Stenberg plc is preparing its financial statements for the year ended 30 November 2018. On 1 May 2018, the company purchased a factory for the manufacture of optical disks, paying £24,000,000. The factory will be depreciated over its estimated life of 10 years using the straight line method on a full year basis with no residual value. The asking price for the factory had been £30,000,000. However, Stenberg plc estimated the net present value of the factory’s future expected net cash flows at £28,500,000 and the price eventually agreed with the vendor was £24,000,000. During October 2018 a rival company announced that it had patented a new technology which has been enthusiastically greeted by the major players in the industry. Stenberg plc now feels that it may be necessary to revise downwards its expectations for the factory. It now believes that the net present value of the expected net cash flows from the factory as at 30 November 2018 was £20,500,000. The net realisable value of the factory was estimated at £14,000,000 as at 30 November 2018. Required: Discuss whether or not there is evidence of impairment and describe how the factory should be treated in the financial statements for the year ended 30 November 2018.
> Read the case file at the beginning of this chapter. Compare and contrast the case file facts with the facts of the Mapp case. Look for similar facts, differences and factual gaps.
> Discuss the differences between the complaints in the Simpson and Nichols cases.
> After officers stopped a car to check its registration without reason to believe it was being operated unlawfully, one of them recognized a passenger in the car. Upon verifying that the passenger was a parole violator, the officers formally arrested him
> Reread the case file at the beginning of the chapter. What crimes has the client committed? Explain your answer by discussing the facts and the elements of the crimes.
> Locate the juvenile court rules for your jurisdiction. Choose two statutes. Rewrite them, breaking them into their elements. Review the statutes for assault, battery, and kidnapping in this chapter to review how a statute is broken apart into elements.
> Violet complained to the police as follows: After a domestic dispute, her boyfriend took away the keys to her car, forced her into his car, threatened her, and slapped her. As the boyfriend slowed the car at an intersection, she unlatched her seatbelt. H
> CHIEF JUSTICE ROBERTS delivered the opinion of the Court. The Voting Rights Act of 1965 employed extraordinary measures to address an extraordinary problem. Section 5 of the Act required States to obtain federal permission before enacting any law related
> Review the section of your automobile policy that deals with uninsured-motorist coverage. Describe these provisions.
> Lawrence hired a law firm to represent him in a legal matter and signed an agreement containing a provision requiring arbitration in the event of any dispute regarding fees, costs, or any other aspect of the attorney-client relationship. Eventually Lawre
> Read the case Good News Club v. Milford Central School found in Appendix VII. What was the nature of the lawsuit filed in the trial court? What happened in the trial court?
> A car dealership in Ohio used the image of a famous celebrity residing California in an Internet web site promoting the car dealership. The dealership did not have permission to use the image. Cars were not sold through the Web site. The celebrity sued t
> Betts, a California resident purchased a classic car from Hanson, a Wisconsin resident. The car was placed for sale on e-bay (a California business). The car was shipped from Wisconsin to California. Betts claimed that the car did not meet the descriptio
> Reread the facts of Kaplan. In this case, the appellate court did not find that Coldwell Banker was an ostensible agent, only that there were sufficient facts to withstand a summary judgment (a declaration by the court that there were no facts to support
> BCBSD, Inc. was a non-profit health insurance company and Crosse was a plan participant. Crosse sued the insurance company for not distributing claiming that health insurer breached its fiduciary duties by accumulating a surplus of over $50 million. Cros
> Charlotte Lee was named as a defendant partner in a lawsuit against a partnership. Her interest was as follows: Lee’s husband had been a named partner in the business and when he died, his interest passed to his estate. The remaining partners continued t
> While they were married to one another, John and Jane were both employed as real estate sales agents. In 1999, a year before John and Jane separated, John’s accountant recommended that he create a business for tax purposes. John created Manhattan Associa
> Wells filed a lawsuit against her employer Clackamas Gastorenterology Associates, P.C. alleging that the medical clinic violated the Americans with Disabilities Act of 1990 (ADA or Act) when it terminated her employment. The medical clinic asserted that
> Petitioner sponsors professional golf tournaments conducted on three annual tours. A player may gain entry into the tours in various ways, most commonly through successfully competing in a three-stage qualifying tournament known as the “Q-School.” Any me
> Ollie’s Barbecue is a family-owned restaurant in Birmingham, Alabama, specializing in barbecued meats and homemade pies, with a seating capacity of 220 customers. It is located on a state highway 11 blocks from Interstate 1 and a somewhat greater distanc
> Petersford plc prepares accounts to 31 December each year. On 1 January 2014, the company acquired a non-current asset at a cost of £256,000 and decided to depreciate this asset on the straight-line basis over a five-year period, assuming a residual valu
> On 1 January 2018, a company which prepares accounts to 31 December grants "share appreciation rights" to 30 of its employees. By virtue of these rights, the employees concerned will become entitled to a cash payment on 31 December 2020 on condition that
> A company enters into 10,000 contracts with customers, all on the same date. These contracts have very similar characteristics and therefore (as a practical expedient) the company decides to apply the requirements of IFRS15 to the portfolio of contracts
> Bakewall Ltd prepares annual financial statements to 31 December. On 1 August 2017 the company closed down one of its operations and classified the corresponding cash generating unit (CGU) as held for sale. All of the assets in this CGU were within the s
> An asset which cost £200,000 on 1 January 2016 is being depreciated on the straight line basis over a five year period with an estimated residual value of £40,000. The company which owns the asset has conducted an impairment rev
> Accounting standard IAS16 Property, Plant and Equipment makes a number of recognition, measurement and disclosure requirements with regard to tangible noncurrent assets. The term "non-current asset" is defined in accounting standard IAS1 Presentation of
> The profits attributable to the ordinary shareholders of F plc are as follows: £000 year to 31 December 2016 …………………………….. 1,800 year to 31 December 2017 ……………………………… 2,475 For many years, the company's issued share capital has consisted of 9 mi
> Brenda is considering an investment in the ordinary shares of either Baker plc or Grant plc. Both companies operate in the same sector of industry and both prepare accounts to 30 September each year. Financial statements for the year to 30 September 2018
> The statements of financial position of CC Ltd and its two subsidiaries DD Ltd and EE Ltd as at 31 December 2017 are as follows: The following information is available: (a) CC Ltd acquired 60% of the shares of DD Ltd on 1 January 2016, when DD Ltd had
> Prentiss plc operates a defined benefit pension plan and prepares financial statements to 31 March each year. The financial statements for the year to 31 March 2017 showed that the present value of the defined benefit obligation on 31 March 2017 was £140
> Querk plc prepares financial statements to 31 December each year. On 1 January 2017 the company bought £500,000 of 6% loan stock for £490,420. Interest is receivable on 31 December each year and the loan stock will be redeemed at a 15% premium on 31 Dece
> Western Trading plc is a company which uses a variety of component parts in its manufacturing operations. One of the company's suppliers has recently gone out of business and therefore Western is now seeking an alternative (and reliable) source of supply
> On 1 October 2017 Pumice acquired the following non-current investments: (i) 80% of the equity share capital of Silverton at a cost of £13. 6 million (ii) 50% of Silverton's 10% loan notes at par (iii) 1. 6 million equity shares in Amok at a
> The financial statements of JJ Ltd and KK Ltd for the year to 30 June 2018 are shown below: / / The following information is also available: 1. On 1 July 2014, JJ Ltd paid £3,153,000 to acquire 75% of the ordinary shares and 10% of the pr
> J Ltd has been trading for many years, preparing financial statements to 31 March each year. As from 1 April 2017, the company decided to adopt a new accounting policy in relation to revenue recognition. If this policy had been adopted in previous years,
> (a) List the main indicators of a hyperinflationary economy, as specified by IAS29. (b) Explain why IAS29 takes the view that conventional financial statements are not useful in a hyperinflationary economy. (c) Explain how each of the following items sho
> Related party relationships are a common feature of commercial life. The objective of IAS24 Related Party Disclosures is to ensure that financial statements contain the necessary disclosures to make users aware of the possibility that financial statement
> During the year to 31 December 2017, Tinderlake Ltd attempted to stimulate sales and increase its profits by reducing selling prices, holding larger inventories and giving customers longer credit. All of the company's purchases and sales are on credit te
> IFRS1 First-time Adoption of International Financial Reporting Standards lays down the procedure which must be followed when an entity prepares its first financial statements that comply with IFRS Standards and IAS Standards. (a) State the objective of I
> IFRS16 Leases replaces IAS17 Leases for accounting periods beginning on or after 1 January 2019. The main aim of the new standard is to improve lessee accounting so that a lessee's financial statements provide a more faithful representation of the lessee
> There are two international standards which deal with goodwill. IAS38 does not allow internally generated goodwill to be recognised as an asset. Goodwill acquired in a business combination is dealt with by IFRS3. (a) Define the term "goodwill" and explai
> The main role of the International Accounting Standards Board (IASB) is to devise and publish International Financial Reporting Standards (IFRS Standards) and revised versions of International Accounting Standards (IAS Standards). IAS Standards were orig
> Assuming that today's date is 1 January 2018, calculate the present value of each of the following: (a) £50,000 to be received on 1 January 2021 (b) £100,000 to be received on 1 January 2023 (c) £10,000 to be received on I January each year from 2019 to
> The International Accounting Standards Board (IASB) develops international standards by means of a "due process". The main stages of this process are listed in the Preface to International Financial Reporting Standards. The Preface also states the object
> The main activity of J&T Ltd is to buy old vehicles, which are sold after converting them into a saleable condition. At 28 February 2018, the end of the company’s financial year, J&T Ltd had the following vehicles that were at v
> Triangle, a public listed company, is in the process of preparing its draft financial statements for the year to 31 March 2018. On 1 April 2017, Triangle sold maturing inventory that had a carrying value of £3m (at cost) to Factorall, a finance house, fo
> (a) Sparkling Pictures plc is a company which specialises in video production. The company is preparing its financial statements for the financial year ended 30 April 2018. During the financial year ended 30 April 2017 Sparkling Pictures plc was responsi
> On 1 December 2014, Gebouw plc entered into a finance lease requiring the company to make payments of £785,000 each on 1 December 2014, 2015, 2016, 2017 and 2018. The fair value of the leased asset on 1 December 2014 was £2,997,000 and it was expected to
> The following information relates to three companies that use the revaluation model in relation to intangible assets and prepare annual financial statements to 31 December: (a) Company W acquired an intangible asset for £250,000 on 31 December 2016. This
> (a) Define the term "investment property". Explain why it is not generally appropriate to charge depreciation in relation to such a property. (b) Give three examples of properties (land or buildings) that should be classified as investment properties. (c
> Chilwell Ltd prepares financial statements to 31 October each year. The company's trial balance at 31 October 2017 is as follows: The following information is also available: 1. Land is non-depreciable and is to be revalued at £280,000 on
> On 1 January 2016, G plc issued £2 million of 7% convertible loan stock. The holders of this stock may choose to convert the stock to ordinary shares on 1 January 2020, 2021 or 2022. The number of ordinary shares into which the stock will be converted is
> The following are the statements of financial position of two companies at 31 October 2018, the end of their most recent financial years: The following additional information is available: 1) On 1 November 2016 Multa plc purchased 90,000,000 ordinary s
> The statement of financial position of Aadvaark Trading Ltd at 30 November 2018 (with comparatives for 2017) is as follows: / / The following information is also available: (i) Freehold property which was valued at £500,000 on 30 November 2017 was reva
> Floothair plc is a large international airline company with three operating segments: – International airline business – Domestic airline business – Non-airline business. The company reports segment i
> If most long-term forecasts are usually incorrect, why bother doing them?
> What can a corporation do to ensure that information about strategic environmental factors gets the attention of strategy makers?
> Why is environmental uncertainty an important concept in strategic management?
> Using Carroll’s list of four responsibilities, should a company be concerned about discretionary responsibilities? Why or why not?
> How does the resource-based view of the firm provide a superior means of evaluating a company’s competitive advantage?
> How appropriate is the theory of laissez-faire in today’s world?
> Is there a conflict between agency theory and the concept of organizational stakeholders?
> Why are strategic decisions different from other kinds of decisions?
> What is a learning organization? Is this approach to strategic management better than the more traditional top-down approach in which strategic planning is primarily done by top management?
> How does strategic management typically evolve in a company?
> Explain how our understanding of the three generic strategic approaches available to companies can be used to direct the efforts of all employees at those companies.
> Why has strategic management become so important in business?
> What are the pros and cons of management’s using the experience curve to determine strategy?
> In what ways can a corporation’s structure and culture be internal strengths or weaknesses?
> How can value-chain analysis help identify a company’s strengths and weaknesses?
> What is the relevance of the resource-based view of the firm to strategic management in a global environment?
> The effects of climate change on companies can be grouped into six categories of risk. Use any two of these to explain the impact upon the resort hotel industry.
> Compare and contrast trend extrapolation with the writing of scenarios as forecasting techniques.
> How can a decision maker identify strategic factors in a corporation’s external international environment?
> Is Pepsi Cola a substitute for Coca Cola?
> How would you determine the level of competitive intensity in an industry?
> Reconcile the strategic decision-making process depicted in Fig. 1.5 with the strategic management model depicted in Fig. 1.2. Figure 1.5: Figure 1.2: FIGURE 1-5 3(a) 3(b) Strategic Decision- Making Process Scan and Assess Extemal Environment: An
> Discuss how a development in a corporation’s natural and societal environments can affect the corporation through its task environment.
> Given that people rarely use a company’s code of ethics to guide their decision making, what good are the codes?
> Are people living in a relationship-based governance system likely to be unethical in business dealings?
> Does a company have to act selflessly to be considered socially responsible? For example, when building a new plant, a corporation voluntarily invested in additional equipment that enabled it to reduce its pollution emissions beyond any current laws. Kno
> What is your opinion of Apple having a code of conduct for its suppliers? What would Milton Friedman say? Contrast his view with that of Archie Carroll’s.
> What is the relationship between corporate governance and social responsibility?
> How does STEEP analysis aid in the development of the strategy in a company?
> Should all CEOs be transformational leaders? Would you like to work for a transformational leader?
> What would be the impact if the only insider on a corporation’s board were the CEO?
> Should a CEO be allowed to serve on another company’s board of directors? Why or why not?
> What information is needed for the proper formulation of strategy? Why?
> Who should and should not serve on a board of directors? What about environmentalists or union leaders?
> When does a corporation need a board of directors?
> When is the planning mode of strategic decision making superior to the entrepreneurial and adaptive modes?
> How can you learn what date a case took place?
> When is inflation an important issue in conducting case analysis? Why bother?
> When should you gather information outside a case? What should you look for?
> What are common-size financial statements? What is their value to case analysis? How are they calculated?
> How does a company ensure that its code of ethics is integrated into the daily decision-making process of the company and is not just a symbolic trophy or plaque hanging on the wall?
> Why should one begin a case analysis with a financial analysis? When are other approaches appropriate?
> Is the evaluation and control process appropriate for a corporation that emphasizes creativity? Are control and creativity compatible? Explain. (This is an open question.)
> Does every business firm have business strategies?
> What issues affect your faith in a transfer price as a substitute for a market price in measuring a profit center’s performance?
> How does EVA improve our knowledge of performance over ROI, ROE, or EPS?
