...determined based on the remaining lease rentals, adjusted for the effects of any prepaid or deferred items recognized, reduced by estimated sublease rentals that could be reasonably obtained, even if the entity does not intend to sublease (so long as it is contractually permitted). While ―remaining lease rentals‖ as discussed in ASC 420-10-30-8 is not defined in existing literature, ASC 420-10-30-9 states ―A liability for costs that will continue to be incurred under a contract for its remaining term without economic benefit to the entity shall be measured at its fair value at the cease-use date.‖ Therefore, if executory costs (e.g., common area maintenance costs, real estate taxes) are required to be paid by the lessee as part of the lease contract, those costs will continue to be incurred by the lessee and should be included in any calculation of contract termination costs. The measurement of any net liability would be a discounted amount that includes the nonperformance risk associated with the liability and an appropriate market risk premium. The effect, if any, of the market risk premium, will be relative to the uncertainty in the timing and amount of the future cash flows. Although the contractual lease payments are fixed with respect to both timing and amount, sublease income, if any, can fluctuate as to the timing of when a tenant would sublease and the amount of rent that would be paid. An operating lease example is...
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...MINI CASE #1 Issue Identified How to account for the expected loss resulted from redemption of the debt obligations in the period that it announces its intent to call the debt for redemption? ASC References ASC 470-50-40-2 states that “ a difference between the reacquisition price of debt and the net carrying amount of the extinguished debt shall be recognized currently in income of the period of extinguishment as losses or gains and identified as a separate item.Gains and losses shall not be amortized to future periods. “ ASC 405-20-40 states that “a debtor shall derecognize a liability if and only if it has been extinguished. A liability has been extinguished if either of the following conditions is met: The debtor pays the creditor and is relieved of its obligation for the liability. Paying the creditor includes the following: Delivery of cash Delivery of other financial assets Delivery of goods or services Reacquisition by the debtor of its outstanding debt securities whether the securities are cancelled or held as so-called treasury bonds. The debtor is legally released from being the primary obligor under the liability, either judicially or by the creditor. ASC 470-50-55-9 specifies that “the following situations do not result in an extinguishment and would not result in gain or loss recognition under either paragraph 405-20-40-1 or this Subtopic: An announcement of intent by the debtor to call a debt instrument at the first call date In-substance defeasance ...
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... € 7,500 or € 10,000* € 16,000 € 69,000 € 65,000 € € € € € € € € € € 4,500 4,500 6,000 5,000 2,000 2,000 4,000 2,500 4,000 6,500 LUMP SUM Upon signing franchise agreement LUMP SUM Upon signing intent to sublease AS INCURRED Pro rata during construction LUMP SUM Before equipment is ordered LUMP SUM When you place order LUMP SUM When you place order or on delivery LUMP SUM When you place order LUMP SUM Within one week of opening AS INCURRED Before opening AS INCURRED Before opening AS INCURRED During training LUMP SUM Before opening LUMP SUM Around opening AS INCURRED As required LUMP SUM As required FREIGHT CHARGES (Varies by location) OUTSIDE SIGNS OPENING INVENTORY INSURANCE SUPPLIES TRAINING EXPENSES (Including travel and lodging) LEGAL & ACCOUNTING OPENING ADVERTISMENT (Business License utility deposit, small equip. & surplus capital) MISC. EXPENSES ADDITIONAL FUNDS - 3 MONTHS ESTIMATEDTOTALINVESTMENT*** € 12,000 € 16,500 €99,500 or €102,000* €148,700 or €151,200* €215,000 or €217,500* *Iceland, Gibraltar, Ireland, United Kingdom, Finland, Germany, Luxembourg, Sweden and the Netherlands have an Initial Franchise Fee of €10,000. ** This amount is the estimated deposit of 2 months rent payable upon signing the Intent to Sublease. THESE FIGURES ARE ESTIMATES OF THE COMPLETE...
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...MFRS 119 Employee Benefits MFRS 119 define employee benefits as to prescribe the accounting and disclosure by employers for employee benefits. Thus, it replaces MASB Approved Accounting Standard IAS 19 Accounting for Retirement Benefits in the Financial Statements of Employees. The major changes from old IAS 19 are set out in the Basis for Conclusions. The Standard does not deal with reporting by employee benefit plans (see FRS 126 Accounting and Reporting by Retirement Benefit Plans ). From MFRS 119, there are four categories of employee benefits to be identified which are: (a) short-term employee benefits, such as wages, salaries and social security contributions, paid annual leave and paid sick leave, profit-sharing and bonuses (if payable within twelve months of the end of the period) and non-monetary benefits (such as medical care, housing, cars and free or subsidised goods or services) for current employees; (b) post-employment benefits such as pensions, other retirement benefits, post-employment life insurance and post-employment medical care; (c) other long-term employee benefits, including long-service leave or sabbatical leave, jubilee or other long-service benefits, long-term disability benefits and, if they are payable twelve months or more after the end of the period, profit-sharing, bonuses and deferred compensation; and (d) termination benefits. 3.1 Accounting Policy Used on MFRS 119 Employee Benefits for AZRB AZRB act or implement the employee benefits...
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...ABC Company (NAME OF COMPANY IN CASE) Date: September 24, 2012 (DATE ASSIGNMENT DUE) Prepared by: Really Smart Senior (YOUR NAME) Reviewed by: Professor Robert Elya ISSUE: Accounting for ABC’s sale-sublease-leaseback of solar equipment with customers and third party investors. (THIS TOPIC/ISSUE LINE SHOULD SUCCINCTLY DESCRIBE THE OVERALL ACCOUNTING ISSUE BEING ADDRESSED IN THE MEMO) BRIEF BACKGROUND OF COMPANY (THIS SECTION IS DESIGNED TO PUT THE ISSUE IN CONTEXT) THIS SECTION SHOULD BRIEFLY DESCRIBE THE IMPORTANT INFORMATION ABOUT THE COMPANY THAT A READER OF MEMO WOULD FIND HELPFUL IN EVALUATING THE ISSUE, INCLUDING NATURE OF ITS BUSINESS, RELATIVE SIZE (TO PROVIDE DEGREE OF MATERIALITY OF ISSUE TO THE COMPANY’S OVERALL FINANCIAL STATEMENTS),PUBLIC/PRIVATE (TO DETERMINE SEC CONSIDERATIONS), AND AN INTRODUCTION TO THE OVERALL QUESTION BEING ADDRESSED ABC Company is a publicly held alternative energy firm that develops and leases solar panel technology to residential, government and commercial markets. As of December 31st, 2011, ABC Company recognized $X billion in revenue for the sale, lease and installation of photovoltaic solar systems. Customers have the choice of either purchasing or leasing ABC’s solar panels. ABC Company is currently involved in a sale and leasing arrangement involving residents and third party investors. KEY CONSIDERATIONS INVOLVED IN THE ACCOUNTING QUESTIONS (IN THIS SECTION YOU WILL BREAKDOWN THE OVERALL ACCOUNTING QUESTION INTO...
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...Lease Accounting Update ( Learning objective After completing this chapter, you should be familiar with: A brief overview of the FAS B's proposed comprehensive new lease accounting guidance. I. The end is near... In May 2013, the FASB issued proposed ASU, Leases (Topic 842): a revision of the 2010 proposed Accountin-g Standards Update, Leases (Topic 840). The comment period ended in September 2013. Notice that the new lease accounting guidance is moving from FASB Accounting Standards Codification (ASC) 840, Leases, to a new Topic, ASC 842, Leases, which will supersede ASC 840. The new lease accounting guidance in ASC 842 will apply to all leases except for: Leases of intangible assets; Leases to explore for or use minerals, oil, natural gas, and similar non-regenerative resources; and Leases of biological assets, including timber. The new guidance is intended to improve the quality and comparability of financial reporting by providing greater transparency about leverage, the assets an organization uses in its operations, and the risks to which it is exposed from entering into leasing transactions. Under existing accounting standards, a majority of leases are not reported on a lessee's balance sheet even though the amounts involved can be substantial. In addition, lessees and lessors are required to classify their leases as either capital leases or operating leases and to account for those leases differently. For a lessee, capital lease assets and liabilities...
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...BBPS4103 BBPS4103 fathimath ABDUL Sattar S1404021286 BHRM 08 fathimath ABDUL Sattar S1404021286 BHRM 08 Strategic management Maldives tourism development corporation plc. Strategic management Maldives tourism development corporation plc. Contents INTRODUCTION 2 MTDC Core Strengths 2 Vision 3 Mission 3 Business Principles and Strategies 3 ELEMENTS OF STRATEGIES 4 CONCLUSION 9 REFERENCE 10 introduction When tourism was introduced in Maldives in 1972, tourism pioneers had strived hard to uphold the industry which was started from nothing. Today tourism had become the main source of income and prosperity to Maldives. MTDC was establish to structure and develop tourism industry of Maldives while protecting and preserving the nature. Government of Maldives established MTDC as the first public company for tourism development on 9th April 2006. MTDC had aimed to make every citizen of Maldives as their shareholder, in order to have a reward from the industry. They envision Maldivian to invest in tourism. Today MTDC ensures that every shareholder of the company have a proper distribution of shares. MTDC intends to provide tourism development to all the corners of Maldives so that communities can gain direct and indirect benefit. Moreover to outsource operations of resorts to local community so that would have more opportunities for employment. MTDC Core Strengths * Management Team The organization understands that a good leadership is...
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...them without major modifications being made * at commencement of the lease term, finance leases should be recorded as an asset and a liability at the lower of the fair value of the asset and the present value of the minimum lease payments * monthly depreciation should be recorded Disclosure: lessees – finance leases [IAS 17.31] * carrying amount of asset * reconciliation between total minimum lease payments and their present value * amounts of minimum lease payments at balance sheet date and the present value thereof, for: * the next year * years 2 through 5 combined * beyond five years * contingent rent recognised as an expense * total future minimum sublease income under noncancellable subleases * general description of significant leasing arrangements, including contingent rent provisions, renewal or purchase options, and restrictions imposed on dividends, borrowings, or further leasing Lawsuit * contingent liability CRM * instead of flat-rate compensation each month until the completion of the project, could pay variable rate based on # of hours he has worked, or a flat rate for the entire project and paid in monthly installments because could have some months where he doesn’t have time to work on the project, but would still be paid, and could last for extended period of time * have duty to inform customers that their information has been...
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...The purpose of this response is to determine the difference between direct finance leasing, sales-type leasing or an operating lease for Company ABC. To accomplish this, I will discuss a little background on all of the options and the advantages and disadvantages of a lease. This will aid company ABC in determining the best course of action for acquiring equipment in the future. First, what is a lease? “According to the Federal Accounting Standards Board (FASB), a lease is an agreement conveying the right to use property, plant, and equipment usually for a stated period of time” (Lee, 2003). Essentially a lease is an agreement between a lessee and lessor whereby the lessor “rents” their equipment to the lessee in return for a determined payment or series or payments over an agreed time period. SFAS No. 13 has specified criteria by which lease structures are classified into two basic types of leases, capital and operating leases. If all of the benefits and risk of ownership are transferred to the lessee, the FASB considers it to be a capital lease (Lee, 2003). The capital lease is then further classified in to a sales type lease and direct financing lease. A sales-type lease has a fair value amount different from its carrying amount (Lee, 2003). A sales-type lease can involve any type of property, plant and/or equipment. To be considered a capital lease it must do one of the following; (1) transfer of ownership to lessee, (2) option to purchase the property at a bargain price...
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...LEASE CASE Basic Concepts: 1. On January 1, 2013, Flying High Airlines leased a new airplane for a term of 10 years. The expected life of the airplane is 20 years. There are no rights to purchase the asset at the end of the term, no bargain purchase option, and no residual value guarantee. The lease stipulates that Flying High makes annual payments of $650,000 beginning at the end of the first year (December 31, 2013). Flying High has an incremental borrowing rate of 4.5% and the fair market value of the airplane on January 1, 2013 is $6,250,000 (for simplicity, assume the lessor’s implicit rate is greater than 4.5%). a. What journal entries related to the lease arrangement should be recorded during 2013 (assume Flying High’s fiscal year end is December 31). b. Identify any effects the lease arrangement and the associated reporting would have on the balance sheet, income statement, and statement of cash flows for 2013. c. What is the annual lease payment that results in a present value of minimum lease payments equal to 90% of the fair market value of the airplane ($6,250,000)? 2. Now assume that the lessor decided to require the lease payments at the beginning of the year as opposed to the end of the year. Also assume that the lease arrangement had a bargain purchase option under which the lessee could purchase the airplane at the end of the contract for $250,000. a. What journal entries related to the lease arrangement should be recorded during 2013. b. Identify any...
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...Case Study: Pit Stop Closed 1) The Pit Stop Center store closure should not be reported as a discontinued operation in Auto World’s second quarter financial statements. Auto World determined that the Pit Stop Centers meet the definition of a “component of an entity,” which is defined as comprising “operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. A component of an entity may be a reportable segment or an operating segment, a reporting, a subsidiary, or an asset group.” However, there is a four-step process that determines when a component of an entity should be classified as a discontinued operation. Based on those four steps classification of Pit Stop as a discontinued operation is not appropriate. The test is as follows: * Step One: A component of an entity has been disposed of or classified as held for sale. * Yes, Pit Stop, a component of Auto World is closing all Pit Stop Centers by June 30, 2007. Since this answer is yes, we can move to step two. * Step Two: Are continuing cash flows expected to be generated? * Yes, according to the press release on April 15, 2007 cash flows are expected to be generated. Auto World is expecting operating earnings of $58 million in 2008 and $67 million annually thereafter. Auto World will also be losing $100 million because there will be continuing cash flow from the sale of automotive services and tires by the ongoing...
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...THE LICENSEE'S PERSPECTIVE For licensees, the principal advantage of a license (typically referred to as a "license-in") is that it allows the licensee to use proven technology in its business in exchange for paying the license fee, rather than incurring the full cost of developing and maintaining the technology. If the licensee's business is relatively complex and involves a variety of different technologies, which would be difficult and costly for the licensee to develop on its own, then the licensee will probably need a number of "licenses-in." The principal disadvantage of licenses-in is that they can cause the licensee to become technologically dependent on the licensor, which could lead to a variety of problems when the time comes to renew the license. The licensor could use its leverage to negotiate better terms. Or, if another party has offered the licensor more money in exchange for an exclusive license, then the licensor might refuse to license the technology to the licensee. Even if the license-in is a perpetual license, which does not need to be renewed, the licensee is still at risk. The licensor could license the same technology to one or more of the licensee's competitors, thereby giving them the same competitive advantage that the technology provides to the licensee. In addition, the licensor could fail to maintain or update the technology, thereby diminishing its value. THE LICENSOR'S PERSPECTIVE From the licensor's perspective, a license is referred to as...
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...Marquis Lawrence June 29, 2014 MGT - 4460 XTIA Assignment #2 Request for Proposal Lease/Operation of a Bar in Columbus Sleep Away Hotel in Columbus, Ga The Uptown Construction Company seeks to discover attracted business ventures’ to enter into a lease to co-operate a bar on the first floor of the Columbus Sleep Away Hotel. This hotel located in the historic district of Downtown Muscogee County, Columbus, Georgia is being giving a new makeover with this bar being an attraction for the hotel guest’s. The construction and renovation of this bar and hotel will be completed in the summer of 2015. Background: Purpose The Columbus Sleep Away Hotel is located on Broadway Street in the historic Downtown district in Muscogee County, Columbus, Ga. The Columbus Sleep Away Hotel is currently undergoing a $10-million renovation. The renovation will redesign every room with the added bar on the first floor. The construction project will begin September 2014 and will be completed by summer July 2015. Bar Facility, Utility, and Services The proposed bar space is 900 sq. ft. and is located in the south direction of the hotel lobby. Sleep Away Hotel guests will have access to the bar through main lobby area. The bar will allow outside customers access with a cover charge. The non hotel guests will enter through a door located on the South side of the hotel. 1. Operating Considerations: Limits and Conditions Utility Systems and Services The bar will be operated by the...
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...Leases Introduction Definition A lease is an estate in land of defined duration. It is capable of being a legal estate under s.1(1)(b) of the Law of Property Act 1925 provided that it is a ‘term of years absolute’ (s.205) and is created in the correct manner (i.e. if exceeding three years by deed (ss.52 and 54). If not created by deed, the general rule is that the lease will be equitable in nature. A lease will usually carry with it an estate, but this is not necessarily the case: Bruton v London & Quadrant Housing Trust. Requirements for a lease There are three essential requirements where the first two of these requirements were confirmed by the House of Lords in Street v Mountford where Lord Templeman expressed ‘must be granted exclusive possession for a fixed or periodic term certain in consideration of a premium or periodical payments’ however this consideration was not necessary, as could be one peppercorn a year: Ashburn Anstalt v Arnold 1. The estate must be of a duration permitted for a leasehold estate; 2. The grant must give exclusive possession; and 3. The grant must have the correct formalities Duration of Leases Fixed Term Leases The vital feature of a fixed term lease is that there is a fixed maximum duration such as 1month, 3 years, 99 years, 999 years etc. It is perfectly possible, indeed normal, for a least to contain a forfeiture clause under which the landlord can terminate the lease prematurely if the tenant breaks any of the terms...
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...interview I was offered positions at both companies so of course I had to decide between the two. With a five day grace period a decision had to be made quickly. Being a Software Engineer would provide me with the skills I needed to do mobile application development on the back end, in other words, “coding”. The role of a Front End Developer or Project Manager would assist me in developing the user interface or user experience of mobile applications. It would also help me learn the different methodologies and approaches to application development. The position at IBM would require me to move to Durham, NC and the position at AT&T required me to relocate to Atlanta, Georgia. If I took the position in either place I would have to sublease a home for the summer. This would mean I needed to...
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