During a weekly meeting the CEO of company made an statement that he heard from a friend that “There is general agreement that, before it can be regarded as useful in satisfying the needs of various user groups, accounting information should satisfy certain criteria.”

You as a chief account of the company is required to explain the to the CEO the key characteristics of Accounting Information with clearly providing example(s) wherever queried for each characteristic.

Strategic Human Resources – Assignment Sheet 2
Case Study:
In the past, the decision criteria for mergers and acquisitions were typically based on considerations such as the strategic fit of the merged organizations, financial criteria, and operational criteria. Mergers and acquisitions were often conducted without much regard for the human resource issues that would be faced when the organizations were joined. As a result, several undesirable effects on the organizations’ human resources commonly occurred. Nonetheless, competitive conditions favor mergers and acquisitions and they remain a frequent occurrence. Examples of mergers among some of the largest companies include the following: Honeywell and Allied Signal, British Petroleum and Amoco, Exxon and Mobil, Lockheed and Martin, Boeing and McDonnell Douglas, SBC and Pacific Telesis, America Online and Time Warner, Burlington Northern and Santa Fe, Union Pacific and Southern Pacific, Daimler-Benz and Chrysler, Ford and Volvo, and Bank of America and Nations Bank.
Layoffs often accompany mergers or acquisitions, particularly if the two organizations are from the same industry. In addition to layoffs related to redundancies, top managers of acquiring firms may terminate some competent employees because they do not fit in with the new culture of the merged organization or because their loyalty to the new management may be suspect. The desire for a good fit with the cultural objectives of the new organization and loyalty are understandable. However, the depletion of the stock of human resources deserves serious consideration, just as with physical resources. Unfortunately, the way that mergers and acquisitions have been carried out has often conveyed a lack of concern for human resources.
A sense of this disregard is revealed in the following observation:
Post combination integration strategies vary in tactics, some resemble to “marriage & love’ but in reality, collaborative mergers are much more hostile in implementing forceful decision and financial takeovers. Yet, as a cursory scan of virtually any newspaper or popular business magazine readily reveals, the simple fact is that the latter are much more common than the former.
The cumulative effects of these developments often cause employee morale and loyalty to decline, and feelings of betrayal may develop. Nonetheless, such adverse consequences are not inevitable. A few companies, such as Cisco Systems, which has made over 50 acquisitions (https://www.cisco.com/c/en/us/about/corporate-strategy-office/acquisitions/acquisitions-list-years.html), are very adept in handling the human resource issues associated with these actions. An example of one of Cisco’s practices is illustrative. At Cisco Systems, no one from an acquired firm is laid off without the personal approval of Cisco’s CEO as well as the CEO of the firm that was acquired.

QUESTIONS:

1. Interview someone who has been through a merger or acquisition. Find out how they felt as an employee. Determine how they and their coworkers were affected. Ask about the effects on productivity, loyalty, and morale. Find out what human resource practices were used and obtain their evaluations of what was helpful or harmful.

Case Study

Mark Miller, CEO of Jefferson General Hospital, has some tough decisions to make in the future. Jefferson General is a stand-alone, not-for-profit hospital that has a long and proud tradition of serving the community in which it operates. It was founded in the midst of the great depression as Jefferson County Hospital and remained under public control for over 50 years. Then, in 1986, after years of losses, the county decided that it could no long afford to operate the hospital, and it subsequently converted the hospital from a public to a private entity.At that time, Mark was brought in as the CEO. After a shaky start, he was able to turn the hospital into a moneymaker. Still, he was very aware of the hospital’s roots, and he made sure that the hospital continued its original mission of providing healthcare services to the needy regardless of their ability to pay.Jefferson General is the smallest of the three hospitals that serve Jefferson and surrounding counties; the other two are St. Vincent’s Hospital and Northwest Regional Medical Center. St. Vincent’s has religious roots, but it is now operated as a not-for-profit, non sectarian hospital. Northwest Regional is owned and operated by a large for-profit chain. The combined capacity of the three hospitals is over 950 beds,but none of the three operates above 60 percent occupancy. Further-more, managed care is starting to take hold locally, and hospital utilization trends indicate that the service area will need only 600 beds as utilization rates are squeezed down.The most logical solution to the county’s changing healthcare market conditions is a merger between two of the three hospitals, and Jefferson General is the hospital most likely to be acquired. Mark has been approached by the CEOs of both St. Vincent’s and Northwest Regional concerning his interest in a merger. Although it was too early to speculate on the exact terms that might result if a merger takes place,past mergers in the region provide some insights into what might hap-pen to Mark should a merger occur.If the hospital were acquired by St. Vincent’s, Mark would prob-ably continue as CEO of the hospital, at about the same compensation as he currently receives. However, he would lose much of his autonomy and authority because he would now have to report to the system CEO,who most likely would be the current CEO of St. Vincent’s. If the hospital were acquired by Northwest Regional, Mark would probably relocate to a CEO position at some other not-for-profit hospital because the for-profit chain usually brings in its own management team when it makes an acquisition. But Mark would not go away empty handed. He would probably receive a large “golden parachute” as a result of his job loss, which might include lucrative stock options, a lump sum payment,and a consulting contract. The aggregate amount of such payments could easily be worth many times his current annual salary.Although the ultimate decision regarding the fate of Jefferson General rests in the hands of its board of trustees, the members of the board were chosen more on the basis of their community ties than on their business acumen. Thus, all those involved are aware that Mark’s recommendations regarding the hospital’s future will carry a great deal of weight in the final decision.

What do you think about the dilemma facing Mark Miller? Does this case present an ethical issue? If so, to which party (or parties)? If you could act as the ultimate authority on this situation, what would you do?

The CEO of Fullbrix Dana Alcar (a 20-year veteran of Supply chain business frameworks) has given all powers to the running of the company to five Senior Vice-Presidents. Fullbrix is a Satellite spare parts provider that has four key clients. The company employs 200 employees and has a management team of 27. With five Senior Vice-Presidents running the company and running it well, the Board of Directors have begun an investigation on what the CEO is doing with her time. Initial investigations found that the CEO was building a broader base to support an alternative structure than the four key clients the company serves. The alternative would be 14 other companies that provide the same revenue as the present 4 companies. The 10-member Board of Directors are 50/50 split on their decision. One group wants to fire the present CEO and replace her with one of the Senior Vice Presidents and the other wants to keep things as they are.

20. Using terms discussed in class, can Dana Alcar’s leadership qualities help her to succeed in the long run?

21. Using terms discussed in class, how do you think it would be possible to convince the 5 Board Members to stop their petition to remove the CEO?

22. What can Dana Alcar do to create a convincing case to the Board of Directors to keep her on?

tudents taking the Graduate Management Admissions Test (GMAT) were asked about their undergraduate major and intent to pursue their MBA as a full-time or part-time student. A summary of their responses follows. Undergraduate Major Business Engineering Other Totals Intended Enrollment Full Time 420 394 75 889 Status Part Time 400 591 44 1,035 Totals 820 985 119 1,924 Develop a joint probability table for these data (to 3 decimals). Undergraduate Major Business Engineering Other Totals Intended Enrollment Full-Time Status Part-Time Totals Use the marginal probabilities of undergraduate major (Business, Engineering, or Other) to comment on which undergraduate major produces the most potential MBA students. If a student intends to attend classes full-time in pursuit of an MBA degree, what is the probability that the student was an undergraduate Engineering major (to 3 decimals)? If a student was an undergraduate Business major, what is the probability that the student intends to attend classes full-time in pursuit of an MBA degree (to 3 decimals)? Let A denote the event that student intends to attend classes full-time in pursuit of an MBA degree, and let B denote the event that the student was an undergraduate Business major. Are events A and B independent?

Q1: On January 1, 2019, Yarmouth Inc. acquired 90% of Covington Co. by paying $477,000 cash. There is no active trading market for Covington stock. Covington Co. reported a Common Stock account balance of $140,000 and Retained Earnings of $280,000 at that date. The fair value of Covington Co. was appraised at $530,000.    The total annual amortization was $11,000 as a result of this transaction. The subsidiary earned $198,000 in 2019 and $226,000 in 2020 with dividend payments of $42,000 each year. Without regard for this investment, Yarmouth had income of $308,000 in 2019 and $364,000 in 2020 (these numbers do not have investment income).

Prepare a proper presentation of consolidated net income and its allocation (Consolidated net income before allocation, NCI share of NI from Covington, and Consolidated Net income to Yarmouth) for 2020.

What is the noncontrolling interest balance as of December 31, 2020?

What is the investment balance as of December 31, 2020?

During January 2019, Mindy, Inc. acquired 30% of the outstanding common stock of Milton Co. for $1,500,000. This investment gave Mindy the ability to exercise significant influence over Milton. Milton’s assets on that date were recorded at $6,400,000 with liabilities of $3,000,000. Any excess of cost over book value of Mindy’ investment was attributed to unrecorded patents having a remaining useful life of ten years.

In 2019, Milton reported net income of $600,000. For 2020, Milton reported net income of $750,000. Dividends of $200,000 were paid in each of these two years. What was the reported balance of Mindy’ Investment in Wilson Co. at December 31, 2020 and how much was the reported investment income in Wilson for 2020?

On February 6, 2013, Danial Farris filed a claim against International Paper Company (IP), alleging that IP failed to to pay vested vacation wages upon termination.

On May 30, 2014, IP field a third-party claim against Yeghia Bekiarian, a former managerial employee. IP argued that Bekiarian was responsible for the liability for vacation wages by not only promising Farris that he would be entitled to paid vacation, but then instructing human resources employees not to provide paid vacation for IP’s sales representatives, of which Farris was a member.

Bekiarian field an answer asserting that since the claim against IP arose from Bekiarian’s actions as an employee of IP, IP was required to reimburse and indemnify him.

[Daniel Farris v. International Paper Company, et ai., 2014 U.S. Dist. LEXIS 143607.]

Do you think Bekiarian should be indemnified for his actions which led to Farris’s claims? Keep in mind that Farris did not include Bekiarian in his action against IP. How did the court decide on the third-party claim between IP and Bekiarian? What was the court’s reasoning?

For the next three years MBA Inc. is expected to pay​ $1.50, $2.00 and​ $2.50 in dividends and after that dividends will grow at the rate of​ 4% in perpetuity. The required rate of return is​ 12%. Assuming the first dividend will be paid in exactly one​ year, the intrinsic value of MBA shares is

A. $28.96

B. $38.50

C. $25.37

D. $27.85

EXERCISE 4‐1

Parent Company Entries, Liquidating Dividend LO 2

Percy Company purchased 80% of the outstanding voting shares of Song Company at the beginning of 2019 for $387,000. At the time of purchase, Song Company's total stockholders' equity amounted to $475,000. Income and dividend distributions for Song Company from 2019 through 2021 are as follows:

Required:

Prepare journal entries on the books of Percy Company from the date of purchase through 2021 to account for its investment in Song Company under each of the following assumptions:

1. Percy Company uses the cost method to record its investment.
2. Percy Company uses the partial equity method to record its investment.
3. Percy Company uses the complete equity method to record its investment. The difference between book value of equity acquired and the value implied by the purchase price was attributed solely to an excess of market over book values of depreciable assets, with a remaining life of 10 years.