How does being family-owned (as compared to being publicly owned) affect a firm’s strategic management?

4. Suppose your company has opened a futures position in the Brazilian Real futures contract traded on the CME Group. One contract is worth 100,000 Brazilian Reais, and the price quote is given as # USD per 1 Brazilian Real. Suppose today’s futures price for the Brazilian Real futures contract that expires in October is ‘0.1883’. If the daily changes in the settlement prices over the next 5 days turn out to be 0.0015, 0.0010, -0.0005, 0.0020, and -0.0025 (quoted on same basis as the price--#US$ per 1 Brazilian Real), what would be the total marking-to-market change in the value of the contract over the 5 days? If your company was long Brazilian Real, would it have gained or lost from this marking-to-market change in value (assume 1 contract)?

A publically traded company more than doubled its EPS by changing depreciation methods. In justifying the change, management supported the change as follows: In comparison to direct competitors, the previous depreciation method was more conservative and thus had a negative impact on earnings.

Although difficult to prove, there is considerable evidence that accounting changes are made for reasons other than improved financial reporting. GAAP are flexible in the initial selection of accounting methods and in making subsequent changes. However, the accounting standards specifically require that only changes to preferable accounting methods be made.

Comment on the appropriateness of making accounting changes to fulfill financial reporting objectives, Consisder relevant ethical issues in your response. Who are the stakeholders? Does this violate GAAP? What is the ethical issue? What is an alternative course of action?

A publically traded company more than doubled its EPS by changing depreciation methods. In justifying the change, management supported the change as follows: In comparison to direct competitors, the previous depreciation method was more conservative and thus had a negative impact on earnings.

Although difficult to prove, there is considerable evidence that accounting changes are made for reasons other than improved financial reporting. GAAP are flexible in the initial selection of accounting methods and in making subsequent changes. However, the accounting standards specifically require that only changes to preferable accounting methods be made.

Does this violate GAAP? Is this ethical? What would be an alternative course of action?

1.When Coca-Cola traded their soft drink for wine in Slovenia, the company was engaged in:

A.Exchange control.

B.Countertrade.

C.Tariff trading.

D.Quota trade.

E.Global bargaining

2. In the global marketplace. Production invention

A. is the most inexpensive solution to production introduction

B. is the most localized solution to production introduction

C. is the most global solution to the production introduction

D. is the least commonly enjoyed option to production introduction

E. is the most commonly employed option to the production introduction

3.Psychographics is the segmentation method that delves into how consumers

A. adjust to demographic changes

B.allocate scarce incomes to a variety of goods and services

C.describe themselves

d.value their livelihoods.

E. all of these

4.the type of global entry expansions that has the greatest risk and yet generally the highest profit potential is

A. a joint venture with a foreign partner

B. a joint venture with a local partner

C. a direct exporting by the firm without an export agent

D.a sales and marketing office in the foreign market

E. franchising but no licensing

F. a direct investment in a Wholly -owend Foreign Enterprise.

5.The wheel of retailing means

A. a retail format or individual competitior should always be scanning the environment for a new,cheaper retailer looming on the horizen that may pre-empt its current success.

B.bricks and mortar stores are endangered with the advent of the online store

C. this is a life cycle to bricks-and-mortar retailer formats that is very predictable

D.that fashions recycle and prices assortment over several years may repeat

E.when a retailer first enters the market, prices will be very competitive, then they will decline just as any other product or service experiences as it moves through PLC.

Assume you are the CEO of a publically traded company. Your chief financial officer (CFO) informs you that your company will not be able to meet earnings per share targets for the current year. In that event your stock price will likely decline. The CFO proposes reducing the quarterly provision for uncollectible amounts (bad debt expense) to increase your EPS to the level analysts expect. This will result in an allowance that is less than it should be. The CFO explains that outsiders cannot easily detect a reduction in this allowance and that the allowance can be increased next year. The benefit is that your shareholders will not experience a decline in stock price.

1. Identify the parties likely to be affected by this proposed action.

2. How will reducing the provision for uncollectible accounts affect the income statement and the balance sheet?

3. How will reducing the provision for uncollectible accounts in the current period affect the income statement and the balance sheet in a future period?

4. What argument might the CFO use to convince the company's internal auditors that this action is justified?

5. How might an analyst detect this earnings management activity?

6. How might this action affect the moral compass of your company? What repercussions might this action have?

1.MACRS with Trade-In: In May 2011, your company traded in a computer and peripheral equipment, used in its business, that had a BV at that time of $25,000. A new, faster computer
system having a fair market value of $300,000 was acquired. Because the vendor accepted
the older computer as a trade-in, a deal was agreed to whereby your company

would pay $225,000 cash for the new computer system.

a. What is the property class life and recovery year for the computer system?
b. Using MACRS GDS rates, how much depreciation can be deducted each year based on this class life?

Suneview Ltd., a listed public company with actively traded securities, issued debentures with a total term of fifteen years and a face value of $1,000 to the public exactly five years ago for $1,000 each. The debentures were issued at an annual coupon interest rate of 12% p.a. with payments annually in arrears. Interest rates for debentures of a similar risk to those of Suneview Ltd. are currently (five years after originally being issued) being traded at a premium of 3% above the government bond rate. A new series of government bonds (Series XXIV) were issued today for a ten-year term at an annual coupon interest rate of 5% p.a. (with payments annually in arrears), a face / par value of $1,000 and a current yield to bondholders of 7% p.a.

Required:

a) Given the information provided above, how much would you pay today for Suneview Ltd. debentures? Show all relevant calculations and briefly explain the basis for the change in price, if any, from the original issue price of $1,000 using appropriate finance terminology / reasoning.

b) Assume that a further three years has elapsed since the calculations undertaken in part a) of this question (a total of eight years after the original debenture issue), and the premium on Suneview Ltd. debentures has increased to 5% above the government bond rate. No further government bonds have been issued since Series XXIV bonds which closed trading today at a yield of 9% p.a.

i) How much would you now (a total of eight years after the original debenture issue) pay for Suneview Ltd. debentures?

ii) Briefly discuss the possible ‘real-world’ factors that may have caused the differences in the premium on Suneview Ltd. debentures as compared to the government bond rate (from 3% to 5%). Note: This part of the question has a different focus than the response required in part a) of this question.

Earnings Management

M. K. Gallant is president of Kranbrack Corporation, a company whose stock is traded on a national exchange. In a meeting with investment analysts at the beginning of the year, Gallant had predicted that the company’s earnings would grow by 20% this year. Unfortunately, sales have been less than expected for the year, and Gallant concluded within two weeks of the end of the fiscal year that it would be impossible to report an increase in earnings as large as predicted unless some drastic action was taken. Accordingly, Gallant has ordered that wherever possible, expenditures should be postponed to the new year—including canceling or postponing orders with suppliers, delaying planned maintenance and training, and cutting back on end-of-year advertising and travel. Additionally, Gallant ordered the company’s controller to carefully scrutinize all costs that are currently classified as period costs and reclassify as many as possible as product costs. The company is expected to have substantial inventories at the end of the year.

Using the above scenario, your textbook, and a minimum of one outside source, address the following questions: Why would reclassifying period costs as product costs increase this period’s reported earnings? Do you believe Gallant’s actions are ethical? Why or why not?

Riverbed Enterprises is a large Canadian company traded on the Toronto Stock Exchange. Riverbed purchased two copyrights during 2020. The first copyright was purchased on February 1 for $21,700 and was expected to have a useful life until the end of December, 2022. The second copyright was purchased on July 1 for $126,000 and was expected to have an indefinite useful life. Riverbed's fiscal year-end was December 31.

On July 1, 2021, Riverbed paid $5,040 in legal fees to successfully defend the first copyright in court. On September 1, 2021, Riverbed determined that the second copyright would no longer have an indefinite useful life, and in fact would have a useful life of another 7 years, beginning September 1, 2021. On April 1, 2022, Riverbed sold the second copyright for $133,700.

Prepare the journal entries on the books of Riverbed to record the above transactions. (Hint: don’t forget the year-end amortization entries).