...Group 4 Case 11-6 Lessee Ltd. Lessee Ltd. (a British company that applies IFRSs) and Lessor Inc. had a lease agreement starting on January 1, 2007 which Lessee Ltd. rents equipment from Lessor Inc. for three years. The remaining useful life of the equipment is four years. The fair value of the equipment is $265,000. At the end of the lease term, Lessee Ltd. has guaranteed $20,000 as the residual value. The agreement contains no purchase or renewal options, which means at the end of the lease term, Lessee Ltd. needs to return this equipment to Lessor Inc. in original condition. According to the agreement, Lessee Ltd. needs to make lease payments of $100,000 to Lessor Inc. each year. Also, Lessee Ltd. is responsible for other expenses like insurance, tax and maintenance that cost $2,000 per year. The lessee’s incremental borrowing rate is 11% and Lessor’s implicit rate is 10%. Two accountants of Lessee Ltd. analyzed the assets of the lease. For the present value of lease obligation, if using the implicit rate in the lease (10%), the residual value would be $15,026 and the present value of annual payment would be $248,690. If using the incremental borrowing rate (11%), the residual value would be $14,624 and present value of annual payment would be $244,370. But on the computations of lease payments, the junior and senior accountant used two different ways. The junior accountant defined it is an operating lease and simply added lease expense and insurance expense together...
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...Facts Lessee Ltd, a British company has leased equipment from Lessor Ltd, as of January 1, 2007 for three years. On expiration the equipment reverts to Lessor Ltd. Annual expenses include a lease payment of $100,000 and other expenses of $2,000 with no expenses incurred by Lessor Ltd. The remaining useful life of the equipment is 4 years. At the time, the equipment had a Fair Market Value (FMV) of $265,000. Lessee Ltd guaranteed a residual value of $20,000 by the end of the lease term. The salvage value of the equipment was estimated as $2000 at the end of the economic life. The lessor’s implicit rate was calculated at 10% with the Present Value (PV) of the residual at $15,026 and lease payments at $248,690. The lessee’s incremental borrowing rate is 11% with the PV of the residual at $14,624 and lease payments at $244,370. Issue Is the lease an operating lease as analyzed and interpreted by the junior accountant or is it a finance lease along with other calculations as determined by the senior accountant? Would the answer differ if Lessee Ltd were to adapt U.S GAAP accounting policies as opposed to IFRS? Rule The IFRS standards are known by the name International Accounting Standards (IAS). The IAS 17 helps distinguishes between lease transactions. It states, “A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the...
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...Background Lessee Ltd., a British company operating under IFRS, leased equipment from Lessor Inc. for a period of three years. Lease payments of $100,000 are paid annually by Lessee Ltd., as well as $2,000 of other expenses including insurance, taxes and maintenance. The lessee’s incremental borrowing rate is listed at 11%, and the lessor’s implicit rate is calculated at 10%. The equipment reverts back to the lessor at the termination of the lease. The equipment has a 4-year useful life and a fair value of $265,000. Additionally, the guaranteed residual value of the equipment is $20,000 and the expected salvage value is $2,000. Issue #1: How should Lessee Ltd.’s Lease Be Classified? International Accounting Standard 17.10 states five examples of situations that “individually or in combination would normally lead to a lease being classified as a finance lease.” Two of the statements are relevant in classifying the lease as a finance lease. IAS 17.10.c says that the lease term must be for the “major part of the economic life of the asset.” Since the lease term is three years and the useful life of the equipment is four years, the lease term is 75% of the useful life of the asset which would constitute as a “major part” of the economic life of the equipment. Additionally, per IAS 17.10.d “at the inception of the lease the present value of the minimum lease payments [should] amount to at least substantially all of the fair value of the leased asset.” The present value of...
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...for ‘Major Portion’ of the expected economic life of the asset and the present value of the minimum lease payments is equal to or greater than ‘substantially all’ of the fair value of the asset.” (IAS 17, n.d.) The senior accountant stated “The lease term is for three years. The useful life of the equipment is for four years. Since the lease term is for a major part of the useful life of the equipment, it is a finance lease.” (Deloitte, 2010) He is obviously the senior accountant for a reason, he understood that he needed to follow IFRS regulations and standards. 3. How would the answer differ under U.S. GAAP? As stated in the Master Glossary of the Codification, an operating lease can be defined two ways. “From the perspective of a lessee, any lease other than a capital lease and from the perspective of a lessor, a lease that meets the conditions in paragraph 840-10-25-43(d).” (FASB, n.d) Paragraph 840-10-25-43(d) states that a lease is an operating lease if it does not meet any of the four criteria below: “The lease transfers...
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...Accounting for Leases under IFRS Lease classification A lease is an agreement between lessor and lessee, whereby the lessor passes to the lessee the right to use an asset for an agreed period of time in return for a payment or series of payments. Under IFRS IAS (17) Leases we recognize two types of leases, finance and operating: IAS 17, paragraph 8: “A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.” IFRS further, in paragraphs 10 and 11, provides examples and indicators that “individually or in combination” would serve as criteria to classify a lease as finance lease. IAS 17, paragraph 10: “Whether a lease is a finance lease or an operating lease depends on the substance of the transaction rather than the form of the contract. Examples of situations that individually or in combination would normally lead to a lease being classified as a finance lease are: (a) the lease transfers ownership of the asset to the lessee by the end of the lease term; (b) the lessee has the option to purchase the asset at a price that is expected to be sufficiently lower than the fair value at the date the option becomes exercisable for it to be reasonably certain, at the inception of the lease, that the option will be exercised; (c) the lease term is for the major part of the economic...
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...MG Rover case PART A: 4. SET OUT THE MAIN STAKEHOLDERS IN THE MG ROVER BUSINESS AT THE TIME OF ITS COLLAPSE. HOW WOULD YOU DETERMINE THE RELATIVE IMPORTANCE OF THEIR STAKE? During the troubled times at MG Rover business, the main stakeholders were: BMW The UK Government Shanghai Automotive Industrial Corporation (SAIC) Employees of MG Rover, both workers as well as employees part of the supply chain. Phoenix Four and, Nanjing Automobiles. The importance of each of the stakeholders can only be a matter of one’s opinion. The Chartered Quality Institute (CQI) says that the meaning of Stakeholders normally varies and is extremely contextual in nature. (CQI, n.d.). However, CQI (n.d) adds that in business parlay, the term ‘Stakeholder’ can be equated with any third party who has an ‘interest’ in the end result. (CQI, n.d.). The six main stakeholders at MG Rover are listed above, who had a direct interest in the economic outcomes at the business. Perhaps the most important stakeholder was the several employees at MG Rover. The corporate battles and Government interventions first provided them hope of continued employment and stability, then, squashed these very hopes. The employees did not have a direct role in the fortunes of the company. They were not the people implementing the strategies at MG Rover. However, their stake in the company was beyond any comparison. Their livelihood, future and needs for basic requirements fluctuated with the fortunes of the company...
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...I decided to write my project on Ubuntu, which is a distro of Linux. Ubuntu |oǒ'boǒntoō|: Ubuntu is an ancient African word meaning 'humanity to others'. It also means 'I am what I am because of who we all are'. The Ubuntu operating system brings the spirit of Ubuntu to the world of computers. (The Ubuntu Story) I chose Ubuntu because I have used it since 2009 and have loved it ever since then. I will be discussing the current distro which is 14.04, the next one will be 15.04 but 14.04 is the current stable version of Ubuntu or also often referred to as LTS or Long Term Support. The history of Ubuntu is quite short or at least 2004 kind of short. Mark Shuttleworth, from South Africa, started a company called Canonical which was created alongside Ubuntu. The purpose was to help it reach a wider market. They help governments and businesses the world over with migrations, management, and support for their Ubuntu deployments. They would work together with their partners, to ensure that Ubuntu runs reliably on every platform from the pc and the smartphone to the server and, crucially, the cloud. (Canonical) Ubuntu is part of a type of software referred to as open source, a development model promotes a universal access via a free license to a product's design or blueprint, and universal redistribution of that design or blueprint, including subsequent improvements to it by anyone. (Open source) The vision of Ubuntu is part social and part economic: free software, available to everybody...
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...JESSLYNE (090503322) STRATEGIC MANAGEMENT ASSIGNMENT NOKIA CASE STUDY JESSLYNE (090503322) STRATEGIC MANAGEMENT ASSIGNMENT NOKIA CASE STUDY SUMMARY Nokia, once a world leader in wireless telecommunications, has lost nearly 39% of its market share to its competitors and in some instances to no name companies. In 80s and 90s Nokia expanded through the acquisition of many other companies with various technologies. Due to this rapid expansion, Nokia lost focus of its ingenuity in wireless communications. However Nokia reorganized by selling most of its businesses which were not performing well and directed its focus once again to its wireless technologies. Acquisition of Sega in 2003 and then merger with Siemens AB in 2006 put Nokia once again in a place where it could compete its rivals. RIM’s blackberry and Apple’s iPhone are the major rivals and have a large market share from business users and consumers. * According to Nokia’s business strategy; the winning strategy is based upon the following factors. Best mobile devices regardless the price and geographical location * Provide extensive internet solutions on mobile devices * Enter into the markets by providing business mobility solutions to the corporate users Analysis: I believe that Nokia’s strategy is a winning strategy for the following reasons: * Business solutions: Innovative Business mobility solutions will attract the corporate users, since Nokia devices are based upon a very stable...
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...QUESTION 1: Write a brief account of how different elements of the temporal and PEST environments interact to influence the situation described in the case. Change in organizations is a form of strategy in the business environment. In a global business environment today, the change in the organization is very important for businesses, as it will determine the competitiveness of the business with other competitors. To survive and develop a long way in the market, organizations need to have a change in their business environment in the best way. Conversely, the enterprises will face to losing business capabilities and their foothold in the market and it can be cause leading to bankruptcy. Nokia Corporation's case is a typical example. In this case, Nokia is facing to big challenges from their new competitors in the markets as well as in technology advance and the changing in their customers’ habits. Because of those changing, the Nokia Corporation is losing their foothold in the mobile market in the world as well as in home country (Finland). Moreover, there are still many factors that affect this group, not only internal elements but also external elements. Those factors required the organization changes. To aware more, we will base on the PEST environments, this tool is used to evaluate the environments value, it relies on Political, social, economic, technology environment. To understand how they influence to the Nokia Corporation, in this essay we will do an analysis on the...
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...EN Case No IV/JV.12 ERICSSON / NOKIA / PSION / MOTOROLA Only the English text is available and authentic. REGULATION (EEC) No 4064/89 MERGER PROCEDURE Article 6(1)(a) INAPPLICABILITY Date: 22/12/1998 Also available in the CELEX database Document No 398J012 Office for Official Publications of the European Communities L-2985 Luxembourg COMMISSION OF THE EUROPEAN COMMUNITIES Brussels, 22.12.1998 In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EEC) No 4064/89 concerning non-disclosure of business secrets and other confidential information. The omissions are shown thus [… ]. Where possible the information omitted has been replaced by ranges of figures or a general description. PUBLIC VERSION MERGER PROCEDURE ARTICLE 6(1)(a) PROCEDURE To the notifying parties Dear Sirs, Subject: Case No IV/JV.12 – ERICSSON / NOKIA / PSION / MOTOROLA (SYMBIAN II) Notification of 20 November 1998 pursuant to Article 4 of Council Regulation No. 4064/89 1. On 20 November 1998, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EEC) No 4064/89 [ OJ L 395, 30.12.1989 p. 1; corrigendum OJ L 257 of 21.9.1990, p. 13; as last amended by Regulation (EC) No 1310/97, OJ L 180, 9. 7. 1997, p. 1, corrigendum in OJ L 40, 13.2.1998, p. 17 .] by which Motorola, Inc. (“Motorola”) would acquire joint control in Symbian Limited (“Symbian”). As a result of the operation...
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...Introduction: BEXIMCO Group is the largest private sector industrial conglomerate in Bangladesh engaged in diverse business areas. BEXIMCO comprises of five publicly listed companies and sixteen private companies. The Group turnover in 2008 was BDT 18.5 billion. BEXIMCO employs 35,000 people and has 230,000 shareholders. BEXIMCO’s shares constitute 4.84% of the market capitalization of DSE. History of BEXIMCO: Since independence Bangladesh has come a long way, and the Beximco Group of Companies is honored to have had a role in the development of its parent nation. The Group has worked with a simple philosophy; identify an important need and then do everything possible to successfully satiate that need, in a manner which best facilitates the well being of the nation. As a result Beximco has focused on those industries which give Bangladesh a competitive advantage in the global market place in many cases creating the industries for the first time in the region. Throughout its four and a half decade journey the Group has been one of the leading innovators in the country. Presently Beximco Group comprises twenty one companies of which five are listed with the Dhaka Stock Exchange employing over 35,000 personnel and is the largest private sector industrial conglomerate in the nation. . In the course of its growth, it has created industrial and management capabilities that will serve the country for generations to come. It was the first local conglomerate to embrace an international...
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...COMPANY PROFILE Of Beximco Group Introduction: BEXIMCO Group is the largest private sector industrial conglomerate in Bangladesh engaged in diverse business areas. BEXIMCO comprises of five publicly listed companies and sixteen private companies. The Group turnover in 2008 was BDT 18.5 billion. BEXIMCO employs 35,000 people and has 230,000 shareholders. BEXIMCOs shares constitute 4.84% of the market capitalization of DSE History of BEXIMCO: Since independence Bangladesh has come a long way, and the Beximco Group of Companies is honored to have had a role in the development of its parent nation. The Group has worked with a simple philosophy; identify an important need and then do everything possible to successfully satiate that need, in a manner which best facilitates the well being of the nation. As a result Beximco has focused on those industries which give Bangladesh a competitive advantage in the global market place in many cases creating the industries for the first time in the region. Throughout its four and a half decade journey the Group has been one of the leading innovators in the country. Presently Beximco Group comprises twenty one companies of which five are listed with the Dhaka Stock Exchange employing over 35,000 personnel and is the largest private sector industrial conglomerate in the nation. . In the course of its growth, it has created industrial and management capabilities that will serve...
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...Hunter Boot Ltd. Case Study Report INDEX 1 Introduction 3 1.1 History of Hunter Boot Ltd. 3 1.2 Hunter Boot Ltd. today 4 2 Comparative and competitive advantage 4 2.1 Comparative advantage 4 2.2 Competitive advantage 5 2.3 Hunter Boot Ltd. and competitive advantage 5 3. Market screening 6 3.1 Asian market 7 3.2 Screening criteria for Hunter Boot Ltd.’s selection of new markets in Asia 7 4. Market Entry Mode 7 4.1 Hunter Boot Ltd. and entry mode 8 5. The 4 P’s of Marketing 9 5.1 Hunter Boot Ltd.’s two most important P’s 10 5.1.1 Product 10 5.1.2 Pricing strategy to differentiate Hunter products 11 6. Conclusion 11 References 12 1 Introduction This paper looks into different aspects of Hunter Boot Ltd. and its possible expansion to the Asian market. The paper’s content is based on a case study prepared for a Webinar April 12th 2013. The report goes through Hunter Boot Ltd.’s history, theories of comparative and competitive advantages, market screening criteria, Asian market, entry modes and how Hunter Boot Ltd. could apply these theories in order to enter Asian market. Lastly, the report is finished with a short summary of the subject. In recent years, an increasing number of key industries such as automobile and motorcycle production, agricultural equipment, aerospace, military hardware, telecommunication, electronics and luxury consumer goods have become global in scope. Firms in these industries originate,...
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...Tyco's Management Planning Melissa Dinges MGT/230 December 01, 2014 Steven Friloux Tyco's Management Planning Tyco International Ltd. is a company that has two major business sections security systems and fire protection and it is located in Switzerland, but has its operational headquarters in Princeton, New Jersey. Tyco International Ltd. was founded in 1962 and became incorporated in 1962. (Wikipedia, the free encyclopedia, 2014) It has been around for quite a few years and seen the ups and downs of business and has learned from it and bounced back. A major thing that the company has learned is that it has to have a management plan to stay in business and to be successful. This plan has to also encompass the company’s mission statement and ethics. Tyco’s mission statement is “We will increase the value of our company and our global portfolio of diversified brands by exceeding customers' expectations and achieving market leadership and operating excellence in every segment of our company.” (AllFinancialMatters.com, 2005) Management Planning Planning is looking ahead and calculating the future course. It is a preparatory step that determines what the company wants to attain, and also incorporating the company’s goals in the plan. Tyco has a few different goals depending on what factors you are discussing. In the planning process there are three goals that factor into management planning. The governance goal deals with practices and policies. It states that...
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...1. Historical background Beximco Pharmaceuticals Limited (BPL) is a part of Beximco Group, the largest private sector industrial conglomerate in Bangladesh. BPL develops, manufactures and markets both finished dosage form branded generic pharmaceutical products and active pharmaceutical ingredients (APIs), with products including solid dose forms, Metered Dose Inhalers, Nasal Sprays, Large Volume Intravenous Fluids, Suppositories, and Creams/Ointments. BPL produces and markets 'branded generics' for most diseases ranging from AIDS to cancer, from infection to asthma, from hypertension to diabetes, for both national and international markets. The company also manufactures active pharmaceutical ingredients and intravenous fluids and contract manufacture for major international brands of leading multinational companies. BPL utilizes state of the art manufacturing facilities. BPL also has outstanding reverse engineering capabilities. Incorporated in 1976, BPL started off as a distributor of pharmaceutical products. It imported products from global MNCs such as Bayer AG of Germany and Upjohn Inc. of USA and sold them in the local market. It eventually graduated to a manufacturer and distributor of these products in local market under licensing agreements. During the early 80s, BPL launched its own products in the local market. Beximco started its exports operation in the early 90s with APIs. Today BPL is one of the largest exporters of medicines from Bangladesh. BPL employs more...
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