In: Economics
Answer the questions with an essay of not more than 300 words : 2. Explain the short run and long run effects of the following events on output and price level with the AD-AS diagram: a. tax cuts b. money supply increases c. an increase in the price of key imported inputs d. a natural disaster that destroys a significant portion of production capacity e. a major technological innovation
In: Economics
Monsters, Inc
As you watch the movie, look for elements of strategic management within the storyline.
For Example: Strategic Leadership Organizational Purpose & Principles Stakeholders Competitive Advantage Business Ethics Organizational Culture Organizational Mission Adaptation & Organizational Change Innovation Risk.
In the movie Monsters Inc, what are some examples of strategic management. Above is a list of some you might see
In: Operations Management
Analyzing and Interpreting Pension Disclosures
Assume E.I. Du Pont De Nemours and Co.'s 10-K report has the
following disclosures related to its retirement plans ($
millions).
| Pension Benefits | ||
|---|---|---|
| ($ millions) | 2010 | 2009 |
| Change in benefit obligation | ||
| Benefit obligation at beginning of year | $ 22,849 | $ 22,935 |
| Service cost | 383 | 388 |
| Interest cost | 1,228 | 1,192 |
| Plan participants' contributions | 13 | 9 |
| Acturarial loss (gain) | (728) | (244) |
| Benefits paid | (1,544) | (1,506) |
| Amendments | -- | (1) |
| Net effects of acquisitions/divestitures | 5 | 76 |
| Benefit obligation at end of year | $ 22,206 | $ 22,849 |
| Change in plan assets | ||
| Fair value of plan assets at beginning of year | $ 22,249 | $ 20,132 |
| Actual gain on plan assets | 1,927 | 3,306 |
| Employer contributions | 277 | 280 |
| Plan participants' contributions | 13 | 9 |
| Benefits paid | (1,544) | (1,506) |
| Net effects of acquisitions/divestitures | -- | 28 |
| Fair value of plan assets at end of year | $ 22,922 | $ 22,249 |
| Funded status | ||
| U.S. plans with plan assets | $ 2,365 | $ 892 |
| Non-U.S. plans with plan assets | (90) | (317) |
| All other plans | (1,559) | (1,515) |
| Total | $ 716 | $ (940) |
| Pension Benefits (in millions) |
|||
|---|---|---|---|
| Components of net periodic benefit cost (credit) | 2010 | 2009 | 2008 |
| Net periodic benefit | |||
| Service cost | $ 383 | $ 388 | $ 349 |
| Interest cost | 1,228 | 1,192 | 1,160 |
| Expected return on plan assets | (1,799) | (1,648) | (1,416) |
| Amortization of loss | 117 | 227 | 303 |
| Amortization of prior service cost | 18 | 29 | 37 |
| Curtailment/settlement (gain) loss | -- | 3 | (1) |
| Net periodic benefit cost | $ (53) | $ 191 | $ 432 |
| Weighted-avg. assumptions used for net periodic benefit cost for years ended Dec. 31 |
2010 |
2009 |
|---|---|---|
| Discount Rate | 5.56% | 5.43% |
| Expected return on plan assets | 8.09% | 8.18% |
| Rate of compensation increase | 4.32% | 4.31% |
The following benefit payments, which reflect future service, as
appropriate, are expected to be paid:
| ($ millions) | Pension Benefits |
|---|---|
| 2008 | $ 1,525 |
| 2009 | 1,507 |
| 2010 | 1,493 |
| 2011 | 1,500 |
| 2012 | 1,500 |
| Years 2013-2017 | 7,690 |
HINT: Do not use negative signs with your answers.
(a) How much pension expense (revenue) does DuPont report in its
2010 income statement?
DuPont reports pension Answer
of $Answer
million.
(b) DuPont reports a $1,799 million expected return on pension plan
assets as an offset to 2010 pension expense. Estimate what the
expected return would have been had DuPont not changed the
assumption on the expected return in 2010. (Round your dollar
answers to the nearest whole number.)
$Answer
million
What is DuPont's actual gain or loss realized on its 2010 pension
plan assets?
Answer
($ million) Answer
(c) What main factors affected DuPont's pension plan assets and
pension liability during 2010?
Investment gains and employer contributions increased the plan assets. Service and interest costs increased the pension liability, and actuarial gains and benefit payments reduced the liability. Benefits were paid directly by the company and did not affect plan assets
Investment gains and employer contributions increased the plan assets, and benefits paid reduced plan assets. Service and interest costs increased the pension liability, and actuarial gains and benefit payments reduced the liability.
Investment gains and employer contributions increased the plan assets, and benefits paid reduced plan assets. Service and interest costs decreased the pension liability, and actuarial gains and benefit payments reduced the liability.
Investment gains and employer contributions increased the plan assets, and benefits paid reduced plan assets. Service costs increased the pension liability, and actuarial gains and benefit payments reduced the liability. Interest reflects the amount the company paid to its lenders and did not affect the pension obligation directly.
(d) Which of the following statements best describes what the
phrase funded status means? What is the funded status of the 2010
DuPont pension plans?
"Funded status" reveals how much cash the plan has.
"Funded status" refers to the extent to which the plan assets are invested in mutual funds.
"Funded status" reflects the contributions that the company has made to the plan.
"Funded status" is the excess or deficiency of the pension obligation over plan assets.
DuPont's pension plan is Answer
by $Answer
million
(e) DuPont increased its discount rate from 5.43% to 5.56% in 2010.
What effect(s) does the increase in the discount rate for
determining pension obligations and cost have on the company's
balance sheet and its income statement?
An increase in the discount rate reduces the PBO and has no effect on pension cost.
An increase in the discount rate reduces the PBO and increases pension cost.
An increase in the discount rate reduces the PBO and decreases pension cost.
An increase in the discount rate increases the PBO and increases pension cost.
(f) Which of the following statements best describes how DuPont's
pension plan affected its 2010 cash flow?
There was no effect on the company's cash flow as all benefit payments are paid from plan assets.
The company's cash flow increased as the increase in pension assets more than offset the increase in the PBO.
The company's cash flow increased by the gains on the plan's investment portfolio and decreased by the benefits paid to plan participants.
The company contributed cash to its pension plan in 2010. This contribution directly affected the company's cash flow.
(g) Explain how the returns on pension assets affect the amount of
cash that DuPont must contribute to fund the pension plan.
Asset returns have no effect on DuPont's cash flow because they are recognized in the pension plan and not on the company's financial statements.
Should pension investments decline as a result of a decline in the financial markets, DuPont might be required to increase its cash contribution to the pension plan.
Asset returns have no effect on DuPont's cash flow because increases in the PBO provide whatever financing the plan needs.
Asset returns have no effect on DuPont's cash flow because employee contributions make up any shortfall.
In: Accounting
Natural monopoly firms are often regulated so that they can only
charge prices set by
the authorities. Under one approach, prices are based on the
monopolist’s costs so that for any given quantity of sales, the
monopolist can only set prices equal to its average costs.
1. Why might regulators believe that forcing the monopoly to charge a price equal to average cost is a good outcome? Does this price regulation maximise social welfare? What problems do you see with this form of price regulation?
2. Suppose the monopolist can undertake innovation that will lower its average cost. If the monopolist faces average-cost price regulation, does it face strong or weak incentives to innovate? Explain your answer.
3. An alternative to average-cost price regulation is to set a ‘price cap’ for the natural monopoly firm. With a price cap, the regulator does not adjust the regulated price as soon as monopolist’s costs change but keeps the same regulated prices for a number of years. It is argued that price- cap regulation encourages innovation. Do you agree with this and why?
In: Economics
FARS Research Case
VTech is an Enterprise Resource Planning (ERP) software development corporation that specializes in providing technological solutions for firms to better manage their businesses. Being in the technology industry, research, and development (R&D) is one of the largest expenditures. For example, in the second quarter of the fiscal year 2020 alone, VTech’s internal books reveal that the company has generated the following R&D expenditures directly attributable to the software they plan to develop and sell:
- Incurred $5,000,000 as an effort to establish technological feasibility of an ERP software
- Incurred $3,000,000 in production costs, after they had decided that the software is a viable product
In addition to the development of software for sale, VTech also developed specialized software that will help with their internal accounts payable system. During the fiscal quarter, the company spent $1,000,000 on the software which will be for internal use only and not for resale.
An accounting intern at the firm approaches you, the senior manager, and asked for your advice on how to properly record and recognize these expenditures. Should the firm treat all the expenditures the same? Differently?
In: Accounting
The time and cost required to manufacture its product R&D costs were $120,000. The process was patented. On July 1, 2016. Legal costs and fees to require the patent totaled $12,500. Browen estimated the useful life of the patent at 10 years.
On July 1,2018, Browen sold the nonexclusive right to use the new process to Kennedy Company for $90,000. Because Bowen retained the patent, the agreement allows Kennedy to use, but not sell, the new technology for a period of 5 years. But Bowen Company and Kennedy Company have December 31 fiscal years.
On July 1, 2020, another competitor obtained a patent on a new process that made Browen's patent obsolete.
1) How should Bowen Company account for the R&D costs and legal costs incurred to obtain the patent? Show the effects of these entries using the financial statement effects template, prepare the appropriate journal entries necessary to account for the costs incurred in 2016, and psot the entries to T-accounts
In: Accounting
Splish Brothers Inc. is building a new hockey arena at a cost of $2,800,000. It received a down payment of $560,000 from local businesses to support the project, and now needs to borrow $2,240,000 to complete the project. It therefore decides to issue $2,240,000 of 10-year, 10.5% bonds. These bonds were issued on January 1, 2020, and pay interest annually on each January 1. The bonds yield 10% to the investor and have an effective interest rate to the issuer of 10.4053%. (There is an increased effective interest rate due to the capitalization of the bond issue costs.) Any additional funds that are needed to complete the project will be obtained from local businesses. Splish Brothers Inc. paid and capitalized $56,000 in bond issuance costs related to the bond issue. Splish Brothers prepares financial statements in accordance with IFRS.
1- Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, calculate the value of the bonds and prepare the journal entry to record the issuance of the bonds on January 1, 2020.
2- Prepare a bond amortization schedule up to and including January 1, 2025, using the effective interest method.
3- Assume that on July 1, 2023, the company retires half of the bonds at a cost of $1,193,000 plus accrued interest. Prepare the journal entries to record this retirement.
In: Accounting
Information Technology: Mayo Clinic:
Describe where the Mayo Clinic organization are with respect to the
use of information technology. Are they leading or trailing edge?
What are the implications??
In: Nursing
Are distributed ledger technologies general purpose technology, social technology or both? Explain in detail why and why it is important for long-run economic growth
In: Economics