The primary question raised in this article is:Â â€œWhat effects would switching to IFRS have for companies, if forced to switch by the SEC?â€ Based on a panel of four executives from four major companies, most agreed that there will be almost no material effects in areas that investors care about.Â
1.Â Based on the opinion of Jack Klinger, director of accounting research at Alcoa, what would be the greatest impact of IFRS for his company?
2.Â What did Aaron Anderson, director of IFRS policy at IBM see as the benefit of converting to IFRS?
3.Â Based on comments by HSBCâ€™s chief accountant, John McGinnis, what was a benefit to the bank of reporting U.S. results in IFRS?
The CIO Executive Board is a membership of senior executives with a shared commitment to steward enterprise-wide IT initiatives. In their role of offering cross-functional perspectives on IT and practical tools to promote strategic agendas, the Board found via a survey that most companies are using a â€œlump sumâ€ cost allocation method to distribute IT operating costs and that this method typically provides little connection between the costs and the volume of services actually consumed.
1. Based on the article, some companies used a â€œgranular-chargeback model.â€Â Explain what this is and its benefits or costs.
2.Â What is the CIO Executive Board recommending at the best practice for allocating IT costs?
3.Â Explain in your own words what you see as the benefits of implementing the CIO Executive Boardâ€™s recommendations.
In this video, Darrin T. Mish, tax attorney discusses some of the questions businesses ask about non-payment of payroll taxes.Â His advice is to â€œget currentâ€ as soon as possible, even though the IRS may not catch the lapse for up to four years and because IRS payroll tax problems can quickly escalate, once identified.
1. What form is the Employer’s Quarterly Federal Tax Form?
2. What is known as the trust fund portion of the payroll tax obligation?
3. In general, if an agreement is made with the IRS to pay back payroll taxes, over how many years is this agreement?
Source: YouTube.com. What to do if you are behind on payroll taxes, June 23, 2009. (Retrievable online at http://www.youtube.com/watch?v=HTvpHyl4WsA)
New accounting rules governing off-balance-sheet transactions went into effect for most companies in January 2010. The rules force companies to put assets, like mortgage servicing rights, back on their balance sheets.
1. What financial accounting standards (FASs) are forcing companies to put such assets back on their balance sheets?
2. What are some of the reasons that these assets are returning to the balance sheet?
3. Since their enactment, which industry is most impacted by the new accounting rules?
4. Can you speculate why companies, like Harley Davidson and Marriott International, showed big jumps in assets, due to these new rules?
A security deposit is money paid by the tenant to the landlord. This deposit protects the landlord if the tenant vacates without making required payments or damages the rental property. If the tenant gives proper notice and vacates without owing any rent or damages, the landlord must return the security deposit to the tenant in accordance with laws in the state where the rental property is located.Â This video looks at some New York regulations pertaining to accounting for security deposits.
1.Â Using the example in the video, make the journal entries that a landlord or rental company would record upon the receipt of the security deposit and the final disposition of the forfeited security deposit to the rental company or landlord.
2. Using the example in the video, make the journal entries to that the landlord or rental company would Â record for the interest on the security deposit, including administrative fees collected on the interest and the distribution of interest to the tenant.
Wisconsin lawmakers agreed on Thursday, April 22, 2010, to regulate payday lenders. Wisconsin had been the only state not to regulate this industry, which consumer advocates said allowed its rapid growth and trapped too many borrowers who take out short-term loans with high interest rates in a cycle of debt.
1. What were some provisions of the plan?
2. According to the plan, if a personâ€™s monthly income was $5,000, how much could he/she borrow from a payday lender?
3. Why do you think that Wisconsin was the last state to pass some type of regulation on this industry? What are the regulations on payday lenders in your state?
4. If a person wanted to take out a short-term auto title loan with a payday lender in the state of Wisconsin and had a car with a value of $14,000, how much could they borrow under this new regulation?
Tracking efforts in companies like Wal-Mart, Hewlett-Packard and Clorox, authors Ram Nidumulo, C.K. Prahalad, and M.R. Rangaswami, identified a five-stage process that will benefit companies as they navigate through the adoption of green business models.Â In the article, the authors contend that early adopters of this process will develop competencies that will be difficult for their competitors to match. They also submit that adoption of these processes by corporate leaders will be key to real change within our economy.
1. If consumers will not pay more for eco-friendly products, where do the authors suggest that profitability will come from?
2. Give a specific example of how the authors point to redesigning operations can save money.
3.Â How would you define â€œgreenwashing?â€ Is it a good thing or a bad thing?Â Explain.
According to new research, approximately 4,000 small and medium sized firms in the U.K. collapsed in 2008 due to late payments by customers. This amounted to approximately 62 billion pounds that were more than 30 days late and of this 15.5 billion that were more than 120 days overdue. For more than twelve percent of these firms, over 60% of all their invoices are paid late.
1.Â What can businesses do to alleviate the problems of late payments?Â
2.Â Explain the cash flow implications of this problem.Â
3. What type of financial ratios couldÂ a company perform in order to better understand the severity of this problem?Â
4.Â How does the current â€œcredit squeezeâ€ add to the woes for both businesses and consumers?
Chris Mittelstaedt, owner of The FruitGuys, has turned his local business into a national operation by changing strategy during the recession through investment in technology and the restructuring of his operations.
1.Â Based on the video, what were some of the things that Chris did to cut costs?Â What disaster almost bankrupted his company?
2.Â Â Look up the topic of â€œcorporate wellness.â€ Investigate what links the company has to the concept of â€œcorporate wellness.â€ Discuss how this could be important and profitable part of the companyâ€™s business strategy.
3. Look up the topic of â€œgreen businessâ€ and â€œsustainability.â€Â Is this an important part of the business strategy for the Fruit Guys?Â Explain how it can impact profitability.
4. Chris mentioned that he took a â€œMASH unit approachâ€ to the business.Â What does this mean?Â How can it translate into profits?
The Securities and Exchange Commission is asking public-company CFOs for better disclosures and additional information about repurchase agreements, or repos, which are the sameÂ transactions that Lehman Brothers used to make its balance sheet look healthy before the investment bank collapsed into bankruptcy. Based on company responses, the SEC could ask issuers to amend their filings or modify disclosures in future filings.
1. Explain why this article says that Lehman’s Repo 105 transactions are destined to take a prominent place in the annals of accounting scandals.
2. Is this the first time the SEC has questioned companies about the way they apply asset-transfer accounting rules? Explain.
3. What type of ratios do these repos affect? Give an example of how this might work.