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)
Embrace Change
February 19, 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
Kodak, the 131-year-old film pioneer, filed for bankruptcy protection last month. News got worse this week when the company announced they would stop doing what they were the first to ever do – manufacture digital cameras. Then on Feb. 15, Apple asked a bankruptcy court for permission to sue Kodak for patent infringement, resulting from Kodak’s efforts to import printers and digital camera.
Questions:
1. Why did the video say that this should be a business school case study?
2. What specific signs should Kodak have recognized as roadmarks for change?
3. What is Kodak’s strategy going forward under bankruptcy protection? Discuss what other avenues you believe Kodak could take going forward.
4. If Apple is successful, how should the company account for any proceeds gained from the patent infringement lawsuit?
Source:
The New York Times video.(2012). Kodak Declares Bankruptcy, Jan.19 (Retrievable online at http://video.nytimes.com/video/2012/01/19/business/100000001296658/kodak-declares-banruptcy.html)
Passikoff, R. (2012). No More Kodak Moments. Forbes.com, Feb. 13 (Retrievable online at http://www.forbes.com/sites/marketshare/2012/02/13/no-more-kodak-moments/)
Reuters staff. (2012). Apple Inc. has asked a bankruptcy court for permission to sue Eastman Kodak, accusing it of infringing its patents. Reuters.com, Feb. 15 (Retrievable online at http://www.reuters.com/article/2012/02/16/us-apple-kodak-idUSTRE81F05V20120216)
Coinstar and Self-Service Retailing
February 19, 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
Coinstar is a company that was founded just over two decades ago by Jens Molbak, who as a Stanford University graduate student, realized there wasn’t an easy way to spend the spare change piled up in a jar on top of his dresser. Since that time the company has become known for its Redbox kiosks, its movie rental subsidiary. Redbox has largely overshadowed its parent company’s broader ambitions to reinvent vending machines by applying them to new categories of retailing.
Questions:
1. What percentage of Coinstar’s revenue came from Redbox last year?
2. Based on the percentage of Redbox’s investment in Verizon’s online movie services, how should this be accounted for in Redbox’s financial statements?
3. According to the article, Coinstar has about eight or nine kiosk ideas in various stages of development. In general, how should the company account for these?
4. In 2009, Redbox signed Sony to $460 Million distribution agreement, which was a five-year deal that guarantees that the studio would provide DVDs to the kiosk rental company. How do you think Redbox accounted for this agreement? How do you think Sony accounted for this agreement?
Source:
Wingfield, N. (2012) Thinking outside the Redbox. The New York Times, Feb. 17 (Retrievable online at http://www.nytimes.com/2012/02/18/business/coinstar-ventures-beyond-its-redbox-success.html?_r=1&ref=business)
Pressure Packages
January 24, 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
Pressure from financial institutions and Treasury officials undermined an effort to limit executive pay at seven companies rescued with taxpayer money, a new government audit showed on Tuesday. The official overseeing executive pay for bailout firms limited cash compensation and made some reductions in pay, but still approved compensation packages in the millions, the TARP (Troubled Asset Relief Program) inspector general said in the report. Former U.S. pay czar Kenneth Feinberg approved pay packages worth $5 million or more from 2009 to 2011 for 49 top earners, the report said.
Questions:
1. What was the significant leverage that the article said the companies had over Feinberg? Do you agree that this would be significant enough to compromise? Why or why not?
2. What was Feinberg’s title? What does TARP stand for?
3. Who were the companies involved? Which of these have exited the TARP program?
Source:
Reuters Staff. (2012). Bailed-out Companies Pressured TARP Pay Czar to Keep Executive Pay High: Report, Jan. 24 (Retrievable online at http://www.huffingtonpost.com/2012/01/24/tarp-executive-pay_n_1226485.html?ref=business)
Do you think they will notice if we understate the numbers a little?
December 19, 2011 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
The Securities and Exchange Commission capped a three-year investigation into Fannie Mae and Freddie Mac on Friday, filing securities fraud charges against six former executives at the government-sponsored mortgage giants. The SEC claims that the execs failed to disclose the full extent of their companies’ subprime loan exposure. However, the outcome of the cases could depend on what exactly is considered a subprime loan, with one defendant already arguing that there’s no standard definition.
Questions:
1. By what percentage did the Freddie Mac executives understate the amount of the company’s Single Family Guarantee business that was exposed to subprime loans in June 2008?
2. By what percentage did the Fannie Mae executives understate the amount of the company’s “Alt-A” loans?
3. What does a 10-Q filing with the SEC present?
4. Explain why most of these SEC settlements are set up with the language “without admitting or denying liability?” Do you believe this is a good thing?
Source:
Li, V. (2011). SEC Suits Against Fannie Mae, Freddie Mac Execs Turn on Subprime Loan Definition, Law.com, Dec. 20 (Retrievable online at http://www.law.com/jsp/cc/PubArticleCC.jsp?id=1202536066304&SEC_Suits_Against_Fannie_Mae_Freddie_Mac_Execs_May_Turn_on_Subprime_Loan_Definition)
Tickets, Anyone?
December 13, 2011 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
Ticketmaster’s various fees and surcharges, which sometimes add 40 percent or more to the cost of a ticket, have long infuriated its customers. But next year, thanks to a recent class-action settlement, many of those fans will be able to get some money back.
Questions:
1. According to the article, what are the two types of credits that will be offered to people who bought tickets on the Ticketmaster Web site from Oct. 21, 1999, to Oct. 19, 2011?
2. Are there any limitations to the credits?
3. Explain how Ticketmaster will likely make the journal entries for these claim amounts.
4. What is the minimum payment that Ticketmaster faces per year over the four-year life of the settlement? What happens if individuals do not claim their credits?
Source:
Sisario, B. (2011). Ticketmaster Offers Credits to Settle Lawsuit. The New York Times, Dec. 2 (Retrievable online at http://mediadecoder.blogs.nytimes.com/2011/12/02/ticketmaster-to-offer-redress-for-fees/?scp=2&sq=ticketmaster&st=cse)
More Job Cuts
December 7, 2011 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
Citigroup Inc is cutting 4,500 jobs worldwide, Chief Executive Vikram Pandit said on Tuesday, becoming the latest large bank to trim staff. Pandit said the cuts would be completed over “the next few quarters” and would come from a range of businesses.
Questions:
1. What is the $400 million charge for?
2. How will this cut and cuts in general affect earnings quality?
3. Where will the charge be reported in the financial statements? Explain
Source: Rauch, Joe (2011)Citi cuts 4,500 jobs, will take $400 million charge. Reuters Dec. 7(Retrievable at http://in.reuters.com/article/2011/12/07/citigroup-layoffs-idINDEE7B50KG20111207)
PPM: What does it stand for when funding is involved?
November 27, 2011 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
The abbreviation PPM stands for many things, including parts per million. But what does PPM stand for if you are an entrepeneur that is interested gaining funding for your business? When a company is looking to raise funds without an initial public offering, a private placement memorandum (PPM) is one of the best ways to raise capital. A company must have the consent of the Securities Exchange Commission (SEC) before this can be done, and will need an information memorandum along with the PPM. Because of the complexity of SEC rules and documentation, it is highly advised to seek a knowledgeable attorney to help throughout this process.
Questions:
1. What are the sections in a PPM?
2. What should be the length of a PPM?
3. When Mike on the video talks about the internal route of raising funds, from an accounting standpoint, what is comparable to the Use of Funds table that he presents? Do you agree or disagree that all new companies can follow the model that Mike presents using Dell as an example?
4. If you presell like the Dell example in the video, how would you make the journal entries for the products that you sell? Give an example problem.
Sources:
Spotora, A. (2011). Los Angeles Business Attorney Emphasizes the Importance of Private Placement Memorandums, Spotora Blog (Retrievable online at http://www.spotoralaw.com/2011/11/los-angeles-business-attorney-emphasizes-the-importance-of-private-placement-memorandums/)
Michalowisc, M. (2011) Video: On A Roll- Raising Funds For Your Business (Retrievable online at http://www.toiletpaperentrepreneur.com/videos?tubepress_page=15)
Geonzon, M. (2011) Private Funding Technique And Practical Information On Small Enterprises. Articles Corp., Nov. 24 (Retrievable online at http://articlescorp.com/business/venture-capital/private-funding-technique-and-practical-information-on-small-enterprises)
On A Roll- Raising Funds For Your Business from Obsidian on Vimeo.
Accounting Error or Change in Estimate?
November 27, 2011 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
On November 21, 2011, independent research firm, Gradient Analytics issued a report that questioned whether j2 Global appropriately treated the measurement of annual contacts with eFax customers as a change in estimate. Based on its examination of the j2 Global’s financial disclosures, applicable accounting rules, and limited feedback from the company, Gradient reported that “…the description of the underlying circumstances sounds more like a correction of an error in prior-period financial results.” If those adjustments are appropriately considered an accounting error rather than a change in estimate, a restatement of j2 Global’s 2010 financial reports may be warranted if such errors are considered material under accounting rules.
Questions:
1. In your own words, briefly explain the difference between the treatment of an accounting error and a change in estimate and why it is important for this company.
2. Who is Sam E. Antar, the author of this blog, and why should an accountant recognize him?
3. Look at other articles in Mr. Antar’s blog and briefly summarize one that interests you.
Sources:
Antar, Sam (2011). Should j2 Global Communications Restate its 2010 Financial Reports?, November 22. (Retrievable online at http://whitecollarfraud.blogspot.com/2011/11/should-j2-global-communications-restate.html)
Michalowisc, M. (2011) Video: Biggest Accounting Mistake #2. (Retrievable online at http://www.toiletpaperentrepreneur.com/videos?tubepress_page=3)
Biggest Accounting Mistake #2 from Obsidian on Vimeo.
Brother, can you spare $5
November 6, 2011 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
Beginning Tuesday, Starbucks coffee drinkers can get their morning caffeine fix and help create jobs in small businesses across the country. According to CEO Howard Schultz of Starbucks, the company will accept donations for a program that helps raise money and spurs job creation by small businesses, at its almost 6,800 locations across the nation, in addition to its website at www.CreateJobsforUSA.org.
Questions:
1. What is the Opportunity Finance Network? Do you think this a good approach to the downturn in our economy? Discuss.
2. Based on these articles, each job created equal to a salary of $21,000 or are other factors being considered in the multiplier effect mentioned?
3. Do you believe that this campaign is about marketing rather than what the CEO purports? Discuss the pros and cons.
4. Comment on Mr. Schultz’s comment about the importance of a trade off between social contract and traditional profit being needed. Does this indicate that there might be a new profit paradigm emerging in today’s economy? Discuss.
5. Mr. Schultz indicated that Starbucks would probably be spending millions of dollars on the campaign. How would you as their accountant classify these costs?
Sources:
Clifford, C. (2011) Starbucks steps up to the jobs challenge, Oct. 4 (Retrievable online at http://money.cnn.com/2011/10/03/smallbusiness/starbucks_jobs/index.htm?iid=EL)
Clifford, C. (2011) Get your Starbucks, create a job, Nov. 2 (Retrievable online at http://money.cnn.com/2011/11/01/smallbusiness/starbucks_jobs/)
