Loaning $9.2 Billion of Your Tax Dollars to Ford

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According to the New York Times, Ford Motor and its battery manufacturing partner will receive a $9.2 billion loan to build three battery factories in Kentucky and Tennessee from the Department of Energy.

Questions:

  1. How many people will be employed?
  2. What is the Biden Administration goal for electric cars?
  3. How should the loan be recorded in the financial statements?
  4. What industry does Ford expect the newly employed people to transition from?
  5. When or if will you get an electric vehicle? Discuss.

Source:

Ewing, J. and C. Krauss (2023). Ford’s Battery Joint Venture to Get $9.2 Billion Government Loan, The New York Times, June 23 (Retrievable online at https://www.nytimes.com/2023/06/22/business/energy-environment/ford-battery-plants-loan.html)

Forever Chemicals Settlement; No Liability Admitted

Posted by & filed under Accounting Information Systems, Accounting Principles, Advanced Accounting, All Articles, Auditing, Behavioral and Social Issues Related to Accounting, Cost Accounting, Ethical Dilemma, Financial Accounting, Financial Reporting and Analysis, Income Taxes, Intermediate Accounting, Managerial Accounting, Uncategorized, Video Updates.

According to the New York Times, chemical giant, 3M, reached a $10.3 billion settlement deal with U.S. cities and towns regarding claims that the company contaminated drinking water with so-called forever chemicals used in everything from firefighting foam to nonstick coatings.

Questions:

  1. Over what period will the payout happen?
  2. How many lawsuits did 3M face regarding these forever chemicals?
  3. What types of journal entries and footnote disclosures do you anticipate impacting the 3M annual report?
  4. What is PFAS? As part of the settlement, when will 3M exit the manufacture of PFAS?
Source: Friedman, L and V. Giang. (2023) 3M Reaches $10.3 Billion Settlement in ‘Forever Chemicals’ Suits, The New York Times, June 22 (Retrievable online at https://www.nytimes.com/2023/06/22/business/3m-settlement-forever-chemicals-lawsuit.html)

The Ups and Downs of the Interest Rate

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According to the Washington Post, the Federal Reserve announced Wednesday that it would not raise interest rates this month.

Questions:

  1. How many consecutive interest rate hikes over 15 months has the Federal Reserve made to curb inflation up to this point?
  2. What did the Tuesday inflation numbers show just a day prior to this announcement?
  3. How many jobs were added in May?
  4. What are the confluency of issues that make this economic situation a “real head-scratcher?”
  5. How do the interest rate hikes affect most Americans?

Source:

Siegel, R. and A. Bhattarai. (2023). Fed leaves rates unchanged for first time since March 2022. The Washington Post, June 14 (Retrievable online at https://www.washingtonpost.com/business/2023/06/14/fed-expected-leave-rates-unchanged-first-time-since-march-2022/)

A New Report on Artificial Intelligence

Posted by & filed under Accounting Information Systems, Accounting Principles, Advanced Accounting, All Articles, Auditing, Behavioral and Social Issues Related to Accounting, Financial Accounting, Managerial Accounting, Uncategorized.

According to Fortune, McKinsey Global Institute’s new report looks at 63 potential use cases for artificial intelligence (AI) and predicts that generative AI might add between $2.6 to $4.4 Trillion (with a T) to the global economy.

Questions (from the report):

  1. When was ChatGPT released?
  2. What does the report mean when it says we got to generative AI gradually and then all of a sudden?
  3. Across the banking industry, AI technology could deliver value equal to how much annually if the use cases are fully implemented?
  4. What was the most interesting thing that you read about generative AI in the report?   

Source:

Murray, A. and N. Gordon. (2023) Generative A.I. could add $4.4 trillion to the global economy—with 4 use cases accounting for 75% of the value. Fortune, June 14 (Retrievable online at https://fortune.com/2023/06/14/generative-ai-world-economy-use-cases-mckinsey-report/) PAYWALL
 Staff. (2023). The Economic Potential of Generative AI: The Next Productivity Frontier. McKinsey Global Institute, June 14 (Retrievable online at https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/The-economic-potential-of-generative-AI-The-next-productivity-frontier).

AI in Small Business Accounting

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According to The World Financial Review, artificial intelligence (AI) is revolutionizing advancements in small business accounting.

Questions:

  1. What are the benefits of AI in small business accounting?
  2. What are the challenges of AI in small business accounting?
  3. What are some of the implementation integration issues associated with small business accounting processes?

Source:

Staff. (2023). How AI Is Revolutionizing Small Business Accounting. The World Financial Review, June 14 (Retrievable online at https://worldfinancialreview.com/how-ai-is-revolutionizing-small-business-accounting/)

“Home Equity Theft” ruled on by the Supreme Court

Posted by & filed under Accounting Information Systems, Accounting Principles, Advanced Accounting, All Articles, Auditing, Behavioral and Social Issues Related to Accounting, Cost Accounting, Ethical Dilemma, Financial Accounting, Income Taxes, Intermediate Accounting, Managerial Accounting, Uncategorized.

According to Accounting Today, the Supreme Court unanimously rejected a Minnesota county’s argument that a 94-year-old woman had no property interest in a condominium they seized from her and later sold for more than her unpaid taxes. 

Questions:

  1. According to the justices, which Constitutional Amendments were violated by the county?
  2. How much equity did the Supreme court say that the Minnesota court took illegally?
  3. According to Russell (2023), what states allow the practice of “home equity theft”?
  4. Which state recently eliminated the practice of “home equity theft”?
  5. How do you think this ruling will impact the states listed in #3 above?

Source:

Cohn, M. (2023). SCOTUS rules for 94-year-old in property tax case. Accounting Today, June 6 (Retrievable at https://www.accountingtoday.com/news/scotus-rules-in-favor-of-94-year-old-in-property-tax-case?)

Russell, R. (2023). Supreme Court examines ‘home equity theft’. Accounting Today, May 16 (Retrievable at https://www.accountingtoday.com/news/supreme-court-examines-home-equity-theft)

Higher Stock Ownership among Americans in 2023

Posted by & filed under Accounting Information Systems, Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Ethical Dilemma, Financial Accounting, Intermediate Accounting, Managerial Accounting, Uncategorized.

According to the Washington Post, 61 percent of Americans own stocks, which is the highest number since 2008.

Questions:

  1. According to the article, what type of investment instrument do millennials prefer?
  2. How low did the percentage of Americans owning stock go after the Great Recession in 2013 and 2016?
  3. How much has the U.S. market has gained on an annualized basis over the past decade?
  4. How do investment strategies (like ownership of stocks) impact CPAs?

Source:

Singletary, M. (2023) More Americans own stocks. This is great for their financial future. The Washington Post, June 6. (Retrievable at https://www.washingtonpost.com/business/2023/06/06/american-stock-ownership/)

Do more taxes mean better services?: A cautionary tale

Posted by & filed under Accounting Information Systems, Accounting Principles, Advanced Accounting, All Articles, Auditing, Behavioral and Social Issues Related to Accounting, Cost Accounting, Ethical Dilemma, Financial Accounting, Income Taxes, Managerial Accounting, Uncategorized, Video Updates.

Generally, you equate the need for higher taxes in a city as a way to improve the environment. This blog looks at the city of Portland, Oregon.

Questions:

  1. After reading the Constantz article, explain the taxation difference for earners of $250,000 versus those earning $100,000 in Portland.
  2. What is a HENRY?
  3. While the article says higher taxes in cities like Portland go to support investments in education, health and human services, public safety and infrastructure, do you agree after watching the videos?
  4. The number of stolen cars in Portland has jumped from 6,500 in 2019 to 11,000 in 2022. What do you identify as issues where tax money is likely being used ineffectively or inefficiently to solve this problem?
  5. Were you aware of these issues before Walmart closed all of their stores in Portland earlier this year?

Source:

Conerly, B. (2021) Death Of A City: The Portland Story? Forbes, Jan. 28 (Retrievable online at https://www.forbes.com/sites/billconerly/2021/01/28/death-of-a-city-the-portland-story/?sh=bff67ac74ad0)

Constantz, J. (2023). The cities where high earners face biggest tax hit. Accounting Today, June 2 (Retrievable online ttps://www.accountingtoday.com/articles/the-cities-where-high-earners-face-biggest-tax-hit)

OOPS! A $3 Billion Accounting Error

Posted by & filed under Accounting Information Systems, Accounting Principles, Advanced Accounting, All Articles, Behavioral and Social Issues Related to Accounting, Cost Accounting, Financial Accounting, Intermediate Accounting, International Accounting, Managerial Accounting, Uncategorized, Video Updates.

According to Time, the Pentagon overcounted the value of weapons and other equipment sent to Ukraine by roughly $3 billion.

Questions:

  1. How did the Pentagon do this?
  2. How was the mistake caught?
  3. What is the true cost of aid to Ukraine?
  4. According to the article, how has this mistake impacted support to Ukraine?

Source:

Hennigan, W. (2023) Pentagon Says Multi-Billion Dollar Accounting Mistake Means More Arms Funding for Ukraine. Time, May 18 (Retrievable online at https://time.com/6281063/pentagon-accounting-error-ukraine-arms-funding/)

Catastrophic Panic

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According to the Washington Post, small businesses are beginning to brace for a worst-case scenario of delayed payments, stalled projects and layoffs if the nation defaults on its debt.

Questions:

  1. Briefly explain the ripple effect in the economy described in the article if default happens.
  2. What would be the estimated lost jobs?
  3. What would be the loss in household wealth?
  4. Even if a deal is reached, what instabilities in the economy are already evident?

Source:

Bhattarai, A. (2023). Small businesses are beginning to panic about a government default. The Washington Post, May 21 (Retrievable online at https://www.washingtonpost.com/business/2023/05/20/debt-ceiling-small-business/)