MANUTAN INTERNATIONAL MAIL ORDER EUROPEAN SUCCESS

Manutan International S.A. is a specialist mail-order business providing industrial and offi ce equipment and supplies to the business-to-business, collective, and public sectors. Based in France, Manutan has built up a pan-European network of 24 subsidiaries in 20 countries, from Portugal to Russia and from Sweden to Italy. Manutan also has a strong online presence with 18 e-commerce websites and a workforce of around 1,500 staff . Manutan’s more than 200 catalogues feature over 200,000 items and serve more than 600,000 customers throughout Europe. While mail-order houses had been in operation in France for many years, they have tended to focus primarily on the consumer market. In 1966, however, André Guichard, joined by son Jean-Pierre, set up a company dedicated to providing mail-order services to the business sector. Th e company’s major innovation was in its choice of goods, that of industrial equipment, especially materials handling equipment. Manutan quickly recognized the potential of entering other European markets. Th e company’s fi rst choice was the United Kingdom, where, as in France in the 1960s, the market for mail-order materials handling, lift ing, and storage equipment was more or less non-existent. Manutan’s success in the United Kingdom led it to quickly move into a large number of new foreign markets aft er 1974. Manutan focused on its mail-order operations until the early 2000s. In 2001, however, the company expanded and established a presence on the Internet, launching its fi rst e-commerce-enabled website. Th at site later provided the platform for the rollout of 18 websites targeting each of the company’s markets. By 2005, the company had posted more than €1 million in sales through its e-commerce sites. During the recent global fi nancial crisis, Manutan made a strategic decision not to cut its marketing and commercial investments. On the contrary, Manutan maintained its promotional expenditure, and refocused part of its staff on direct selling, thereby increasing the multi-channel contact with their customers. Th is strategic insight seems to have paid off : the company recorded revenues of €563 million during the 2010 fi nancial year, an increase of 15.2% over the previous year.

3. Suppose the customer satisfaction survey included a question on the overall quality of Manutan measured on a scale from 0 to 10 where higher numbers indicate greater quality. Company managers monitor the fi gures from year to year to help determine whether Manutan is improving customers’ perceptions of its quality. Suppose random samples of the responses from 2011 customers and 2012 customers are taken and analysed on this question, and the following Minitab analysis of the data results. Help managers interpret this analysis so that comparisons can be made between 2011 and 2012. Discuss the samples, the statistics, and the conclusions.

In 1993, Nash Company completed the construction of a building at a cost of $2,040,000 and first occupied it in January 1994. It was estimated that the building will have a useful life of 40 years and a salvage value of $59,200 at the end of that time.

Early in 2004, an addition to the building was constructed at a cost of $510,000. At that time, it was estimated that the remaining life of the building would be, as originally estimated, an additional 30 years, and that the addition would have a life of 30 years and a salvage value of $20,400.

In 2022, it is determined that the probable life of the building and addition will extend to the end of 2053, or 20 years beyond the original estimate.

Using the straight-line method, compute the annual depreciation that would have been charged from 1994 through 2003.

Compute the annual depreciation that would have been charged from 2004 through 2022.

Prepare the entry, if necessary, to adjust the account balances because of the revision of the estimated life in 2021. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Compute the annual depreciation to be charged, beginning with 2022. (Round answer to 0 decimal places, e.g. 45,892.)

In 1993, Windsor Company completed the construction of a building at a cost of $2,160,000 and first occupied it in January 1994. It was estimated that the building will have a useful life of 40 years and a salvage value of $65,600 at the end of that time.

Early in 2004, an addition to the building was constructed at a cost of $540,000. At that time, it was estimated that the remaining life of the building would be, as originally estimated, an additional 30 years, and that the addition would have a life of 30 years and a salvage value of $21,600.

In 2022, it is determined that the probable life of the building and addition will extend to the end of 2053, or 20 years beyond the original estimate.

Using the straight-line method, compute the annual depreciation that would have been charged from 1994 through 2003.

Compute the annual depreciation that would have been charged from 2004 through 2022.

Prepare the entry, if necessary, to adjust the account balances because of the revision of the estimated life in 2021. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Compute the annual depreciation to be charged, beginning with 2022. (Round answer to 0 decimal places, e.g. 45,892.)

Question a.

Nisha Patel has a full time job as a nurse in her local hospital. In her spare time she has a goat farming operation. The goat farm began in 2016, and resulted in a loss of $10,000. She deducted the maximum allowable amount of the loss against her 2016 income. In 2017, most of the problems had been worked out, and Nisha had a profit from the farm operation of $5,000, as well as employment income of $100,000. Determine Ms. Patel's taxable income for 2017.

Question b.

Which of the following statements about Allowable Business Investment Losses is correct?

Question c.

When an individual makes a gift of publicly traded securities to a registered charity, any capital gain that results from the disposition is deemed to be nil.

Buckler Company manufactures desks with vinyl tops. In 2004, a 1,000 desk production run cost for the vinyl used per Model S desk is $27.00 based on 12 square feet of vinyl at a cost of $2.25 per square foot. A production run of 1,000 desks in 2003 resulted in the usage of 12,600 square feet of vinyl at a cost of $2.00 per square foot, a total cost of $25,200.

Resulting from the above production run what is the material volume variance ______, the materials efficiency variance_____, and the materials price variance ______?

Problem 1

On January 2, 20x8, the Todd Company acquired a truck with a list price of $400,000. The Todd Company's incremental borrowing rate is 8% (imputed rate). Assume that the

truck manufacturer is offering Todd the following terms (each situation is independent). For each of the terms, prepare the journal entries for the life of the note. Assume a December 31 year end.

Todd company is a publicly accountable company.

a) Todd Company has to make equal annual payments of principal and interest over five years. Payments are due on December 31 of every year. The interest rate charged is 10%.

b) Todd Company pays the $400,000 in three years. No interest is charged on the note.

c) Todd Company pays the $400,000 in three years. Interest of 3% is charged on the note payable on December 31 of every year.

d) Todd Company pays $80,000 on the principal at the end of every year, over 5 years. No interest is charged.

e) Todd Company has to make equal annual payments of principal and interest over five years. The interest rate charged is 4%.

Change in Estimate versus Error Correction- LandCo is a lawn service company which provides grounds and maintenance services to a range of corporate customers. Customers are expected to pay on the first of each month, in advance of receiving services. One of LandCo’s corporate customers is an eldercare facility whose grounds the company has maintained for many years. The customer has not paid for the last three months of service (from October – December 2019); nevertheless, to maintain a positive relationship, LandCo continued to provide mowing and weed control services to the eldercare facility during that time. LandCo ceased providing services in January 2020 and found out in that same month that the eldercare facility filed for bankruptcy in September. LandCo now believes that collection of the missed payments is extremely unlikely.

LandCo has already issued financial statements to lenders (for the period ending 12/31/2019) which reflected revenue and a corresponding account receivable related to this customer of $10,000 per month for services provided. Those financial statements also reflected the company’s standard allowance (reserve) amount on receivables, of 4% of sales. In total, LandCo’s average monthly sales amount to $500,000.

Required:

1- Evaluate whether receipt of this information indicates you have a change in estimate or the customer's bankruptcy results in this event being considered an error in previously issued financial statements. Describe the accounting treatment required by the Codification for each alternatives with draft journal entries.

2- Research US accounting standards to determine the proper treatment for the service receivable/customer bankruptcy on LandCo’s financial statements, assuming it is headquartered in the United States.

3- Research international accounting standards to determine the proper treatment for LandCo’s transactions, assuming it is headquartered in France.

Read the following article: Netflix Tested a Price Hike in Australia (FORTUNE) By TOM HUDDLESTON JR. May 15, 2017

(https://fortune.com/2017/05/15/netflix-price-hike-australia/)

Netflix customers in Australia could soon be facing steeper monthly charges. The popular streaming service on Monday confirmed that it recently tested higher subscription prices for new customers in Australia. The company—which has nearly 100 million global subscribers and expanded to Australia in 2015—has reportedly tested raising prices for new subscribers by as much as three Australian dollars (AU). Netflix’s test resulted in some Australian customers seeing price increases for the streaming service’s Basic plan (going from AU$8.99 to AU$9.99 per month), while Netflix’s Standard plan increased AU$2 to AU$13.99 and the Premium plan increased AU$3 to AU$17.99 per month, according to The Australian. Netflix confirmed the tests, but emphasized that it has not yet formally announced any permanent price increases. “We continuously test new things at Netflix and these tests typically vary in length of time,” the company said in a statement. “In this case, we are testing slightly different price points to better understand how consumers value Netflix. Not everyone will see this test and we may not ever offer it generally.”

Your task: Discuss why you think Netflix conducted this test and what you think they found from that test based on their later decisions.

Refer in particular to concepts, such as what price elasticity of demand is and how it is calculated and used, its relationship with revenue, and relevant determinants of price elasticity of demand. ___

Netflix customers in Australia could soon be facing steeper monthly charges. The popular streaming service on Monday confirmed that it recently tested higher subscription prices for new customers in Australia. The company—which has nearly 100 million global subscribers and expanded to Australia in 2015—has reportedly tested raising prices for new subscribers by as much as three Australian dollars (AU). Netflix’s test resulted in some Australian customers seeing price increases for the streaming service’s Basic plan (going from AU$8.99 to AU$9.99 per month), while Netflix’s Standard plan increased AU$2 to AU$13.99 and the Premium plan increased AU$3 to AU$17.99 per month, according to The Australian. Netflix confirmed the tests, but emphasized that it has not yet formally announced any permanent price increases. “We continuously test new things at Netflix and these tests typically vary in length of time,” the company said in a statement. “In this case, we are testing slightly different price points to better understand how consumers value Netflix. Not everyone will see this test and we may not ever offer it generally.”

Addendum from the lecturer: They increased the prices to $9.99, $13.99 and $17.99 respectively from 1st July 2017. And in 2019 they increased the premium plan to $19.99, while leaving the other two prices constant.

Discuss why you think Netflix conducted this test and what you think they found from that test based on their later decisions.

Refer in particular to concepts from what price elasticity of demand is and how it is calculated and used, its relationship with revenue, and relevant determinants of price elasticity of demand.

James and Katie will be auditing the revenue account for their retail client, Go Big Tires. They disagree about how to test the occurrence assertion for the revenue account. James thinks they should use Procedure A, while Katie thinks Procedure B is appropriate.

Who do you agree with, James or Katie, and why? Which assertion does the other procedure provide evidence about?