...Case 10-2 Eagle Impairment Loss Eagle Company (Eagle) is a manufacturing company with operations in Italy and Serbia. Eagle in Italy: In addition to other assets, Eagle owns and operates a commercial building in Italy that is carried at its cost less any accumulated depreciation and any accumulated impairment losses. The building represents a cash-generating unit (CGU) for which the following information is available as of December 31, 2010: Building 12/31/10 in thousands  Carrying amount  $1,100  Value in use   900  Fair market value less costs to sell 800  Fair market value  850  Undiscounted future cash flows 1,150  Eagle in Serbia: In Serbia, in 2008, Eagle acquired a smaller competing company and goodwill was allocated to the CGU shown below. Activities in Serbia represent the lowest level at which internal management monitors goodwill. At the end of 2008 and 2009, the value in use of the CGU including goodwill exceeded its carrying amount. Therefore the activities of Eagle in Serbia and the goodwill allocated to those activities were regarded as not impaired. However, at the end of 2010, the newly elected government passed legislation significantly restricting exports of Eagle’s main product. The information below relates to the CGU (which includes goodwill) of Eagle’s operations in Serbia before the impairment analysis is performed. For this case, assume the basis of segmentation for CGUs and reporting units (RU) is the same under...
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...Case #2 (Eagle Impairment Loss) Question 1: The Impairment Loss of Eagle in Italy under IFRS Recoverability test: Asset’s carrying amount exceeds the recoverable amount which is the higher of the asset’s value-in-use (discounted present value of the asset’s expected future cash flows) and fair market value less costs to sell. (IAS36-15) According to IAS36-6, “an impairment loss is the amount by which the carrying amount of an asset or a cash-generating unit exceeds its recoverable amount. The impairment loss = Carrying amount - Value in use = $1,100,000-900,000=$200,000 Question 2: The Impairment Loss of Eagle in Italy under U.S. GAAP (FASB 360-10) Recoverability test: Asset’s carrying amount exceeds the undiscounted future cash flows from the asset. Because the carrying amount $1,100 is less than the undiscounted future cash flows $1,150, there is no impairment loss. Question 3: The Impairment Loss of Eagle in Serbia 1. Impairment of Goodwill under GAAP and IFRSs - Two-step approach for testing goodwill impairment under U.S. GAAP (FASB ASC-350-20-35) 1) If assets’ fair value of reporting unit is greater than the carrying amount including goodwill, there is no impairment. 2) If there’s impairment indicated by step 1, then compare implied fair value of goodwill with carrying amount. Implied fair value of goodwill is obtained by deducting the fair values of all the reporting unit’s assets and liabilities from the fair value of the reporting unit. From...
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...Eagle Impairment Loss Eagle Company (Eagle) is a manufacturing company with operations in Italy and Serbia. Eagle in Italy: In addition to other assets, Eagle owns and operates a commercial building in Italy that is carried at its cost less any accumulated depreciation and any accumulated impairment losses. The building represents a cash-generating unit (CGU) for which the following information is available as of December 31, 2010: Building | 12/31/10 inthousands | Carrying amount | $1,100 | Value in use | 900 | Fair market value less costs to sell | 800 | Fair market value | 850 | Undiscounted future cash flows | 1,150 | Eagle in Serbia: In Serbia, in 2008, Eagle acquired a smaller competing company and goodwill was allocated to the CGU shown below. Activities in Serbia represent the lowest level at which internal management monitors goodwill. At the end of 2008 and 2009, the value in use of the CGU including goodwill exceeded its carrying amount. Therefore the activities of Eagle in Serbia and the goodwill allocated to those activities were regarded as not impaired. However, at the end of 2010, the newly elected government passed legislation significantly restricting exports of Eagle’s main product. The information below relates to the CGU (which includes goodwill) of Eagle’s operations in Serbia before the impairment analysis is performed. For this case, assume the basis of segmentation for CGUs and reporting units (RU) is the same under IFRSs and...
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...Case #2 Murong Feng, Duy Do, TJ Fritzgerald, Hayden Jacobs 2/13/15 Question 1 Given the facts provided for Eagle in Italy, the building is not impaired under IFRS as of December 31, 2010. The carrying value is 1,100,000, and undiscounted future cash flows are 1,150,000. The carrying value is less than undiscounted future cash flows. According to IAS36 paragraph 12, “in assessing whether there is any indication that an asset may be impaired, an entity shall consider, as a minimum, the following indications: (d) the carrying amount of the net assets of the entity is more than its market capitalization.” Thus, there is not any impairment on the building under IFRS. Question 2 Given the facts provided for Eagle in Italy, the building is impaired under U.S. GAAP as of December 31, 2010. Under ACS 360-35-17, “An impairment loss shall be recognized only if the carrying amount of a long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset” In the case, the carrying value is 1,100,000, and the fair value is 850,000. The carrying value is more than its fair value, an impairment should be recognized. However, it is recoverable since its carrying value is less than undiscounted future cash flows. In ASC 360-35-17 “An impairment loss shall be measured as the amount by which the carrying value...
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...Case 2: Eagle Impairment Loss 1. We have referred to IAS 36 to make the decision on the amount that should be impaired by Eagle in Italy. Since in the case it says that there are qualitative factors that suggest an impairment is likely, we have to evaluate based on the recoverability test. IAS claims that we can recognize an impairment loss under the following circumstances: “If, and only if, the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset shall be reduced to its recoverable amount. That reduction is an impairment loss.”(IAS36-59). To be able to determine the amount impaired, we have to find the definition of recoverable amount. On Page 13 in IAS 36, the recoverable amount of an asset is, “the higher of its fair value less costs to sell and its value in use. (P-13 IAS 36) So, the impairment loss is 1100, 000-900,000=200,000 2. According to the FASB, “An impairment loss shall be recognized only if the carrying amount of a long-lived asset (asset group) is not recoverable and exceeds its fair value.”(360-10-35-17) However, in this case the recoverable costs is 1,150,000 which is larger than the carrying value 1,100,000. Thus, we do not need to record the impairment loss under GAAP. 3. Part 1 IFRS Under IFRS, “A cash-generating unit to which goodwill has been allocated shall be tested for Impairment annually, and whenever there is an indication that the unit may be impaired, by comparing the carrying amount of the...
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...REV: JANUARY 15, 2002 LISA MEULBROEK Kmart Inc. and Builders Square Introduction In July 1997, Kmart appeared to be nearing a year-long effort to sell its faltering Do-It-Yourself (DIY) home improvement chain, Builders Square. Leonard Green & Partners, a Los Angeles-based retail buyout firm, had proposed to buy Builders Square (BSQ) and merge it with Hechinger’s, a Washington, D.C.-based DIY chain that had been a pioneer in the retail home improvement industry. The newly-formed Builders Square-Hechinger combination would create the nation’s third largest DIY retailer, and seemed to be one of the few options left to Kmart. Kmart’s CEO, Floyd Hall, had a difficult decision to make: should he move forward with Green’s offer of $10 million for Builders Square, or should he continue the search in hopes of receiving a higher offer? Green’s offer seemed surprisingly low, even given Builders Square’s recent sub-par performance, yet bidders for Builders Square had been slow to materialize. Indeed, Kmart’s recent talks concerning a joint venture with Waban Co.’s HomeBase centers ended when Waban’s management withdrew without explanation. As the decision neared, Kmart’s options seemed limited and time was short. Kmart and its Entry into Specialty Retailing Kmart Corporation, one of the world’s largest mass merchandise retailers, began as the S.S. Kresge Company in 1912 and by the 1950s it was one of the largest general merchandise retailers in the United States....
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...Chapter 1 Financial Statements and Business Decisions ANSWERS TO QUESTIONS 1. Accounting is a system that collects and processes (analyzes, measures, and records) financial information about an organization and reports that information to decision makers. 2. Financial accounting involves preparation of the four basic financial statements and related disclosures for external decision makers. Managerial accounting involves the preparation of detailed plans, budgets, forecasts, and performance reports for internal decision makers. 3. Financial reports are used by both internal and external groups and individuals. The internal groups are comprised of the various managers of the entity. The external groups include the owners, investors, creditors, governmental agencies, other interested parties, and the public at large. 4. Investors purchase all or part of a business and hope to gain by receiving part of what the company earns and/or selling the company in the future at a higher price than they paid. Creditors lend money to a company for a specific length of time and hope to gain by charging interest on the loan. 5. In a society each organization can be defined as a separate accounting entity. An accounting entity is the organization for which financial data are to be collected. Typical accounting entities are a business, a church, a governmental unit, a university and other nonprofit organizations such as a hospital and a welfare organization. A...
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...INVESTMENTS IN OTHER ENTITIES ANSWERS TO QUESTIONS Q1-1 Complex organizational structures often result when companies do business in a complex business environment. New subsidiaries or other entities may be formed for purposes such as extending operations into foreign countries, seeking to protect existing assets from risks associated with entry into new product lines, separating activities that fall under regulatory controls, and reducing taxes by separating certain types of operations. Q1-2 The split-off and spin-off result in the same reduction of reported assets and liabilities. Only the stockholders’ equity accounts of the company are different. The number of shares outstanding remains unchanged in the case of a spin-off and retained earnings or paid-in capital is reduced. Shares of the parent are exchanged for shares of the subsidiary in a split-off, thereby reducing the outstanding shares of the parent company. Q1-3 The management of Enron appears to have used special-purpose entities to avoid reporting debt on its balance sheet and to create fictional transactions that resulted in reported income. It also transferred bad loans and investments to special-purpose entities to avoid recognizing losses in its income statement. Q1-4 (a) A statutory merger...
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...Chapter 1 Financial Statements and Business Decisions ANSWERS TO QUESTIONS 1. Accounting is a system that collects and processes (analyzes, measures, and records) financial information about an organization and reports that information to decision makers. 2. Financial accounting involves preparation of the four basic financial statements and related disclosures for external decision makers. Managerial accounting involves the preparation of detailed plans, budgets, forecasts, and performance reports for internal decision makers. 3. Financial reports are used by both internal and external groups and individuals. The internal groups are comprised of the various managers of the entity. The external groups include the owners, investors, creditors, governmental agencies, other interested parties, and the public at large. 4. Investors purchase all or part of a business and hope to gain by receiving part of what the company earns and/or selling the company in the future at a higher price than they paid. Creditors lend money to a company for a specific length of time and hope to gain by charging interest on the loan. 5. In a society each organization can be defined as a separate accounting entity. An accounting entity is the organization for which financial data are to be collected. Typical accounting entities are a business, a church, a governmental unit, a university and other nonprofit organizations such as a hospital and a welfare organization. A business typically...
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...Chapter 01 - Financial Statements and Business Decisions Chapter 01 Financial Statements and Business Decisions ANSWERS TO QUESTIONS 1. Accounting is a system that collects and processes (analyzes, measures, and records) financial information about an organization and reports that information to decision makers. 2. Financial accounting involves preparation of the four basic financial statements and related disclosures for external decision makers. Managerial accounting involves the preparation of detailed plans, budgets, forecasts, and performance reports for internal decision makers. 3. Financial reports are used by both internal and external groups and individuals. The internal groups are comprised of the various managers of the entity. The external groups include the owners, investors, creditors, governmental agencies, other interested parties, and the public at large. 4. Investors purchase all or part of a business and hope to gain by receiving part of what the company earns and/or selling the company in the future at a higher price than they paid. Creditors lend money to a company for a specific length of time and hope to gain by charging interest on the loan. 5. In a society each organization can be defined as a separate accounting entity. An accounting entity is the organization for which financial data are to be collected. Typical accounting entities are a business, a church, a governmental unit, a university and other nonprofit organizations such as a hospital and...
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...UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2010 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-5424 DELTA AIR LINES, INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) Post Office Box 20706 Atlanta, Georgia (Address of principal executive offices) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered 58-0218548 (I.R.S. Employer Identification No.) 30320-6001 (Zip Code) Registrant’s telephone number, including area code: (404) 715-2600 Common Stock, par value $0.0001 per share New York Stock Exchange No Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the...
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...top U.S. exporter, the company supports airlines and U.S. and allied government customers in more than 90 countries. Our products and tailored services include commercial and military aircraft, satellites, weapons, electronic and defense systems, launch systems, advanced information and communication systems, and performance-based logistics and training. With corporate offices in Chicago, Boeing employs more than 160,000 people across the United States and in 70 countries. Our leadership is strengthened further by hundreds of thousands of people who work for Boeing suppliers worldwide. Contents Operational Summary Message From Our Chairman The Executive Council Financial Results Form 10-K Selected Programs, Products and Services Shareholder Information Board of Directors Company Officers 1 2 7 8 9 134 141 142 142 Cover photo: 787 Dreamliner in flight test Photo above: F/A-18E/F Super Hornet strength Operational Summary Q Earned net income of $3.3 billion, or $4.46 per share, compared with $1.3 billion, or $1.87 per share, in 2009. Q Delivered 115 production military aircraft, two launch vehicles and four satellites, and increased backlog at Defense, Space & Security to $65 billion, more than twice the business unit’s 2010 revenue. Q Delivered the 900th 777 and started assembly of the 1,000th 767. Q Delivered revenues of $64.3 billion, compared with $68.3 billion in 2009. Q Achieved key Defense, Space & Security milestones, including delivery of...
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...CHAPTER 15 INVESTMENTS CONTENT ANALYSIS OF EXERCISES AND PROBLEMS Time Range (minutes) 10-15 10-15 10-15 15-20 15-20 10-15 Number E15-1 E15-2 E15-3 E15-4 E15-5 E15-6 Content Trading Securities. (Easy) Journal entries. Unrealized holding gain. Balance sheet disclosure. Trading Securities. (Moderate) Journal entries. Income statement and balance sheet disclosures. Long-Term Investments. (Easy) Securities available for sale. Purchase and adjusting entries. Available-for-Sale Securities. (Easy) Journal entries. Compute unrealized increase/decrease balance. Available-for-Sale Securities. (Easy) Journal entries. Balance sheet disclosure. Held-to-Maturity Bond Investment. (Easy) Premium, straight-line amortization, journal entries. Error in recording interest at acquisition. Held-to-Maturity Bond Investment. (Easy) Discount, semiannual interest receipts, straight-line and effective interest methods of amortization, journal entries. Held-to-Maturity Bond Investment. (Moderate) Discount, semiannual interest receipts, sale at gain. Effective interest method. Journal entries. Bond Investment. (Moderate) Discount, semiannual interest receipts, amortization schedule using effective interest method, journal entries. Bond Investment. (Moderate) Premium, semiannual interest receipts, amortization schedule using effective interest method, journal entries. Bond Investment. (Moderate) Premium, semiannual interest receipts, sale at loss. Effective interest method. Journal entries. Transfer...
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...SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 29, 2012 Commission file number: 1-5256 V. F. CORPORATION (Exact name of registrant as specified in its charter) Pennsylvania (State or other jurisdiction of incorporation or organization) 23-1180120 (I.R.S. employer identification number) 105 Corporate Center Boulevard Greensboro, North Carolina 27408 (Address of principal executive offices) (336) 424-6000 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, without par value, stated capital $1 per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES x Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES ¨ NO ¨ NO x Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. YES x NO ¨ Indicate by check mark whether the registrant...
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...A01-06-0007 Graeme Rankine Fossil, Inc.—Global Watches and Accessories While we found that Fossil has very strong brand recognition among teens in the watch category, we believe watches are less important to teens than other accessories in the current fashion cycle. According to our proprietary research, interest in the accessories category declined 19% on a yearover-year basis this Fall following the 16% decline seen this past Spring. Given that handbags continue to sell well across the industry, we conclude that the watch category may be giving up share to other “accessories” including handbags and shoes and possibly non-apparel related goods (e.g., iPods). Confirming our conclusion, we asked students to list their favorite accessories purchased in the last six months and belts and handbags tied for first place with each garnering 26% of the votes. Jewelry came in third place and watches, fourth. In consideration of the above, we are trimming estimates slightly this year and next year. In a related fashion, we are lowering our price target from $23 to $20. With the shares trading near our target, we are reiterating our Market Perform rating on FOSL shares. PiperJaffrey, October 5, 2005 Anna Amphlett contemplated PiperJaffrey’s comments about Fossil. Just three months earlier, PiperJaffrey issued a more bullish report on the company by indicating that it “believed that better times could be ahead for Fossil as the company grows its global portfolio of brands” and that...
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