...Corporate Restructuring on the Shareholders’ Value: The Case of GEC/Marconi Magdy Abdel-Kader 1 * and Vagia Mentzeniot 2 1 Brunel Business School. Brunel University. Uxbridge. Middlesex UB8 3PH. UK * Corresponding author: Tel: +44 (0)1895 266739. Fax: +44 (0)1895 269775. Email: magdy.kader@brunel.ac.uk 2 Finance Division, Piraeus Bank Group, Headquarters, Stadiou & Amerikis 4, Athens, 10557, Greece Abstract GEC/Marconi’s transformation from a diversified conglomerate to a focused telecommunications and information technology company was an eventful and rambling transmission that resulted in the deterioration of shareholders’ value. It represents one of the most dramatic falls from grace in British corporate history and one of the greatest corporate governance fiascos of all time. The study investigates the wealth effects of Marconi’s sell-offs and acquisitions on its shareholders’ value by calculating the abnormal returns on the announcement days of all the disposals/acquisition during 1996-2002. The results support the view that shareholders’ value increases when a company proceeds to corporate sell-offs to pursue a focus strategy. However, the authors conjecture that GEC/Marconi has destroyed shareholders’ value through these disposals/acquisitions because of several mistakes, such as being prone to heavy debt. © 2007 World Research Organization. All rights reserved Keywords: Marconi, GEC, Restructuring, Disposals, Acquisitions, Divestiture Citation: Abdel-Kader, M...
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...Publishing Publishing F3 INT Study Text Financial Accounting ACCA Publishing ACCA Distance Learning Courses Learn quickly and efficiently Using a blended learning approach, our distance learning package will steer you towards exam success. Our aim is to teach you all you need to know and give you plenty of practice, without bombarding you with excessive detail. We therefore offer you the following tailored package: • Access to our dedicated distance learning website – where you’ll find a regular blog from the distance learning department – reminders, hints and tips, study advice and other ideas from tutors, writers and markers – as well as access to your course material • • Tutor support – by phone or by email, answered within 48 hours The handbook – outlining distance learning with us and helping you understand the ACCA course Study phase Revision phase • The key study text – covering the syllabus without excessive detail and containing a bank of practice questions for plenty of reinforcement of key topics • A key study guide – guiding you through the study text and helping you revise • An online question bank for additional reinforcement of knowledge • An exam kit – essential for exam preparation and packed with examstandard practice questions • 2 tutor-marked mock exams to be sat during your studies • Key notes - highlighting the key topics in an easy-to-use format Total price: £160.95 ...
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...JWCL165_c09_396-443.qxd 8/4/09 9:39 PM Page 396 Chapter 9 Plant Assets, Natural Resources, and Intangible Assets STUDY OBJECTIVES After studying this chapter, you should be able to: 1 Describe how the cost principle applies to plant assets. 2 Explain the concept of depreciation. 3 Compute periodic depreciation using different methods. 4 Describe the procedure for revising periodic depreciation. 5 Distinguish between revenue and capital expenditures, and explain the entries for each. 6 Explain how to account for the disposal of a plant asset. 7 Compute periodic depletion of natural resources. 8 Explain the basic issues related to accounting for intangible assets. 9 Indicate how plant assets, natural resources, and intangible assets are The Navigator reported. ✓ The Navigator Scan Study Objectives Read Feature Story Read Preview Read text and answer p. 402 ■ ■ ■ ■ p. 409 ■ Do it! p. 412 Do it! ■ p. 417 ■ ■ ■ ■ ■ ■ Work Comprehensive p. 421 p. 422 Review Summary of Study Objectives Answer Self-Study Questions Complete Assignments ✓ Feature Story HOW MUCH FOR A RIDE TO THE BEACH? It’s spring break. Your plane has landed, you’ve finally found your bags, and you’re dying to hit the beach—but first you need a “vehicular unit” to get 396 JWCL165_c09_396-443.qxd 7/31/09 4:20 PM Page 397 you there. As you turn away from baggage claim you see a long row of rental agency booths. Many are names you are familiar...
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...Case Study A: What concerns would you have about operating this business as a sole proprietorship if you were Stan? What alternative form of business organization would you recommend and why? In this case Stan is thinking about starting a toxic waste disposal business. He is considering operating this business as a sole proprietorship. Although this is a valid business organization it also carries numerous disadvantages, if not all aspects of the company are taken into account. I will explain some possible conflicts Stan can encounter as a sole proprietorship, and I will recommend an alternative form of business organization that may become more beneficial. After taking into consideration the two different operations I will come to a conclusion of which business organization may be more preferable in Stan’s situation. A sole proprietorship is ideal for individuals operating a low risk and small business organization since there are many disadvantages with certain risks, or when the company begins to grow. Starting a toxic waste disposal with transportation raises many concerns. This operation is highly at risk for an incident and a sole proprietorship may not be the best business organization. As a sole proprietorship Stan would carry the business on his own without adopting any other form of business organization. Stan would have unlimited personal liability with any incident being fully responsible. One of the major issues is the environmental impact if there happens...
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...Income Tax: Can a private equity entity make an income gain from the disposal of target assets it has acquired? – deals with private equity entities disposing of Australian target assets, and per this draft determination, the ATO’s view on this is that yes a private equity entity can make an income gain on the disposal of such assets, although they do acknowledge that each case will depend on fact and circumstance. The draft determination basically states that where a foreign private equity entity that is not in a treaty country carries on a business of deriving a profit from the sale of an Australian asset then the profit is ordinary income under section 6-5 of the ITAA 1997 which is taxable in Australia and is not exempt as a capital gain. Whether a private equity entity can make an income gain on the disposal of its target assets will be a question of fact and circumstance. It will need to be determined on what account the asset was being held on and in order to determine this. The investment strategy and the form and substance of the private equity entity must be looked at in detail and at length to determine this. Basically, if the intent of the private equity entity is to acquire the target asset, become a long term investor and derive dividend income from its shares then the gain made from disposal would be held on capital account as the disposal would be the realisation of the capital asset. However if a private equity entity is in the business of acquiring...
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...CHAPTER 10 Plant Assets, Natural Resources, and Intangible Assets ASSIGNMENT CLASSIFICATION TABLE Brief Exercises 1, 2 A Problems 1A B Problems 1B Study Objectives 1. Describe how the cost principle applies to plant assets. Explain the concept of depreciation. Compute periodic depreciation using different methods. Describe the procedure for revising periodic depreciation. Distinguish between revenue and capital expenditures, and explain the entries for each. Explain how to account for the disposal of a plant asset. Compute periodic depletion of natural resources. Explain the basic issues related to accounting for intangible assets. Questions 1, 2, 3 Exercises 1, 2, 3 2. 4, 5 4 3. 6, 7, 22 3, 4, 5, 6 5, 6, 7 2A, 3A, 4A, 5A 4A 2B, 3B, 4B, 5B 4B 4. 8 7 8 5. 9, 24 8 6. 10, 11 9, 10 9, 10 5A, 6A 5B, 6B 7. 12, 13 11 11 8. 14, 15, 16, 17, 18, 19 12 12, 13 7A, 8A 7B, 8B 10-1 ASSIGNMENT CLASSIFICATION TABLE (Continued) Brief Exercises 13, 14 A Problems 5A, 7A, 9A B Problems 5B, 7B, 9B Study Objectives 9. Indicate how plant assets, natural resources, and intangible assets are reported. Questions 20, 21, 23 Exercises 14 *10. Explain how to account for the exchange of plant assets. 25, 26 15, 16 15, 16 10-2 ASSIGNMENT CHARACTERISTICS TABLE Problem Number 1A 2A 3A 4A 5A Difficulty Level Simple Simple Moderate Moderate Moderate Time Allotted (min.)...
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...Introduction of Company Suntec Singapore International Convention & Exhibition Centre (Suntec Singapore) is a world-renowned, international venue located at the heart of waterfront business centre, adjacent to the Central Business District. It has the perfect location for hosting corporate meetings, conventions, exhibitions, banquets as well as special events which attract plentiful organizations from around the world. Suntec Singapore is also a fully integrated convention city, which offers direct access to hotel rooms, retail stores, restaurants and region’s newest centre for performing arts, Esplanade – Theatres on the Bay. Suntec Singapore’s vision is to be recognized as the world’s best host. And they live by their mission statement that rises readily to all challenges with a professional attitude. Job Description I am being put under the Finance Department, guided by a few seniors, mainly two Account Executives. There are two categories under the Account Payable (A/P) Department, and they are Sundry and Food and Beverages. Account Payable – Sundry The purpose of preparing an Account Payable Reconciliation is to check if there are any differences and if there are, the reason were Payment in Transit, Invoice in Transit, Invoice in Aging but not Statement and Price Discrepancies. Besides that, also on the following up on the status of suppliers on long outstanding invoices and Credit Notes. Account Payable – F&B The purpose...
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...CHAPTER 10 Plant Assets, Natural Resources, and Intangible Assets ASSIGNMENT CLASSIFICATION TABLE Brief Exercises 1, 2 A Problems 1A B Problems 1B Study Objectives 1. Describe how the cost principle applies to plant assets. Explain the concept of depreciation. Compute periodic depreciation using different methods. Describe the procedure for revising periodic depreciation. Distinguish between revenue and capital expenditures, and explain the entries for each. Explain how to account for the disposal of a plant asset. Compute periodic depletion of natural resources. Explain the basic issues related to accounting for intangible assets. Questions 1, 2, 3 Exercises 1, 2, 3 2. 4, 5 4 3. 6, 7, 22 3, 4, 5, 6 5, 6, 7 2A, 3A, 4A, 5A 4A 2B, 3B, 4B, 5B 4B 4. 8 7 8 5. 9, 24 8 6. 10, 11 9, 10 9, 10 5A, 6A 5B, 6B 7. 12, 13 11 11 8. 14, 15, 16, 17, 18, 19 12 12, 13 7A, 8A 7B, 8B 10-1 ASSIGNMENT CLASSIFICATION TABLE (Continued) Brief Exercises 13, 14 A Problems 5A, 7A, 9A B Problems 5B, 7B, 9B Study Objectives 9. Indicate how plant assets, natural resources, and intangible assets are reported. Questions 20, 21, 23 Exercises 14 *10. Explain how to account for the exchange of plant assets. 25, 26 15, 16 15, 16 10-2 ASSIGNMENT CHARACTERISTICS TABLE Problem Number 1A 2A 3A 4A 5A Difficulty Level Simple Simple Moderate Moderate Moderate Time Allotted (min.)...
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...On the balance sheet inventory is listed in the current assets section. As a current asset, inventory is viewed by users of financial statements as an asset that may be readily converted to cash if needed. In line with the historical cost principle, the valuation of inventory is solely based on the amount the inventory was purchased for. However, if the value of the inventory decreases below the original cost, then when valuing inventory the historical cost principle must not be used in this case. The reason for such a decrease in value could be for many reasons such as price level changes in the market, obsolescence, or a natural disaster such as a flood or fire. In lieu of such events the value of the asset must be adjusted because the assets future utility has negatively been affected. Therefore, the value of such inventory will need to be adjusted in recorded at lower of cost or market, and not as the original cost as the historical cost principle propose. The departure from the historical cost principle is justified due to several factors. One of the factors is that investors rely on the financial statements to provide an accurate account of the liquidity of the company. As previously stated investors believe that inventory may be converted to cash for at least the amount that is reported on the balance sheet. Additionally, the matching principle requires that losses be charged against the revenue in which the lost occurred. However, if the value of inventory has increased...
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...A.2 Case Waste Management Synopsis In February 1998 Waste Management announced that it was restating its financial statements for 1993 through 1996. In its restatement, Waste Management said that it had materially overstated its reported pretax earnings by $1.43 billion. After the announcement, the company’s stock dropped by more than 33 percent, and shareholders lost over $6 billion. The SEC brought charges against the company’s founder, Dean Buntrock, and five other former top officers. The charges alleged that management had made repeated changes to depreciation-related estimates to reduce expenses and had employed several improper accounting practices related to capitalization policies, also designed to reduce expenses.1 In its final judgment, the SEC permanently barred Buntrock and three other executives from acting as officers or directors of public companies and required payment from them of $30.8 million in penalties.2 History In 1956 Dean Buntrock took over Ace Scavenger, a garbage collector owned by his father-in-law, who had recently died. After merging Ace with a number of other waste companies, Buntrock founded Waste Management in 1968.3 Under Buntrock’s reign as its CEO, the company went public in 1971 and then expanded during the 1970s and 1980s through several acquisitions of local waste hauling companies and landfill operators. At one point the company was performing close to 200 acquisitions a year.4 From 1971 to 1991 the company enjoyed 36 percent...
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...CHAPTER 10 PLANT ASSETS, NATURAL RESOURCES, AND INTANGIBLE ASSETS SUMMARY OF QUESTIONS BY OBJECTIVES AND BLOOM’S TAXONOMY Item 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80. 81. 82. 83. sg st a SO 1 1 1 1 1 1 2 2 2 2 2 3 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 BT K K K K K C C K C K K C K AP C C K C AP AP AP AP K C C AP K C AP AP K K K K K C K C K Item 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 88. 89. 90. 91. 92. 93. 94. 95. 96. 97. 98. 99. 100. 101. 102. 103. 104. 105. 106. 107. 108. 109. 110. 111. 112. 113. 114. SO 3 3 3 3 4 4 4 5 5 5 5 6 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 BT K K K K K K K K K K K K AP AP K AP K AP AP K K K K AP AP K AP C K AP AP AP AN AP AP AP AP C AP Item 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 119. 120. 121. 122. 123. 124. 125. 126. 127. 128. 129. 130. 131. 132. 133. 134. 135. 136. 137. 138. 139. 140. 141. 142. 143. 144. 145. SO 6 6 6 6 6 6 6 7 7 7 7 7 3 3 3 3 4 4 4 4 4 4 4 5 5 5 5 5 6 6 6 6 6 6 6 6 6 6 6 BT C C C K C K C K K K K K AP AP AP AP AP AP AP K K K AN K K K C C C K K C C AP K K C C C Item 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. a 47. a 48. 150. 151. 152. 153. 154. 155. 156. 157. 158. 159. 160. 161. 162. 163. 164. 165. 166. 167. 168. 169. 170. 171. 172. 173. 174. 175. 176. SO 7 7 8 8 8 8 8 9 9 9 10 10 6 6 6 6 7 7 7 7 7 7 7 7 7 7 8 8 8 8 8 8 8 8 8 8 8 8 8 BT C K K K K K K K K K...
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...managerial/cost accounting section than on the national accounting section. The module is subdivided as follows: 1) Introduction What is accounting? Relevance of accounting and capital budgeting to environmental management and engineering issues Types of accounting systems Shortcomings of accounting systems as environmental information systems Full cost accounting 2) Incorporating social and environmental costs into accounting systems: National accounts Financial accounts 2 Cost accounting systems and capital budgeting 3) Valuing the environment 4) The ultimate goal – full cost pricing 5) Difficulties associated with full cost accounting 6) Additional teaching resources available Case studies Readings Appendix 1: Example...
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...CHAPTER 10 Plant Assets, Natural Resources, and Intangible Assets ASSIGNMENT CLASSIFICATION TABLE Brief Exercises 1, 2 A Problems 1A B Problems 1B Study Objectives 1. Describe how the cost principle applies to plant assets. Explain the concept of depreciation. Compute periodic depreciation using different methods. Describe the procedure for revising periodic depreciation. Distinguish between revenue and capital expenditures, and explain the entries for each. Explain how to account for the disposal of a plant asset. Compute periodic depletion of natural resources. Explain the basic issues related to accounting for intangible assets. Questions 1, 2, 3 Do It! 1 Exercises 1, 2, 3 2. 4, 5 2 4 3. 6, 7, 21, 22, 23 8 3, 4, 5, 6 6 5, 6, 7 2A, 3A, 4A, 5A 4A 2B, 3B, 4B, 5B 4B 4. 7 7, 8 8 5. 9, 24 8 6. 10, 11 9, 10 9, 10 5A, 6A 5B, 6B 7. 12, 13 11 11 8. 14, 15, 16, 17, 18, 19 12 12, 13 7A, 8A 7B, 8B 9. Indicate how plant assets, natural resources, and intangible assets are reported. 20, 25 13, 14 14 5A, 7A, 9A 5B, 7B, 9B *10. Explain how to account for the exchange of plant assets. 26, 27 15, 16 15, 16 Copyright © 2009 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 9/e, Solutions Manual (For Instructor Use Only) 10-1 ASSIGNMENT CHARACTERISTICS TABLE Problem Number 1A 2A 3A 4A 5A Difficulty Level Simple Simple Moderate Moderate Moderate Time Allotted (min.) 20–30 30–40 30–40 20–30 40–50 Description Determine acquisition costs...
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...having analyzed the financial ratios and SWOT of the company, it has been decided that it is better for the company not to push through with the expansion. Despite the promising increase in sales and net income, its inventory has been problematic as it showed an inverse relationship with its sales which is where we can trace back the deficit in its operating cash flows. It is recommended that the company seek better implementation of how it disposes it inventories as well as collect its receivables, find alternatives as how to handle increasing cost of production, and study its business environment. This could be the best alternatives that the company could do until they are in shape again to continue with expansion plans if the need arise again in the coming years. II. Point of View For this case, the point of view of the Vice President for Finance of First Farms Corporation (FFC) will be used. III. Case Context The First Farms Corporation started in the 1950s as a small animal feeds manufacturing plant with 15 employees in Caloocan. Since then, the company has expanded to other agribusiness products and set up nationwide facilities. The company experienced a massive growth in the 1990s as shown by the increase in revenues, net income and ROE. As of 1994, the corporation’s product line included fresh and frozen chickens, processed meats, animal health products and feeds. It was also recognized as the leading poultry integrator in the country...
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...Programmes for Government departments and public agencies to help them implement their reform agenda. The Finance Department, GOAP entrusted the project ‘Framework for Preparation of Asset Register’ to CGG under IDF grant for strengthening public financial management. The Team This Report on ʹAsset Register Framework for Government of Andhra Pradeshʹ has been prepared by Mr. A. Srinivas Kumar IA&AS., Deputy Executive Director, CGG with assistance from Mr A P H D Varma, ACA, Consultant and Ms. Vasantha Pratha, Knowledge Manager (PFM) CGG under the overall guidance of Dr. Rajiv Sharma, IAS, Director General & Executive Director, CGG. Acknowledgements The study team would like express its sincere gratitude to Mr C R Kamalanathan, IAS (Retd.), Consultant, CGG for his valuable guidance and support. We are also grateful to Ms Vasudha Mishra, IAS, Secretary (IF), Finance Department, GoAP for her involvement and active participation in the deliberations of the workshop, which helped clarify many points. We would also like to thank Mr N Madanaiah, SE (I&CAD) Retd, Consultant, CGG and Mr J Bhavani Shankar, Programme Manager, CGG for proving useful information and insights on infrastructure assets. They would also like to acknowledge with sincere thanks the help rendered by departmental officers by generously sharing their knowledge...
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