...Intermediate Accounting II Chapter 20 Accounting for Pensions Overview of Employer's Accounting for Pension Plans Defined contribution plan - employer agrees to make a defined contribution to a pension plan plan participants receive whatever benefits have accumulated each year, employer records an expense an a related liability for the contribution Defined benefit plan - employer agrees to provide a benefit at retirement that is defines or fixed by formula employer accepts risk of meeting the obligation upon employee's retirement requires use of complex actuarial estimates Involves 2 accounting entities employer sponsor - reports pension expense on the income statement, and apension liability which is the sum of two accounts - accrued/prepaid pension cost and additional liability, and an intangible asset -deferred pension cost (if required) employee sponsor must also maintain these accounts on a memo basis -unrecognized prior service costs and unrecognized gains and losses pension plan - maintains these accounts: projected benefit obligation,accumulated benefit obligation (for reporting purposes only), vested benefits (for reporting purposes only) and plan assets Terminology Accumulated Benefit Obligation (ABO) - actuarial present value of benefits (vested or unvested) attributed by the pension benefit formula to employee services rendered before a specified date, and based on employee service...
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...creditor’s objective is to maximize recovery of its investment by granting relief to the debtor. The creditor expects to obtain more cash or other value from the debtor, or to increase the probability of receipt by granting the concession, rather than by not granting it. Modifications and exchanges that are not considered Troubled Debt Restructurings are accounted for as either (1) an extinguishment (if the terms are substantially different, greater than 10 percent) or (2) a modification. A Troubled Debt Restructuring involves one of two basic types of transactions: 1. Continuation of debt with a modification of terms. 2. Settlement of debt at less than its carrying amount. In the first type of transaction, the creditor agrees to restructure the original terms of the loan in order to help the debtor meet its short-term cash requirement. The purpose of this modification of terms and reduction or deferral in payment is to help the debtor improve its financial condition and eventually be able to pay the creditor. The second type of transaction is an agreement between the creditor and debtor in which the creditor accepts cash payment, other assets or an equity interest in the debtor to fully satisfy the debt even though the value received is less than the amount of debt. In either case, the creditor is trying to make the best of a difficult situation and to maximize its recovery of its investment. If a debtor is currently able to...
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...Kudler Fine Foods Restructure Proposal Edward D. Williams HRM/531 – Human Capital Management August 16, 2010 Professor Susan Frear Submitted for your approval is a request for change in our present company structure. Our objective is to streamline cost, increase productivity and improve the quality of life of our present and future employees. Through this restructure we will evenly distribute work responsibilities thereby more effectively sharing the work load. This move is necessary if we are to expand and compete with other companies in our industry. Our present setup is too narrow in its focus and scope. It does not allow for the potential growth and expansion of our business. For us to grow we must plan and make changes to our existing management and leadership structure. The following changes are hereby requested: 1. The elimination of in-store Wine Stewards at each location. We will reduce that position down to one Wine Steward who will rotate from store to store. That individual will also train store management and general staff at each store on the basics of wine nuances and selection. They will hold wine information and training sessions held at our locations and open to the public. This will create the potential to attract new clients to our facility and gain new customers. 2. The elimination of the in-store specialist position. Each department will receive training on their particular specialty. For example, the meat department will be trained...
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...1) According to IAS 37, paragraph 72, “A constructive obligation to restructure arises only when an entity: (a) has a detailed formal plan for the restructuring identifying at least: (i) the business or part of a business concerned; (ii) the principal locations affected; (iii) the location, function, and approximate number of employees who will be compensated for terminating their services; (iv) the expenditures that will be undertaken; and (v) when the plan will be implemented; and (b) has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it. “ By making the press release and communicating the termination plan to its employees , Pharma Co raised a valid expectation to those affected by announcement of the plan. Also, Pharma Co set the date when the plan will be implemented, the principle location affected, the part of the business concerned, the number of employees who will be terminated, and the expenditures that will be undertaken. According to IAS 37, paragraph 80, “A restructuring provision shall include only the direct expenditures arising from the restructuring, which are those that are both: (a) necessarily entailed by the restructuring; and > (b) not associated with the ongoing activities of the entity. “ Thus, only direct costs must be accrued in the end of 2010: the lease termination fee $1.3 mln and the exit package for the...
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...Compensation Plan The goal of this compensation plan is to provide employees motivation on a day-to-day basis, but also to give them incentive to remain with the company; additionally, this compensation plan has been created with the goal of being as cost effective for the company as possible. Benefits play a crucial role in both attracting and retaining the best employees (Gillette, 2007, p29). Salaries Employees will continue to receive a base salary and receive commission for sales of products. Each employee will be given a sales goal based on their experience, past effectiveness, target customer base, etc. Recognizing that a new sales person is not going to sell as much or reach as high a level as a more experienced sales person is an important component. As a sales person develops their skills and builds their client base it is important to help them maintain their confidence and feel that they are achieving at a comparable rate. Therefore, employees will also receive a bonus for going past their quarterly goals. While this amount won’t be large, the goal with it is to provide encouragement and incentive for employees to continue to excel. By offering the employees quarterly incentives for exceeding their goals it will encourage all employees to strive to surpass their goals. This is also beneficial for all employees, regardless of their level of sales experience. Because sales goals may not be set as high for a new employee as for a more experienced one a new employee...
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...Analysis of Marriott Corporation’s ‘Project Chariot’ Introduction In the spring of 1992, J.W. Marriott Jr., Marriott Corporation’s Chairman and CEO, must decide whether to recommend a proposal to the Board of Directors for a complete restructuring of the firm due to financial distress and a hefty current debt burden. While restructuring seems promising to executives, there are serious ethical considerations at hand regarding the fiduciary duty of management to both shareholders and debtholders. In theory, Project Chariot is a leveraged buyout that would diminish the value of Marriott’s current debt and distribute it to existing shareholders who may realize capital gains from stock appreciation. Our analysts hypothesize that CFO Stephen Bollenbach’s proposal, Project Chariot, will ultimately satisfy its outstanding debt payments to creditors in the long term despite an imminent credit downgrade, and more than anything leave shareholders extremely pleased. Project Chariot: A Brief Overview Stephen Bollenbach is proposing Project Chariot in an effort to combat the problems causing Marriott Corporation (MC) severe financial distress. The most immediate problem to fix is MC’s debt issue. Economic downturns in the 80s and the 1990 crash of the real estate market have left MC with debt issues that have weighed heavily on the company. Once the debt issues are resolved, Marriott Corporation will be able to raise capital. The new company will have the ability to take advantage...
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...Capital Budget Recommendation for Guillermo Furniture Managerial Accounting and Legal Aspects of Business ACC 543 Capital Budget Recommendation for Guillermo Furniture After careful evaluation of preexisting financial documents, an assessment has been made to determine what business decision will provide the greatest return for Mr. Navallez, owner of Guillermo Furniture. Presently, Mr. Navallez needs to re-strategize his business endeavors, because there is now new competition in the furniture manufacturing industry. The competition uses high-tech, automated machinery to mass-produce furniture at an end-price cheaper than Mr. Navallez can offer his clientele (Guillermo Furniture Scenario). Additionally, the competition has very little labor costs, as most work is done by machine; conversely, Navallez is projected to pay $44,065 in wages for the year of 2011 (Guillermo Furniture Financial Data Sheets). Although expensive, an option available to Mr. Navallez is to invest in high-end equipment and remain in the furniture manufacturing industry. In order to explore the possibility a potentially lucrative investment opportunity capital budget must be estimated and compared to the expected cash inflow. Capital budgeting techniques can be used to determine if the investment in high-tech machinery will provide a sufficient return on investment. Two methods commonly used are net present value (NPV) and internal rate of return (IRR). Additionally, the amount of time it will...
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...How to Restructure Society So That All Citizens Follow the Moral Law A society is an organized group of persons living in a particular region and having shared customs, laws, and organizations (google.com). In other words, the community we live in and the people we interact with are all part of our society. Like professor Robinson said, the first society we are in, is our family. A family can be composed of a mother, father, brothers and sisters. It can also be a single mother and her children or a single father and his children. There are many ways to describe what a family is. In other words, it is the first people who surround you when you are first born and as you grow up. It is at this point where a child begins to learn ethical behavior and moral value. What is Ethics? The dictionary definition for ethics is “a theory or system dealing with values relating to human conduct, with respect to the rightness and wrongness of certain actions and to the goodness and badness of the motives and ends of such actions” (Dictionary.com). Our laws, rules, procedures, and policies are founded on ethics. Therefore, it is important that families have good ethics; after all they will be passing it down to the next generation. Family has a very important role in restructuring society so that all citizens follow the moral law; it is with the family where it starts in order to change society. It is here where a child learns to get along with others and develop...
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...https://en.wikipedia.org/wiki/Restructuring When change is not handled well, additional loss of jobs can occur. In addition, demoralization of the work force; increased worker turnover; decreased cooperation and teamwork; and increased levels of stress, anxiety, absenteeism, illness, and mistakes can follow. For example - Some have been economically dynamic but socially disintegrated; others have been equitable but stagnant; several are both stagnant and unintegrated. Even as the economic outlook appears to brighten, the fact remains that many organisations can no longer operate as they had been. A key feature of this changing landscape is the need for organisations to restructure. Here are seven broad restructuring principles to help make any restructure a successful one. 1. Align structure to strategy All restructures must align to strategy. This may seem self-evident, yet a significant number of organisations fail to do so. For example, if local conditions are a predominant factor, then stress local sales and marketing functions rather than a centralised behemoth that then tries to matrix with local elements. 2. Reduce complexity Simply put, complexity costs. Whether it is a complex organisational structure, a complex product offering or complex transactional processes, the added cost of complexity can be a drag on performance. To mitigate complexity, there are three considerations that help with...
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...costs, which instead only worked to distract Marvel from producing quality product. Besides, Perelman showed a poor judgment in several acquisitions aimed at building Marvel into an entertainment empire but which only further distracted the company and paid more than he could earn from the acquisitions At the year 1996, there are more than 70% debts at Marvel entertainment group. The public debts issued by Marvel Holding Companies are 47.2% of the old shares and 9.1% new shares by the time reorganization plan 2. Describe and evaluate the proposed restructuring plan. Will it solve the problems that caused Marvel to file for chapter 11? The restructure plan: Buy 410m new shares for $350m @ $0.85 Acquire remaining Toy Biz with 32% premium Bondholders get 14.6% of shares (77.3m) The restructure will allow Marvel to restructure current debt. Also will allow Marvel to sustain operations while they make improvements in the organizational structure and refocused. Marvel will see profits increasing with focus on movie production....
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...Part A Company A is in financial trouble. The company is reorganizing its processes and is looking to restructure its debt. Debt restructure is a mutual agreement between a financially troubled company and this company’s creditor, the bank. This process will reorganize the liabilities to prevent foreclosure or even asset liquidation (Business Dictionary, 2012). The liabilities under consideration for Company A are its capital lease obligations, notes outstanding liability, and mortgage outstanding. Company A’s capital lease obligations are currently $54,580. A capital lease is fixed-term lease similar to a loan agreement to the extent of purchasing capital assets with installment payment plans. The current capital lease obligation will not need restructuring but will require regular payments. The notes outstanding are for $3 million is of great concern to the company. The bank has offered to accept land with a book value of $1,950,000 and fair value of $2,400,000. By restructuring this debt, Company A will be able to concentrate on paying off its other current and long-term debts. The journal entries should this restructure occur are: Land (2,400,000 – 1,950,000) 450,000 Gain on disposition of assets (ordinary) 450,000 Note Payable 3,000,000 Land (fair value) 2,400,000 Gains on troubled debt restructure (extraordinary) 600,000 The mortgage outstanding is for $608,030 and will not require restructuring to settle this amount. A mortgage...
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... WEIZHE QI A IAS37 Provisions, Contingent liabilities and Contingent Assets B According to IFRS IAS37 72-79: 72 A constructive obligation to restructure arises only when an entity: (a) has a detailed formal plan for the restructuring identifying at least: (i) the business or part of a business concerned; (ii) the principal locations affected; (iii) the location, function, and approximate number of employees who will be compensated for terminating their services; (iv) the expenditures that will be undertaken; and (v) when the plan will be implemented; and (b) has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it. 73 Evidence that an entity has started to implement a restructuring plan would be provided, for example, by dismantling plant or selling assets or by the public announcement of the main features of the plan. A public announcement of a detailed plan to restructure constitutes a constructive obligation to restructure only if it is made in such a way and in sufficient detail (ie setting out the main features of the plan) that it gives rise to valid expectations in other parties such as customers, suppliers and employees (or their representatives) that the entity will carry out the restructuring...
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...PART I THE VALUATION OF BLUESCOPE FOR THE RESTRUCTURE 1. Historical Financial Performance According to BlueScope Steel Limited consolidated financial headlines, the total revenue of BlueScope kept slightly increasing from 2003 to 2008. However, there is a significant fluctuation of revenue in recent three years. As a result, the EBIT and NPAT suffered a tremendous decrease from 2008 to 2009. And BlueScope generated its first loss (YR 2009) on NPAT shown negative A$66 million which is caused by the 20% increasing of operation expense on raw materials. In addition, the continuously increasing in asset impairment expense for the recent three years makes the highest loss on NPAT in 2011 (negative A$1,054million). The Total Revenue, EBIT, NPAT of BSL from 2003 to 2011 (A$million) 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 (1,000) (2,000) Total Revenue EBIT NPAT 2003 2004 2005 2006 2007 2008 2009 2010 2011 According to the financial analysis about the business segmentation, BlueScope Steel make more money from its overseas businesses than its Australian businesses. One reason of the poor Australian business is because of losing money on the export business for more than three years. Its lost was nearly A$500 million on its Australian export business which leads to a net loss of just over A$1 billion in 2011 so BlueScope has decided to stop exporting (The Sunday Morning Heralds, 2011). Deeply analyzing on currently three years, four key ratios...
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...Eastman Kodak dominated the film industry. Unfortunately for them, Eastman Kodak did not respond to the fast paced growth in the tech industry. The innovative staff at Fuji introduced a new product that decreased Eastman Kodak’s market share by a large margin for the first time. Their market share went from $85 per share to $71 per share, which resulted in a 16% decline. Eastman Kodak’s market share continued to decrease while the technology market as a whole was increasing tremendously. The obligatory changing of the organizational architecture for Eastman Kodak was in response to the immediate decline in market share, earnings per share, and lack of response to advances in modern technology. Eastman Kodak realized that they needed to restructure and respond very quickly but they were unsuccessful. Ultimately, Eastman Kodak was left in the dust. Before the distinct advances in technology, Eastman Kodak had a centralized decision method. This requires lower level management decisions to go through top management before any changes could be decided or implemented. Although the top down decision-making can control the company in positive ways, this method requires a tremendous amount of time because of the amount of approvals required. Eastman Kodak realized that they needed more opinions and ideas flowing around the company in order to stay competitive in the tech market, so they changed their decision methods. Eastman Kodak opted to decentralize their decision rights...
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...Cindy Following on from our recent discussion, I appreciate your openness about the current situation and for the opportunity to justify the importance of Human Resources (HR) as a value added function, especially as we move towards a new corporate structure. If correctly aligned to the business strategy, HR is critical in ensuring the success of the transition. Under Arnold’s leadership, the focus was to operate as a “one family company”, with HR was responsible for organising expensive leadership programs and sales conferences. There is a lot more to the role of HR than what the Board understands. Let me explain – 1. Using your knowledge of HR strategy, provide a rationale for the contribution of HR to the change process in this corporate context. With the impact of globalisation and the need to remain competitive, companies have had to reassess various departmental activities to meet new organisational objectives (Lawler & Mohrman, 2003). A new strategic role for HR is one of these changes. Cabrera & Bonache (as cited in Lengnick-Hall et al., 2009) argued that Human Resource Management (HRM) practices are an essential part of a company’s corporate business strategy. Combining business strategy and people management together creates a new set of responsibilities, a bigger challenge for HRM and an increase in HR deliverables (Conner & Ulrich, 1996). Therefore, HR professionals must concentrate more on HR strategy, and move away from the traditional...
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