...Poluuter Corp In: Business and Management Cash Flow Poluuter Corp José A Valdés 3 de octubre de 2013 Sem. De Contabilidad Prof. Alejandro Méndez Case 11-1 Polluter Corp Facts of Case: Polluter Corp is an SEC registrant and manufacturer household cleaning products. In the course of operations, Polluter Corp emits emission pollutants; The Company receives emissions allowances, (EAs,) from the government for 2010 to 2030. Polluter Corp will upgrade their production facilities in 2014 in order to reduce their pollutants. Emissions Allowance are given by the government in order to offset pollution expense, with the goal being to reduce pollution 2010 Transactions After 2014, Polluter will emit less pollution, but until then it will need more EAs in order to avoid penalties. Transactions Fiscal Year 2010 After 2014, Polluter Corp will emit less pollution, but until then it will need more EA’s in order to avoid penalties, Polluter buys extra EA’s for 2012 from Clear Air Corp for $3 million. In an effort to offset the cost of the April 2, 2010 purchase of 2012 Eas, the company sold Eas with a vintage year of 2016 to Dirty Chemical Corp for $2 million. Answer Required: 1. What is the appropriate classification in the statement of cash flows in the company’s December 31, 2010, financial statements for its purchase of 2012 EAs from Clean Air Corp ? According to the FASB codification section 805-50-3-1-2, these allowance will be...
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...Polluter Corp. Case Study Polluter Corporation is a manufacturing firm in the United States registered with the Securities and Exchange Commission. Polluter Corp. operates three facilities manufacturing various household cleaning products. These products produced are sold to retail customers. The United States government funded their company with emission allowances (EAs). An emission allowance is an authorization to emit a fixed amount of a pollutant. An emissions allowance is sometimes also referred to as a permit. An allowance is a fully marketable commodity that may be bought, sold, or traded for use by entities covered by the program. The government granted those EAs with varying vintage years which is the number of years the allowance may be used. Polluter Corp. EAs were to be used between 2010 and 2030 which is substantial time. Once the company received their receipt they record the EAs as intangible assets with a cost basis of zero, in accordance with The Federal Energy Regulatory Commission (FERC). FERC is accounting guidance for EAs so companies understand rules and regulations associated with the allowance. Governing bodies generally issue rights to help control or reduce the emission of pollutants and greenhouse gases. They also allow entities to emit a specified level of pollutants. EAs individually have vintage year designation, but EAs with the same vintage year destination are replaceable and can be replaced by another identical item...
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...Memorandum to the File Date: August 1, 20XX From: Carie Ford Re: Summarize the tax issue/purpose of the memo. Background Provide a concise yet complete overview of facts/background. Issue State the issue(s) in question format. Authoritative Guidance List all authoritative guidance used to form conclusion and analysis. Refer to p. 718 in your tax textbook for citation reference guidance. Analysis Discuss each issue separately. Describe the logical, defendable, legal alternatives to each issue/problem. Provide support and detail for your reasoning. Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx...
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...of items commonly considered to be cash equivalents are Treasury bills, commercial paper, money market funds, and federal funds sold (for an entity with banking operations). Suggested Solution -- Case 01 Objectives of the Case This case gives students an opportunity to apply cash flow principles to determine the appropriate classification of various transactions in the statement of cash flows. Applicable Professional Pronouncements ASC 230, Statement of Cash Flows (ASC 230) IAS 7, Statement of Cash Flows (IAS 7) Discussion 1 — Purchase of 2012 Emission Allowances What is the appropriate classification in the statement of cash flows in Polluter Corp.’s (the ―Company’s‖) December 31, 2010, financial statements for its purchase of 2012 emission allowances (―EAs‖) from Clean Air Corp.? Accounting Alternatives — Purchase of 2012 Emission Allowances Alternative 1 — The Company should classify the purchase of the 2012 EAs from Clean Air Corp. as an investing cash outflow in its December 31, 2010, statement of cash flows. Proponents of Alternative 1 believe...
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...de octubre de 2013 Sem. De Contabilidad Prof. Alejandro Méndez Case 11-1 Polluter Corp Facts of Case: Polluter Corp is an SEC registrant and manufacturer household cleaning products. In the course of operations, Polluter Corp emits emission pollutants; The Company receives emissions allowances, (EAs,) from the government for 2010 to 2030. Polluter Corp will upgrade their production facilities in 2014 in order to reduce their pollutants. Emissions Allowance are given by the government in order to offset pollution expense, with the goal being to reduce pollution 2010 Transactions After 2014, Polluter will emit less pollution, but until then it will need more EAs in order to avoid penalties. Transactions Fiscal Year 2010 After 2014, Polluter Corp will emit less pollution, but until then it will need more EA’s in order to avoid penalties, Polluter buys extra EA’s for 2012 from Clear Air Corp for $3 million. In an effort to offset the cost of the April 2, 2010 purchase of 2012 Eas, the company sold Eas with a vintage year of 2016 to Dirty Chemical Corp for $2 million. Answer Required: 1. What is the appropriate classification in the statement of cash flows in the company’s December 31, 2010, financial statements for its purchase of 2012 EAs from Clean Air Corp ? According to the FASB codification section 805-50-3-1-2, these allowance will be recognized as intangible assets at their cost. When a company buys any assets, the...
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... Date: Subject: Case 11-1 Polluter Corp. Statement of Relevant Facts Polluter Corporation, an SEC registrant, operates three manufacturing plants in the United States. The Company manufactures various household cleaning products at each facility, which are sold to retail customers. The U.S. government granted the Company emission allowances (“EAs”) of varying vintage years (i.e., the years in which the allowance may be used) to be used between 2010 and 2030. Upon receipt of the EAs, the Company recorded the EA’s as intangible assets with a cost basis of zero. The Company currently emits a significant amount of greenhouse gases because of its antiquated manufacturing facilities. The Company plans to upgrade its facilities in 2014, which will decrease greenhouse gas emissions to a very low level. On the basis of the timing of the upgrade, the Company currently anticipates a need for additional EAs in fiscal years 2010–2014. However, upon completion of the upgrade, the Company believes it will have excess EAs in fiscal years subsequent to 2014 because of reduced emissions as a result of the upgrade. The Company entered into the following two separate transactions in fiscal year 2010, which will impact the Company’s results as presented in the statement of cash flows: 1. To meet its need for additional EAs in fiscal years 2010–2014, on April 2, 2010, the Company spent $3 million to purchase EAs with a vintage year of 2012 from Clean Air Corp. 2. In an effort to offset the...
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...MEMORANDUM Polluter Corp operates three manufacturing facilities in which various household cleaning products are manufactured and sold to retail stores. Polluter has a certain emission allowances for each year that are classified as intangible assets. Because it anticipates a need for additional emission allowances for the years 2010 – 2014, it purchased $3 million in emissions credits from Clean Air Corp. on April 2, 2010. A complete renovation of its facilities will be completed by 2014, at which point in time Polluter expects to have additional emission allowance that it does not need. Therefore, to offset the cost of having to purchase emissions credits until the renovations are complete, Polluter sold $2 million worth of future emissions credits to Dirty Chemical Corp. The question of how to account for these transactions in the statement of cash flows has been raised. This memo discusses and evaluates the relevant options. Definitions Accounting Standards Codification 230-10 Statement of Cash Flows 230-10-20 Glossary Financing Activities Financing activities include obtaining resources from owners and providing them with a return on, and a return of, their investment; receiving restricted resources that by donor stipulation must be used for long-term purposes; borrowing money and repaying amounts borrowed, or otherwise settling the obligation; and obtaining and paying for other resources obtained from creditors on long-term credit. Investing Activities ...
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...2010, financial statements for its purchase of 2012 EAs from Clean Air Corp? Provide the logic for each alternative and indicate which alternative you believe is best and why. In regards to the information given in the Polluter case, there are several ways the company can classify the $3 million purchase of emission allowances (“EAs”) from Clean Air Corp. First, it is important to understand the Polluter’s intention for the EAs and nature of their ‘business.’ In order to understand what are the “feasible alternative classifications in the statement of cash flows” for the $3 million purchase, Polluter will determine what type of asset they will classify the EAs as on their balance sheet. Following are three alternatives Polluter can consider as outlined in Deloitte’s “Accounting for Emission Rights” paper: 1. The EAs are intangible assets as defined under SFAS No. 142, Goodwill and Other Intangible Assets, because they lack physical substance but do not meet the definition of a financial asset under SFAS 140. 2. EAs are listed as financial assets because markets and exchanges for the trading of EAs provided evidence that they qualified as financial assets as the allowances would be readily convertible to cash. 3. An alternative view is that they are listed as inventory, as they are part of the necessary costs to comply with environmental regulations and emissions reduction schemes. Polluter currently has significantly high levels of greenhouse gas pollution,...
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...Case 11-1: Polluter Corp. Page 1 Suggested Solution -- Case 01 Objectives of the Case This case gives students an opportunity to apply cash flow principles to determine the appropriate classification of various transactions in the statement of cash flows. Applicable Professional Pronouncements ASC 230, Statement of Cash Flows (ASC 230) IAS 7, Statement of Cash Flows (IAS 7) Discussion 1 — Purchase of 2012 Emission Allowances What is the appropriate classification in the statement of cash flows in Polluter Corp.’s (the ―Company’s‖) December 31, 2010, financial statements for its purchase of 2012 emission allowances (―EAs‖) from Clean Air Corp.? Accounting Alternatives — Purchase of 2012 Emission Allowances Alternative 1 — The Company should classify the purchase of the 2012 EAs from Clean Air Corp. as an investing cash outflow in its December 31, 2010, statement of cash flows. Proponents of Alternative 1 believe the Company should classify the purchase of EAs as investing activities in the statement of cash flows given the Company’s election to classify the EAs as intangible assets on its balance sheet. Although EAs are not specifically mentioned in ASC 230, proponents of Alternative 1 believe, given the Company’s accounting policy, the EAs represent ―productive assets.‖ ASC 230-10-20 defines investing activities as follows: Investing activities include making and collecting loans and acquiring and disposing of debt or equity instruments and property, plant, and equipment...
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...POLLUTER CORP. Polluter Corp is a leading household cleaning products manufacturing company based in the United States. The Company operates three manufacturing facilities as an SEC registrant. Company emission allowances of vintage years are granted by U.S government to be used 2010 and 2030. According to the Federal Energy Regulatory Commission, Polluter Corp. recorded EAs as intangible assets with a zero cost basis when government issued EAs to company and has a fiscal year end of December 31. Government has special guidance to control or reduce the emission of pollutants and greenhouse gases to participating companies. These are explained as follow; companies have a specified level of pollutants to emit EAs. EAs with same vintage year designation are exchangeable or replaceable by any companies to reduce pollution. That means company can buy EAs from other companies when it needs EAs or sell excess its EAS to other companies who need to satisfy pollution control obligation through a broker. According to EAs regulation, company is required to deliver to the governing bodies EAs sufficient to offset the company’s actual emission or pay a fine for overage of EAs. Currently, Polluter has facing a significant increase in emission due to its old manufacturing facilities and forecasted a need for EAs in fiscal year 2010-2014. In order to reduce green house gas emission to a significant low level, company plans to upgrade its facilities in 2014 and it will cost $15 millions. Under...
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...Purchase of 2012 Emission Allowances What is the appropriate classification in the statement of cash flows in Polluter Corp.’s (the ―Company’s‖) December 31, 2010, financial statements for its purchase of 2012 emission allowances (―EAs‖) from Clean Air Corp.? Accounting Alternatives — Purchase of 2012 Emission Allowances Alternative 1 — The Company should classify the purchase of the 2012 EAs from Clean Air Corp. as an investing cash outflow in its December 31, 2010, statement of cash flows. Proponents of Alternative 1 believe the Company should classify the purchase of EAs as investing activities in the statement of cash flows given the Company’s election to classify the EAs as intangible assets on its balance sheet. Although EAs are not specifically mentioned in ASC 230, proponents of Alternative 1 believe, given the Company’s accounting policy, the EAs represent ―productive assets.‖ ASC 230-10-20 defines investing activities as follows: Investing activities include making and collecting loans and acquiring and disposing of debt or equity instruments and property, plant, and equipment and other productive assets, that is, assets held for or used in the production of goods or services by the entity (other than materials that are part of the entity’s inventory). Investing activities exclude acquiring and disposing of certain loans or other debt or equity instruments that are acquired specifically for resale, as discussed in paragraphs 230-10-45-12 and 230-10-45-21. Further, ASC...
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...Accounting 5110 – Fall 2012 Critical Writing Case Section 1 by 7:30 am Section 2 by 3:40 pm Section 3 by 10:45 am Due November 21, 2013 Please submit your memo in Canvas The attached case presents an accounting dilemma and asks you to provide guidance on the proper accounting. Prepare your guidance in memo format. The purpose of this assignment is to help you recognize an accounting problem, gather and weigh relevant information, consider and evaluate alternatives, and reach and articulate informed solutions. I strongly encourage you to make use of a service here on campus – the University Writing Center (UWC). UWC provides one-on-one writing consultation free to university students. Unlimited half hour sessions are available. UWC now has an office in the business building – SFE 1171. To make an appointment follow this link: http://uath.mywconline.com/. The final draft of your memo should not exceed two pages, single-spaced, one-inch margins, 12 point font. The memo will be graded based on the attached rubric. Criterion Organization Points possible 5 100% Appears neat and organized; no spelling or grammar errors; uses active voice; guides the reader through the case; gets to the point Summarizes the facts completely; key facts identified; distinguishes between facts and assumptions ...
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...Clean Air Act Clean Air Act, 42 U.S.C. § 7401 et seq. -- Enforced by US EPA -- By the end of this lecture you should be able to describe: * The race to laxity * What NAAQS means. * The federal government’s role in cooperative federalism * 7 criteria pollutants * A hazardous pollutant under the CAA * Non-attainment area * Emissions trading programs * Noise pollution under the CAA * The four Class I areas designated by the State of Florida * The four emissions regulated by Title II of the Clean Air Act relating to motorized vehicles * How long a waiver is good for and to how much of an auto manufacturer’s production does it apply to. * What city is the Title II pollution numbers based on. * What is a clean fuel vehicle. LOOK for *** as pointers NOTE Most of the narrative on the lectures in this course has been modified from: - Plater et al. Environmental Law and Policy: Nature, Law and Society, 1992. - Findley and Farber. Environmental Law, 2008. Background Air and water are common resources and are sometimes referred to by lay-people as “pollution sinks,” implying that airsheds and water bodies are large vats into which pollutants can be thrown as a large disposal. As we saw with the Clean Water Act, this isn’t true. While both airsheds and water bodies can handle some amount of pollution without significant degradation, airsheds and water...
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...Corporate Carbon Strategies Threats and opportunities arising from the new energy imperative Reference Code: BI00036-019 Publication Date: March 2011 1 About the authors Professor Merlin Stone Merlin is Head of Research at The Customer Framework. He is author or co-author of many articles and thirty books and also on the editorial advisory boards of several academic journals. He has a first class honors degree and doctorate in economics from Sussex University, UK. In parallel to his business career, he has also pursued a full academic career, holding senior posts at various universities. He is now a visiting professor at De Montfort, Oxford Brookes and Portsmouth Universities, teaches economics for the Open University and marketing for Exeter University. Jane Fae Ozimek The author is a writer and researcher in the areas of IT, Business and the Law. Jane is currently editor of the Journal of Database Marketing and has previously published works on the use of statistics in business and Marketing Resource Management. Recent research papers include publications on the misuse of security protocols by major corporations, and a re-evaluation of the Loyalty Ladder concept in marketing theory. Jane was also co-author of the recently published Carbon Trading and the Effect of the Copenhagen Agreement (published by Business Insights, 2010). 2 Disclaimer Copyright © 2011 Business Insights Ltd This report is published by Business Insights (the Publisher). This report...
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...Green Banking Initiative: Opportunities for Bangladesh Dr. S M Ahsan Habib Professor and Director (Training & Research), BIBM The paper was presented at a seminar on Green Banking at BIBM on October 14, 2010 Green Banking Initiative: Opportunities for Bangladesh I. Introduction Banks that were once seen only as profit motive institutions have been adjusting to a more demanding market and to a more conscious society over last two decades. An increasing number of banks around the world are going green by providing innovative green products that cover financial services to support the activities that are not hazardous to environment and help conserve environment. A green bank is also called an ethical bank, a socially responsible bank, or a sustainable bank. The exact meaning of all these titles may not be same however they cover a lot of common activities and perceptions. At least, all these banks- in various ways and at different times- have engaged themselves in making a better future (Merzio 2007). The approach to green banking (GB) varies from bank to bank, however, broad objectives of green banks are to use their resources with responsibility avoiding waste and giving priority to environment and society. The public concern of the state of environment has been growing significantly in the last few years, mostly due to apparently unusual weather patterns, rising greenhouse gases, declining...
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