Sabrina Hoffman is founder and CEO of Golden Care, Inc., which owns and operates several assisted-living facilities. The facilities are apartment-style buildings with 25 to 30 one- or two-bedroom apartments. While each apartment has its own complete kitchen, in every building Golden Care offers communal dining options and an on-site nurse who is available 24 hours a day. Residents can choose monthly meal options that include one or two meals per day in the dining room. Residents who require nursing services (e.g., blood pressure monitoring and injections) can receive those services from the nurse. However, Golden Care facilities are not nursing homes, all residents are ambulatory, and custodial care is not an option. In the five years it has been in operation, the company has expanded from one facility to five, located in southwestern cities. The income statement for last year follows.

Sabrina originally got into the business because she had trouble finding adequate facilities for her mother. The concept worked well, and income over the past five years had grown nicely at 20 percent per year. However, Sabrina sensed clouds on the horizon. She knew that the population was aging and that her current clients would be moving to more traditional forms of nursing care. As a result, Sabrina wanted to consider adding one or more nursing homes to Golden Care. These nursing homes would be staffed around the clock with RNs and LPNs. The residents would likely have more severe medical problems and would be confined to beds or wheelchairs. Sabrina knew that quality care of this type was needed. So, she contacted Peter Verdon, her marketing manager, and Bernadette Masters, her accountant, for a brainstorming session.

Peter: "Sabrina, I really like the concept. As you know, several of our facilities have faced seeing their long-term residents move out to local nursing homes. Not only are these homes of lower quality than what we could provide, but losing a resident is heartrending for the staff, as well as for the remaining residents. I like the idea of providing a transition from less care to more."

Bernadette: "I agree with you, Peter. But let's not forget the differences between assisted-living and full-time, nursing-home-type care. Our expenses will really increase."

Sabrina: "That's why I wanted to talk with both of you. As you know, Golden Care's mission statement emphasizes the need to make a profit. We can't continue to serve our residents and provide high-quality care if we don't make enough money to pay our staff a living wage and earn enough of a profit to smooth over the rough patches and continue to improve our business. Could the two of you look into this idea, and get back to me in a week or so?"

Throughout the following week, the three communicated by e-mail. By the end of the week, a number of possibilities had surfaced, and these were summarized in a message from Bernadette to the others.

TO: [email protected], [email protected]

FROM: [email protected]

MESSAGE:

I've compiled the ideas from all of our e-mails into the following list. This may be a good starting point for our meeting tomorrow.

Buy an existing nursing home in one of Golden Care's current locations.

Buy an existing nursing home in another city.

Build a new nursing home facility in one of Golden Care's current locations.

Build a new nursing home facility in another city.

Build a wing on to an existing Golden Care facility. The Apache Junction facility has sufficient open land for an addition.

The next day, Sabrina, Peter, and Bernadette met again in Sabrina's office.

Sabrina: "I didn't realize there were so many possibilities. Are we going to have to work up numbers on each of them?"

Bernadette: "No, I think we can eliminate a few of them pretty quickly. For example, building a new facility would cost more than the other options, and it would involve the most risk."

Peter: "I agree, and I also think we might eliminate the purchase of an existing nursing home for the same reasons. Also, existing homes would not give us the option of building a facility that is state of the art and meets our needs, and it would lock us into a preexisting patient mix."

Sabrina: "I like that thinking. Let's restrict our attention to Option 5."

Bernadette: "I thought you might like that option, so Peter and I sketched out two alternatives for an extension of the Apache Junction building. We call the alternatives Basic Care and Lifestyle Care."

Peter: "There are different markets for each type of care. If we want to concentrate on Medicare and Medicaid patients, the reimbursement is lower, and we would want to offer the Basic Care option. Private insurance and private-pay patients could afford more services; if we are marketing to these patients, we could offer the Lifestyle Care option. Both alternatives provide high-quality nursing care. Basic Care concentrates on the quality nursing and maintenance activities. For example, the addition would have 25 double rooms, two nursing stations, two recreation rooms, a treatment room, and an office. The Lifestyle Care option adds physical and recreational therapy with a specially equipped gym and pool. That addition would have 30 single rooms, two nursing stations, a recreation room, a swimming pool, a hydrotherapy spa and gym, a treatment room, and an office. In each case, there would be cable TV and telephone hookups in each room and a buffer area between the nursing home and the apartments."

Sabrina: "Why the buffer area? Won't that add unnecessary cost?"

Peter: "It adds cost, but it will be well worth it. Sabrina, you must remember that the nursing home patients are different from the apartment residents. Some of the patients will have advanced dementia. We'll lose apartment residents in a hurry if they have to be reminded every day of what might be in store for them later on."

Sabrina: "I see your point. Bernadette, what will these two plans cost? I'll tell you right now that I like the Lifestyle Care option better. It fits with our history of doing whatever we can to make life better for our residents."

Bernadette: "I've checked into the costs of putting on a new wing and operating both alternatives. Here's a listing."

* Other includes supplies, utilities, food, and so on.

"In both cases, total administrative costs for Golden Care would increase by $30,000 per year. This seems high, but the increased legal and insurance requirements will add significantly more paperwork and accounting."

Sabrina: "All this sounds reasonable, but why is reimbursement such an important factor?"

Peter: "Well, if you admit Medicaid patients, the state will reimburse at most $30,000 per year. Private insurance policies will pay roughly $46,000 per year. We can charge up to about $65,000 for private patients, but this type of care is so expensive that many of these patients exhaust their funds and go on Medicaid. The nice aspect of Medicaid is that we can be virtually assured that we will operate at capacity."

Sabrina: "Can we cross that bridge when we come to it?"

Peter: "No, not really. Once the patient is a resident of our facility, it is hard to evict him or her. Also, while it is legal to force patients out before they go on Medicaid and to refuse to accept Medicaid patients, once we do accept Medicaid patients, we are prevented by law from evicting them—no matter how high our costs go."

Sabrina: "OK, it looks as if we have some hard work ahead of us to decide whether or not to get into this line of business."

Required:

4. What would the price per month for a Basic Care patient be if the same markup were used? For a Lifestyle Care patient? (Assume in both cases that occupancy is at 80 percent of capacity.) Round your intermediate calculation to 3 decimal places and final answers to the nearest dollar amount.

Reading:

Steve Jobs was Apple’s founder and icon CEO. Much of Apple’s phenomenal success, especially after 2000, was attributed to Steve Job’s “genius” and leadership. Because of this and Tim Cook having a significantly different style from Jobs, he was given little chance for success. Yet, in 2014, several years after Cook assumed the CEO position, Apple had what Tim Cook referred to as an unbelievable year. Apple sold 200 million iPhones and had $200 billion in revenue. Apple’s stock price increased by 65 percent, and the company’s market value reached more than $700 billion, the largest ever of any U.S. firm. The $700 billion in market value is more than twice as much as either Microsoft or Exxon Mobil. Cook’s primary experience has been as manager of operations; he was Apple’s COO prior to assuming the CEO role. And, much of Apple’s sales are based on products developed and introduced to the market under Job’s lead- ership. So, the jury is still out on Cook, especially with regard to developing new products and making them a success in the marketplace. Steve Jobs was a master at this process. Cook’s style of lead- ership is much different from the approach used by Jobs. Some consid- ered Jobs to be ruthless and impulsive and almost maniacal in developing new products and ensur- ing a high quality product desirable in the market. Cook’s knowledge and skills do not make him an expert in product development, design, or marketing. So, he delegates those respon- sibilities but remains as the leader and decision maker. Cook tries to buffer and maintain Apple’s corporate culture developed largely by Jobs. Thus, the emphasis remains on innovation that is valued in the marketplace. Cook has learned the importance of hiring other top managers with talent but who also fit into Apple’s culture. He has made some very good hires, such as Angela Ahrendts who now heads Apple’s very important retail stores. Cook takes a much less emotional approach than Jobs. Some refer to it as a “measured emotional approach to leadership.” He empowers his team to manage their functional areas and emphasizes the need to take a long-run perspective. Observers have been able to highlight other differences between Cook’s and Job’s strategic leadership approaches. Cook shares the limelight with his leadership team, whereas Jobs kept the light on himself. In fact, one analyst suggested that Cook is a good leader who builds an effective team around him. Cook is leading Apple to be more philanthropic than in the past. His strategy has entailed a major acquisition (an audio company for $3 billion) and developing enterprise solutions for corporate IT units, both strategic actions that Jobs eschewed. Apple has formed an alliance with IBM to develop enterprise applications many of which will be designed for the iPad, especially the new and larger versions. Innovations developed during Cook’s leadership include the Apple watch, introduced to the market in April 2015. Many are waiting to learn its rate of success. Initial reports suggest that demand is exceeding supply, causing Apple to increase production. In addition, hints provided by Cook suggest that Apple may be planning to enter the television market. Most importantly, Cook claims that Apple’s goal is to change the way people work and will target the development of future products for that purpose.

Question:

What do you think of Jim Cook’s strategic leadership for Apple’s recent success after Jobs passed away?

Problem 2:

The following events apply to Sam’s Seafood Restaurant for the year ended December 31, 2020, its first year of operations:

1. The company acquired $50,000 cash by issuing common stock.

2. Purchased a new cook top that cost $35,000 cash.

3. Earned $36,000 in cash revenue.

4. Paid $12,000 cash for salaries expense.  

5. Recorded depreciation expense on the cook top for 2020 using straight-line depreciation. The cooktop was purchased on January 1, 2020, the expected useful life of the cook top is four years, and the estimated salvage value is $3,000.  

Required: Answer the following questions.

1. What is the net income for 2020?   

2. What amount of depreciation expense would Sam’s report on the 2021 income statement?

3. What amount of accumulated depreciation would Sam’s report on the December 31, 2021, balance sheet?

4. Would the cash flow from operating activites be affected by depreciation in 2021?

5. If Sam’s Seafood Restaurant decided to sell the new cooktop in 2022 for $10,000, would the company realize a gain or loss? How much?  

The problem of many developing businesses has always been attributed to insufficient or lack
of capital to run these enterprises. But on taking an MBA course at the University of Ghana
Business School, you have come to realize that most businesses in Ghana and Africa fail not
because of capital adequacy issues but rather, human resources management issues. What
significant expectations would you give to all HR managers as needed competences to be
equipped with if you are the consultant general to businesses in Ghana?

On July 1, 2020, Adams Company acquired a new machine for $ 200,000 and estimated that it would have a useful life of 10 years and residual value of $ 10,000. On January 2, 2022, Adams spent $ 31,500 to perform a major overhaul on the equipment which improved the efficiency of the machine by 20%. Due to this change, Adams believed that the machine should have a total useful life of 12 years and residual value should be increased by $ 4,000. On November 1, 2023, the machine was sold for $ 110,000. The company uses straight line method of depreciation and closes its book on December 31.
Required: 1. Calculate the carrying value of the equipment at December 31, 2021.
2. Calculate depreciation expense for 2022.
3. Prepare the journal entry on November 1, 2023.

MBA, spring 2020

Assignment 7

Topic: Logistic Management:

Your task is simple and exploratory: come up with a max. 1000 words write up that covers following:

Autonomous Truck & Drones: how play important roles in logistic management and that are impacting a particular facet of Logistics Management. Write a maximum 1000 words analysis.

A recent article by an investigative journalist has gone viral; exposing some pretty disturbing labor practices in one of the company’s factories in India. Worse still, this comes on the heels of another high profile documentary exposing the environmental issues in cotton production. The company sources cotton from both India and China. Corporate management is coming under intense international pressure as well as from the US press, public, environmentalists, shareholders and the board of directors. The CEO is looking to you to:

You've been asked to provide examples of country-specific and culturally sensitive initiatives that the company will be taking to remedy the situation and improve the company's image in the eyes of its international stakeholders. (RAA Excellence System Mastery Level Civic & Social Responsibility)

Thomas Company acquired machinery on January 2, 2016, which it depreciated under the straight-line method with an estimated life of fifteen years and no salvage value. On January 1, 2020, Thomas estimated that the remaining life of this machinery was six years with no salvage value. How should this change be accounted for by Thomas?

Group of answer choices

by continuing to depreciate the machinery over the original fifteen year life

as a prior period adjustment

as a change in accounting principle in 2020

by setting future annual depreciation equal to one-sixth of the machinery’s book value on January 1, 2020

Melbourne Ltd acquired 100% of Sydney Ltd on 11 December 2016. On 1 January 2017, Sydney Ltd sold a machine to Melbourne Ltd for $80,000 and recorded a profit of $20,000. Melbourne Ltd will depreciate this machine on a straight-line basis over its useful life of 8 years. You, the group accountant, have just finished preparing the consolidated financial statements for the year ending 30 June 2020. Mrs Jones, CEO of Melbourne Ltd, is not an accountant and she doesn’t understand why you had to make some adjustments before you prepare the consolidated accounts.

Required: Write an email to Mrs Jones summarising why it is essential to adjust for this intra-group transaction before preparing the consolidated financial statements. Note: consolidation entries are not required.