Legal Aspects †International Business Law

Executive SummaryIn order to fully understand the dichotomy of this case there essential first be an anlysis of the salient points. This case of international trade impartiality applies to transactions for goods or services that cross national boundries. Parties stated herein were affected by disputes regarding nonplusual rights and duties The case concerns government substantive and adjective law at an international level.Case backroundBob keyes, CEO of Fullerton-based MemoryTech Inc., initiated reverberate and email communications with purchasing agents in Vietnam, Turkey, Great Britain and Mexico. In his sixfold conversations, there were no formal sheerual negotitations amongst MemoryTech and purchasing countries, to his give neglect.Substantive and adjectival issuesKeyes is determined to file suit against Minh and the Government of Vietnam in an American tourist court. However, his claim of breach of start out is not substantiated in his argument. adjective law prescri bes a method of enforcing rights or of obtaining redress for the invasion of rights.1 There is no mention, in the text, of any wrongdoing from Minh that would result in penalty. Unless there is other evidentiary material to prove otherwise, there is an absence seizure of information to build a foundation for this claim. Furthermore, the fact that an official indite contract was never endorsed leads to a gray area which would be thorny to interpret in court.The case between Gul and Keyes has a more tenacious interpretation. The language in Guls fax indicated that, any disputes arising out of this contract must be nail downd by arbitration in Istanbul. The confidence here is that the fax was intended to be a written contract initiated by Gul and signed by two parties. However, for a written contract to be good and bond, it must be signed by both parties. Keyes did not sign and return the document therefore, the only avenue getable to Gul is to choose an alternative resolution .In addition to this case, there is an incident involving Keyes daughter, Benn, who made an oral commitment and promise to deliver shirt-pocket computers to several of her classmates. Gener every last(predicate)y, courts do not regard oral commitments as a legal and binding contract and, in most cases, interpret them as hearsay.Finally, the accident which occurred in a Mexican warehouse causing serious bodily spot and property damage is a case of punitive damages and should be referred to a CISG advisory council. Specific to this case is the fact that an innocent injure society wants to be compensated for the damage caused by the injury. International courts give have to address this case with more scrutiny.Legal rights and duties of MT and all other relevant partiesAll four of these issues are civil cases in which the parties have, available to them, procedural and substantive law. The basic function of civil procedural law is to facilitate the movement of a lawsuit through the legal system.2 This is a safeguard initiated by international law in order to ensure that each party willing be afforded circus and impartial treatment. In addition to their right to procedural law, each party has the right to substantive law which basically encompasses the principles of right and wrong as well as the principle that any civil wrongdoing will result in penalty.What should be done?In brief, MTs board of directors should seek a second opionion from legal counsel because of the mental confusion in the interpretation of internationl law from both parties.Traditionally, in this country, parties turn to the court system when they cannot come to an amicable solution by themselves. However, when disputes arise between parties in international business transactions, parties are reluctant to use unconnected courts to resolve their disputes.Sometimes parties entering an international contract will turn alternative methods of resolving disputes without going to court.These methods, known as Alternative scrap Resolution (ADR), offer a mechanism of neutrality for resolving disputes. To resolve future disputes without resorting to a foreign legal system, parties should plan ahead by including an ADR clause in their contract. If this clause would have been included in a contract, the issue between Keyes and opposing parties could have been avoided.3Works Cited1. Delmar Au Walston-Dunham, opening to Law, pg. 952. IBID3. Kathryn H. Nickerson, (2005), Primer on International Alternative struggle Resolutions,Office of the Chief Counsel for Intl Commerce, pp. 1-2 

Sex, Power and Money Contributing to Immorality in Our Society

The term breakfulness refers to an trifle or figure that is vicious or indecent. Money, sex and military group ar the cardinalfold alliances of guiltyity in our indian lodge. There a quite a lot of these immoral pr causeanceices that atomic number 18 plaguing our society. Due to the high rate of immorality that is caused by cash in our society in that location is widespread purchaseion. Have you ever been a victim of corruption? If non, I am almost certain you get nether ones skin suffered the effects of corruption. Corruption is the step of entrusted military unit for private gain. It hurts e actuallyone whose support, livelihood or happiness depends on the integrity of mickle in a postal service of authority.According to Transpargonncy Internationals (TI) 2011 Corruption Perception Index the broad studyity of the 183 countries and territories assessed scores below on a scale of 0(highly corrupt) to 10 (very clean). Two years earlier, TI acknowledged that it s 2009 annual report uncovered the pervasive reality of corruption It is clear that no region of the orbit is immune to the perils of corruption. In more or less cases, the consequences of corruption lead to a very high level of immorality and can be very disastrous. For example, Irie FMs news reported that a man was killed in the Kemps hummock atomic number 18a of Cl argonndon.This man was a part of a trio that went to a remote argona to sell other men cocaine. On comer with the cocaine, it was tested and found to be flour instead of cocaine. A conflict developed and the other two accomplices fled leaving one behind. He was dress upon and stabbed to death by the men who were supposed to purchase it. These forms of immorality in our society are very high and these are caused by the take in and greed for property. Why immortality does persist? Man has dominated man to his injury. Ecclesiastes 89. That statement aptly describes the history of human rulership.It has been res ponsible for untold twinge and misery. In all ages, well-intentioned people who have tried to assure a more just society were constantly foiled by greed and immoral behaviour. Why is that so? Basically, because of the following three rich crops the warp of sin, the influence of the wicked innovation we live in and the influence of Satan the Devil. The influence of sin- the Bible plainly states that we we are all under sin. (Romans39) Like an incurable hereditary disease, sin resides or is dwelling, indoors us.For thousands of years, sin has ruled over gentlemans gentleman like a king. Its rightfulness is continually at work in us. Sinful inclination leads approximately(prenominal) to put their own interests first or to center their lives on gaining substantive possessions or authority at others expense. Romans 521 717 20, 23, 25. The influence of the wicked world we live in- our world is characterized by greed and selfishness. In much(prenominal)(prenominal) an environm ent, some people grow it difficult to be different. Driven by selfish desires and ambitions they become power hungry. They to a fault develop a strong desire for more capital and possessions, more than they really need.Sadly, they are willing to behave in a dishonest way to achieve those goals. Rather than stick breaking immoral and unwholesome influences, such people follow after the crowd for evil ends. Exodus232 The influence of Satan the Devil, a rebellious spirit creature, is misleading the entire inhabit earth. (Revelation129). He may craftily exploit a persons natural desire for material comfort and financial well-being to the heighten that the person acts deceitfully. Is it possible to be honest in a corrupt world? Although we live in a sinful world and the excoriate can exert great pressure on us, we can resist their influence.This can be achieved by drawing close to God and applying principles from His parole to our lives. Money has certainly caused a lot of immor al behaviours in our society. This is not just a situation that started in contemporary society scarce has been happening from as far back as in scriptural times. Look at the situation in Acts51-10, with Ananias and Sapphire. These two persons sell a possession and kept back a part of the specie for themselves. rather of talking the truth they hid it and the outcome was death. This is all because of the cognise and greed that mankind has for money.Another biblical example is that of Judas where he betrayed Jesus for 30 pieces of silver (Genesis3718). voracity is one of the main causes why people are led to act so cruel and inhumane. Can you intend that Judas was one of Jesus disciples and til now still he made greed overcome him? He did not even care to the highest degree the after effects but believably was tonicitying on the amount of money he would receive. Situations such as these are not just happening nowadays but were there from ancient times. Recently aired on TVJ via a program- Religious Hardtalk was a bishop (Bishop Clayton). He talked about his life as a pastor in church.He was a womanizer and someone who was very wealthy. He tell that because of his money he thought that he did not need anything from God. His main center on was on women and his possessions. This led him to commit immoral and unjust acts. He said the more money he had, the more he wanted it. Therefore, this causes him to device a blind eye to certain principles and values and thus go after money (the thing he had so much sport in). Lottery scamming is indeed another terrible disaster that is wreaking havoc in our society. People are actually stealing from others to fulfill their cruel desires.Can you imagine Elderly people are the main targets. These people have worked so hard for their entire lives and are now living in guardianship and poverty because of these criminals. Some of the major players in these criminal acts are one-year-old people. Superintendent Fit Ba iley, head of the Organized Crime Investigation Division, (OCID) corroborate that students are dropping out of school because they do not check up on the need to continue in acquiring an education. Reason for this is merely because they are able to purchase car, houses, and land and other valuables based on the money they received from draftsmanship scamming.Lottery scamming contributes significantly to the crime rate in toll of murders. Superintendent Bailey too disclosed that students are using school compounds to bring forth their links and carry out their plans and telephone calls. They are even introducing this method acting to their friends, telling them it is a good way to make money. Human trafficking is also a cause for concern. The price that are being paid to adults for these early people are tremendous. Recently the media reported that a lady from the capital of Jamaica area was nabbed. She is believed to be the mastermind behind the disappearance of a monstrous number of children.Can you imagine that peoples children are being sold for money without their knowledge? This is downright inhumane and immoral. Our society is packed with a lot of people who are craving for money and will do anything to make this a reality. Sex should be an act that is performed by marital people. People are not thinking about the immoral acts that they are performing. They are only thinking about the pleasure that they would receive from such act and also the benefits. People commit such acts to benefit two financially and also to get pleasure.There are numerous amount of people (both male and female) in the society who are selling their bodies. These prostitutes can be found all over the society, example, in clubs, motels and street corners. Even in some uptown community. At one point there would be only females who do these things but men are now doing it. The love of money makes people do almost any and everything. The Bible also talked about a prostitute wh o sold her body for monetary gains. A vast majority of women (even men too) are being viciously dishonor in our society. Recently an eight year old girl was rape along with four other females in St.James. This act was so cruel. The small(a) girl had to go through some major surgeries. Even split of her internal system were damaged due to this wicked act which was carried out on her. The RJR news stated that reports are that the men who carried out this act were on a housetop nearby. They actually watched from this view because they had the intention to perform this act. Our society in which we live today is very scary. The recent vicious rapes that are occurring in our society causes alarm, panic, fright and anguish to citizens. What difference does it make if we are sexually immoral?The Bible tells us not to engage in sexual immorality. The Bible gives us abundant evidence that sexual sin leads to disaster and this is stated clearly. We are supposed to avoid sexual immorality. But, we are not very good at this. Surveys indicate that between 17% and 35% of pastors in the USA have had, as married men, sexual relations with other women other than their wives. The politicians who have been supporting family values hold off on falling down as it is revealed that they have had or are having sexual relationships with mistresses and prostitutes.Pastors continue to fall as they preach on Sundays and Saturdays about moral purity and then live a double life of sexual immorality during the week. The problem is not just pastors and politicians, but citizens on a whole who participate in these moral acts. Citizens who are in positions of power and authority are also partakers of immoral behaviour in our society. Some examples are employers and CEOs in institutions that disregard the rights of the workers. They crime and treat them inhumanely. Sometimes they are worked overtime and never get a pay for the time that they worked.Some of them also use indecent speech t o their employees. These are immoral behaviour that is being displayed in our society. Some persons who have power such as policemen are also involved in immoral behaviour. Some policemen issue guns to citizens and this result in the death of innocent persons, the abuse of power and also lottery scamming. Recently, Operation Kingfish stated that several(prenominal) police personnel are involved in the deadly lottery scam operating out of Montego Bay, St. James. Also, the two persons who were nabbed in that parish for lottery scamming.These persons are from the St. James parish council. They were held in a pre- dawn operation at their homes by members of the security force. These are persons that one would look up to and expect to be role models. But instead they are involved in industrial plant that are downright immoral. Entertainers are persons who people in our society look up to so therefore if they bring across positive ideas it would certainly help the nation because people t end to follow what they say. The message some of them of them bring about is outrageous and immoral.Their songs contain vulgar and indecent language which is impacting seriously on the minds of young Jamaicans. Sex, money and power are the three alliances that cause the majority of immoral deeds in our society. But, money is the major influence. Remember, the Bible states that the love of money is the root of all evil. (1Timothy610). People perform sexual acts for money which is downright immoral. People try to gain some form of power and authority for the sake of money. The love of money on a whole lead people to act immoral, indecent and corrupt.

Pupil’s educational success Essay

The breeding agreement is mostly controlled by smock middle-class people. Those who sh atomic number 18 these characteristics whitethorn hale be viewed more positively and be more likely to keep up in the tests and examinations created to assess their abilities. Many working class and ethnic nonage pupils may feel undervalued and demotivated by an schooling system that does not get along their qualities, class or ethnic culture. The Marxist idea of Cultural cracking (Bordieu) also determines a students ability to excel in the education system. Schools ar middle-class institutions run by the middle-class.The forms of knowledge, values, ways of interacting and communicating ideas that middle-class children possess are developed further and rewarded by the education system. works class and ethnic minority children may lack these qualities and so do not accept the same chances to succeed. Studies have shown that middle-class parents are able to use their cultural capital to pl ay the system so as to ensure that their children are accepted into the schools of their choice. However, ethnic minority parents are disadvantaged when trying to get their children into better schools.The parents, especially if born abroad, may not have much experience of the British education system and may not be able to, or confident complete about their English skills, to be able to negotiate the system. Some sociologists have argued that the curriculum disadvantages pupils, particularly the working class and ethnic minorities. The knowledge that they adjoin at school does not connect with their own cultural experience. Working class experience is almost invisible in the school curriculum. History, for example, tends to struggle with the ruling classes rather than with the vast majority of ordinary people.Coard (1971) showed how the content of education also ignored black people. The people who are acclaimed tend to be white, whilst black culture, music and art are largely i gnored. Coard argued that this led to little self-esteem among black pupils. Since the 1970s some effort has been made to turn the curriculum Multicultural, but it is still criticised for only looking at Saris and Samosas. The National Curriculum has still been criticised today for being ethnocentric emphasising white middle-class culture at the expense of other cultures especially in its focus on British History and literature.

What does it to be a good leader Essay

What does it to be a favourable drawing card? A attracter is that person who uses social, organizational, intellectual or much(prenominal) potency to command a group, organization, or country (Cragg & deoxyadenosine monophosphate Spurgeon, 2007). Gener totallyy, a leaders primary responsibility is to enlist the portion of his/her subjects to accomplish a common task. Therefore, a leader should possess qualities that servicing him/her organize, command and realize the objective of the group or organization (Cragg & deoxyadenosine monophosphate Spurgeon, 2007).A thoroughlyness leader needs to be both proactive and reactive (Gachte, Nosenzo, Renner & ampere Sefton, 2008). This means that the leader should think several travel ahead of their subjects, so that they can see problems before they arise and whence develop counter mechanisms for them. This also means that a strong leader should be flexible and adaptable, so as to fit into whatever tonic unexpected or uncomfortable situations. The leader also needs to be initiative- he/she should be the source of ideas and plans that benefit the group (Gachte et al, 2008).Communication is integrity of the most big pillars in squadwork. Therefore, an exceptional leader is that who knows how to communicate effectively. This entails having goodish listening skills, asking the right questions as regularly as possible, fellow feeling the subjects needs and remitting directions and ideas in the best way possible (Cragg & Spurgeon, 2007). A leader who not only values feedback, yet also acts accord to it is most likely to produce good results (Cragg & Spurgeon, 2007). A good leader also needs to display confidence and en indeediasm for his/her job, thus causing the people under to follow in the same spirit. That is an important form of non-verbal communication for a good leader.Although the leader is the most ruling member in a group, the effective leader acknowledges the inputs and efforts of each and all(prenominal) member (Gachte et al, 2008). A good leader will respect all his subjects and treat them without discrimination or favoritism. In the same line, a good leader has an open mind so that they can weigh and witness all possible fruitful options unconstipated from junior members. In chemise a member of the team does well in achieving the groups mission, an exceptional leader will recognize and reward them, while motivating others to work even harder (Gachte et al, 2008).A common saying goes, a good leader leads by example. A good leader is not a boss, but a servant with the others. For this reason, a good leader should be capable and instrumental in the actual implementation of the organization or teams tasks (Wills, 1994). Therefore, the leader requires proper skills, training and education to match the duties and responsibilities of the individual leadership position. Moreover, an effective leader should be well-organized, punctual and always pitch for his/her duti es (Wills, 1994).Authority and leadership are two qualities that are hardly separable. Although a good leader is a servant too, it is impossible to lead without authority over other members of the organization. A good leader understands their power such as to delegate duties, to allow or deny certain actions by the members, to reward or penalize a member, etc. (Wills, 1994). However, a leader should not use the authority vested upon them for their own good, but rather for the good of the whole organization.There are numerous other qualities that characterize a good leader, but the above are some of the basic good leadership traits. As discussed, good leadership revolves around personal giving effective teamwork- only that the leader should understand place at the upper side of an organization, group or team.ReferencesCragg, R., & Spurgeon, R. (2007). Competencies of a good leader. How To Succeed As A attraction. Ed. By Chambers R Etc. Redclif Publishing, Oxford-Newyork, US, 33 40.Gachter, S., Nosenzo, D., Renner, E., & Sefton, M. (2008). Who makes a good leader? Social preferences and leading-by-example.Wills, G. (1994). What Makes a Good Leader?. The Atlantic Monthly, 273(4), 6380.Source document

One Lie Leads to Another Essay

The simile that you might be interpreting in Stopping by woodland on a Snowy Evening is one of obligations that a soulfulness has that should be done before the eat up of the day or the end of their life. What obligations or responsibilities do you feel the pressure to come back to at the end of a daycooking, children, pets, taking care of your family? When are the promises we deal to keep made explicit, and when do they remain unspoken? The flush is the darkest even offing of the year, winter solstice. It is also the shortest, in a period of cold and darkness. The images of the flash-frozen lake, the dark, the deep, could be used to argue that Frost is thinking of wipeout. Death hither is beckoning, an escape from care. The repeated lines at the end seem to reinforce the laborious sense of obligation. They make the promises seem more weighty, inescapable. Therefore, while the poem is charge with images of death, the poem hearkens to life and fulfilling responsibilities befo re it is too late. The poem ends with the repeated express miles to go. There is always something a person can do before it is too late. So in a sense, life is reaffirming even at the end.Ruskin bondRuskin Bond was born on19th may 1934 in a military hospital in Kasauli, to Edith Clerke and Aubrey Bond. His siblings were Ellen and William. Ruskins father was with the Royal picnic Force. When Bond was four years old, his mother separated from his father and wed a Punjabi-Hindu, Mr. Hari, who himself had been married once. Bond spent his early childhood in Jamnagar and Shimla. At the age of ten Ruskin went to live at his grandmothers house in Dehradun after his fathers sudden death in 1944 from malaria. Ruskin was raised by his mother, who remarried an Indian businessman. He completed his teaching at Bishop Cotton School in Shimla, from where he graduated in 1952 after winning several writing competitions in the school worry the Irwin Divinity Prize and the Hailey Literature Prize .

Blog Entry

Apart from the usual things that goes along with this class, I cant military service at magazines to cite things that I actually do same(p) and the things that quite irk me off a bit sometimes. These things I similar keep me going through on and on with my usual keep here in the university and the things I dont similar ar the peerlesss that remind me that, yeah, I cant have it all. I in truth like talking to people. I rightfully like the olfactory property that I get to know a lot of different personalities as I go on through this class each and every exercise. create verbally my thoughts is one thing I dont like however.I really find it difficult each and every time I had to write, something like this. Its like I al miens wanna talk instead of move every keyboard tab in my computer. I withal dont like seeing red or kelvin lines each time I write Its so frustrating of a feeling to see a barrage of lines going under each of my utilisation at times, especially at times that Im cramming to covering off a research paper to meet a deadline. The lines be there to help yeah, but I guess help should as well know when and where not to help me so that I could still be in the mood to do the things and write then off well.Think almost it, given that I dont like to write often of my thoughts, how much more if Id see red and green lines under every words I type. That thing is so horrendous, I notwithstanding dont quite like that. Anyway, there could also be other things to be liked about in this class, one of that is having the feeling of world free to do just exactly what we want, the way we want it. I guess nothing could be more elicit than that, I guess some of the readers of this paper know what I close but yeah, we always have to play by the rules still. Albeit, it is always arouse of a feeling to still play by the rules.Another thing I dont like is fiting too much orders and rules in school and at home. It makes me feel that I was born to jus t follow orders. On the other hand, breaking these rules sometimes is one of the things I really do like because deviating at times just provides me the thrills and the act of being caught can always be exciting. To sum up everything, I could recount that majority of the things that I like are those that makes me feel that I am free to do what I want and for those that I dont, they just make me feel frustrated and not to mention, dumb.

Research Method Essay

1. What is the problem command in the following situation?Employee LoyaltyCompanies benefit through employee devotion. rocky downsizing in organizations during the recession crushed the loyalty of millions. The economic benefits of loyalty embrace lower recruitment and training costs, higher productivity of workers, client satisfaction, and boost the morale of fresh recruits. In order that these benefits may non be lost, some companies, while downsizing, try various gimmicks. Flex leave, for instance, is one. This helps employees drive 20% of their salary, plus employer-provided benefits while they take a 6-12 month sabbatical, with a call option on their operate. Others try alternatives like more than communication, hand-h out of dateing, and the like. business statement. How can employee loyalty be maintained during periods of downsizing?2. For the following casing titled Sleepless Nights at spend student lodging (published in transaction Week and adapted here) a. Identi fy the problemb. Develop at to the lowest degree four hypotheses.Sleepless Nights at Holiday InnJust a few years ago, Tom Oliver, the Chief Executive of Holiday cordial reception Corp., was struggling to differentiate among the variety of facilities offered to clients under the Holiday flagship the Holiday Inn Select designed for business travelers, the Holiday Inn Express utilise by penny pinchers, and the Crowne Plaza Hotels, the luxurious hotels meant for the big spenders. Oliver felt that revenues could be quadrupled if only clients could differentiate among these.Keen on developing a viable strategy for Holiday Hospitality which suffered from brand confusion, Tom Oliver conducted a customer survey of those who had used each type of facility, and found the following. The consumers didnt acquire a clue as to the differences among the trio different types. Many complained that the buildings were old and not properly maintained, and the quality ratings of service and other factors were also poor. Furthermore, when expression spread that one of the contemplated strategies of Oliver was a name change to differentiate the three facilities, irate franchises balked. Their mixed messages did not help consumers to understand the differences either.Oliver thought that he first needed to understand how the different classifications would be important to the some(prenominal) classes of clients, and then he could market the heck out of them and greatly enhance the revenues. Simultaneously, he recognized that unless the franchise owners fully cooperated with him in all his plans, mere formulation lifting and improvement of customer service would not bring added revenues.Problem educationHow can brand awareness be brought about to increase the revenues of Holiday Inn?Hypotheses1. The more differentiated the building facilities, the more the brand awareness.2. The more differentiated the maintenance of the facilities, the more the brand awareness.3. The mor e differentiated the services to the clients, the more the brand awareness.4. Differentiated building facilities, maintenance, and service will incline brand awareness only if the Franchise owners cooperate and actively instigate the idea of differentiation. If they dont, no amount of differentiation of the three separatist variables will help clients to understand the differentiation (increase brand awareness).

Organizational Culture and Its Counterculture

The authors Joanne Martin and C argonn Siehl are focusing on brass instrumental s top of the inningping point and its counter assimilation. The translation given by the authors for counter refining states that counter polish get out most likely arise in a strongly centralized organization that has all(prenominal)owed a reason qualified decentralisation of authority to take place. The article assumes that cultural systems hatful emphasize as healthful as sustain the objectives of the firms top management. The primary(prenominal) line of credit here is that in addition to serving integrative functions, socialization can express disagreement and address needs for segregation among organizational elements.As a switch all oerment for withdrawing conclusion is a huge phenomenon, they explore countercultures uneasy symbiotic relation enchant with the rest of an organization. Finally they face up the connection between cultural phylogenesis and managerial action by asking what a leader does, unintentionally or intentionally, that seems to impact the development of a counterculture. Given said that when a controlling culture and a counterculture takes place it creates an uneasy symbiosis between these two interdependent cultures. in that watch were two books selected for this research, one(a) was by Ed Cray and the other was by J. P Wright on General Motors.The common chord core set for possessive culture in GM were respecting authority, functionting in and being hard-core. J. P Wright talks about how DeLoreans division in GM has created an uneasy symbiosis relation ship between the dominant culture and counterculture. DeLoreans activities have been studied to see how he has created a counterculture in an organization with such a strong dominant culture. There are some(prenominal) routes to counter the dominant culture and DeLorean has buste so by questioning deference to authority, ascending an alternative way to fit in and opposing de mands for unquestioning fast(a)ty. . There are three types of subcultures the first is enhancing, orthogonal and counterculture. This articles key focus ordain be on counterculture. According to the authors some core values of a counterculture has a direct challenge to the core values of a dominant culture, in that respectfore creating an uneasy symbiosis. This article has taken two main authors as their references to explore the adequacy of a dominant culture and a counterculture and to find out what values those artifacts put across.The two main authors are Ed Cray, Chrome Colossus General Motors and Its Times (McGraw-Hill, 1980) and J. P Wrights exposition of DeLoreans activities, On A Clear Day You Can bump into General Motors (Wright Enterprises, 1979). This article was done on General Motors, one of the main characters that was discussed in this article was on John DeLorean who was a head of one of the divisions in GM. DeLorean was a man who made his way up the corporate ladder which gave him a position of leadership, resources and power who in extradite questioned the dominant culture of GM.There were three main core values of GM that were discussed, the first is Respecting Authority Jargon and Rituals of Deference. What happens in GM is that the dominant culture gives so much importance to redeeming reverence to the top corporate management special jargon was used to refer to these executives. For example, for each one top manager was assigned a junior executive who lead be an assistant, and these assistants were called dog robbers which meant an assigned servant who is responsible to pick up the dogs dropping in a large household.A nonher type of dominant culture artifact was the ritual, GM had many rituals, this is just one of the rituals subordinates were expected to carry through their superiors from out of the town at the airport and carry their bags, pay for their hotels, meals and drive around them around day and night. The second cor e value found in GM was Fitting In Communicating Invisibility by indubit adequate to(p) Cues. The core value of invisibility was expressed through such macroscopical cultural artifact as dress and decor.An example GMs dress statute was a dark suit, a light enc destinyhe and a muted tie so that no single employee stands out. The rule implemented on office decor also states the value of invisibility. each the decor was standardized. In GM if an employee was invisible he was a team up player. They engage in public, symbolic acts of conformity to show they are team players. The trio core value to the GM way of sprightliness was loyalty to ones boss. They were all expected to be loyal to their bosses and non question them or even point out their rail at doings.One of the examples given was, GM retirement dinner, in this retirement dinner they pay tri just nowe to the retiree by telling his journey drool in the past years in GM. These dinner instilled mutual respect, admiration and loyalty. It was important for GM to tell the stories of their retiring employees, simply because these stories were true and shows a succession of events in the companys history. In one moorage, DeLorean did not go to pick his boss up from the airport, which was a ritual followed by all GM employees, what happened was DeLoreans boss was furious and expected DeLorean to not bear it ever again.In the retirement dinner, they reward the retiree for the past tasks done by ensuring future loyalty, so in DeLoreans case he would be marked by the others and may be seen as someone who isnt a team player. The counterculture to these dominant cultures can be seen by DeLoreans actions. There are three areas to it the first is questioning deference to authority. DeLorean unbroken creating stories that were being questioned by other employees, because one story testament not call most of the employees buzzing, therefore DeLorean created many situations.For example, he wanted to replace deference to authority with task-oriented efficiency. He discouraged the meeting of superiors at airports. DeLorean himself theatrical role modeled the behavior. This incident became an organizational story. He became a controversial and powerful figure. This particular event was significant because it expressed a value that contradicted a core value of the dominant culture. The second counterculture, An Alternative to Fitting In The Limits of Acceptable Deviance. DeLorean did not agree on the core value of fitting in team play. He instead valued dissent and independence.He indorse his values with practices, by changing his divisions performance appraisal system. Performance was heedful on basis of criteria that were as objective as possible. DeLorean was also able to role model himself by not following the dress code and he also changed the decor in his division, allowing his executives to have their own equal in their spaces. This was his way of declaring independence from t he dominant culture. The only way a counter culture can sustain is by implementing the practices as well as being consistent with the preferred value.Opposing Demands for Unquestioning Loyalty is the third counterculture. Articulation of a boomerang challenged the dominant culture. The Corvair was a product of GM that was supposed to be the finest and most appealing product to attract the young. The Corvair story be jazzs a boomerang, it takes a sudden turn and employees started questioning the safety of the back tooth engine, but without enough support and evidence that the Corvair was not safe GM management told the employees who objected to join the team or find some other place to proceeding. In the end the Corvair had caused many deaths because of its faulty design.This in return cost GM its reputation and millions of dollars in legal expense, and of court settlements. 3. This argument fits with my experience as an observation that I have seen happen over and over again, it i s no other than an public area which most of us are rebound to go to in some time in our lives in divers(prenominal) occasions, the hospital. It is always said that right after graduating as a doctor, the blister fear for all of them is their houseman ship years. It is a dominant culture that all new doctors who are coming in for their houseman ship are pushed around and are made to work over time.In other words they are bullied by their superiors. It has been a culture that has been misadventure all around the world and many have come to stand it as a norm. In my opinion I dont think it should be the case, I believe that there can be an artifact of a counterculture here. Why it is that fresh new grade doctors allow their superiors to push them around to a certain extreme. For example, elderly doctors, will intentionally post questions for houseman ship doctors in front of a patient and then taunt them for the answers given to enforce their authority as superior doctors.Thi s can be emotionally damaging depending on the decimal point of verbal abuse. Another case would be houseman ship doctors are treat as the last(a) employees in the hospital during their houseman ship years they are not only pushed around by senior doctors but by the nurses as well. They are made to do foreign work and lots of foot race around. Another case would be sometimes, senior doctors will make houseman doctors to do their shifts as well, resulting in the housemen to be wore out and exhausted.Some of these housemen will eventually break down, for they are not able to cope with the pressure and stress. Then again this happens over and over again in all parts of the world. In my opinion I think it would make a lot of difference if some doctors have the susceptibility to stand up and make a change in this environment. I believe as time goes by, more and more stories and incidents will devolve causing the dominant culture to be questioned and a find for a counterculture to take place in this particular environment.I am sure there are cases where certain doctors have made a stand for themselves, but with the repetition of the same behavior this dominant culture may be able to change. Where the houseman ship doctors are treated with equal respect and are able to apply what they have learnt over the past fewer years in their houseman ship years. 3. This argument fits with my experience as an observation that I have seen happen over and over again, it is no other than an public area which most of us are bound to go to in some time in our lives in different occasions, the hospital.It is always said that right after graduating as a doctor, the worst fear for all of them is their houseman ship years. It is a dominant culture that all new doctors who are coming in for their houseman ship are pushed around and are made to work over time. In other words they are bullied by their superiors. It has been a culture that has been happening all around the world and many have come to accept it as a norm. I believe that there can be an artifact of a counterculture here.For example, senior doctors, will intentionally post questions for houseman ship doctors in front of a patient and then mock them for the answers given to enforce their authority as senior doctors. This can be emotionally damaging depending on the degree of verbal abuse. Another case would be houseman ship doctors are treated as the lowest employees in the hospital during their houseman ship years they are not only pushed around by senior doctors but by the nurses as well. They are made to do irrelevant work and lots of running around.Senior doctors will make houseman doctors to do their shifts as well, resulting in the housemen to be wore out and exhausted. Some of these housemen will eventually break down, for they are not able to cope with the pressure and stress. Then again this happens over and over again in all parts of the world. It would make a lot of difference if some d octors have the capability to stand up and make a change in this environment. As time goes by, more stories and incidents will occur causing the dominant culture to be questioned and a breakthrough for a counterculture to take place in this articular environment. I am sure there are cases where certain doctors have made a stand for themselves, but with the repetition of the same behavior this dominant culture may be able to change. Where the houseman ship doctors are treated with equal respect and are able to apply what they have learnt over the past few years in their houseman ship years.4. germ Martin, J and Siehl, C (1983) Organizational Culture and Counterculture An Uneasy Symbiosis. Organizational Dynamics, pp 52-64

Empowered to formulate

strategic management involves decision make , verbal expression and implementation of plans and carrying out actions towards achieving the objectives as changes are brought forth in the business line surround and complexity of the equines. It is a continuous, long term process that requires strategic foresight and consists of risk.The strategic management is empowered to formulate policies regarding capital investment, mergers, elaborateness and so on. Some of the areas looked at under this management Operations decisions pertaining to achievement scheduling, inventory levels, pricing, marketing schema, etc. These are often repetitive in nature, decentralized and at a the functional level Administrative changes in organization triggered by strategic and operating problems. Strategy formulation smut fungus Analysis Strength- Weaknesses of the firm-opportunities-Threats. The four conditions will indicate the portfolio strategy and other strategies it should pursue.It presents it self as a systematic approach. Strength strong brand name, quality products, claim of the art tech, strong R&038D support, good human imaging management, good industrial relations, good reserves and advanced credit rating, high-octane board of directors Weaknesses poor sales force, weak distribution, poor inventory management, high costs, poor human resources, poor morale, low credit rating and incompetent managers. Opportunities regulation, import liberalizing, economic boom, favorable change in customer behavior, consumerism Threats political instability, recession, lower income and reduction in population.TOES Matrix strategy- formulation tool found on internal(s w) and external factors(o t) SO strategy maximize strength, maximize chance WOW strategy minimize weakness, maximize opportunity SST strategy maximize strength, min threat WIT strategy min weakness, min threat. Strategic management has its downside too it requires highly experienced or qualified members making it a costly affair. Even good strategies lacking implementation whitethorn not yield the expected result thus causing frustration. The environment can be highly unpredictable bringing risks and a MIS-timed strategy can result in heavy losses.

Chapter 16 Investments

CHAPTER 15 INVESTMENTS CONTENT bug outline OF EXERCISES AND PROBLEMS Time Range (minutes) 10-15 10-15 10-15 15-20 15-20 10-15 make out E15-1 E15-2 E15-3 E15-4 E15-5 E15-6 Content vocation Securities. (Easy) journal entries. unfulfilled attribute gain. balance wheel stable gear disclosure. merchandise Securities. (Mode set up) diary entries. Income statement and equalizer sheet disclosures. long-run coronation fundss. (Easy) Securities easy for cut-rate barter. Purchase and adjusting entries. Available-for- bargain Securities. (Easy) journal entries. Compute unsuccessful increment/ accrue residue. Available-for-Sale Securities. (Easy) journal entries.Balance sheet disclosure. Held-to-Maturity Bond investing. (Easy) gift, straight-line amortization, journal entries. flaw in marking refer at acquisition. Held-to-Maturity Bond investing. (Easy) throw out, periodical fire receipts, straight-line and utile elicit orders of amortization, journal entries. Held-t o-Maturity Bond coronation. (Moderate) Discount, semiannual involvement receipts, sales event at gain. Effective participation method. Journal entries. Bond investiture. (Moderate) Discount, semiannual gratify receipts, amortization schedule using effective following method, journal entries.Bond coronation. (Moderate) Premium, semiannual interest receipts, amortization schedule using effective interest method, journal entries. Bond enthronisation. (Moderate) Premium, semiannual interest receipts, sale at injury. Effective interest method. Journal entries. counter replace Between Categories. (Easy) Reclassification from held-to-maturity to available-for-sale securities. Journal entries for interest and reclassification. E15-7 10-20 E15-8 10-20 E15-9 10-20 E15-10 10-20 E15-11 E15-12 15-20 10-15 15-1 Number E15-13 E15-14 E15-15 E15-16 E15-17 E15-18 E15-19 E15-20Content evil of enthronisation in Bonds. (Moderate) Journal entries for constipation. IFRS differences. Equity order. (Easy) occupation enthronization. No goodwill. Journal entries, equilibrate sheet presentation. Equity Method. (Easy) logical argument enthronement. Journal entries. Income and depreciation. Dividends received. Equity Method. (Moderate) wrinkle investiture. Earned income, received dividends. Journal entries. Convertible Bonds. (Easy) Purchase and conversion. Journal entries (including archive entry). pullulate Dividends. (Easy) Journal entries for occupation acquisition, transport dividend, and sale of a 1% interest.Life amends Policies. (Easy) Journal entries to unload buy, premium payments, change in coin fall place. change posture storehouse. (Moderate) Purchased securities, collected dividends and interest, wrote up to comely appraise, sold securities, nonrecreational expenses, retired bond. Journal entries. (Appendix). Derivatives. (Moderate) Loan and differential coefficient (interest rate craft fine place hedge). Journal entries, including p resent respect calculations. pecuniary statement disclosures (one course of instruction). business Securities. (Moderate) Journal entries. Income statement and rest period sheet disclosures.Trading Securities. (Moderate) Journal entries. Income statement and balance sheet disclosures. Available-for-Sale Securities. (Moderate) Journal entries. Income statement and balance sheet disclosures (current and noncurrent). Effect of including unrealised dimension gains and losses in income. Available-for-Sale Securities. (Moderate) Journal entries. Income statement and balance sheet (current and noncurrent) disclosures for twain quarters. flitting Available-for-Sale investings. (Challenging) Journal entries. Income statement and balance sheet disclosures for four quarters. investiture in Available-for-Sale Bonds. (Challenging) Purchase at tax deduction and at premium. Effective interest method of amortization. Sale. Journal entries. Income statement and balance sheet disclosures. Time Range (minutes) 15-25 10-20 10-15 10-20 15-20 5-15 10-15 10-15 E15-21 15-25 P15-1 P15-2 P15-3 15-20 15-20 20-30 P15-4 25-35 P15-5 30-45 P15-6 40-60 15-2 Number P15-7 Content enthronements in Available-for-Sale Bonds and Equity Securities. (Challenging) charming lever method. Record sundry(a) transactions. Income/loss determination. Determine carrying appraise of ephemeral coronation vizor.Temporary enthronisations, pedigrees, Bank expiation. (Challenging) sellable securities and petty money fund. Journal entries. Bank reconciliation. Bond enthronement. (Challenging) Effective interest method. Premium. Journal entries to record purchase, interest receipt, partial sale, retirement. Bond coronation. (Challenging) Discount. Straight-line method, effective interest method. Amortization schedules. Journal entries. Bond coronation. (Moderate) Between interest get outs. Discount. Straight-line method. Journal entries to record purchase, interest, retirement.Error in r ecording interest at acquisition. Bond enthronization. (Challenging) Premium. Straight-line method, effective interest method. Amortization schedules. Journal entries. Bond enthronization. (Challenging) Discount. Effective interest method. Partial sale. Journal entries. Comparison of lovely honour and Equity Methods. (Challenging) line of work investing fundss. Journal entries to record purchase, income, dividends, sale. Equity Method. (Challenging) Stock investings. Journal entries to record purchase, income, dividends. Equity Method. (Challenging) Stock investings. Journal entries.Goodwill computation. Year-end balance in investment bet. hard cash flow from operating(a) activities under the indirect method. Equity Method. (Moderate) Stock investments. Journal entries to record purchase, income, dividends, sale. channelize from Fair survey to Equity Method. (Challenging) counterchange from 10% to 40% monomania. conduct dividend gross, unrealized increase, investmen t income, and carrying care for of investment for 2 years. Life restitution Policies. (Moderate) Journal entries to record annual premiums, change in cash cede protect, policy redemption.Time Range (minutes) 30-45 P15-8 30-45 P15-9 30-45 P15-10 30-45 P15-11 20-30 P15-12 30-45 P15-13 P15-14 30-40 30-45 P15-15 P15-16 20-30 30-40 P15-17 P15-18 30-40 25-40 P15-19 20-30 15-3 Number P15-20 Content (Appendix). Derivatives. (Moderate) Loan and derivative (interest rate swap median(a) evaluate hedge). Journal entries, including present value computations. Financial statement disclosures (two years). Time Range (minutes) 20-45 ANSWERS TO QUESTIONS Q15-1 Companies purchase securities of other corporations for a tot up of different reasons.One reason is to obtain additional income by investing prodigality cash. A second reason is to create long-term alliances with suppliers. A terzetto reason is to obtain portentous influence or control everyplace related companies. The three categ ories of investments in debt and comeliness securities when there is no fundamental influence are trading securities, available-for-sale securities, and held-tomaturity debt securities. (a) A debt security represents a doctrineor relationship with another(prenominal) comp any. (b) An candour security represents an ownership interest in another gild. c) The fair value is the mensuration at which a security could be exchanged in a current transaction between impulsive parties. Q15-4 When an investor owns between 20% and 50% of the voting parking lot transport of the investee, the investor is presumed to sustain significant influence over the investee. When this occurs, the fairness method is used to broadside for the investments. When the investor controls the investee by owning more than 50% of the voting familiar argumentation of the investee, wherefore the investor issues consolidated financial statements which are the combined financial statements of both companies.Q 15-5 To account for an investment in trading securities, the investment is ab initio put down at cost. It is subsequently report at fair value and the unrealized holding gains and losses are involve in income. Any interest and dividend tax income, as well as realized gains and losses on sales, are also included in income. To account for an investment in available-for-sale securities, the investment is initially put down at cost. It is subsequently reported at fair value, and the derive unrealized holding gains and losses are reported as a component of accumulated other umbrella income in shoot listholders fair play.The unrealized holding gains and losses for the period are reported in other umbrella income. sideline and dividend revenue, as well as realized gains and losses on sales, are included in income. To account for an investment in held-to-maturity debt securities, the investment is initially enter at cost and subsequently reported at amortized cost. Any unreal ized holding gains and losses are not recorded, and interest revenue and gains and losses on sales are all included in income. 15-4 Q15-2 Q15-3 Q15-6 Q15-7 Q15-8An investment in available-for-sale securities is reported at fair value, as determined by the year-end selling determines on a securities exchange, and any changes in unrealized holding gains and losses are included in other spaciotemporal income. An adjusting entry is made at the end of individually period to an unfulfilled addition/ light account and an fitting account to reflect any change in fair value. The total unrealized increase/ diminution is reported as accumulated other comprehensive income in transmission lineholders virtue. crystallises and losses on sales of securities are reported in the income statement.They are measured as the difference between the selling price and the cost (in the case of an equity security) or the amortized cost (in the case of a debt security). In addition, because the security is no longer in the portfolio of available-for-sale securities, the cumulative balance in the includeance account and the cumulative unrealized increase/decrease in the value of the security reported for that security at the previous balance sheet date must be reversed out of the accounts. Bonds carrying a tell interest rate above the prevailing accept for securities with a similar descend of peril are purchased at a premium.Premium amortizations result in an effective interest rate that is lower than the stated rate. Thus, interest revenue is lower. Bonds carrying a stated interest rate on a lower floor the prevailing market rate for securities with a similar amount of risk are purchased at a discount. Discount amortizations result in an effective interest rate that is high than the stated rate. Thus, interest revenue is higher. The two methods available to recognize interest revenue and account for premiums and discounts on investments in held-to-maturity bonds are the stra ight-line and effective interest methods. infra the straight-line method, an equal amount of premium or discount is amortized each period as an appointment of interest revenue. to a lower place the effective interest method, the market (yield) rate at the time of consequence is multiplied times the previous carrying value to determine the interest revenue. (a) When an investment in a debt security is removered from the held to maturity category to the available for sale category, an unrealized holding gain or loss is computed by canvass the current fair value to the carrying value (amortized cost) of the bond and is reported as a component of other comprehensive income. b) When an investment in a debt security is transferred from the available for sale category to the held for maturity category, any unrealized holding gain or loss on the date of transfer continues to be reported as a component of other comprehensive income. The amount is amortized over the remaining life senten ce as an margin of the yield. Q15-9 Q15-10 Q15-11 Q15-12 Q15-13 Q15-14 genuine asset Temporary investment (at cost) Plus fee for change in value of investment Temporary investment (at market value) $XXXX XXX $XXXX 15-5 Q15-15 IFRS allow the reversal of an impairment loss.The reversal of this impairment loss is reported on the income statement. U. S. GAAP does not permit the reversal of an impairment loss. When an investor corporation owns a sufficiently large percentage of leafy vegetable stock, it is able to exert significant influence over the operating and financial policies of the investee corporation. In particular, the investor may be able to influence the investees dividend policy. The dividends paid may be affected by the investors cash needs, desire to raise its income, or by tax considerations. The equity method is used to account for this investment.It ack flatledges the existence of a material economical relationship between the investor and the investee, is based upon the requirements of accrual accounting, and reflects the changes in the stockholders equity of the investee company. When the equity method is used, an investment in general stock is initially recorded at its acquisition cost. However, in contrast to the fair value method, income is recorded by the investor as an increase to the coronation account and as investment income (based on the investors percentage ownership) when it is reported by the investee.Dividends received (or receivable) are recorded as reductions in the carrying value of the enthronement account whenever they are paid (or declared) by the investee. Furthermore, (1) since a material relationship is presumed, the effects of all intercompany items of revenue and expense are removed from the investors accounts to avoid double-counting, and (2) if the acquisition cost is great than the pro stackal take value of the investee, additional depreciation may be recognized.It is necessary to eliminate intercompany re venues and expenses in the determination of investor net income, depreciate the proportionate dish out of any difference between the fair values and book values of investee depreciable assets implied by the acquisition of the investee piece of lands, and treat the proportionate share of investee comical items as investor extraordinary items (the proportionate share of investee results of discontinued operations is treat in a similar manner). The facts and ircumstances that preclude an investor who owns more than a 20% investment of an investee from using the equity method include (1) the investee challenges the investors ability to cause significant influence through litigation or complaints to governmental regulatory authorities (2) the investor and investee sign an agreement that the investor surrenders significant rights as a stockholder (3) a small group of shareholders who operate the investee hold majority ownership and ignore the views of the investor (4) the investor ne eds more financial information to apply the equity method than is available to the investees other shareholders, and cannot obtain this information (5) the investor cannot obtain way on the investees board of directors. a) When an investor acquires enough additional common stock during a year to change from the fair value method to the equity method, the investor is necessary to restate its investment in the investee by accounting the investment account and course credit entrying carry Earnings for its previous percentage of investee earnings (less dividends) for the period from the original date of acquisition to the date that significant influence was obtained. It also eliminates any enrolments of the allow and unfulfilled growing/ slack accounts made under the fair value method. Q15-16 Q15-17 Q15-18 Q15-19 15-6 Q15-19 (continued) (b) When an investor using the equity method sells a portion of the investment such that its portion of ownership falls below 20%, the use of the equity method is no longer appropriate and the investor no longer accrues its share of investee earnings. However, previously recorded income remains as a part of the carrying value of the enthronement account. The investment is then accounted for under the fair value method.Q15-20 to a lower place IFRS, Morgan and Parker could account for the pin venture arrangement using either the equity method or proportionate consolidation. beneath the equity method, Morgan and Parker would report their investment in the associate (equity method investee) at cost, adjusted for their proportionate share of the income less their proportionate share of any dividends paid by the investee. Under proportionate consolidation, Morgan and Parker would report consolidated financial statements for their proportionate share of the joint venture. (Consolidations are covered in a later accounting course. ) Under U. S. GAAP, the use of proportionate consolidation for joint venture arrangements is not allowed.Many insurance policy policies allow a portion of accumulated premiums to build up as a savings plan and, if the policy is canceled, this savings plan, or cash surrender value of the policy, is returned to the company purchasing the life insurance policy. When a company is guaranteed a return equal to the amount of the cash surrender value of the policy, a part of each premium paid represents an investment. The portion of the yearly premium that does not increase the cash surrender value of the policy is recorded as the amount of insurance expense, typically in the year-end adjustment of prepaid insurance. The amount of cash surrender value of life insurance policies is included as a long-term investment on the balance sheet. The increase each year is stated in the policy.A fund involves setting aside cash and other assets to accomplish particularised objectives whereas, an appropriation of retained earnings only reduces retained earnings available for dividends and do es not provide any cash. lines may be current, such as petty cash funds, or they may be long-term, such as those to retire long-term bonds or preferred stock, or those to purchase long-term assets. Q15-21 Q15-22 ANSWERS TO MULTIPLE CHOICE 1. 2. a b 3. 4. a c 5. 6. b b 7. 8. c a 9. 10. c c 15-7 SOLUTIONS TO suss out EXERCISES RE15-1 investment funds in Available-For-Sale Securities* amour taxation ($12,000 x 0. 10 x 4/12) bullion *$12,000 + $6,000 RE15-2 wager annotations ($12,000 x 0. 0 x 6/12) interestingness tax income Dividends funds Dividend receipts ($1 x ccc) RE15-3 unrealized affix/ lessening in prise of Available-For-Sale Securities* wages for spay in apprize of investing *($12,ccc $12,000) + ($5, calciferol $6,000) RE15-4 cash in Investment in Available-For-Sale Securities deduce on Sale of Available-For-Sale Securities payment for transform in nurse of Investment unsuccessful Increase/ minify in encourage of Available-For-Sale Securities RE15-5 Investment in Held-To-Maturity Debt Securities interchange 215,443 215,443 6,four hundred 6,000 cd two hundred 600 18,000 400 18,400 600 300 300 two hundred 500 500 15-8 RE15-6 notes ($200,000 x 0. 12 x ? ) Investment in Held-To-Maturity Debt Securities pertain taxation ($215,443 x 0. 10 x ? RE15-7 Investment in Trading Securities Investment in Available-For-Sale Securities come on Transfer of Securities unrealized Increase/ go down in quantify of Available-For-Sale Securities gross profit for shift in prize of Investment RE15-8 established expiration on settle in honor Investment in Held-To-Maturity Debt Securities RE15-9 Investment in Stock Eagle bay window (0. 30 x $120,000) Investment Income Investment Income Investment in Stock Eagle lodge ($620,000 $600,000) x 0. 30 ? 8 change (0. 30 x $48,000) Investment in Stock Eagle Corporation RE15-10 Note No journal entry is required, only a enrolment entry is made for a stock dividend. Memo Received 1,500 shares of hell-rooster troupe stock as a stock dividend. The cost of the shares is now $22 per share, computed as follows ($99,000 ? 4,500). 36,000 750 750 14,400 14,400 15,520 15,520 12,500 9,400 3, degree Celsius 12,000 1,228 10,772 2,300 2,300 36,000 15-9RE15-11 cash in (750 x $28) Investment in Available-For-Sale Securities (750 x $22) draw in on Sale of Investment 750 x ($28 $22) unrealized Increase/ flow in esteem of Available-For-Sale Securities 750 x ($24 $22) remuneration for deepen in cheer of Investment RE15-12 Prepaid amends money Insurance outgo specie giving up revalue of Life Insurance Prepaid Insurance 12,000 10,500 1,500 12,000 21,000 16,500 4,500 1,500 1,500 12,000 15-10 SOLUTIONS TO EXERCISES E15-1 1. 2010 Dec. 10 21 31 Investment in Trading Securities property (500 x $76) Investment in Trading Securities silver (800 x $34) Investment in Trading Securities Unrealized Gain on Increase in honor of Trading Securities 38,000 27,200 700* 700 12/31/10 Fair ev aluate $39,500 26,400 $65,900 additive variegate in Fair rate $1,500 (800) $ 700 38,000 27,200 * warrantor 500 shares of C beau monde common stock 800 shares of D smart set common stock Totals 2. 3. E15-2 1. 2010 Oct. Nov. 26 26 hail $38,000 27,200 $65,200 700 unrealized gain on increase in value of trading securities reported on 2010 income statement. veritable assets Temporary investment in trading securities (at fair value) $65,900 Investment in Trading Securities specie (300 x $35) money (200 x $25) divergence on Sale of Trading Securities Investment in Trading Securities Investment in Trading Securities cash (400 x $41) Investment in Trading Securities Unrealized Gain on Increase in cherish of Trading Securities 10,500 5,000 200 16,400 500* 10,500 5,200 16,400 Dec. 10 31 500 15-11 E15-2 (continued) 1. (continued) * pledge 300 shares of F society common stock 400 shares of G Company common stock Totals 2. 3.E15-3 2010 During the year Investment in Available-for-Sale Securities hard cash (900 x $18) Investment in Available-for-Sale Securities exchange (800 x $22) Dec. 31 Unrealized Increase/Decrease in prize of Available-for-Sale Securities Allowance for veer in order of Investment 12/31/10 Fair tax $14,000 15,300 16,000 $45,300 Cost $10,500 16,400 $26,900 12/31/10 Fair hold dear $11,400 16,000 $27,400 Cumulative Change in Fair Value $ 900 (400) $ 500 $ (200) 500 $27,400 passing on sale of trading securities Unrealized gain on increase in value of trading securities Current assets Temporary investment in trading securities (at fair value) 16,200 16,200 17,600 17,600 1,500 1,500* Cumulative Change in Fair Value $(1,000) (900) (1,600) $(3,500) credential X Company common stock Y Company common stock Z Company common stock Totals Cost $15,000 16,200 17,600 $48,800 $1,500 credit adjustment = $3,500 required endpoint credit balance $2,000 number one credit balance 15-12 E15-3 (continued) Noncurrent assets Investment in available-for-sale s ecurities (at cost) Less Allowance for change in value of investment Investment in available-for-sale securities (at fair value) Stockholders equity stash away Other Comprehensive Income Unrealized decrease in value of available-for-sale securities E15-4 1. 2010 May 3 Investment in Available-for-Sale Securities hard cash cash Investment in Available-for-SaleSecurities Gain on Sale of Available-for-Sale Securities ($25,000 $20,000) Unrealized Increase/Decrease in Value of Available-for-Sale Securities ($25,000 $20,000) Allowance for Change in Value of Investment money Dividend revenue enhancement Allowance for Change in Value of Investment Unrealized Increase/Decrease in Value of Available-for-Sale Securities $48,800 (3,500) $45,300 $ (3,500) 13,500 25,000 13,500 July 16 20,000 5,000 16 5,000 5,000 800 800 Dec. 31 31 5,000* 5,000 12/31/10 Fair Value $32,000 15,500 $47,500 Cumulative Change in Fair Value $2,000 2,000 $4,000 * security measure B Company common stock C Company com mon stock Totals Cost $30,000 13,500 $43,500 15-13 E15-4 (continued) 1. (continued) $5,000 calculate adjustment = $4,000 required decision account balance + $5,000 credit adjustment (7/16/10) $4,000 kickoff calculate balance 2. $4,000 credit balance $4,000 beginning credit balance $5,000 debit adjustment (7/16/10) + $5,000 ending credit adjustment E15-5 1. 010 June 8 Investment in Available-for-Sale Securities Cash Cash Loss on Sale of Available-for-Sale Securities ($35,400 $37,000) Investment in Available-for-Sale Securities Allowance for Change in Value of Investment Unrealized Increase/Decrease in Value of Available-for-Sale Securities Cash Dividend tax income Allowance for Change in Value of Investment Unrealized Increase/Decrease in Value of Available-for-Sale Securities 50,000 35,400 1,600 50,000 Oct. 11 37,000 2,800 2,800 900 900 Oct. 11 Dec. 31 31 400* 400 12/31/10 Fair Value $43,900 49,600 $93,500 Cumulative Change in Fair Value $1,900 (400) $1,500 * tribute N Comp any common stock O Company common stock Totals Cost $42,000 50,000 $92,000 15-14 E15-5 (continued) 1. continued) $400 debit adjustment = $1,500 required ending debit balance $1,700 beginning credit balance $2,800 debit adjustment (10/11/10) $92,000 1,500 $93,500 2. Noncurrent assets Investment in available-for-sale securities (at cost) Plus Allowance for change in value of investment Investment in available-for-sale securities (at fair value) Stockholders equity hive away Other Comprehensive Income Unrealized increase in value of available-for-sale securities $ 1,500 E15-6 1. 2010 Mar. 31 Investment in Held-to-Maturity Debt Securities raise revenue ($400,000 x 0. 12 x 3/12) Cash Cash ($400,000 x 0. 12 x 6/12) enkindle receipts ($400,000 x 0. 2 x 6/12) $600 Investment in Held-to-Maturity Debt Securities ($413,800 $400,000) x 3/69 Cash pursuance tax ($24,000 $1,200) Investment in Held-to-Maturity Debt Securities ($13,800 x 6/69) 413,800 12,000 24,000 23,400 600 24,000 22,80 0 1,200 425,800 June 30 Dec. 31 2. If the company failed to separately record the interest at acquisition, the interest revenue for 2010 would be overstated and the value of the held-tomaturity debt securities would also be overstated. Therefore, excess amortization would be recognized over the remaining life of the bond, resulting in an understatement of interest revenue. 15-15 E15-7 1. 2010 Jan. 1 Investment in Held-to-Maturity Debt Securities Cash Cash ($500,000 x 0. 09 x 6/12) Investment in Held-to-Maturity Debt Securities ($500,000 $483,841. 79) ? invade Revenue Cash Investment in Held-to-Maturity Debt Securities engage Revenue Investment in Held-to-Maturity Debt Securities Cash Cash ($500,000 x 0. 09 x 6/12) Investment in Held-to-Maturity Debt Securities ($24,192. 09 $22,500) come to Revenue ($483,841. 79 x 0. 10 x 6/12) Cash Investment in Held-to-Maturity Debt Securities absorb Revenue ($483,841. 79 + $1,692. 09) x 0. 10 x 6/12 483,841. 79 22,500. 00 2,019. 78 22,500. 0 0 2,019. 78 483,841. 79 June 30 24,519. 78 Dec. 31 24,519. 78 2. 2010 Jan. 1 483,841. 79 22,500. 00 1,692. 09 483,841. 79 June 30 24,192. 09 22,500. 00 1,776. 69 24,276. 69 Dec. 31 15-16 E15-8 2009 Nov. 1 Investment in Held-to-Maturity Debt Securities Cash 673,618. 61 673,618. 1 REID flock Bond Investment sake Revenue and Discount Amortization schedule (Partial) Effective gratify Method Cash Debita $35,000 35,000 x 0. 10 x ? carrying value x 0. 11 x ? from footnote b amount from footnote a carrying value + amount from footnote c Cash Investment in Held-to-Maturity Debt Securities Interest Revenue Cash Investment in Held-to-Maturity Debt Securities Interest Revenue Cash Investment in Held-to-Maturity Debt Securities (from schedule) Gain on Sale of Debt Securities 35,000. 00 2,049. 02 35,000. 00 2,161. 72 700,000. 00 677,829. 35 22,170. 65 37,161. 72 37,049. 02 Interest Revenue Creditb $37,049. 02 37,161. 2 Investment in Debt Securities Debitc $2,049. 02 2,161. 72 Carrying Value o f Debt Securitiesd $673,618. 61 675,667. 63 677,829. 35 Date 11/01/09 04/30/10 10/31/10 a$700,000 bPrevious cAmount dPrevious 2010 Apr. 30 Oct. 31 Nov. 1 15-17 E15-9 1. 2010 Jan. 1 Investment in Held-to-Maturity Debt Securities Cash 190,165. 35 190,165. 35 2. RODGERS COMPANY Bond Investment Interest Revenue and Discount Amortization Schedule Effective Interest Method Cash Debita $10,000 10,000 10,000 10,000 10,000 10,000 Interest Revenue Creditb $11,409. 92 11,494. 52 11,584. 19 11,679. 24 11,779. 99 11,886. 79 Investment in Debt Securities Debitc $1,409. 92 1,494. 52 1,584. 19 1,679. 24 1,779. 99 1,886. 9 Carrying Value of Debt Securitiesd $190,165. 35 191,575. 27 193,069. 79 194,653. 98 196,333. 22 198,113. 21 200,000. 00 Date 01/01/10 06/30/10 12/31/10 06/30/11 12/31/11 06/30/12 12/31/12 a$200,000 bPrevious cAmount dPrevious (face value) x 0. 10 (face rate of interest) x ? (year) carrying value x 0. 12 (effective interest rate) x ? (year) from footnote b amount from footnote a c arrying value + amount from footnote c Cash Investment in Held-to-Maturity Debt Securities Interest Revenue Cash Investment in Held-to-Maturity Debt Securities Interest Revenue 10,000. 00 1,409. 92 11,409. 92 3. 2010 June 30 2012 June 30 10,000. 00 1,779. 99 11,779. 99 15-18 E15-10 1. 2010 Jan. Investment in Held-to-Maturity Debt Securities Cash LYNCH COMPANY Bond Investment Interest Revenue and Premium Amortization Schedule Effective Interest Method Cash Debita $3,250 3,250 3,250 3,250 3,250 3,250 Interest Revenue Creditb $3,073. 76 3,063. 19 3,051. 98 3,040. 10 3,027. 50 3,014. 12e Investment in Debt Securities Creditc $176. 24 186. 81 198. 02 209. 90 222. 50 235. 88 Carrying Value of Debt Securitiesd $51,229. 35 51,053. 11 50,866. 30 50,668. 28 50,458. 38 50,235. 88 50,000. 00 51,229. 35 51,229. 35 2. Date 01/01/10 06/30/10 12/31/10 06/30/11 12/31/11 06/30/12 12/31/12 a$50,000 (face value) x 0. 13 (face rate of interest) x ? (year) carrying value x 0. 12 (effective interest rate) x ? year) from footnote a amount from footnote b carrying value amount from footnote c due to $0. 03 rounding error Cash Investment in Held-to-Maturity Debt Securities Interest Revenue Cash Investment in Held-to-Maturity Debt Securities Interest Revenue 3,250. 00 176. 24 3,073. 76 3,250. 00 235. 88 3,014. 12 bPrevious cAmount dPrevious eDifference 3. 2010 June 30 2012 Dec. 31 15-19 E15-11 2010 Jan. 1 Investment in Held-to-Maturity Debt Securities Cash 307,493. 34 307,493. 34 GLOVER CORPORATION Bond Investment Interest Revenue and Premium Amortization Schedule (Partial) Effective Interest Method Cash Debita $18,000 18,000 Interest Revenue Creditb $16,912. 13 16,852. 30 Investment in Debt Securities Creditc $1,087. 87 1,147. 0 Carrying Value of Debt Securitiesd $307,493. 34 306,405. 47 305,257. 77 Date 01/01/10 06/30/10 12/31/10 a$300,000 bPrevious cAmount dPrevious (face value) x 0. 12 x ? year carrying value x 0. 11 x ? year from footnote a amount from footnote b carrying value amount from footnote c Cash Interest Revenue Investment in Held-to-Maturity Debt Securities Cash Interest Revenue Investment in Held-to-Maturity Debt Securities Cash Loss on Sale of Debt Securities Investment in Held-to-Maturity Debt Securities (from schedule) 18,000 2010 June 30 16,912. 13 1,087. 87 Dec. 31 18,000 16,852. 30 1,147. 70 2011 Jan. 1 300,000. 00 5,257. 77 305,257. 77 15-20 E15-12 2010 Dec. 1 Cash ($ carbon,000 x 0. 08) Interest Revenue ($107,023. 56 x 0. 07) Investment in Held-to-Maturity Debt Securities ($8,000 $7,491. 65) Investment in Available-for-Sale Securities Investment in Held-to-Maturity Debt Securities ($107,023. 56 $508. 35) Unrealized Increase/Decrease in Value of Available-for-Sale Securities Allowance for Change in Value of Investment $106,515. 21 ($100,000 x 1. 05) 8,000 7,491. 65 508. 35 106,515. 21 106,515. 21 31 31 1,515. 21 1,515. 21 E15-13 1. June 1, 2010 Investment in Held-to-Maturity Debt Securities Cash 2011 Realized Loss on Decline in Value I nvestment in Held-to-Maturity Debt Securities 2012 No entry 2.Under IFRS, the company would make the same journal entries as in Requirement 1 for 2010 and 2011. In 2012, it would recognize the recovery of the impairment as follows 2012 Investment in Held-to-Maturity Debt Securities Realized Loss Recovery on Increase in Value 3,000 10,000 10,000 4,000 4,000 3,000 15-21 E15-14 1. 2010 Jan. 1 Investment in Stock Crowell Corporation Cash Cash ($50,000 x 0. 30) Investment in Stock Crowell Corporation Investment in Stock Crowell Corporation Investment Income ($120,000 x 0. 30) Cash ($50,000 x 0. 30) Investment in Stock Crowell Corporation Investment in Stock Crowell Corporation Investment Income ($140,000 x 0. 30) 160,000 15,000 160,000 Mar. 31 5,000 36,000 36,000 15,000 15,000 42,000 42,000 June 30 Sept. 30 Dec. 31 2. Investment in Stock Crowell Corporation veritable investment $160,000 Share of 06/30 investment income 36,000 Share of 12/31 investment income 42,000 Balance, 12/31/10 $20 8,000 03/31 dividend 09/30 dividend $15,000 15,000 E15-15 2010 Jan. Dec. 1 31 31 31 Investment in Stock northeastward Company Cash Investment in Stock North Company Investment Income ($45,000 x 0. 40) Investment Income ($15,000 ? 12 years) Investment in Stock North Company Cash ($0. 70 x 8,000) Investment in Stock North Company 15-22 144,000 18,000 1,250 5,600 144,000 18,000 1,250 5,600 E15-16 2010 Jan.During the year 1 Investment in Stock Fink Company Cash (3,000 x $16) Investment in Stock Fink Company Investment Income ($22,000 x 0. 30) Cash ($6,000 x 0. 30) Investment in Stock Fink Company 31 Investment Income Investment in Stock Fink Company a($115,000 48,000 6,600 1,800 750a 48,000 6,600 1,800 750 Dec. $90,000) x 0. 30 ? 10 years E15-17 2009 Jan. 1 Investment in Available-for-Sale Securities Cash 19,760 19,760 2011 July 1 inscription entry On this date, the Taylor Corporation exchanged its investment in Kalanda Corporation 12% convertible bonds with a carrying value of $19,8 80a for 300 shares of Kalanda common stock with a fair value of $21,600.The cost per share is $66. 27 ($19,880 ? 300 shares). a$19,760 + (5 x $24*) *Amortization per period = $24 ($20,000 $19,760) ? 10 periods E15-18 2010 Mar. 2 Investment in Available-for-Sale Securities Cash 60,000 60,000 May 1 enumeration entry Received 1,000 (5,000 x 0. 20) additional shares of Foreman Company common stock as a stock dividend. The cost of the shares is now $10 per share as follows $60,000 = $10 5,000 + (5,000 x 0. 20) 15-23 E15-18 (continued) 2011 Feb. 1 Cash (1,500 x $12) Investment in Available-for-Sale Securities (1,500 x $10) Gain on Sale of Investment in Available-for-Sale Securities 18,000 15,000 3,000 E15-19 2010 Jan. Dec. 31 Prepaid Insurance Cash Insurance spending Cash Surrender Value of Life Insurance ($103,900 $98,450) Prepaid Insurance Cash Gain on Death of Officer Cash Surrender Value of Life Insurance 13,300 7,850 5,450 13,300 13,300 2011 Jan. 1 50,000 43,520 6,480 E15-20 2010 Jan. Feb. July 1 3 30 change posture Fund Cash Cash change posture Fund Securities Sinking Fund Cash Sinking Fund Cash Loss on Sale of Sinking Fund Securities Sinking Fund Securities Sinking Fund Cash Sinking Fund Revenues Allowance for Change in Value of Sinking Fund Securities $355,000 ($400,000 $48,000) Unrealized Increase/Decrease in Value of Sinking Fund Securities 425,000 400,000 45,000 3,000 49,000 48,000 49,000 425,000 400,000 Dec. 31 31 3,000 3,000 15-24 E15-20 (continued) 2011 Dec. 1 31 31 Sinking Fund Cash Sinking Fund Revenues Sinking Fund set downs Sinking Fund Cash Sinking Fund Cash Sinking Fund Securities Gain on Sale of Sinking Fund Securities 40,000 4,500 360,000 40,000 4,500 352,000 8,000 31 Unrealized Increase/Decrease in Value of Sinking Fund Securities Allowance for Change in Value of Sinking Fund Securities 31 31 E15-21 Bonds Payable Sinking Fund Cash Cash Sinking Fund Cash 3,000 3,000 500,000 14,500 500,000 14,500 Note to instructor This interest rate s wap is a fair value hedge. Original Bank Loan (not required) Cash Notes Payable Interest Payment on Loan declination 31, 2010 Interest Expense Cash a7% 3,000,000 3,000,000 210,000a 210,000 x $3 million Interest measure craft Payment December 31, 2010 Cash Interest Expense b(7% 12,000b 12,000 6. 6%) x $3 million 15-25E15-21 (continued) Fair Values and Gains and Losses, December 31, 2010 Loss in Value of Derivative Liability from Interest Rate Swap cPresent 53,497c 53,497 value = (8% 7%) x $3,000,000 x 1. 783265 (n=2, i=0. 08 from card 4 in the TVM Module) = $30,000 x 1. 783265 = $53,497 (rounded down to balance) A swap derivative loss and liability exist because the 8% current market rate is higher than the 7% fixed interest rate that Anglar receives on the derivative. Notes Payable Gain in Value of Debt dPresent 53,497d 53,497 value of principal = $3,000,000 x 0. 857339 (n=2, i=0. 08 from Table 3 in the TVM Module) = $2,572,017 = $210,000 x 1. 783265 (n=2, i=0. 08 from Table 4 in the TVM Module) = $374,486 = $2,572,017 + $374,486 = $2,946,503Present value of interest Total present value Decrease in value of debt = $3,000,000 $2,946,503 = $53,497 The increase in interest rates decreases the value of note payable by the same amount as the increase in the value of the swap derivative liability. 15-26 E15-21 (continued) 2. Income Statement for Year Ending December 31, 2010 Other Items Interest expense Loss in value of derivative Gain in value of debt e$210,000 $ (198,000)e (53,497) 53,497 $12,000 Balance piece of paper, December 31, 2010 Long-Term Liabilities Notes payable Liability from interest rate swap f$3,000,000 $53,497 $2,946,503f 53,497 $3,000,000 15-27 SOLUTIONS TO PROBLEMS P15-1 1. 2010 Nov. 19 29 Investment in Trading Securities Cash (200 x $86) Investment in Trading Securities Cash (300 x $63) Cash (100 x $89) Investment in Trading Securities (100 x $86) Gain on Sale of Trading Securities Investment in Trading Securities Cash (400 x $37) Cash (100 x $62) Loss on Sale of Trading Securities Investment in Trading Securities (100 x $63) Unrealized Loss on Decrease in Value of Trading Securities Investment in Trading Securities 17,200 18,900 8,900 8,600 300 14,800 6,200 100 6,300 200 14,800 17,200 18,900 Dec. 15 17 31 200* Cumulative Change in Fair Value $ 100 (400) 100 $(200) $ 300 (100) (200) $35,800 * bail 100 shares of M Company common stock 200 shares of P Company preferred stock 400 shares of T Company common stock Totals 2. Cost $ 8,600 12,600 14,800 $36,000 12/31/10 Fair Value $ 8,700 12,200 14,900 $35,800Gain on sale of trading securities Loss on sale of trading securities Unrealized loss on decrease in value of trading securities Current assets Temporary investment in trading securities (at fair value) 3. 15-28 P15-2 1. 2010 July 2 14 Cash (100 x $1. 50) Dividend Revenue Cash (600 x $20) Loss on Sale of Trading Securities Investment in Trading Securities Investment in Trading Securities Cash (300 x $36) Cash (100 x $30) Investment in Trading Securities Gain on Sale of Trading Securities Investment in Trading Securities Cash (500 x $22) Unrealized Loss on Decrease in Value of Trading Securities Investment in Trading Securities cl 12,000 600 10,800 3,000 one hundred fifty 12,600 10,800 2,800 200 11,000 Aug. 9 24 Sept. 17 30 11,000 350 350* *Security 300 shares of P Company preferred stock 500 shares of U Company common stock Totals 2.Cost $10,800 11,000 $21,800 Cumulative 9/30/10 Change in Fair Value Fair Value $10,950 $ 150 10,500 (500) $21,450 $(350) $ 150 (600) 200 (350) $21,450 Dividend revenue Loss on sale of trading securities Gain on sale of trading securities Unrealized loss on decrease in value of trading securities Current assets Temporary investment in trading securities (at fair value) 3. 15-29 P15-3 1. 2010 Mar. 31 Investment in Available-for-Sale Securities Interest Revenue ($10,000 x 0. 08 x 3/12) Cash Cash (200 x $30) Loss on Sale of Available-for-Sale Securities 200 x $30 ($2 3,100 ? 700) Investment in Available-for-Sale Securities 200 x ($23,100 ? 00) Allowance for Change in Value of Investment Unrealized Increase/Decrease in Value of Available-for-Sale Securities 200/700 x ($21,700 $23,100) Cash Interest Revenue ($10,000 x 0. 08 x 6/12) Cash (100 x $24) Investment in Available-for-Sale Securities 100 x ($8,400 ? 400) Gain on Sale of Available-for-Sale Securities 100 x $24 ($8,400 ? 400) Unrealized Increase/Decrease in Value of Available-for-Sale Securities 100/400 x ($9,400 $8,400) Allowance for Change in Value of Investment 10,000 200 10,200 May 17 6,000 600 6,600 400 17 400 400 400 2,400 2,100 300 June 30 Oct. 12 12 250 250 15-30 P15-3 (continued) 1. (continued) Dec. 31 Cash Interest Revenue ($10,000 x 0. 8 x 6/12) Dividend Revenue (300 x $1) + (500 x $1. 50) Allowance for Change in Value of Investment Unrealized Increase/Decrease in Value of Available-for-Sale Securities 1,450 400 1,050 550* 550 12/31/10 Fair Value $ 7,500 15,500 10,100 $33,100 Cu mulative Change in Fair Value $1,200 (1,000) 100 $ 300 31 *Security 300 shares of I Company common stock 500 shares of O Company common stock $10,000 face value of U Company 8% bonds Totals $550 debit adjustment = Cost $ 6,300 16,500 10,000 $32,800 $300 required ending debit balance + $400 beginning credit balance $400 debit adjustment (5/17/10) + $250 credit adjustment (10/12/10) $ 600 1,050 (600) 300 2.Interest revenue Dividend revenue Loss on sale of available-for-sale securities Gain on sale of available-for-sale securities Current assets Temporary investment in available-for-sale securities (at cost) Plus Allowance for change in value of investment Temporary investment in available-for-sale securities (at fair value) Noncurrent assets Investment in available-for-sale securities (at cost) Less Allowance for change in value of investment Investment in available-for-sale securities (at fair value) 3. $6,300 1,200 $7,500 $26,500 (900) $25,600 15-31 P15-3 (continued) 3. (continued) Stockholders equity lay in Other Comprehensive Income Unrealized increase in value of available-for-sale securities 4. Holly would include a gain of $700 the change in the unrealized increase/decrease on the portfolio from $(400) to $300. $ 300 P15-4 1. 2010 Jan. Cash (400 x $45) Investment in Available-for-Sale Securities (400 x $43) Gain on Sale of Available-for-Sale Securities (400 x $45) $17,200 Unrealized Increase/Decrease in Value of Available-for-Sale Securities Allowance for Change in Value of Investment (400 x $1) Investment in Available-for-Sale Securities Cash (700 x $45) Cash Dividend Revenue Unrealized Increase/Decrease in Value of Available-for-Sale Securities Allowance for Change in Value of Investment 18,000 17,200 800 6 400 400 31,500 2,500 Feb. 3 31,500 2,500 Mar. 31 31 2,300 2,300* 15-32 P15-4 (continued) 1. (continued) 3/31/10 Fair Value $ 29,500 18,000 28,000 30,100 $105,600 Cumulative Change in Fair Value $ (500) 800 -(1,400) $ (1,100) Cost *Security 500 sha res of Keene Company common stock $ 30,000 400 shares of Sachs, Inc. common stock 17,200 400 shares of Bacon Company common stock 28,000 700 shares of Jackson Corp. common stock 31,500 Totals $106,700 $2,300 credit adjustment $1,100 required ending credit balance + $1,600a beginning debit balance $400 credit adjustment (1/6/10) a800 x ($44 $43) + 400 x ($72 $70) Apr. 14 Investment in Available-for-Sale Securities Cash (300 x $52) Cash (400 x $42) Loss on Sale of Available-for-Sale Securities (400 x $42) $17,200 Investment in Available-for-Sale Securities Unrealized Increase/Decrease in Value of Available-for-Sale Securities Allowance for Change in Value of Investment Cash Dividend Revenue Allowance for Change in Value of Investment Unrealized Increase/Decrease in Value of Available-for-Sale Securities 15,600 16,800 400 17,200 15,600 May 11 11 800 800 2,800 2,800 June 30 30 2,600* 2,600 15-33 P15-4 (continued) 1. continued) 6/30/10 Fair Value $ 31,000 27,600 32,200 15,000 $105,80 0 Cumulative Change in Fair Value $ 1,000 (400) 700 (600) $ 700 Cost *Security 500 shares of Keene Company common stock $ 30,000 400 shares of Bacon Company common stock 28,000 700 shares of Jackson Corp. common stock 31,500 300 shares of Quinn Company common stock 15,600 Totals $105,100 $2,600 debit adjustment = $700 required ending debit balance + $1,100 beginning credit balance + $800 credit adjustment (5/11/10) $ 800 2,500 randomness line 2010 Loss on sale of securities $ (400) Dividend revenue 2,800 3/31/10 $47,200 300 $47,500 6/30/10 $30,000 1,000 $31,000 2. First Quarter 2010 Gain on sale of securities Dividend revenue 3.Assets Current assets Temporary investment in available-for-sale securities (at cost) Plus Allowance for change in value of investment Temporary investment in available-for-sale securities (at fair value) Noncurrent assets Investment in available-for-sale securities (at cost) Less Allowance for change in value of investment Investment in available-for-sale securities (at fair value) Stockholders Equity Accumulated Other Comprehensive Income Unrealized increase (decrease) in value of available-for-sale securities $59,500 (1,400) $58,100 $75,100 (300) $74,800 $ (1,100) $ 700 15-34 P15-5 1. 2010 Jan. Mar. 6 31 31 Cash Dividend Revenue Cash Dividend Revenue Allowance for Change in Value of Investment Unrealized Increase/Decrease in Value of Available-for-Sale Securities 265 500 65 500 1,180* 1,180 Cumulative 3/31/10 Change in Fair Value Fair Value $13,470 $ (805) 13,765 1,115 18,940 1,490 15,500 (3,600) $61,675 $(1,800) *Security 400 shares of Turben Co. common stock 500 shares of constitute Corp. common stock 700 shares of knoll Corp. common stock 200 shares of network Engines preferred stock Totals $1,180 debit adjustment June 30 30 Cost $14,275 12,650 17,450 19,100 $63,475 = $1,800 required ending credit balance $2,980 ($63,475 $60,495) beginning credit balance 1,075 1,075 Cash ($375 + $700) Dividend Revenue Allowance for Change in Value of Investment Unrealized Increase/Decrease in Value of Available-for-Sale Securities 50* 450 6/30/10 Fair Value $13,300 14,125 19,300 15,400 $62,125 Cumulative Change in Fair Value $ (975) 1,475 1,850 (3,700) $(1,350) *Security 400 shares of Turben Co. common stock 500 shares of Cook Corp. common stock 700 shares of Hill Corp. common stock 200 shares of sack Engines preferred stock Totals Cost $14,275 12,650 17,450 19,100 $63,475 15-35 P15-5 (continued) 1. (continued) $450 debit adjustment = July 6 $1,350 required ending credit balance $1,800 beginning credit balance 13,750 525 14,275 975 975 500 500 Cash Loss on Sale of Available-for-Sale Securities ($13,750 $14,275) Investment in Available-for-Sale Securities Allowance for Change in Value ofInvestment Unrealized Increase/Decrease in Value of Available-for-Sale Securities Cash Dividend Revenue Allowance for Change in Value of Investment Unrealized Increase/Decrease in Value of Available-for-Sale Securities 6 Sept. 29 30 8 05* 805 Cumulative 9/30/10 Change in Fair Value Fair Value $14,230 $ 1,580 19,500 2,050 15,900 (3,200) $49,630 $ 430 *Security 500 shares of Cook Corp. common stock 700 shares of Hill Corp. common stock 200 shares of Web Engines preferred stock Totals $805 debit adjustment = Cost $12,650 17,450 19,100 $49,200 $430 required ending debit balance + $1,350 beginning credit balance $975 debit adjustment (7/6/10) 19,780 17,450 2,330 Nov. 2 Cash Investment in Available-for-Sale Securities Gain on Sale of Available-for-Sale Securities ($19,780 $17,450) 15-36 P15-5 (continued) 1. (continued) Nov. Unrealized Increase/Decrease in Value of Available-for-Sale Securities Allowance for Change in Value of Investment Cash Dividend Revenue Allowance for Increase/Decrease in Value of Available-for-Sale Securities Unrealized Change in Value of Investment 2,050 2,050 375 375 Dec. 30 31 550* 550 Cumulative 12/31/10 Change in Fair Value Fair Value $14,280 $ 1,630 16,400 (2,700) $30,680 $(1,070) *Securit y 500 shares of Cook Corp. common stock 200 shares of Web Engines preferred stock Totals $550 debit adjustment = Cost $12,650 19,100 $31,750 $1,070 required ending credit balance + $430 beginning debit balance $2,050 credit adjustment (11/2/10) March 31 $765a For Quarter Ended June 30 Sept. 30 $1,075b $500 525 Dec. 31 $ 375 2,330 2. Dividend revenue Loss on sale of securities Gain on sale of securities a$265 b$375 + $500 + $700 15-37 P15-5 (continued) 3.Current assets Temporary investment in available-for-sale securities (at cost) Plus (Less) Allowance for change in value of investment Temporary investment in available-for-sale securities (at fair value) March 31 Balance Sheet as of June 30 Sept. 30 Dec. 31 $63,475 (1,800) $61,675 $63,475 (1,350) $62,125 $49,200 430 $49,630 $31,750 (1,070) $30,680 Stockholders equity Accumulated Other Comprehensive Income Unrealized increase(decrease) in value of available-forsale securities $ (1,800) $ (1,350) P15-6 1. 2010 Jan. 1 Investment i n Available-for-Sale Securities Cash ($30,000 x 0. 97) Investment in Available-for-Sale Securities Cash ($40,000 x 1. 01) Cash ($30,000 x 0. 08 x 1/2) Investment in Available-for-Sale Securities Interest Revenue ($29,100 x 0. 0 x 1/2) Cash ($40,000 x 0. 10 x 1/2) Investment in Available-for-Sale Securities Interest Revenue ($40,400 x 0. 098 x 1/2) $ 430 $ (1,070) 29,100 29,100 1 40,400 1,200 255 40,400 June 30 1,455 2,000 20 1,980 30 15-38 P15-6 (continued) 1. (continued) June 30 Allowance for Change in Value of Investment Unrealized Increase/Decrease in Value of Available-for-Sale Securities 225* 225 Cumulative Change in Fair Value $ (195) 420 $ 225 *Security $30,000 face value of Bradford Co. bonds $40,000 face value of Morris Co. bonds Totals a$29,100 b$40,400 c$30,000 d$40,000 Amortized 6/30/10 Cost Fair Value a $29,160c $29,355 b 40,800d 40,380 $69,960 $69,735 ost + $255 amortization of discount cost $20 amortization of premium x 0. 972 x 1. 02 1 Investment in Available-for-Sa le Securities Cash ($25,000 x 0. 92) Interest Receivable ($25,000 x 0. 11 x 5/12) Investment in Available-for-Sale Securities Interest Revenue ($23,000 x 0. 12 x 5/12) Cash ($25,000 x 0. 91) + $1,146 Loss on Sale of Available-for-Sale Securities Investment in Available-for-Sale Securities Interest Receivable 23,000 July 23,000 Nov. 30 1,146 4 1,150 23,896 254* 23,004 1,146 30 *$23,004 carrying value ($23,000 cost + $4 amortization of discount) $22,750 harvest-tide (excluding interest) 15-39 P15-6 (continued) 1. (continued) Dec. 31 Cash ($30,000 x 0. 8 x 1/2) Investment in Available-for-Sale Securities Interest Revenue ($29,355 x 0. 10 x 1/2) Cash ($40,000 x 0. 10 x 1/2) Investment in Available-for-Sale Securities Interest Revenue ($40,380 x 0. 098 x 1/2) Cash ($40,000 x 1. 02) Investment in Available-for-Sale Securities ($40,380 $21) Gain on Sale of Available-for-Sale Securities ($40,800 $40,359) Unrealized Increase/Decrease in Value of Available-for-Sale Securities Allowance for Change in Value of Investment (from 6/30/10 schedule) Unrealized Increase/Decrease in Value of Available-for-Sale Securities Allowance for Change in Value of Investment 1,200 268 1,468 2,000 21 1,979 40,800 40,359 441 31 31 31 420 420 31 28 628* 12/31/10 Fair Value $28,800b $28,800 Cumulative Change in Fair Value $(823) $(823) *Security $30,000 face value of Bradford Co. bonds Totals a$29,355 b$30,000 Cost $29,623a $29,623 amortized cost (6/30/10) + $268 amortization of discount x 0. 96 = $823 required ending credit balance + $225 beginning (6/30/10) debit balance $420 credit adjustment (12/31/10) $628 credit adjustment 15-40 P15-6 (continued) 2. Interest revenue Loss on sale of securities Gain on sale of securities a$1,455 b$1,150 For Semiannual Period Ended 12/31/10 6/30/10 a $4,597b $3,435 (254) 441 + $1,980 + $1,468 + $1,979 Balance Sheet As of 06/30/10 12/31/10 $69,753 225 $69,960 $29,623 (823) $28,800 3.Current assets Temporary investment in available-for-sale securities ( at amortized cost) Plus (Less) Allowance for change in value of investment Temporary investment in available-for-sale securities (at fair value) Stockholders equity Accumulated Other Comprehensive Income Unrealized increase (decrease) in value of available-for-sale securities $225 $(823) P15-7 1. 2010 Feb. 3 Investment in Available-for-Sale Securities Cash (3,000 x $12) Investment in Available-for-Sale Securities Interest Revenue ($20,000 x 0. 12 x 3/12) Cash Cash Interest Revenue ($20,000 x 0. 12 x 6/12) Dividend Revenue (3,000 x $0. 25) 36,000 36,000 Apr. 1 20,000 600 1,950 1,200 750 20,600 June 30 15-41 P15-7 (continued) 1. (continued) Sept. 1 Investment in Available-for-Sale Securities Cash (4,000 x $22) Investment in Available-for-Sale Securities Interest Revenue ($30,000 x 0. 11 x 5/12) Cash Cash Interest Revenue ($30,000 x 0. 11 x 6/12) Cash ($30,000 x 1. 1) Investment in Available-for-Sale Securities Gain on Sale of Available-for-Sale Securities ($30,300 $30,000) Cash Divid end Revenue (3,000 x $0. 25) Cash Loss on Sale of Available-for-Sale Securities ($35,300 $36,000) Investment in Available-for-Sale Securities Cash Interest Revenue ($20,000 x 0. 12 x 6/12) Allowance for Change in Value of Investment Unrealized Increase/Decrease in Value of Available-for-Sale Securities 88,000 88,000 Nov. 1 30,000 1,375 1,650 1,650 30,300 30,000 300 750 35,300 700 36,000 1,200 1,200 4,200* 4,200 750 31,375 Dec. 1 1 30 30 31 31 15-42 P15-7 (continued) 1. (continued) Cost *Security $20,000 face value of Solomon Co. bonds $ 20,000 4,000 shares of woodman Corp. ommon stock 88,000 Totals $108,000 a$20,000 b4,000 Cumulative 12/31/10 Change in Fair Value Fair Value $ 200 $ 20,200a 92,000b 4,000 $112,200 $4,200 x 1. 01 x $23 $2,075 (-$600+$1,200-$1,375+$1,650+$1,200) 1,500 ($750+$750) 300 (700) 2. Interest revenue Dividend revenue Gain on sale of securities Loss on sale of securities 3. Current assets Temporary investment in available-for-sale securities (at cost) Plus Allo wance for change in value of investment Temporary investment in available-for-sale securities (at fair value) $108,000 4,200 $112,200 P15-8 Note to Instructor This problem contains petty cash journal entries and a bank reconciliation, previously covered in Chapter 7. 1. 2010 Jan. Investment in Available-for-Sale Securities (150 x $20) + (200 x $30) + (100 x $25) Cash Investment in Available-for-Sale Securities ($20,000 + $12,000) Interest Revenue ($20,000 x 0. 12 x 5/12) + ($12,000 x 0. 10 x 4/12) Cash Petty Cash Cash 11,500 11,500 Feb. 1 32,000 1,400 500 33,400 500 1 15-43 P15-8 (continued) 1. (continued) Feb. 28 Cash Interest Revenue $20,000 x 0. 12 x 6/12 Postage Expense Office Supplies Expense Transportation Expense Miscellaneous Expense Cash Cash Short and Over Cash a$125. 50 1,200 1,200 110. 00 170. 65 45. 00 43. 50 5. 35a 28 369. 15 5. 35 28 ($500. 00 $369. 15) 2,100 200 1,500 800 Mar. 31 Cash ($1,500 + $600) Interest Receivable ($20,000 x 0. 12 x 1/12 A Co. bonds) Dividend Revenue Interest Revenue ($12,000 x 0. 0 x 6/12) + ($20,000 x 0. 12 x 1/12) Unrealized Increase/Decrease in Value of Available-for-Sale Securities Allowance for Change in Value of Investment b$42,600 31 900 900b ($11,500 + $32,000) 140. 00 75. 30 54. 20 31 Postage Expense Office Supplies Expense Miscellaneous Expense Cash 269. 50 15-44 P15-8 2. (continued) PAYNE CORPORATION Bank Reconciliation March 31, 2010 Balance per bank statement Add Deposits in enactment Deduct Outstanding checks familiarized cash balance Balance per company records Add Note collected by bank Interest on note Deduct Bank service charge NSF check returned Adjusted cash balance 3. 2010 Mar. 31 Cash Notes Receivable Interest Revenue