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.

Lots of people are curious about the price of liposuction (which is also referred to as lipoplasty and suction lipectomy). Although the procedure sports a somewhat hefty price tag, it is among the cheaper cosmetic surgeries available. Some the of the cheapest areas for liposuction are the arms, buttocks, female back, hips and outer thighs. These areas could cost around $1,500 to $5,000 to treat.

Questions:

For the following questions, pick an area of the body discussed in the article and answer questions 1-3.

1.  What factors can affect the overall cost? What qualitative issues are important before you chose the lowest costs in lipoplasty?

2.  What costs do you think are fixed costs relating to these procedures?

3.  What costs do you think are variable costs relating to these procedures?  What costs are mixed?

Source:

Heftel, Christian. (2010). What Would it Cost Me to Get Liposuction? MzoneArticles.com, July 30 (Retrievable online at http://www.mzonearticles.com/Art/28071/84/What-Would-It-Cost-Me-To-Get-Liposuction.html)

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

In one of the most recently uncovered Ponzi cases, a former hedge-fund manager has pleaded guilty to criminal charges in an investment scam in which he bilked as much as $900-million from investors, including four university endowments. According to investigators, the Paul R. Greenwood and his partner Stephen Walsh spent at least $160-million on mansions, horses, rare books, and an $80,000 collectible teddy bear. Mr. Walsh has pleaded not guilty, and Mr. Greenwood will testify against him at trial.

Questions:

1. What did the investors find out about their assets?  Explain why this was a bad sign.

2.  What do the articles say could have prevented the university investments in this scheme?

3.  What potential penalties does Mr. Greenwood face?

Sources:

Fain, Paul. (2010). Hedge-Fund Manager Pleads Guilty to Multimillion-Dollar Swindle of Four Universities. The Chronicle of Higher Education, July 29 (Retrievable online at http://chronicle.com/article/Hedge-Fund-Manager-Pleads/123713/?sid=at&utm_source=at&utm_medium=en)

Fain, Paul. (2009). Two Universities Seek Answers After $114-Million Vanishes in an Alleged Swindle. The Chronicle of Higher Education, March 5 (Retrievable online at http://onnidan1.com/forum/index.php?topic=24965.0)

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, Video Updates.

If accounting has the Big 4, then social media has the Big 3: LinkedIn, Facebook and Twitter. Still, many accounting firms and businesses consider LinkedIn as their sole source of social media because the site helps form relationships that often result in more business and turn into referral sources. But what are the benefits and drawbacks to using the other two main social media sources.  As this article and video show, taking time to investigate and manage social media outlets may help a firm’s marketing and ultimately its bottom line. 

 

Questions:

1.What were the 5 tips in the video for using social media to boost your firm’s income or presence?

2.Based on the video and article, what would you say are the biggest benefit(s) for accounting firms that use social media to promote their practices?

3.Are there any drawbacks for accounting firms who use social media?  How would you design a policy that would help in preventing these issues?

 Sources:

Cytron, Scott. (2009). Just a Tweet Away: Social Media in Accounting Firms. The CPA Technology Advisor, November.  (Retrievable online at http://www.cpatechnologyadvisor.com/publication/article.jsp?pubId=1&id=2609&pageNum=4)

CNN. (2010). How to Make Money with Social Media, CNN videos, July 24. (Retrievable online at http://www.cnn.com/video/)

Posted by & filed under Accounting Principles, All Articles, Cost Accounting, Financial Accounting, Managerial Accounting.

India has developed the world’s cheapest laptop – a touchscreen device which resembles Apple’s wildly popular iPad but will cost just £23.

The prototype was unveiled this week by Kapil Sibal, the country’s human resource development minister, who said 110 million Indian schoolchildren would be the first recipients.

Questions:

1.  Find the current exchange rates and calculate the price of the laptop in U.S. dollars?  Show your work and the site you found to get the exchange rate.

2. What types of costs do you speculate that the country has been able to cut to achieve the £1,450 Tata Nano car and a mobile phone costing less than £11. 3 and now the £23 laptop?

3. What do you see as the biggest advantages are of this new laptop?

 

Source:

Halliday, J. (2010). India unveils world’s cheapest laptop. Guardian.co.uk, July 23 (Retrievable online at http://www.guardian.co.uk/world/2010/jul/23/india-unveils-cheapest-laptop)

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.

Contractors should be educating themselves on the impact of the new proposed revenue recognition standards and the recently published (June 24, 2010) exposure draft pertaining to revenue from contracts with customers. Public comments are due October 22, 2010, and it is expected the standards will be finalized in 2011.

Questions:

1. What are some of the significant changes in this standard that will affect contractors?

2. How will the proposed standard define the economic unit of measure?

3. Explain what the new cost of capitalization rules will mean for contractors.

 

Source:

Henderson, J. (2010). Proposed Revenue Recognition Rules Would Significantly Affect Contractors, BKD Alerts, June (Retrievable online at http://www.bkd.com/industry/Construction-RealEstate/Insights/2010/2010-06alertsCRE-1.htm)

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, Video Updates.

Given the last year’s trend, is there an end in sight to new record-low interest rates? For example, on July 22, Freddie Mac’s Primary Mortgage Market Survey, which provides a snapshot of national average mortgage rates, reported a national average rate of 4.56% with 0.7 points on a 30-year fixed-rate mortgage. At the same time last year, the rate was 5.2% with 0.7 points. Given these changes and the housing crisis, many are turning to mortgage fair events for additional information.

Questions:

1. Assume that the women in this video has a fifteen-year $175,000 mortgage with a 7.5% interest rate and a monthly payment of $1,622.28. What is the interest portion of her first payment and how much is her principal reduced by with her first payment? If she refinanced this loan for 30 years at the same interest rate, what elements of her mortgage would change? 
2. The woman at the end of the video said that her mortgage was upside down. What does that mean? Why does she need an appraisal?
3. What do you see as the benefits for having mortgage fair events like these?
4. What is a point that is charged on mortgages and how do these affect the homebuyer?
Source:


Fontinelle, A. (2010). All-Time Low Mortgage Rates: Time To Refinance? San Francisco Chronicle, July 26. (Retrievable online at http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/07/26/investopedia45861.DTL)


CNN.com. Free Mortgage Fair Help Draws Crowd (Retrievable online at: http://www.cnn.com/video/#/video/us/2010/07/26/endo.mortgage.help.fair.cnn?hpt=C2)

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

Bank of America incorrectly classified as much as $10.7 billion in short-term lending and repurchase deals for mortgage securities as sales. This claim surfaced in a May 13 letter to the SEC where the banking corporation alleges that the transactions were immaterial and that it would be beefing up its internal accounting controls.  This letter was sent in response to an SEC request of finance chiefs at about two dozen firms in March, asking whether they employed accounting strategies like Repo 105 used at Lehman Brothers Holdings Inc.

Questions:

1. In the letter, the bank said its incorrect accounting for the six trades wasn’t intentional. “We do not deliberately structure transactions that are economically disadvantageous simply for the purpose of recording a sale or reducing recorded liabilities.” What must their incorrect journal entries have been?

2. Why did the bank include the phrase that “its incorrect accounting for the six trades wasn’t intentional?”

3. What does “end-of-quarter window dressing” mean in terms of this event? What is Repo 105?

4. Do you agree or disagree that this amount is not material enough to disclose? Explain your answer.

Source:

Rebel Traders (2010). Bank Of America (NYSE: BAC) Admits To Hiding Debt, iStock Analysts, July 12 (Retrievable online at http://www.istockanalyst.com/article/viewarticle/articleid/4299094)

Video: Lehman Brothers ‘Accounting Gimmick’: Repo 105 Lehman Hid Assets (Retrievable online at http://www.youtube.com/watch?v=Zb3DLWeHCks)

Staff reporter. (2010). Bank of America Wrongly Classified Transactions, China Daily, July 12 (Retrievable online at http://english.sina.com/business/2010/0711/328707.html)

Posted by & filed under Accounting Principles, All Articles, Cost Accounting, Managerial Accounting.

According to market research firm, Apple’s iPhone 4 wireless handset components cost about  $187.51. The iPhone 4 sells for $199 and $299. The most expensive component is the LG display that costs $28.50. According to the consultant, the iPhone has typically hovered around the $170-to-$180 cost range because Apple seems to be trying to hit some kind of budget.

Questions:

1.  According to the article the firm that put this information together used a teardown analysis.  What is this?

2. What are some of the reasons that Apple would put together this $170-to-$180 cost point budget?

3.  What is the markup on the gyroscope chip? What percent of the total part cost is the display?

4.  What percent profit is made on the iPhone 4 as compared to the iPhone 3GS?

Source:  Hesseldahl, A. (2010). Apple iPhone 4 Parts Cost About $188, Bloomberg Businessweek, June 28 (Retrievable online at http://www.businessweek.com/technology/content/jun2010/tc20100627_763714.htm?link_position=link1)

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.

In a last-minute change to the financial reforms bill, Congress allowed Wall Street to continue to sell interest-rate swaps directly, rather than isolating these derivatives in separate units. The thinking behind this move is that the interest-rate securities are benign, or at least less dangerous than credit default swaps, which the legislation requires banks to detach from their main operations.

Questions:

1. What is an interest-rate swap?  Do you think that Congress’ action regarding interest-rate swaps was a good idea?  Why or why not?

2. What is an auction-rate security?

3.  How was the hospital industry harmed by these financial instruments?  What other entities took a hit from these financial instruments?

Source:

Sherter, A. (2010). Financial Reform: How Supposedly Safe Derivatives Make Hospitals Sick, BNET, July 8. (Retrievable online at http://industry.bnet.com/financial-services/100010474/financial-reform-how-supposedly-safe-derivatives-make-hospitals-sick/)

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, Video Updates.

The U.S. Supreme Court on Tuesday ordered a new review of the convictions in the government corruption case against former Alabama Gov. Don Siegelman and ex-HealthSouth CEO Richard Scrushy.

Questions:

1. What is the “honest services” fraud law?

2. What is a “quid pro quo” agreement?

3. A judge issued a $2.9 billion civil judgment against Scrushy. According to the opinion, what did Mr. Scrushy do and why?

 

Sources:

Johnson, B. (2010). Court Orders New Review of Siegelman, Scrushy Case, Associated Press, June 29 (Retrievable online at http://www.google.com/hostednews/ap/article/ALeqM5gEFj4h2WLTpKm2g7jltY0N0opHMgD9GL1FQO1

Memorandum Opinion in the 2002 Derivative Litigation for Jefferson County Alabama Circuit Court Case of Wade Tucker, et.al. versus Richard M. Scrushy, et. Al., June 18, 2009. (Retrievable online at http://www.hwnn.com/images/stories/files/Scrushy%20Memorandum%20Opinion.pdf)