In 2001, the turnaround was largely complete. Minoli’s focus shifted to future growth. Minoli announced ambitious growth targets. What should Ducati do next? What strategic directions are available to Minoli in 2001? (financial perspective)

The Turnaround Program
Ducati was founded on July 4, 1926, when Antonio Cavalieri Ducati and his three sons established
one of the first Italian operations of radios and electrical components. In 1935 Ducati started
production at a new factory in Borgo Panigale, just outside Bologna, at the heart of what later became
the most extensive Italian mechanical district. Not until the post-war period did Ducati’s first
motorcycle appear. The bike, “il Cucciolo,” soon became a blockbuster. The 1950s witnessed the
introduction of a series of increasingly sophisticated and powerful bikes, and particularly the
appearance of Ducati’s technical signature: the Desmodromic valve distribution system. This
innovation, developed by the celebrated Ducati engineer Fabio Taglioni, was a sophisticated
mechanical system allowing the engine to achieve more revolutions per minute and greater “usable”
power. The Desmo system could still be found in 2001 on every motorcycle produced, representing
the soul of all Ducatis: the deep intoxicating noise made by the desmo engine was music to the ears of
purists.
Thanks to their technical superiority, Ducati motorcycles rapidly achieved success in the
international racing circuit. This success fueled growth throughout the sixties and the seventies, and
the development of a strong reputation in the performance segment of the motorcycle industry. In
1972, a Ducati 750 Super Sport prototype won a dramatic victory in the Imola 200cc race. This
motorcycle, which was configured with an L-shape desmo engine (two cylinders mounted at a 90-
degree angle) and a Formula Uno-derived tubular trestle frame, inspired the production of a new line
of larger displacement motorcycles that represented the stylistic and technical foundation of modern
Ducatis.

Despite the innovativeness and technical excellence of its product lines, Ducati’s fortunes declined
sharply in the early 1980’s, primarily due to the decision of its major shareholder at that time (IRI, a
State holding company) to refocus the company on products other than motorcycles. In 1985 IRI
decided to sell its motorcycle assets, and Cagiva, an Italian manufacturing conglomerate and
producer of small displacement motorcycles, acquired Ducati. Under Cagiva, Ducati suddenly
recovered its reputation for on and off-track excellence. An impressive series of victories in the
World Superbike Championship where, for the first time, a Ducati two-cylinder engine defeated a
four-cylinder engine produced by Japanese competitors, was paralleled by the introduction of a new
series of stunningly beautiful street performance bikes. However, towards the mid nineties, liquidity
problems at the larger Cagiva group deprived Ducati of the necessary working capital funding,
which, in turn, delayed its payment terms to some key suppliers, resulting in significant production
delays.
Ducati was one step from going bankrupt when, in September 1996, a majority stake in the
company was acquired by the Texas Pacific Group, an American private equity firm. Abel Halpern,
HBS ’93 and TPG partner was the driving force behind the deal. He had a passion for high-end,
“nichey” businesses, and was driven by the firm belief that Ducati had enormous potential that was
largely unexploited due to poor management. For this reason, he needed a first-class, highly
committed management team, and TPG appointed Halpern’s friend and former colleague at Bain &
Co., Federico Minoli, as CEO of Ducati.

Carla Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2020 in which no benefits were paid.

Determine the amounts of the components of pension expense that should be recognized by the company in 2020.

Prepare the journal entry or entries to record pension expense and the employer’s contribution to the pension trustee in 2020.

Indicate the pension-related amounts that would be reported on the income statement and the balance sheet for Carla Company for the year 2020.
(Should be a Partial Income Statement, Comprehensive Income Statement and a Partial Balance Sheet)

Net income figures for Flounder Ltd. are as follows: 2016 - $77,800 2017 - $56,500 2018 - $86,400 2019 - $90,600 2020 - $71,600 Future income is expected to continue at the average amount of the past five years. The company’s identifiable net assets are appraised at $468,200 on December 31, 2020. The business is to be acquired by Novak Corp. in early 2021. The normal rate of return on net assets for the industry is 9%. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. What amount should Novak Corp. pay for goodwill, and for Flounder Ltd. as a whole, if goodwill is equal to average excess earnings capitalized at 25%? Novak Corp. pay for goodwill $ Novak Corp. pay for Company $ What amount should Novak Corp. pay for goodwill, and for Flounder Ltd. as a whole, if a perpetual 18% return is expected on any amount paid for goodwill? (Round answers to 0 decimal places, e.g. 5,275.) Novak Corp. pay for goodwill $ Novak Corp. pay for Company $ What amount should Novak Corp. pay for goodwill, and for Flounder Ltd. as a whole, if goodwill is equal to five years of excess earnings? (Round answers to 0 decimal places, e.g. 5,275.) Novak Corp. pay for goodwill $ Novak Corp. pay for Company $ What amount should Novak Corp. pay for goodwill, and for Flounder Ltd. as a whole, if goodwill is equal to the present value of five years of excess earnings capitalized at 20%? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.) Novak Corp. pay for goodwill $ Novak Corp. pay for Company $

Facts:

On April 1, 2020, Bert's Baseball Company purchased equipment for $66,000. The company expected the equipment to last four years or 6,000 hours, with an estimated salvage value of $6,000 at the end of the useful life. The equipment was used 1,000 hours during 2020.

1. What amount of depreciation expense will Bert's Baseball Company record in 2020 using the straight-line method of depreciation?

2. What amount of depreciation expense will Bert's Baseball Company record in 2020 using the units-of-activity method of depreciation?

3. In your opinion, is it ethical for a company to change depreciation methods for the sole purpose of maximizing profitability (increasing net income)? Why or why not? Explain.

1. Jipange Ltd has a share capital of Ksh 50,000. The membership of the Company has reduced from forty Five members (45) to One(1) member. The register of members was not properly kept. The directors of Jipange Ltd have sought your advice regarding the maintenance of Company Register of members.

1. Outline four particulars which might have been contained in Jipange Ltd former register of members.

Indicate the contents of Jipange Ltd current register of members.

wk 4 cs

What is your opinion or thoughts on this question below? I need a 4500-word summary including an introduction, body, sub-title, conclusion and 2-3 references. please, thank you.

The new president of Toyota, Akio Toyoda (grandson of the founder), has said, “Everyone says Toyota is the best company in the world, but the consumer doesn’t care about the world. They care if we are the best in town.” What do you think he means by that? Answer: Toyoda understands his customers.

1.

How is control determined when a parent company does not own a majority of the voting stock of a subsidiary?

Multiple Choice

Top of Form

Controlling the subsidiary’s financing activities.

Controlling the subsidiary’s investing activities.

Criteria that establish effective control include control of the subsidiary’s senior management or board of directors, the control of the subsidiary’s operating, investing, or financing activities, and the right to obtain control by buying more shares after a triggering event.

Controlling the subsidiary’s operating activities.

2.

How does accounting for bearer plants differ from that for other biological assets?

Multiple Choice

Companies never revalue bearer plants, because of their nature.

Companies treat bearer plants as PPE. Thus, they choose between the cost and revaluation models for these assets. The treatment of bearer plants constitutes an important exception to the requirement that companies revalue biological assets.

Companies always revalue bearer plants, as they are required to do for all other biological assets.

Companies treat bearer plants as goodwill.

3.

Under U.S. GAAP, fixed assets are generally reported on the balance sheet at their:

Multiple Choice

fair value.

historical cost.

market value.

net realizable value.

4.

Which intangible assets are subject to annual impairment testing?

Multiple Choice

Indefinite-lived intangible assets.

Definite-lived tangible assets.

Definite-lived intangible assets.

Indefinite-lived intangibles and goodwill are subject to impairment testing at least annually.

5.

How do IFRS and U.S. GAAP differ in their approach to allowing reversals of inventory write-downs?

Multiple Choice

IFRS requires the reversal of write-downs from cost to net realization value (NRV) when the selling price increases. U.S. GAAP prohibits the reversal of past write-downs.

The cost of the intangibles should be expensed by the acquiring company on the merger date.

If they had not been previously recorded as separate assets by the acquired company, they should always be recorded as "Goodwill" on the balance sheet of the company acquiring them.

They should be recorded as separate intangible assets only if their useful life is indefinite.

In 2017, the new CEO of Watsontown Electric Supply became concerned about the company’s apparently deteriorating financial position. Wishing to make certain that the grim monthly reports he was receiving from the company’s bookkeeper were accurate, the CEO engaged a CPA firm to examine the company’s financial records. The CPA firm discovered the following facts during the course of the engagement, which was completed prior to any adjusting or closing entries being prepared for 2017.

1. A new digital imaging system was acquired on January 5, 2016, at a cost of $5,000. Although this asset was expected to be in use for the next four years, the purchase was inadvertently charged to office expense. Per the company’s accounting manual, office equipment of this type should be depreciated using the straight-line method with no salvage value assumed.
2. A used truck, purchased on November 18, 2017, was recorded with this entry:
   
   To record truck expenditure:
   

   DR Vehicle Expense	$	18,000
   CR Cash				$	18,000

   
   Management plans to use this truck for three years and then trade it in on a new one. Salvage is estimated at $3,000. Watsontown has always used straight-line depreciation for fixed assets, recording a half-year of depreciation in the year the asset is acquired.
   

3. On July 1, 2017, the company rented a warehouse for three years. The lease agreement specified that each year’s rent be paid in advance, so a check for the first year’s rent of $18,000 was issued and recorded as an addition to the Buildings account.
4. Late in 2016, Watsontown collected $23,500 from a customer in full payment of his account. The cash receipt was credited to revenue. In 2017, Watsontown’s bookkeeper was reviewing outstanding receivables and noticed the outstanding balance. Knowing the customer in question had recently died, she wrote off the account. Because Watsontown seldom has bad debts, the company uses the direct write-off method whereby it charges Bad debts expense and credits Accounts receivable when an account is deemed uncollectible.
5. A three-year property and casualty insurance policy was purchased in January 2016 for $30,000. The entire amount was recorded as an insurance expense at the time.
6. On October 1, 2016, Watsontown borrowed $100,000 from a local bank. The loan terms specified annual interest payments of $8,000 on the anniversary date of the loan. The first interest payment was made on October 1, 2017, and expensed in its entirety.

Required:

Prepare any journal entry necessary to correct each error as well as any year-end adjusting entry for 2017 related to the described situation. Ignore income tax effects. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

In 2017, the new CEO of Watsontown Electric Supply became concerned about the company’s apparently deteriorating financial position. Wishing to make certain that the grim monthly reports he was receiving from the company’s bookkeeper were accurate, the CEO engaged a CPA firm to examine the company’s financial records. The CPA firm discovered the following facts during the course of the engagement, which was completed prior to any adjusting or closing entries being prepared for 2017.

1. A new digital imaging system was acquired on January 5, 2016, at a cost of $5,000. Although this asset was expected to be in use for the next four years, the purchase was inadvertently charged to office expense. Per the company’s accounting manual, office equipment of this type should be depreciated using the straight-line method with no salvage value assumed.
2. A used truck, purchased on November 18, 2017, was recorded with this entry:
   
   To record truck expenditure:
   

   DR Vehicle Expense	$	18,000
   CR Cash				$	18,000

   
   Management plans to use this truck for three years and then trade it in on a new one. Salvage is estimated at $3,000. Watsontown has always used straight-line depreciation for fixed assets, recording a half-year of depreciation in the year the asset is acquired.
   

3. On July 1, 2017, the company rented a warehouse for three years. The lease agreement specified that each year’s rent be paid in advance, so a check for the first year’s rent of $18,000 was issued and recorded as an addition to the Buildings account.
4. Late in 2016, Watsontown collected $23,500 from a customer in full payment of his account. The cash receipt was credited to revenue. In 2017, Watsontown’s bookkeeper was reviewing outstanding receivables and noticed the outstanding balance. Knowing the customer in question had recently died, she wrote off the account. Because Watsontown seldom has bad debts, the company uses the direct write-off method whereby it charges Bad debts expense and credits Accounts receivable when an account is deemed uncollectible.
5. A three-year property and casualty insurance policy was purchased in January 2016 for $30,000. The entire amount was recorded as an insurance expense at the time.
6. On October 1, 2016, Watsontown borrowed $100,000 from a local bank. The loan terms specified annual interest payments of $8,000 on the anniversary date of the loan. The first interest payment was made on October 1, 2017, and expensed in its entirety.

Required:

Prepare any journal entry necessary to correct each error as well as any year-end adjusting entry for 2017 related to the described situation. Ignore income tax effects. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

In 2017, the new CEO of Watsontown Electric Supply became concerned about the company’s apparently deteriorating financial position. Wishing to make certain that the grim monthly reports he was receiving from the company’s bookkeeper were accurate, the CEO engaged a CPA firm to examine the company’s financial records. The CPA firm discovered the following facts during the course of the engagement, which was completed prior to any adjusting or closing entries being prepared for 2017.

1. A new digital imaging system was acquired on January 5, 2016, at a cost of $5,000. Although this asset was expected to be in use for the next four years, the purchase was inadvertently charged to office expense. Per the company’s accounting manual, office equipment of this type should be depreciated using the straight-line method with no salvage value assumed.
2. A used truck, purchased on November 18, 2017, was recorded with this entry:
   
   To record truck expenditure:
   

   DR Vehicle Expense	$	18,000
   CR Cash				$	18,000

   
   Management plans to use this truck for three years and then trade it in on a new one. Salvage is estimated at $3,000. Watsontown has always used straight-line depreciation for fixed assets, recording a half-year of depreciation in the year the asset is acquired.
   

3. On July 1, 2017, the company rented a warehouse for three years. The lease agreement specified that each year’s rent be paid in advance, so a check for the first year’s rent of $18,000 was issued and recorded as an addition to the Buildings account.
4. Late in 2016, Watsontown collected $23,500 from a customer in full payment of his account. The cash receipt was credited to revenue. In 2017, Watsontown’s bookkeeper was reviewing outstanding receivables and noticed the outstanding balance. Knowing the customer in question had recently died, she wrote off the account. Because Watsontown seldom has bad debts, the company uses the direct write-off method whereby it charges Bad debts expense and credits Accounts receivable when an account is deemed uncollectible.
5. A three-year property and casualty insurance policy was purchased in January 2016 for $30,000. The entire amount was recorded as an insurance expense at the time.
6. On October 1, 2016, Watsontown borrowed $100,000 from a local bank. The loan terms specified annual interest payments of $8,000 on the anniversary date of the loan. The first interest payment was made on October 1, 2017, and expensed in its entirety.

Required:

Prepare any journal entry necessary to correct each error as well as any year-end adjusting entry for 2017 related to the described situation. Ignore income tax effects. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)