Question 1

a) Differentiate between the 'definition of assets' and the criteria for recognition of assets' provided in the conceptual framework.

b) If an asset is expensed in one financial year because future economic benefits were not deemed to be 'probable', can the same asset be reinstated in future periods if the benefits are subsequently assessed as probable? In this respect, does the ability to reinstate assets apply to all assets? Briefly explain.

c) AASB 101 stipulates a number of disclosures that many reporting entities are required to make. What specific disclosures are required by AASB 101 in relation to assets?

d) Is depreciation an allocation process or a valuation process? Provide reasons for your answer

e) In an article that appeared in The Australian Financial Review on 26 August 2011 ('Apple could easily flounder without its founder' by Mark Ritson), it was reported: The news that Steve Jobs has resigned from Apple and will be replaced as CEO by Tim Cook made global headlines yesterday What has followed since has been a frenzied discussion of what the loss of Jobs will mean for new product development timelines, share price issues and corporate culture. Apple's share price fell 5 per cent on the news of the resignation as questions were raised about Apple's prospects without its creative guru at the helm. But the real question for Apple as it enters its post-Jobs period is how well the brand will survive without the founder. Required The fact that the share prices fell following the departure of Steve Jobs is consistent with the view that Jobs was an 'asset' to the company. How do you think this 'asset' would have been disclosed in the financial statements of Apple?

f) What is a contingent asset? When should a contingent asset be disclosed within the notes to the financial statements? If something is initially disclosed as a contingent asset, when can it subsequently be recognised as an asset within the financial statements? Briefly explain.

Please don't copy other CHEGG ANSWERS because they are not answered according to the question. please answer according to question and marks

1. Barriers to entry enhance the market power of many business organizations because they make it difficult for would-be competing firms to enter into an established market. Describe each of the government barriers to entry set forth below:

     a. Patents

     b. Regulations

     c. Business Taxes


1A. What are some basic economic pros and cons of government regulation?

2. With your MBA in hand from Indiana Tech University and a few years of experience under your belt, you have recently been hired to serve as the business manager of a fairly large company. The company faces very tough competition from one primary competitor, and so you are tasked with recommending a strategy to try to eliminate this competitor. Reviewing your coursework in MBA 5120, your options come down to either limit pricing or predatory pricing. Which pricing method will you recommend, and explain why?

(Select only one pricing strategy; not both strategies or combinations of both strategies.)  

A. Is the pricing method you chose guaranteed to work? Explain why or why not.

1. Barriers to entry enhance the market power of many business organizations because they make it difficult for would-be competing firms to enter into an established market. Describe each of the government barriers to entry set forth below:

     a. Patents

     b. Regulations

     c. Business Taxes


1A. What are some basic economic pros and cons of government regulation?

2. With your MBA in hand from Indiana Tech University and a few years of experience under your belt, you have recently been hired to serve as the business manager of a fairly large company. The company faces very tough competition from one primary competitor, and so you are tasked with recommending a strategy to try to eliminate this competitor. Reviewing your coursework in MBA 5120, your options come down to either limit pricing or predatory pricing.  Which pricing method will you recommend, and explain why?

(Select only one pricing strategy; not both strategies or combinations of both strategies.)  

A. Is the pricing method you chose guaranteed to work? Explain why or why not.

The CEO of Dynamic Manufacturing was at a conference and talked to a supplier about a new piece of equipment for its production process that she believes will produce ongoing cost savings. As the Operations Manager, your CEO has asked for your perspective on whether or not to purchase the machinery. After talking to the supplier and meeting with your Engineers and Financial Analysts, you’ve gathered the following pieces of data: • Cost of Machine: $140,000 • Estimated Annual After Tax Cash Flow Savings: $60,000 (which may or may not grow) • Estimated machinery life: 3-5 years (after which there will be zero value for the equipment and no further cost savings) • You seem to recall that Dynamic’s Finance organization recommends either a 10% or a 15% discount rate for all Cost Savings Projects From your JWMI MBA, you know that you need to understand the project financials to ensure that this investment will be economically attractive to Dynamic Manufacturing’s shareholders. Calculate the Nominal Payback, the Discounted Payback, the Net Present Value and the IRR for each scenario, assuming: A. Ann (A) recommends using the base assumptions above: 3 year project life, flat annual savings, 10% discount rate. B. Bob (B) recommends savings that grow each year: 3 year project life, 10% discount rate and a 10% compounded annual savings growth in years 2 & 3. In other words, instead of assuming savings stay flat, assume that they will grow by 10% in year 2, and then grow another 10% over year 3 in year. C. Cassidy (C) believes we use a higher Discount Rate because of the risk of this type of project: 3 year project life, flat annual savings, 15% discount rate. D. David (D) is convinced the machine will last longer than 3 years. He recommends using a 5 Year Equipment Life: 5 year project and savings life, flat annual savings, 10% discount rate. In other words, assume that the machine will last 2 more years and deliver 2 more years of savings. In an MS Word document, in paragraph form, respond to the following questions: 1) Which person’s scenario would you present to management and why? From a strictly financial (numbers) perspective, would you recommend this purchase to management? 2) In your opinion, which person’s scenario is based on the most aggressive assumptions? If you were to select this scenario as the basis for your proposal, how would you justify the more aggressive assumptions? 3) In SIMPLE English (as in talking to a non-Finance and non-MBA person), explain why there is value to management in running all 4 of these scenarios. 4) Beyond financial measures, what other factors would you want to consider, before making a recommendation to management? 5) If you were the CEO, would you approve this proposal? Why or why not?

Joeseph Gallo, the founder of the famous wine company that bears his name, said that when he first started selling wine right after Prohibition (laws outlawing the sale of alcohol), he poured two glasses of wine from the same bottle and put a price of 10 cents a bottle on one and 5 cents a bottle on the other. He let people test both and asked them which they wanted. Most wanted the 10-cent bottle, even though they were the same wine.

• What does this tell us about people?
• Can you think of other areas where that may be the case?
• What does this suggest about pricing?

Joseph Gallo, the founder of the famous wine company that bears his name, said that when he first started selling wine right after Prohibition (laws outlawing the sale of alcohol), he poured two glasses of wine from the same bottle and put a price of 10 cents a bottle on one and 5 cents a bottle on the other. He let people test both and asked them what they wanted. Most wanted the 10-cent bottle, even though they were the same wine.

• What does this tell us about people?
• Can you think of other areas where that may be the case?
• What does this suggest about pricing?

Joseph Gallo, the founder of the famous wine company that bears his name, said that when he first started selling wine right after Prohibition (laws outlawing the sale of alcohol), he poured two glasses of wine from the same bottle and put a price of 10 cents a bottle on one and 5 cents a bottle on the other. He let people test both and asked them which they wanted. Most wanted the 10-cent bottle, even though they were the same wine.

1. What does this tell us about people?
2. Can you think of other areas where that may be the case?
3. What does this suggest about pricing?

SolarTubeGen is a start-up company in the renewable energy sector. The founder of SolarTubeGen, Fritz Herzberg, has developed cutting-edge technology to convert the energy in the sun’s rays to electricity via a novel system of mirrors designed to focus the sun’s rays onto tubes containing a patented type of gas, which then heats and expands to drive turbines. Ramirez & Walker LLP has won the contract for the first audit of SolarTubeGen on the basis of its expertise in the energy sector. However, the lead partner, Mark Ramirez, recognizes the success of the audit is dependent on the correct assessment of the technology being used at SolarTubeGen. Mark specified in the successful audit bid documents that the audit will use an external specialist to help with valuation of the company’s assets.

Fritz Herzberg is very protective of his company’s intellectual property and is resistant to Mark’s first suggested specialist, Manfred Hamburg. Fritz believes that Manfred Hamburg is hostile toward him because they clashed when they both worked for a German company making photovoltaic cells in the 1990s. Fritz has suggested another specialist, Lily Beilherz, with whom he has had good working relations over the last 20 years.

Required

1. a. Advise Mark Ramirez about the choice of a specialist for the audit of SolarTubeGen. What must he consider when making his choice? Refer to AU-C 620 Using the Work of an Auditor’s Specialist to support your answer. (ASB standards can be accessed at www.aicpa.org/research/standards.)
2. b. SolarTubeGen takes over another renewable energy company during the second-year audit. The new subsidiary is based in another country and has previously been audited by a local audit firm. Evaluate how Mark should handle the new audit responsibilities brought about by the client’s ­expansion.

Incorporated by the founder of the Tata Group, Jamsetji Tata, the company opened its first hotel,
the Taj Mahal Palace, in Mumbai in 1903.
For over a century, The Taj Mahal Palace, Mumbai, has remained an iconic flagship and has set a
benchmark for fine living with exquisite refinement, inventiveness and warmth. Indian Hotels
Company Limited (IHCL) has a portfolio of 170 hotels, including 25 under development, in over
eighty locations in twelve countries spread across four continents.
IHCL is amongst South Asia’s largest hospitality companies by market capitalization and represents
a global hallmark of quality in hospitality.
The Tata Group owns hotels in India and all over the world and in order to effectively control
its hotels systems the management have put the following in place:
• Hotel room key cards
• Security alarm systems
• Inventory control
• Hotel management systems
• Financial controls
According to your understanding of organisational control explain what is meant by the
following:
a) Planning, organising, coordination and controlling [25 marks]
b) Explain how the above control systems can be used to monitor, measure, and evaluate
the Tata Group Hotel Systems? [25 marks]
c) Give five purposes of control systems used by TATA Hotels and how staff are made
to contribute to their success? [25 marks]
d) Describe the steps in organisational control and explain why corrective action is
important? [15 marks]
e) Give three financial ratios which can be used in Financial controls and their use? (10
marks) [100 marks]