As oil prices drop and hyperinflation encroaches, there have been wide-reaching consequences for the entire population of this country.
1. What are some of the limitations that citizens must live with?
2. In December, the Venezuelan president announced the withdrawal of the country’s largest banknote from circulation? Why did the government make this move?
3. What is causing this hyperinflation and the country’s economic problems?
Gilbert, D. (2016). Hunger and Panic. The Associated Press, Dec. 30 (Retrievable online at https://news.vice.com/story/venezuelas-continuing-currency-crisis-pushes-country-to-brink-of-collapse).
According to the Washington Post, who sources Senate staffers, the Treasury Department refuses to stop forcing permanently disabled people to pay taxes on student loans that have been canceled, leaving a vulnerable population susceptible to thousands of dollars in charges.
1. What is the financial problem associated with each dollar forgiven?
2. What is the compliance burden that Treasury has avoided?
3. Explain garnishment of Social security. Then, discuss this concept within the context of this “loan bomb” issue.
4. Why doesn’t Congress act to fix this problem? Explain.
5. What percentage of these disabled individuals with student debt are insolvent to begin with?
Douglas-Gabriel, D. (2016).Feds refuse to stop taxing the canceled student debt of severely disabled people. The Washington Post, Dec. 23 (Retrievable online at https://www.washingtonpost.com/news/grade-point/wp/2016/12/23/feds-refuse-to-stop-taxing-the-canceled-student-debt-of-severely-disabled-people/?utm_term=.9e1a72920ca1&wpisrc=nl_highered&wpmm=1)
In China, outstanding loans have risen sharply to 40% of GDP but analysts fear the end of the credit binge could trigger a crisis for the wider world.
1. How fast has the debt per household risen over the last 5 years?
2. What is the Chinese household debt ratio compared to other countries?
3. What is the Chinese government trying to use as the chief driver for growth and by doing so, what is it trying to avoid?
Staff (2016) China’s property frenzy and surging debt raises red flag for economy. The Guardian, Nov. 27 (Retrievable online at https://www.theguardian.com/business/2016/nov/27/chinas-property-frenzy-and-surging-debt-raises-red-flag-for-economy).
In 2012, Forbes dropped J.K. Rowling after eight years on its authoritative billionaires list, saying high British taxes and large charitable contributions had eroded her fortune.
1. Why should Forbes rethink that?
2. If Rowling gets equivalent of Universal Studios Park ticket sales equal to Spielberg, how much of that would a $100 ticket yield her in just ticket sales?
3. Since Last year, NBCUniversal’s parent, Comcast, said overall theme park revenue jumped more than 60 percent to $1.4 billion. She also received a one-time licensing fee estimated at $60 million to $80 million and annual development fees. Like Mr. Spielberg, Ms. Rowling also gets a percentage of gross sales of merchandise, food and beverages. Present a rough estimate of what the Universal deal may have yielded for Ms. Rowling in one year.
Source: Steward, J.B. (2016) In the Chamber of Secrets: J.K. Rowling’s Net Worth. The New York Times, Nov. 24 (Retrievable online at http://www.nytimes.com/2016/11/24/business/in-the-chamber-of-secrets-jk-rowlings-net-worth.html)
In April 1967, hamburger lovers in Uniontown, Pa., south of Pittsburgh, met a newer, bigger burger. Introduced by a local McDonald’s, it was called the Big Mac, and for 45 cents it delivered, as a 1970s jingle would have it, “two all-beef patties, special sauce, lettuce, cheese, pickles, onions on a sesame-seed bun.”
1. How many Big Macs are sold annually?
2. How many McDonalds franchises did Mr. Deligatti own in the Pittsburgh area?
3. Who sang the song used in the commercial, called the The Ballad of Big Mac?
4. What is the Big Mac index?
5. Do you think that Mr. Deligatti should have been compensated for his invention? Explain.
Source: Grimes, W. (2016) Michael James Delligatti, Creator of the Big Mac, Dies at 98. The New York Times, Nov. 30 (Retrievable online at http://www.nytimes.com/2016/11/30/business/michael-james-delligatti-creator-of-the-big-mac-dies-at-98.htmlhttp://www.nytimes.com/2016/11/30/business/michael-james-delligatti-creator-of-the-big-mac-dies-at-98.html)
Major American retailers, including Target and Wal-Mart Stores Inc., have been selling premium-priced sheets purportedly made of Egyptian cotton — a byword for luxury in linens. However, these may in reality be woven with lower-quality cotton blends.
1. Briefly discuss the suits seeking to be certified as class-actions against these actions.
2. Who is the Indian manufacturer spreading these false claims?
3. Discuss the system for certifying Eqyptian cotton.
4. What is the audit firm, Ernst and Young’s, role in this story?
Campbell, M, S. Pettypiece, and S. Philip. (2016). Dirty Linen: A Bed Sheets Scandal Hits the Cotton Industry. Bloomberg, Nov. 15 (Retrievable online at http://www.bloomberg.com/news/articles/2016-11-14/dirty-linen-a-bed-sheets-scandal-is-roiling-the-cotton-industry)
Terrible abdominal pain, while at a Florida conference, landed Doug Moore in an out of town emergency room (ER). While the emergency room charges were paid by his insurance as in-network charges, the doctors’ charges were billed at a much higher out-of-network rate.
1. On average, what percentage of patients that go to ERs face this similar financial shock?
2. What states have already passed legislation to deal with this problem?
3. What is balance billing?
4. How did Mr. Moore finally resolve the payment issue? What would you do if faced with a similar situation?
Sanger-Katz, M. and R. Ableson. (2016). Surprise! Insurance Paid the E.R. but Not the Doctor. The New York Times, Nov. 16 (Retrievable online at http://www.nytimes.com/2016/11/17/upshot/first-comes-the-emergency-then-comes-the-surprise-out-of-network-bill.html).
According to the Washington Post, white and male victims often receive larger awards than people of color and women in similar cases, based on the Post’s research of more than two dozen lawyers and forensic economists, who make the calculations.
1. What are the two tenets of the American justice system discussed in this valuation article?
2. Which Act has outlawed the practice of charging women more for health insurance than men?
3. After reading the article, what was the most interesting issue you discovered?
4. Briefly discuss the G.M.M. case from beginning to end, including valuation amounts and final settlement.
Soffen, K. (2016). In one corner of the law, minorities and women are often valued less. Washington Post, Oct. 25 (Retrievable online at https://www.washingtonpost.com/graphics/business/wonk/settlements/)
According to Reuters, McDonald’s Corp has agreed to pay $3.75 million to settle a lawsuit claiming it was liable for labor law violations by a California franchisee, marking what lawyers said was the first time the company has settled legal claims by a group of U.S. workers at one of its franchises.
1. Where was this suit filed?
2. What was the $3.75 million for specifically? How should McDonald’s record the journal entry for this?
3. Why is McDonald’s being penalized for what its franchisee did? Was the franchisee penalized? Discuss.
4. What measures does McDonald’s plan to take to prevent this from happening again?
Wiessner, D. (2016). McDonald’s to pay $3.75 million in first settlement with franchise workers. Reuters.com, Oct. 31 (Retrievable online at http://www.reuters.com/article/us-mcdonalds-settlement-idUSKBN12V1NJ)
If you have been up late watching TV, you might have seen the Infomercial for a Minnesota company that sells My Pillow, a patented open-cell, poly-foam design created by inventor Michael J. Lindell. This staple of late-night TV infomercials has sold about 18 million pillows since 2005. However, a recent lawsuit successfully argued My Pillow overstated its claims.
1. What are some of the disputed medical claims related to My Pillow?
2. Where was Mr. Lindell sued?
3. What percentage of annual profits did Mr. Lindell settle the suit for?
4. What is the National Sleep Foundation? Would you consider it to be a related party? Discuss whether the foundation should have not-for-profit status.
5. How should the company record the payment for the settlement in its accounting records? Be sure to include the donation and refund, as well as the settlement amount in your journal entries?
Guarino, B. (2016). Infomercial sleeper ‘My Pillow’ gets $1 million wake-up call over false medical claims. The Washington Post, Nov. 3 (Retrievable online at https://www.washingtonpost.com/news/morning-mix/wp/2016/11/03/infomercial-sensation-my-pillow-gets-1-million-wake-up-call-over-false-medical-claims/?hpid=hp_hp-morning-mix_mm-pillow%3Ahomepage%2Fstory)
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