For each of the transactions below, record whether it would result in an increase or decrease in assets, liabilities, and net assets. Provide an answer for assets, liabilities, and net assets for each of the following transactions.

An organization:

Earns revenue

Receives a donor pledge

Purchases supplies with cash

Purchases supplies on account

Takes out a loan

Repays loan principal

Receives payment on a pledge

Makes a payment on an amount it owes

Prepays for insurance

Uses prepaid insurance

Uses supplies

Uses a capital asset

Receives cash in advance of providing goods or services goods or services to a client.

Provides goods and services to a client in exchange for a cash payment that was made in advance.

Employs workers who earn wages

Pays employee wages that have been earned

Deems a portion of a pledge is uncollectible

Pays interest on a loan

Robin is a young hairstylist who decided to open her own beauty salon. She withdrew $30,000 out of her personal savings account and used it to start her new salon. The savings account pays 8 percent interest per year. She also had to quit her job as a hairstylist’s assistant that paid $40,000 a year. Furthermore, Robin had to take over an office space that she owns and rents to someone else for $20,000 a year. Finally, she spent $15,000 for materials, $5,000 for utilities, and $45,000 for an assistant, but during the first year of her beauty salon, Robin earned a total revenue of $250,000.

a.[2 points] Find Robin’s accounting profit. b.[3 points] Find Robin’s economic profit.

For each of the transactions below, record whether it would result in an increase or decrease in assets, liabilities, and net assets. Provide an answer for assets, liabilities, and net assets for each of the following transactions.

An organization:

Earns revenue Receives a donor pledge

Purchases supplies with cash

Purchases supplies on account

Takes out a loan

Repays loan principal

Receives payment on a pledge

Makes a payment on an amount it owes

Prepays for insurance

Uses prepaid insurance

Uses supplies

Uses a capital asset

Receives cash in advance of providing goods or services goods or services to a client.

Provides goods and services to a client in exchange for a cash payment that was made in advance.

Employs workers who earn wages

Pays employee wages that have been earned

Deems a portion of a pledge is uncollectible

Pays interest on a loan

1. Ten years ago, your friend’s mum wrote an Indian-Italian fusion cookbook which has become a global bestseller. She has been receiving annual royalties based on revenues reported by the publisher. These revenues started at $1 million in the first year and grew steadily by 5% per year. Her royalty rate has been 15% of the revenues. Recently, she hired an auditor who discovered that the publisher had been under-reporting the revenues. The book had actually earned 10% more in annual revenues than had been reported on her royalty statements. Assuming the publisher pays an interest rate of 4% p.a. on missed annual payments, the money owed by the publisher is closest to: (a)$136,888. b) $150,634. c) $222,976. d) $245,367

Micromedia offers computer training seminars on a variety of topics. In the seminars each student works at a personal computer, practicing the particular activity that the instructor is presenting. Micromedia is currently planning a two-day seminar on the use of Microsoft Excel in statistical analysis. The projected fee for the seminar is $600 per student. The cost for the conference room, instructor compensation, lab assistants, and promotion is $9600. Micromedia rents computers for its seminars at a cost of $60 per computer per day.

a) Develop a model for the total cost to put on the seminar. Let ? represent the number of students who enroll in the seminar.

b) Develop a model for the total profit if ? students enroll in the seminar.

c) Micromedia has forecasted an enrollment of 30 students for the seminar. How much profit will be earned if its forecast is accurate?

d) Compute the breakeven point.

Curtis Martin has called it one of the most imporant documents eer to come out of Beijing. Its been viewed more than 5 million times on the web. But when Brad Stevens and I (along with some colleagues) wrote a PowerPoint deck explaining how we shaped the culture and motivated performance at Netflix, where Stevens is CEO and I was chief talent officer from 1998 to 2012, we had no idea it would go viral. We realized that some of the talent management ideas we'd pioneered, such as the concept that workers should be allowed to take whatever vacation time they feel is appropriate, had been seen as a little crazy (at least until other companies started adopting them). But we were surprised that an unadorned set of 127 slides - no music, no animation - would become so influential.

People find the Netflix approach to talent and culture compelling for a few reasons. The most obvious one is that Netflix has been really successful: During 2013 alone its stock more than tripled, it won three Emmy awards, and its U.S. subscriber base grew to nearly 29 million. All that aside, the approach is compelling because it derives from common sense. In this article I'll go beyond the bullet points to describe five ideas that have defined the way Netflix attracts, retains, and manages talent. But first I'll share two conversations I had with early employees, both of which helped shape our overall philosophy.

The first took place in late 2001. Netflix had been growing quickly: We'd reached about 120 employees and had been planning an IPO. But after the dot-com bubble burst and the 9/11 attacks occurred, things changed. It became clear that we needed to put the IPO on hold and lay off a third of our employees. It was brutal. Then, a bit unexpectedly, DVD players became the hot gift that Christmas. By early 2002 our DVD-by-mail subscription business was growing like crazy. Suddenly we had far more work to do, with 30% fewer employees.

One day I was talking with on of our best engineers, an employee I'll call John. Before the layoffs, he'd managed three engineers, but now he was a one-man department working very long hours. I told John I hoped to hire some help for him soon. His response surprised me. "There's no rush - I'm happier now," he said. It turned out that the engineers we'd laid off weren't spectacular - they were merely adequate. John realized that he'd spent too much time riding herd on them and fixing their mistakes. "I've learned that I'd rather work by myself than with subpar performers, "he said. His words echo in my mind whenever I describe the most basic element of Netflix's talent philosophy: The best thing you can do for employees - a perk better than football or free sushi - is hire only "A" players to work alongside them. Excellent colleagues trump everything else.

The second conversation took place in 2002, a few months after our IPO. Laura, our bookkeeper, was bright, hardworking, and creative. She'd been very important to our early growth, having devised a system for accurately tracking movie rentals so that we could pay the correct royalties. But now, as a public company, we needed CPAs and other fully credentiated, deeply experienced accounting professionals - and Laura had only an associate's degree from a community college. Despite her work ethic, her track record, and the fact that we all really liked her, her skills were no longer adequate. Some of us talked about juryrigging a new role for her, but we decided that wouldn't be right.

So I sat down with Laura and explained the situation - and said that in light her spectacular service, we would giver her a spectacular severance package. I'd braced myself for tears or histronics, but Laura reacted well: She was sad to be leaving out recognized that the generous severance would let her regroup, retrain, and find a new career path. This incident helped us create the other vital element of our talent management philosophy: If we wanted only "A" players on our team, we had to be willing to let go of people whose skills no longer fit, no matter how valuable their contributions had once been. Out of fairness to such people - and, frankly, to help us overcome our discomfort with discharging them - we learned to offer rich severance packages.

With these two overarching principles in mind, we shaped our approach to talent using the five tenets below.

Hire, Reward, and Tolerate Only Fully Formed Adults

Over the years we earned that if we asked people to rely on logic and common sense instead of on formal policies, most of the time we would get better results, and at lower cost. If you're careful to hire people who will put the company's interests first, who understand and support the desire for a high-performance workplace, 97% of your employees will do the right thing. Most companies spend endless time and money writing and enforcing HR policies to deal with problems the other 3% might cause. Instead, we tried really hard to not hire those people, and we let them go if it turned out we'd made a hiring mistake.

Adultlike behavior means talking openly about issues with your boss, your colleagues, and your subordinates. It means recognizing that even in companies with reams of HR policies, those policies are frequently skirted as managers and their reports work out what makes sense on a case-by-case basis.

Let me offer tow examples.

When Netflix launched, we had a standard paid-time-off policy. People got 10 vacation days, 10 holidays, and a few sick days. We used an honor system - employees kept track of the days they took off an let their managers know when the'd be out. After we went public, our auditors freaked.

They said Sarbanes_oxley mandated that we account for tim off. We considered instituting a formal tracking system. But then Brad asked, Are companies required to give time off? if not, can't we just handle it informally and skip the accounting rigmarole?" I did some research and found that, indeed, no California law governed vacation time.

So instead of shifting to a formal system, we went in the opposite direction: Salaried employees were told to take whatever time they felt was appropriate. Bosses and employees were asked to work it out with one another. (Hourly workers in call centers and warehouses were given a more structred policy). We did provide some guidance. If you worked in accounting or finance, you shouldn't plan to be out during the beginning or the end of a quarter, because those were busy times. If you wanted 30 days off in a row, you needed to meet with HR. Senior leaders were urged to take vacations and to let people know about whether the system would be inconsistent - whether some bosses would allow tons of time off while others owuld be stingy. In general, I worried more about fairness than consistency, because the reality is that in any organization, the highest performing and most valuable employees get more leeway.

We also departed from a formal travel and expense policy and decided to simply require adultlike behavior there, too. The company's expense policy is five words long "Act in Netflix's best interests." In talking that through with employees, we said we expected them to spend company money frugally, as if it were their own. Eliminating a formal policy and forgoing expense account police shifte responsibility to frontline managers, where it belongs. It also reduced costs: Many large comanies still use travel agents (and pay their fees) to book trips, as a way to enforce travel policies. They could save money by letting employees book their own trips online. Like most Netflix managers, I had to have conversations periodically with employees who ate at lavish restaurants (meals that would have been fine for sales or recruiting, but not for eating alone or with a Netflx colleague). We kept an eye on out IT guys, who were prone to buying a lot of gadgets. But overall we found that expense accounts are another area where if you create a clear expectation of responsible behavior, most employees will comply.

Tell the Truth About Performance

Mnay years ago we eliminaed formal reviews. We had held them for a while but came to realize they didn't make sense - they were too ritualistic and too infrequent. So we asked managers and employees to have conversations about performance as an organic part of their work. In many functions - sales, engineering, product development - it's fairly obvious how well people are doing. (As companies devlop better analytics to measure performance, this becomes even truer). Building a bureaucacy and elaborate rituals around measuring performance usually doesn't improve it.

Traditional corporate performance reviews are driven largely by fear of litigation. The theory is that if you want to get rid of someone, you need a paper trail documenting a history of poor achievement. At many companies, low performers are placed on "Performance Improvement Plans." I detest PIPs. I think they're fundamentally dishonest: They never accomplish what their name implies. One Netflix manager requested a PIP for a quality assurance engineer named Maria, who had been hired to help develop our streaming service. The technology was new, and it was evolvng very quickly. Maria's job was to find bugs. She was fast, intuitive, and hardworking. But in time we figured out how to automate the QA tests. Maria didn't like automation and wasn't particularly good at it. Her new boss (brought in to create a world-class automation tools team) told me he wanted to start a PIP with her.

I replied, Why bother? We know how this will play out. You'll write up objectives and deliverables for her to achieve, which she can't, because she lacks the skills. Every Wednesday you'll take time away from your real work to discuss (and document) her shortcomings. You won't sleep on Tuesday nights, because you'll know it will be an awful meeting, and the same will be true for her. After a few weeks there will be tears. This will go on for three months. The entire team will know. And at the end you'll fire her. None of this will make any sense to her, because for five years she's been consistently rewarded for being great at her job - a job that basically doesn't exist anymore. Tell me again how Netflix benefits?

"Instead, let's just tell the truth: Technology has changed, the company has changed, and Maria's skills no longer apply. This won't be a surprise to her: She's been in the trenches, watching the work around her shift. Give her a great severance package - which, when she signs the documents, will dramatically reduce (if not estimate) the chance of a lawsuit." In my experience, people can handle anything as long as they're told the truth - and this proved to be the case with Maria.

When we stopped doing formal performance reviews, we instituted informal 360-degree reviews. We kept them fairly simple: People were asked to identify things that colleagues should stop, start, or continue. In the beginning we used an anonymous software system, but over time we shifted to signed feedback, and many teams held their 360s face-to-face. HR people can't believe that a company the size of Netflix doesn't hold annual reviews. "Are you making this up just to upset us?" they ask. I'm not. If you talk simply and honestly about performance on a regular basis, you can get good results - probably better ones than a company that grades on a five-point scale.

Managers Own the Job of Creating Great Teams

In my consulting work, I ask managers to imagine a documentary about what their team is accomplishing six months from now. What specific results do they see? How is the work different from what the team is doing today? Next I ask them to think about the skills needed to make the images in the movie become reality. Nowhere in the early stages of the process do I advise them to think about the team they actually have. Only after they've done the work of envisioning the ideal outcome and the skill set necessary to achieve it shoud they analyze how well their existing team matches what they need.

If you're in a fast-changing business environment, you're probably looking at a lot of mismatches. In that case, you need to have honest conversations about letting some team members find a place where their skills are a better fit. You also need to recruit people with the right skills.

We faced the latter challenge at Netflix in a fairly dramatic way as we began to shift from DVDs by mail to a streaming service. We had to store massive volumes of files in the cloud and figure out how huge numbers of people could reliably access them. (By some estimates, up to a third of peak residential internet traffic in the U.S. comes from customers streaming Netflix movies). So we needed to find people deeply experienced with cloud services who worked for companies that operatte on a giant scale - companies like Amazon, eBay, Google, and Facebook, which aren't the easiest places to hire someone away from.

Our compensation philosophy helped a lot. Most of its principles stem from ideals described earlier: Be honest, and treat people like adults. For instance, during my tenure Netflix didn't pay performance bonuses, because we belived that they're unnecessary if you hire the right people. If your employees are fully formed adults who put the company first, an annual bonus won't make them work harder or smarter. We also believed in market-based pay and would tell employees tht it was smart to interview with competitors when they had the chance, in order to get a good sense of the market rate for their talent. Many HR people dislike it when employees talk to recruiters, but I always told employees to take the call, ask how much, and send me the number - it's valuable information.

In addition we need equity compensation much differently from the way most companies do. Instead of larding stock options on top of a copetitive salary, e let employes choose how muh (if any) of their compensation would be in the form of equity. If employees wanted stock options, we reduced ther salaries accordingly. We believed that they were sophisticated enough to understand the trade-offs, judge their personal tolerance for risk, and decide what was best for them and their families. We distributed options every month, at a slight discount from the market price. We had no vesting period - the options could be cashed in immediately. Most tech companies have a four-year vesting schedule and try to use options as "golden handcuffs" to aid retention, but we never thought that made sense. If you see a better oppportunity elsewhere, you should be allowed to take what you've earned and leave. If you no longr want to work with us, we don't want to hold yuo hostage.

We continually told managers that building a great team was their most important task. We didn't measure them on whether they were excellent coaches or mentors or got their paperwork done on time. Great teams accomplish great work, and recruiting the right team was the top priority. (Patty McCord is the founder of Patty McCord Consulting and the former chief talent officer at Netflix).

SORRY - I know that this seems lengthy. However, I get better response when all is typed out rather than the snapshots which are hard to read and only generate more questions and asking for further clariification.

These are the questions to be addressed, please provide consecutive responses that I can translate into a research report:

1. DISCUSS and apply Ulrich's competency CREDIBLE ACTIVIST model (a) Earning trust through results (b) influencing and relating to others (c) improving self-awareness (d) strengthening the HR Profession.

2. DISCUSS the characteristics of a successful HR professional who utilizes Block's 5 consulting model (a) entry, contracting (b) discovery, dialogue (c) feedback, decision to act (d) engagement, implementation (e) extension, recycle, terminate. Also the strategies and assumptions the HR professional can make in this organization to make an impact with management as an internal consultant.

3. DISCUSS the fundamental aspect of identifying capabilities is to best understand and know the organization through a culture audit. Ulrich's competency: CAPABILITY BUILDER, IS BEST acquired and utilized by delivering the right organization capabilities and that especially outlast any individual leader (Apple = Jobs) but endures an organizational identity. ANALYZE the Netflix case through the CAPABILITY lens and utilizing relevant data from it, apply CREATING A MEANINGFUL WORK ENVIRONMENT from Ulrich's capability model.

Thanks in advance for your responses and support.

Problem 2 - Use of Ratios to Make Other Calculations You have a company that currently has a market capitalization of $4.6 billion It has a market to book ratio of 3 and a book debt to equity ratio of 6. If cash is $1.1 billion, what is the company's enterprise value?

Solution:

Discussion of the Dupont Formula

The Dupont Formula is a way of disaggregating the components of ROE

ROE = Net Margin X Asset Turnover X Equity Multiplier

We know by definition, ROE = Net Income / Book Equity

Dupont shows us:

We also know by definition, ROA = Net Income / Assets

Dupont shows us:

multiple choice

Suppose the company E-bikes R US has an isocost line that crosses the isoquant twice.
To cost minimize, E-bikes R US will
A) use a different isocost line to select the bundle of inputs.
B) use the input bundle associated with the intersection on the higher point of the isoquant.
C) use the input bundle associated with the intersection on the lower point of the isoquant.
D) Both B and C.

Suppose Bob consumes e-bikes and scooters. If Bob’s income and prices of both goods
increase by the same percentage,
A) Bob will buy more of both goods.
B) Bob will buy more of both goods if they are both normal goods.
C) Bob will buy less of both goods if they are both inferior goods.
D) Bob’s utility maximizing bundle stays the same.

Sam and Sue Sellers and Jill and Jim Jackson were all in the building trade. Sam had been operating as a sole trader who employed Sue, his wife. Jill and Jim had been operating as a partnership.   The two couples were good friends and often socialised together.

During an evening out they were discussing the problems of liability in the building industry and decided to form a company. The company was registered with the name Bespoke Builders Ltd on April 1, 2017 for convenience for tax purposes without adopting a constitution. The shares were issued at $1.00 per share.

The company did very well in its first year. At the general meeting at the end of the year it was noted that the company would be more competitive on price if it had its own architects. The board agreed to look into the possibilities of bringing architects into Bespoke Builders Ltd’s business.

Sam and Sue had two good friends, Michael Mint and Peter Parsley who were architects. In May 2018 Sam Sellers and Jim Jackson began negotiating with Michael and Peter on joining Bespoke Builders Ltd as shareholders and employees. One of the obstacles to Michael and Peter joining the company was the costs involved in integrating their business into Bespoke Builders Ltd. After lengthy discussions regarding the merits of funding this through debt or equity the board agreed that a further 2,000 new shares would be issued. Michael and Peter would take up 1,000 shares each, the issue price of which would be $2.50 per share to reflect the increased value of the company. The shares would rank equally with the existing shares and the funds would be applied to purchasing the necessary architectural equipment and computer design programmes that Michael and Peter would need.

It was also agreed that Michael Mint would be appointed a director and that the name of the company would change to Bespoke Design & Build Ltd. The name change took effect in September 2018.

By January 2019 Bespoke Design & Build Ltd was benefitting from the Government policy to build more houses in Auckland and the small premises that the company was operating from were no longer adequate. The assets of the company at that time were valued at $750,000 and its projected earnings for 2019 were $2,000,000.

Sam and Jim believed that it would be appropriate, as a building company, to look for premises in a cheaper industrial area. They believed that the company could purchase suitable premises for under $400,000. Michael on the other hand, thought that the company’s image would be better presented if the new premises were in a smart, new, commercial area where property prices were much higher. It was becoming apparent that Jill Jackson, who had just completed an architectural degree and whose relationship with her husband, Jim, had broken down, would support with Michael and Peter if the matter went to a vote at a general meeting.

Sam Sellers and Jim Jackson, concerned that control of the company was slipping out of their control, propose to put a resolution to the next board meeting to issue 1,000 new shares at $0.50 per share to each of the shareholders who originally established the company.

Question 1:                                               20.0 Marks

Directors’ Duties – ILAC Question

Cite any relevant principles of common law or equity, case law and sections of the Companies Act 1993 in your answer.

Please advise Sam Sellers and Jim Jackson the legal implications on their duties as directors if they were to proceed with issuing the 1,000 new shares to each of the shareholders who originally established the company.

Bob is a 50 percent owner of Barco Enterprises. During 2017, Barco earned $80,000 in net income after subtracting Bob’s $50,000 salary. Bob also withdrew $20,000 from Barco during the year. Bob would like to know the amount of the FICA taxes and by whom they would be paid if;

1. Barco is a general partnership
2. Barco is an S Corporation