
April 5, 2012 by LuAnn Bean
Filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting, Uncategorized
On Wednesday, the Second Circuit Court of Appeals reversed a lower court’s decision to throw out a five-year old lawsuit asking for $1 billion and filed against YouTube by Viacom, as well as other media companies. This copyright infringement suit has become a symbol of the clash between media companies and those competing with them, such as YouTube, who allows users to upload clips by users. The Circuit Court indicated that “a reasonable jury could conclude [whether] YouTube had knowledge or awareness” of copyright infringement “at least with respect to a handful of specific clips.”
Questions:
1. How are copyrights reported in the financial statements?
2. If the suit for $1 billion is awarded, how would it be recorded, as far as a journal entry? Do you think this award will become a reality? Why or why not?
3. How should YouTube record any revenue gained from the Viacom deal that lets users rent movies on the YouTube site?
Source:
Stetler, B. (2012). Appeals Court Revives Viacom Suit Against YouTube, The New York Times, April 5 (Retrievable online at http://mediadecoder.blogs.nytimes.com/2012/04/05/appeals-court-revives-viacom-suit-against-youtube/?ref=business)
Budget Cut Alternatives?
April 5, 2012 by LuAnn Bean
Filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting, Uncategorized, Video Updates
For generations, community colleges have been seen as a low cost education for many. However, starting this summer, Santa Monica College is going to offer courses that are typically hard to enroll in (due to greater demand and the lack of student seats) at a premium price structure. This two-tiered price structure is raising concerns about the role and obligations of community colleges and unfair exclusion of the poorest students, which creates an imposed lower and upper class of students.
Questions:
1. Explain what has led to this idea. Do you think it is a good one? Why or why not?
2. What percentage increase would be applied to the more expensive courses?
3. If you were brainstorming about ideas to counteract budget cuts and avoid this two-tier system, what are some of the ideas you would suggest?
Source:
CNN.com Video. (2012). Students Pepper-Sprayed at Protest. April 4 (Retrievable online at www.cnn.com/video)
Medina, J. (2012). Two-year College, Squeezed, Sets 2-Tier Tuition, The New York Times,March 29 (Retrievable online at http://www.nytimes.com/2012/03/30/us/community-college-to-charge-more-for-top-courses.html?_r=1&hp)
I Know Where You Live and I Know What you Donated Last Summer!
March 27, 2012 by LuAnn Bean
Filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting, Uncategorized
No, it’s not a new horror flick, but it is scary. As private schools, like Upper East Side preschool hit the upper limits of what they can charge for tuition (or $21,000 per year), fund raising has become more intense and aggressive. In fact, the “development offices” for these schools are mining online data for details about parents’ homes, luxury cars, private planes, stock holdings and donations to other charities.
Questions:
1. What percentage of their time do the heads of the private schools surveyed spend on fundraising? Comment.
2. Explain why Rae Goldsmith sees the strategy of going after the richest parents in a school as short-sighted.
3. Based on the “back-of-the-envelope assumption” mentioned in the article, what percentage do families with more than $5 million in assets give away annually?
Source:
Anderson, J. (2012). Private Schools Mine Parents’ Data and Wallets. The New York Times, March 26 (Retrievable online at http://www.nytimes.com/2012/03/27/nyregion/private-schools-mine-parents-data-and-wallets.html?pagewanted=1&_r=1&ref=todayspaper)
Here comes Scoot!
March 27, 2012 by LuAnn Bean
Filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting, Uncategorized, Video Updates
Singapore Airlines’ wholly-owned budget carrier Scoot will begin flights into China, with flights between Singapore and Tianjin during August. Two more Chinese destinations are also being considered, but the capital of Beijing is not one of them.
Questions:
1. How much is S$88 in U.S. dollars? How does this compare to the fares offered by Southwest Airlines?
2. What is being used by consumers as the reference price for the company in helping to set prices?
3. Compare Scoot’s model to Hong Kong Airline’s new niche model. What are some of the variables that cost analysts must take into consideration for these two models?
Source:
Cnn video.com. (2012). Asia’s low-cost carrier boom (Retrievable online at http://www.cnn.com/video/#/video/international/2012/03/14/business-traveller-asia-low-cost-airlines.cnn)
Tan, V. (2012). Scoot to Launch Tianjin-S’pore Flights in August. Channel News Asia.com, March 27. (Retrievable online at http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1191503/1/.html)
People: The Number One Asset
March 27, 2012 by LuAnn Bean
Filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting, Uncategorized
What radical thinking! Cashiers barred from interacting with customers until they have completed 40 hours of training? Hundreds of staffers sent on trips around the U.S. and world to become experts in their products? No mandatory retirement age? Never laying off workers? All profits reinvested in the company or shared with employees? This is the Wegman model, as a $6.2 billion-a-year, 79-store-supermarket chain with cult-like loyalty among its customers.
Questions:
1. Can you buy shares of stock in Wegman? Discuss.
2. How many stores does the company open per year? Why?
3. Wegman’s vice-president says that “Our employees are our number one asset.” So where are employees listed on the financial statements? Discuss.
Source:
Rohde, D. (2012) The Anti-Wal-Mart: The Secret Sauce of Wegmans is People, The Atlantic, March 23 (Retrievable online at http://www.theatlantic.com/business/archive/2012/03/the-anti-walmart-the-secret-sauce-of-wegmans-is-people/254994/#.T3Eu451pn0M.mailto)
Big News at Amazon: Fulfillment Robots
March 20, 2012 by LuAnn Bean
Filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting, Uncategorized
Amazon.com Inc said on Monday it agreed to buy Kiva Systems Inc for $775 million in cash, a deal that will bring more robotic technology to the e-commerce company’s giant network of warehouses.
Questions:
1. What other companies use this kind of robot technology?
2. Discuss the trend of Amazon’s fulfillment costs and what they would mean in terms of net income and taxes.
3. Discuss in general how Amazon would account for the $775 million acquisition and the types of journal entries it would make.
Source: Barr, A. (2012). Amazon’s Kiva Systems Acquisition To Put Robots To Work, Reuters.com, March 19 (Retrievable online at http://www.huffingtonpost.com/2012/03/19/amazoncom-kiva-acquisition_n_1365512.html)
Taken for a Ride When Trading in a Car
March 20, 2012 by LuAnn Bean
Filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting, Uncategorized
Under the Dodd-Frank financial reform act, the Federal Trade Commission (FTC) is now going after auto dealers that imply to customer that they have no remaining debt obligation for trade-ins. Five dealers in four states (South Dakota, North Carolina, Connecticut and West Virginia) have already agreed to settlements that order them to stop running ads promising to pay off a customer’s loan on a trade-in.
Questions:
1. Explain the practice that the FTC is putting a stop to by using the journal entries that a dealer would make.
2. What percentage of new-car shoppers in 2011 traded in a car on which they had negative equity? Develop an example of this using T-accounts from the point of view of the car owner.
3. The FTC is accepting public comments on the proposed dealer settlements until what date?
Source: Singletary, M. (2012). Trading in a car? Don’t get taken for a ride. The Washington Post, March 17 (Retrievable online at http://www.washingtonpost.com/auto-dealers-take-trade-in-owners-for-a-ride/2012/03/12/gIQAT2sRJS_story.html)
TaxMasters Trouble
March 20, 2012 by LuAnn Bean
Filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting, Uncategorized, Video Updates
A Houston-based tax advisory firm filed for bankruptcy Sunday, a little more than one day before it was scheduled in court to defend itself against fraud accusations. Best known for a national advertising campaign that made company’s bearded, red-haired founder Patrick Cox a recognizable figure, the company spent about $14 million in national advertising in 2009.
Questions:
1. According to the article, what amounts of assets did the company have as compared to debt in the Chapter 11 filing? According to the article, what does the timing of the bankruptcy have to do with the lawsuits filed?
2. What states are suing TaxMasters? What is the company charged with?
3. Instead of speaking to highly qualified tax consultants, who do TaxMasters customers alledgedly speak with?
Source: Video: Oberg, T. (2012). TaxMasters Files Chapter 11 Bankruptcy., ABCNews.com, March 19 (Retrievable online at http://abclocal.go.com/ktrk/story?section=news/local&id=8586594)
Mosk, M. (2012). TaxMasters Files for Bankruptcy, ABCNews.com, March 19 (Retrievable online at http://abcnews.go.com/Blotter/taxmasters-files-bankruptcy/story?id=15932628)
Bathon, M. (2012) TaxMasters Files for Bankruptcy, Dogged by Fraud Suits. Bloomberg.com, March 19 (Retrievable online at http://www.bloomberg.com/news/2012-03-19/taxmasters-files-for-bankruptcy-dogged-by-fraud-suits-1-.html)
Crime of Grime OR Sign of the Times?
March 16, 2012 by LuAnn Bean
Filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting, Uncategorized, Video Updates
Tide is flying off the shelves, according to the Associated Press. Unfortunately, retailers are not seeing the profits from this familiar laundry soap. Instead, Tide has become a hot commodity among thieves at supermarkets and drugstores in at least some parts of the country. While the maker of Tide, Procter & Gamble, has been baffled about why the brand has gotten so much attention from thieves, law enforcement has discovered direct and indirect links to the exchange of the product for illegal drugs.
Questions:
1. If a retailer uses a perpetual inventory method to account for Tide, what should they also follow up with to determine any shortages in the product?
2. If shortages of Tide are found, how should they be accounted for? Give an example including journal entries.
3. How should the extra expenses of security tagging Tide be accounted for? Give an example including journal entries.
Sources:
Nuckols, B. (2012). Thieves Rolling Tide Detergent Out of Stores, Associated Press, March 15. (Retrievable online at http://abcnews.go.com/US/wireStory/thieves-rolling-tide-detergent-stores-15922603)
Youtube.com (Wane.com). (2012). Retailers speak out against odd Tide thefts, March 14.(Retrievable online at www.youtube.com)
