Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Intermediate Accounting, Managerial Accounting, Uncategorized.

When Allison Brooke Eastman’s fiancé found out four months ago just how high her student loan debt was, he broke off their engagement within three days. Although she had told him early in their relationship that she had over $100,000 of debt, when she found that the amount was actually about $170,000, he accused her of lying and walked away from their impending nuptials.

 
Questions:
1. The article mentions that Ms. Eastman pays $1,100 a month for her student loan debt. Assuming that no interest is involved, how many years will it take her to pay off the $170,000?

 
2. Assume that Ms. Eastman must pay 6% interest on the declining balance of the loan. Based on this assumption, how many years will it take her to pay off the $170,000?

 
3. Do you agree with New York divorce law that advanced degrees acquired during the marriage, as well as the earnings power they bring, should be treated as assets to be divided in case of divorce? Why or why not?

 
Source:

 
Lieber, R. (2010). How Debt Can Destroy A Budding Relationship. The New York Times, September 3 (Retrievable at http://www.nytimes.com/2010/09/04/your-money/04money.html?ex=1299643200&en=297c3a5871503c4b&ei=5087&WT.mc_id=BU-D-I-NYT-MOD-MOD-M166-ROS-0910-L2&WT.mc_ev=click)

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The world’s movie capital is not Hollywood but Bollywood. Bollywood is the nickname for the Indian film industry located in Bombay. Fourteen million Indians go to the movies on a daily basis (about 1.4% of the population of 1 billion) and pay the equivalent to the average Indian’s day’s wages (US $1-3) to see any of the over 800 films churned out by Bollywood each year. That’s more than double the number of feature films produced in the United States. However, as this video presents, more movie productions in Bollywood will undergo budget cuts due to economic risks and the push for profits.

Questions:

1. The article tells about the 10 most high budget films of Bollywood. Look at the budget for Love Story 2050. If 1 crore rupee = 10,000,000 rupees, use the Currency Converter at http://coinmill.com/INR_USD.html to find out how many U.S. dollars this is. How does this compare to the average budget for a Hollywood movie?

2. In the article, look at the movie “Singh is Kinng.” This film had the title track song sung by Snoop Dogg. Snoop Dogg was paid 7 crores for this. What percent of the movie’s total budget was this?

3. In the article, look at the movie “Ghajini.” What percentage of profits were made on this movie?

 
Source:

Staff (2009). 10 Most High Budget Films of Bollywood. Full Dhamaal, August, 19 (Retrievable online at http://www.fulldhamaal.com/bollywood-critics/10-most-high-budget-films-of-bollywood-21146.htm)
Video (2010). Budget Bollywood Success, September 7. (Retrievable at http://www.cnn.com/video/)

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting, Uncategorized, Video Updates.

Starting Wednesday, September 8, 2010, travelers from 36 nations will be required to pay a new two-year entry or travel fee when they visit the United States — part of which will be used to promote tourism.

The travelers will pay $14 to register through the Electronic System for Travel Authorization (ESTA), required for those using the Visa Waiver Program. Four of the $14 will cover ESTA operating costs, and $10 will go toward promoting the United States as a tourist destination.

Questions:

 1. According to the video and article, the legislation will create a corporation for Travel Promotion, which is a private corporation that will be funded in part by the $10 fee collected from visitors (who are not required to apply and pay for visas). Assume that the corporation begins its existence on September 8, 2010.  How much revenue will it report as of December 31, 2010, if we assume that 500,000 visitors come to the U.S. over this period? (Hint: remember this fee covers a 2-year period.)

2.Assume that 200,000 visitors pay the fee on October1, 2010.  What journal entry should be made on October 1?

3. Based on question 3, what adjusting journal entry should be made on December 31, 2010? (Hint: remember this fee covers a 2-year period.)

4.  How should the corporation account for the $100 million of matching private sector funds?

Sources:

Hunter, M. (2010) Visitors from 36 nations to pay U.S. tourism promotion fee, CNN Travel, September 8(Retrievable at http://www.cnn.com/2010/TRAVEL/09/08/promotion.fee/index.html?iref=allsearch)

Video (2010).U.S. Charges Entry Fee, September 8 (Retrievable at http://www.cnn.com/video/)

Posted by & 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.

Court papers filed by the federal government and Apple against a former manager detail a scheme that allegedly saw confidential Apple data supplied to Asian electronics companies over more than three years in return for kickbacks of more than $1 million. 

Apple says that over the course of more than three years, two individuals colluded by passing sales forecasts for unreleased iPod and iPhone models, as well as product roadmaps, sales reports and details of problems being encountered by competitors.

Questions:

1. How did Apple find out about the kickbacks?

2. Explain how data like sales forecasts, pricing information and specifications for unreleased products could contribute to this fraud.

3. Why do you think the two fraudsters intentionally kept the wired amounts at less than $10,000?  At there any laws or regulations that are tied to this amount and if so, what are they?

Source:

Williams, M. (2010). Laptop e-mail tipped Apple to kickbacks plot, Computer World, August 17 (Retrievable online at http://www.computerworld.com/s/article/9180820/Laptop_e_mails_tipped_Apple_to_kickbacks_plot?taxonomyId=152&pageNumber=1)

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Candy is big business.  While international giants such as Mars Inc., Nestlé, and Kraft dominate the industry, there is still room for smaller, regional players like South Africa’s Tiger Brands and China’s Hsu Fu Chi International, with each country having a No. 1 candymaker. Even though chocolate remains the most popular candy in the world, chewing gum is growing rapidly. As this article speculates, the reason behind gum’s growth is due to tougher anti-smoking campaigns and aggressive pushes by manufacturers into new markets.

Questions:

1.  What is the number one best-selling candy and how much were its annual U.S. sales in 2007?   Which country eats the most chocolate per capita?  How much is it and how does it compare with the U.S.?

 2.  Why can’t you find a 10-K for Mars Inc. on the Web?

3.  Based on the article, what percentage of the total candy market is accounted for by M & M’s?

 

Source:

Deprez, E. (2009) What are the World’s Most Popular Candies? BusinessWeek, June 24 (Retrievable online at http://www.businessweek.com/globalbiz/content/jun2009/gb20090624_590587.htm#readerComments)

Deprez, E. (2009). The World’s Best Selling Candies (slide show), BusinessWeek, June 24 (Retrievable online at http://images.businessweek.com/ss/09/06/0624_worlds_best_selling_candy/1.htm)

Posted by & 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.

From modest beginnings, Microsoft, started by college dropout Bill Gates, gave birth to an entire
industry, changing the way we live and work and became one of the largest software companies on the
planet. As this article points out, not everything has been notable during its history. In particular, look at
this parody video of Clippy, the cute but much maligned animated paper clip introduced with Office 97.
Microsoft turned off the Clippy feature by default in Office XP, promoting it as part of a $30 million
marketing campaign, and removed it altogether in Office 2007.

Questions:

1. What type of journal entry or entries do you think that Microsoft make for the $30 million campaign to silence Clippy?

2. The article talks about Microsoft’s surprising investment when in August 1997, rival company Apple desperately needed cash. Microsoft came to their rescue and bought $150m in stock. What do you see as the reasons for this event?

3. What journal entries do you think Apple would have made in the exchange mentioned in Question 2?
What journal entries would Microsoft have made?

Sources:


YouTube Video. (2006) Annoying Microsoft Paperclip, November 23
(Retrievable online at http://www.youtube.com/watch?v=1zr2-_ap4O8)
Sanjay. (2010) Happy 35th Birthday Microsoft, Access India, August 27.
(Retrievable online at http://www.mail-archive.com/accessindia@accessindia.org.in/msg40506.html)

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Did you know that roughly 50 percent of employees have no retirement savings at all?  In an effort to increase the number of Americans who are saving for retirement, a bill known as the Automatic IRA Act of 2010 has been introduced in the Senate by Sen. Jeff Bingaman (D-NM) and in the House by Rep. Richard Neal (D-MA). The bill establishes IRA accounts for all employees and sets up automatic payroll deductions. The rationale for the legislation is based on the success of the automatic enrollment in 401(k) plans of a few years ago. When these accounts were established by law, there was a dramatic increase in participation, by about 90 percent of eligible employees. The belief is that, by establishing automatic IRA accounts, tens of millions of workers will be eligible for these plans, and an expected $15 billion will be added to savings annually.

 

Questions:

1.  According to the article, will there be any exemptions for the new Act, if passed?

2. According to the article, will there be any incentives for businesses to promote this?  Do you see this as a weak or a robust plan? Explain.

3. Based on the article, what types of journal entries will accountants have to make with respect to the features of this legislation, if passed?

 

Source:

 

Staff (2010) Democrats seek to legislate retirement savings, AccountingWeb, August 31.

(Retrievable at http://www.accountingweb.com/topic/accounting-auditing/democrats-seek-legislate-retirement-savings)

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, IFRS, Intermediate Accounting, International Accounting, Uncategorized.

While reviewing the proposed expansion of the International Financial Reporting Standards for accounting, Tim Bush, a member of the “Urgent Issues Task Force” that scrutinises the work of the Accounting Standards Board (ASB), claims to have uncovered “fatal” and “dangerous” flaws in the system.  Mr. Bush alleges the regulations, and specifically the way they have been implemented in the U.K. and Ireland, have led to “mistakes [that are so severe] that it is difficult to overstate”.

Questions:

1.  What severe mistakes does Mr. Bush allege?

2. What does he propose would fix these problems?

3. Who does Mr. Bush claim are the first victims of IFRS standards and who will be the secondary victims?  Based on your understanding of the issues, do you agree or disagree?  Why?  

Source:

Armistead, Louise. (2010). UK Bank Accounting “Fatally Flawed” Warns Influential Watchdog, Telegraph.co.uk, August 26 (Retrievable online at http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7964816/UK-bank-accounting-rules-fatally-flawed-warns-influential-watchdog.html)

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According to a new report from the Wall Street Journal, shareholders have won a victory in obtaining greater clout to place directors on corporate boards.  This is part of the the “shareholder rights” movement that has been chipping away the power from top executives in U.S. run corporations. However, the Journal also predicts skirmishes ahead by public companies that hope to strike down the SEC rule, which they say will be used to distract management and advance special-interest agendas.

Questions:

1. What was the SEC vote in favor of the “proxy access” rule?

2. What does the “proxy access” rule require?

3. What are the costs and benefits of this new rule?

4.  How could this new rule impact you as an accountant?

Source:

Holzer, Jessica and D. Berman. (2010). Investors Gain New Clout, The Wall Street Journal, August 26. (Retrievable online at http://online.wsj.com/article/SB10001424052748703632304575451572616571774.html?mod=ITP_pageone_0)

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There has been recent momentum in art market investments, despite the recession. The art market is scouring the world for undervalued works by major artists and museums are seeking new material for blockbuster shows.  Amid this, artistic works by Dalí and others are getting longer looks. Interestingly, few artists could reap more from a late-period revival than Dalí. The artist created at least 1,200 paintings between his art-school years in the 1920s and his death in 1989.

Questions:

1. The article mentions that over the past five years, the average price paid at auction for a late-period Dalí has risen from $108,634 to just over $1 million, based on reports by Art Research Technologies, a New York-based consulting firm that tracks auction prices.  Using this information, what percentage increase is this?

2.  As the video mentioned, many corporations invest in these artworks.  Use the information in Question 1 and assume that these average numbers  represent a sale of one Dalí painting from one corporation to another corporation.  What journal entry would the selling corporation make?

3. Use the information in Question 1 and assume that this is an exchange of one corporation selling a Dalí painting to another corporation.  What journal entry would the buying corporation make?

Sources:

Crow, Kelly. (2010). The Lust for Late, The Wall Street Journal, August 13. (Retrievable online at  http://online.wsj.com/article/SB10001424052748704017904575409732613402068.html?mod=WSJ_hp_mostpop_read#project%3DDALI-TL100805%26articleTabs%3Darticle)

WSJ Video with Kelly Crowe (2010). The Lust for Late, August 13. Retrievable online at  http://online.wsj.com/article/SB10001424052748704017904575409732613402068.html?mod=WSJ_hp_mostpop_read#project%3DDALI-TL100805%26articleTabs%3Dvideo)