The Misidentification of The Day We Were Dogs Essay -- Day We Were Dog

The Misidentification of The Day We Were Dogs      Ã‚   "The Day We Were Dogs," published in 1993 by Elena Garro, illustrates the common error of misidentification of Magical Realism. The fact that Garro is a Mexican author and that fantasy is so closely related to Magical Realism often causes the reader to associate this particular work with Magical Realism. However, this work also contains fantastic elements as well as sublime characteristics, which make it difficult to classify as a strictly Magical Realist work. As "The Day We Were Dogs" can be interpreted in so many different ways, the explanation of the details of the story become much more difficult. Are the two girls, Eva and Leli, pretending to be dogs or did they actually become dogs for a day? Each reader may have a different view of this important question, and this view may alter how he or she classifies this work. The short story does contain several magical elements and even fulfills several of the characteristics of Magical Realism as described by Faris. Should one assume the girls are actually in the canine form, one should notice that the girls are understood by the people around, even though Toni is not. The servants understand when the girls tell them to prepare lunch for three dogs. The men at the murder scene, as well, understand the "dogs" when they question what the dogs saw. This interspecies communication holds a magical aspect due to its nonoccurance in reality (Faris 167). The communication that exists between the "dogs" and Toni, another dog, one could understand. Toni communicates by some speech, but mostly by his actions. He bares his teeth during lunch so he might take the meat and, therefore, prove himself to be the head of the pecking ord... ...the story goes against its classification of Magical Realism in that hesitation occurs by both the reader and the characters. Where does one classify such a work? That answer truly depends upon one's own interpretation and opinion. Works Cited Faris, Wendy B. "Scheherazade's Children: Magical Realism and Postmodern Fiction." Magical Realism: Theory, History, Community. Ed. Lois Parkinson Zamora and Wendy B. Faris. Durham, N.C.: Duke UP, 1995: 163-190. Garro, Elena. "The Day We Were Dogs." Latin American Writers: Thirty Short Stories. Ed. Gabriella Ibieta. New York, N.Y.: St. Martin's Press, 1993: 206-212. Simpkins, Scott. "Sources of Magical Realism/ Supplements to Realism in Contemporary Latin American Literature." Magical Realism: Theory, History, Community. Ed. Lois Parkinson Zamora and Wendy B. Faris. Durham, N.C.: Duke UP, 1995: 145-159.   

Chapter 21 Lease Answer Problems

CHAPTER 21 ACCOUNTING FOR LEASES CONTENT ANALYSIS OF EXERCISES AND PROBLEMS Time Range (minutes) 5-10 Number E21-1 Content Operating Lease. (Easy) Annual rental payments, no renewable option clause, executory costs. Lessee's journal entries to record agreement, payments, expenses. Capital Lease. (Moderate) Calculation of rental payments made at end of year. Table summarizing lease payments, interest expense. Journal entries. IFRS differences. Capital Lease. (Moderate) Payments made at beginning of year. Table summarizing lease payments, interest expense. Journal entries.Direct Financing Lease. (Moderate) Calculation of rental receipts, made at end of year. Table summarizing rental receipts, interest revenue. Journal entries. Direct Financing Lease. (Easy) Journal entries to record contract, first rental receipt. Direct Financing Lease / Capital Lease. (Moderate) Table summarizing lease and interest payments. Journal entries for lessor and lessee. Sales-Type Lease. (Moderate) Payments made at end of year. Calculation of selling price (fair value). Table summarizing lease receipts, interest revenue. Journal entries. Sales-Type Lease. Moderate) Payments made at beginning of year. Calculation of selling price (fair value). Table summarizing lease receipts, interest revenue. Journal entries. Sales-Type Lease / Capital Lease. (Moderate) Computation of lease payments. Journal entries for lessor and lessee. Operating Lease / Sales-Type Lease. (Moderate) Accounted for as operating, should have been sales-type. Computation of effect on net income. Operating Lease. (Easy) Computation of income derived from lease by lessor, amount of rent expense for lessee. E21-2 15-25 E21-3 10-15 E21-4 10-15 E21-5 E21-6 5-10 10-15E21-7 10-15 E21-8 10-15 E21-9 E21-10 10-15 10-20 E21-11 10-15 21-1 Number E21-12 Content Determining Type of Lease. (Moderate) Title passes at leaseend, collectibility reasonably assured, no uncertainties surrounding costs to be incurred. Table summarizing recei pts, revenue. Lessor's journal entries. Guaranteed and Unguaranteed Residual Values. (Moderate) Calculate residual value. Determine classification of the lease depending on the type of residual value. (Appendix). Sales-Leaseback. (Easy) Calculation of lease payments. Lessor's journal entries to record sale and agreement.Description of how to treat the gain by the lessee. Determining Type of Lease. (Moderate) No bargain purchase option, no agreement to transfer ownership at lease-end, no uncertainties surrounding costs to be incurred. Journal entries for lessee and lessor. Guaranteed residual value. Determining Type of Lease. (Moderate) Lessor's viewpoint. Option to buy, collectibility reasonably assured, no uncertainties surrounding costs. Journal entries, disclosure requirements. Capital Lease. (Moderate) Calculation of rental payments. Table summarizing lease payments, interest expense.Journal entries, partial balance sheet. IFRS differences. Direct Financing Lease. (Challenging) Table summarizing lease receipts, interest revenue. Explanation of lease classification. Journal entries. Partial balance sheets. Comprehensive: Direct Financing and Capital Lease. (Challenging) Computation of rental amounts. Table summarizing lease and interest receipts. Analysis of lessee's lease classification. Journal entries for lessor and lessee. Comparative financial statement presentation. Direct Financing Lease. (Moderate) Unguaranteed residual value. Computation of rental amounts.Table summarizing lease and interest receipts. Journal entries. Sales-Type Lease. (Challenging) Calculation of implied selling price. Table summarizing lease receipts, interest revenue. Explanation of lease classification. Journal entries, partial balance sheet. Various Lease Issues. (Challenging) Journal entries for lessee and lessor to record all lease transactions. Various Lease Issues. (Challenging) Computation of annual rentals if payable at beginning of year, at end of year. Table. Journal e ntries for lessee and lessor. Partial balance sheet disclosures. 21-2Time Range (minutes) 15-20 E21-13 15-25 E21-14 15-20 P21-1 30-40 P21-2 25-35 P21-3 30-50 P21-4 35-50 P21-5 45-60 P21-6 30-40 P21-7 30-45 P21-8 P21-9 30-45 45-60 Number P21-10 Content Initial Direct Costs. (Moderate) Analysis for various lease classifications. Determination of lessor's lease classification. Discussion of lessor's journal entries. Various Lease Issues. (Challenging) Classification of lease for lessee, for lessor. Option to buy, collectibility reasonably assured, no uncertainties. Lessor journal entries. Accounting for a change in residual value. Accounting for Leases. Challenging) Journal entries to record the lease for both the lessee and lessor. (AICPA adapted). Lessor's Income Statement. (Challenging) Preparation of lessor's income statement, including sales-type and operating lease as well as long-term construction contracts. (Appendix). Determining Types of Leases. (Moderate) For lessee, for les sor. Lease of land. No bargain purchase option, collectibility reasonably assured, no uncertainties surrounding costs. (Appendix). Sales-Leaseback. (Moderate) Classification of lease by lessee. Journal entries for both lessee and lessor. Time Range (minutes) 20-30P21-11 30-45 P21-12 P21-13 30-45 50-60 P21-14 10-20 P21-15 20-30 ANSWERS TO QUESTIONS Q21-1 Q21-2 GAAP provides a common set of criteria for determining the classification of leases by both the lessee and the lessor. The advantages of leasing for the lessee include: 1. Financing benefits: a. b. c. The lease provides 100% financing so that the lessee acquires the asset without having to make a down payment. The lease contract may contain fewer restrictive provisions for financing. The leasing arrangement creates a claim that is against only the leased equipment and not against all assets. 2.Risk benefit: The lease may reduce the risk of obsolescence for the lessee. 3. Tax benefit: For income tax purposes, the lessee, through deduction of the lease payment, can write off the full cost of an asset. 4. Financial reporting benefit: For operating leases, the lease does not add an asset or a liability to the lessee's balance sheet. 5. Billing benefit: For certain contract-type work, leasing may permit higher charges because interest on borrowed money to purchase assets is not usually allowed as a contract charge, whereas the interest element contained in the rental payments is allowed as a contract charge. 1-3 Q21-3 By structuring the terms of the lease so that it qualifies as an operating lease, the lessee avoids having to include the asset and the liability in the balance sheet. Exclusion of these items creates more favorable financial ratios, such as rate of return on investment, the current ratio, and the ratio of debt to equity. This, in turn, may increase the borrowing capacity of the lessee. The lessee is practicing â€Å"off balance sheet financing. † A capital lease, on the other hand, would appear in the financial statements and affect financial ratios.It may impede lessee borrowing efforts. a. A lease is â€Å"an agreement conveying the right to use property, plant, or equipment (land and/or depreciable assets), usually for a stated period of time. † b. A sales-type lease for the lessor is a lease that meets any one of the Column A criteria and both of the Column B criteria in Exhibit 20-2, and results in a manufacturer's or dealer's profit. c. A direct financing lease for the lessor is a lease that meets any one of the Column A criteria and both of the Column B criteria, and does not result in a manufacturer's or dealer's profit. d.A sale-leaseback transaction is a lease transaction in which the owner of an asset sells it, and then immediately leases it back from the buyer. e. An operating lease for the lessee is a lease that meets none of the Column A criteria. For the lessor, it is a lease that meets none of the Column A criteria, and fails at least one of t he Column B criteria. f. A leveraged lease is a three-party lease in which one party (the equity participant) buys or manufactures an asset and leases it to another party (the asset user), with a third party (the debt participant) providing nonrecourse financing for the transaction.Q21-4 Q21-5 a. Inception of lease is the date of the lease agreement; or, if the leased property is being constructed, the date that the title passes to the lessor. b. Bargain purchase option is a provision allowing the lessee to purchase the leased property at the end of the life of the lease at a price so favorable that the exercise of the option appears, at the inception of the lease, to be reasonably assured. c. Unguaranteed residual value is the portion of the estimated residual value of the leased property that is not guaranteed by the lessee or by a third party unrelated to the lessor. . Implicit interest rate is the interest (discount) rate that, when applied on a present value basis to the sum of the minimum lease payments and any unguaranteed residual value accruing to the lessor, causes the resulting present value to be equal to the net investment of the leased property to the lessor. 21-4 Q21-5 (continued) e. Initial direct costs are costs incurred by the lessor to originate a lease that (1) result directly from acquiring that lease and (2) would not have been incurred had that leasing transaction not occurred.They also include costs directly related to specified activities performed by the lessor for that lease, such as evaluating the lessee's financial condition, negotiating lease terms, preparing and processing lease documents, and closing the transaction. Q21-6 If there is a bargain purchase option, the components of the minimum lease payments are: (1) the minimum periodic rental payment required by the lease over the lease term, and (2) the payment required by the bargain purchase option.Otherwise, they include (1) the minimum periodic rental payments plus (2) any g uarantee by the lessee of the residual value, and (3) any payments upon failure to renew or extend the lease. The criteria for a capital lease are: 1. Transfer of ownership at end of lease 2. Bargain purchase option 3. Lease term is 75% or more of the estimated economic life of the asset 4. Present value of minimum lease payments is 90% or more of fair value of the leased property to the lessor One (or more) of these criteria must be met for the lessee to classify a lease as a capital lease.Q21-8 Under an operating lease, the lessee records each rental payment as rent expense; no amount is capitalized. The lessor records each rental receipt as rent revenue. The leased asset is retained on the lessor's books and is depreciated by the lessor. Under a capital lease, the lessee records the present value of the minimum lease payments as both an asset and a liability. The lessee recognizes a portion of each payment as interest expense to produce a constant rate of interest on the book val ue at the beginning of the period, and recognizes the remainder of the payment as a reduction of the lease obligation.The lessee depreciates the asset over the term of the lease, unless there is a bargain purchase option or transfer of ownership at the end of the lease, in which case the depreciation period is the economic life of the asset. The two additional criteria for a sales-type lease are: 1. Collectibility of the minimum lease payments is reasonably assured. 2. No important uncertainties surround the amount of unreimbursable costs yet to be incurred by the lessor under the lease. In addition, the lease must result in a manufacturer's or dealer's profit or loss.Q21-7 Q21-9 Q21-10 21-5 Q21-11 The basic difference in accounting for a sales-type lease is that the carrying value of the asset is charged to cost of asset leased (expense), and the present value of the minimum lease payments is recorded as the amount of the sale. In a direct financing lease, no sales or expense is re cognized. Instead, the asset is removed from the books and the difference between its carrying value and the undiscounted minimum lease payments is recorded as unearned interest revenue.The net investment in a sales type lease is accounted for in a similar manner to that for a direct financing lease. The FASB states that the interest revenue from a lease is recognized so as to yield a constant return on net investment. Compound interest techniques can be used to compute this return if the following are known: (a) the amount of the lease payment, (b) the cost or fair value of the lease, and (c) the number of periods of the lease. Multiplying the interest rate by the amount of the net investment at the beginning of the year results in a constant return on investment.Q21-12 Q21-13 Q21-14 Owens Company records the lease as a capital lease due to the bargain purchase option, and depreciates the asset over its estimated economic life. The original lease was a capital lease and McFarland C ompany is relieved of its obligation. McFarland removes the equipment from its books, and recognizes the gain when the new lease transaction takes place, that is, during the current year. a. Lessee's disclosure: 1. For all leases, a general description of the leasing arrangement 2.For operating leases having lease terms in excess of one year: (a) Future minimum rental payments required as of the date of the latest balance sheet presented, for each of the 5 succeeding fiscal years and in total The total of minimum rentals to be received in the future under noncancellable subleases Q21-15 (b) 3. For all operating leases, rental expense for each period 4. For capital leases: (a) (b) The gross amount of assets recorded under capital leases by major classes according to nature or function Future minimum lease payments for each of the 5 succeeding fiscal years and in total 21-6 Q21-15 (continued) a. 4. continued) (c) (d) The total of minimum sublease rentals to be received in the future u nder noncancellable subleases Assets, accumulated depreciation, depreciation expense, and liabilities b. Lessor's disclosure: 1. A general description of all leasing arrangements 2. For operating leases: (a) The cost and carrying amount, if different, of property on lease or held for leasing by major classes of property, and the amount of the total accumulated depreciation Minimum future rentals on noncancellable leases for each of the 5 succeeding fiscal years and in total Total contingent rentals included in income for each period b) (c) 3. For direct financing and sales-type leases: (a) The components of the net investment in direct financing and sales-type leases including: (1) (2) (3) (4) (b) (c) Q21-16 Q21-17 The future minimum lease payments to be received Including any profit thereon The unguaranteed residual values accruing to the benefit of the lessor For direct financing leases only, initial direct costs Unearned income Future minimum lease payments to be received for eac h of the 5 succeeding fiscal years Total contingent rentals included in income for each periodIFRS classify leases as either finance leases or operating leases. A finance lease is equivalent to a capital lease under U. S. GAAP. In general, IFRS provide a series of indicators that, individually or in combination, normally lead a lease to be classified as a finance lease. U. S. GAAP contains a series of four criteria which, if any one is met, will result in the classification of a lease as a capital lease. While these indicators and criteria are similar, the IFRS indicators are less detailed and require more judgment in classifying leases. Specifically, both IFRS and U.S. GAAP treat leases that transfer title from the lessor to the lessee and leases that contain bargain purchase options as finance (capital) leases. However, if an asset is leased for the major part of an asset’s economic life, IFRS consider this an indicator of a finance lease. IFRS do not define what is meant b y â€Å"substantially all† of the asset’s fair value while U. S. GAAP sets a 90% threshold. 21-7 Q21-18 The primary accounting issue in accounting for a sales-leaseback transaction from the seller-lessee's viewpoint is the recognition of a profit or a loss on the sale.Any profit or loss is deferred and amortized in proportion to the amortization of the leased asset, if a capital lease, or in proportion to the rental payments, if an operating lease. If the fair value of the property is less than its undepreciated cost at the time of the transaction, a loss is recognized immediately on the difference between the undepreciated cost and the fair value. The fact that there are three or four parties (equity participant, asset user, debt participant, and also a manufacturer if the equity participant does not make the product) distinguishes a leveraged lease from other leases.For the lessee there are no new accounting issues. The lessee classifies and accounts for the lease as for a nonleveraged lease. Q21-19 ANSWERS TO MULTIPLE CHOICE 1. 2. a b 3. 4. d b 5. 6. a c 7. 8. b c 9. 10. a d 21-8 SOLUTIONS TO REVIEW EXERCISES RE21-1 1. 2. 3. 4. Classification Criteria Transfer of ownership at end of lease Bargain purchase option Lease term is 75% or more of economic life Present value of minimum lease payments is 90% or more of fair value Criteria Met? No No No No It is 40% (8 ? 20 years) It is 50% ($50,000 ? $100,000) Remarks Therefore, this lease is an operating lease.It does not meet any of the criteria. RE21-2 Rent Expense Cash 10,000 10,000 RE21-3 1. 2. 3. 4. Classification Criteria Transfer of ownership at end of lease Bargain purchase option Lease term is 75% or more of economic life Present value of minimum lease payments is 90% or more of fair value Criteria Met? No No No Yes It is 71% (5 ? 7 years) It is 100% ($250,000 ? $250,000) Remarks Therefore, this lease is a capital lease. It meets one of the four criteria. RE21-4 Jan, 1 Leased Equipment Capit al Lease Obligation Dec. 31 Interest Expense (10% x $250,000) Capital Lease Obligation ($65,949. 7 – $25,000) Cash 250,000. 00 250,000. 00 25,000. 00 40,949. 37 65,949. 37 21-9 RE21-4 (continued) Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment 50,000. 00* 50,000. 00 *The lessee depreciates the asset using the straight-line method over the lease term because there is no transfer of ownership or bargain purchase option, resulting in annual depreciation of $50,000 ($250,000 ? 5). RE21-5 Jan, 1 Leased Equipment Capital Lease Obligation Capital Lease Obligation Cash Dec. 31 Interest Expense Accrued Interest on Capital Lease Obligation *($275,000 – $65,949. 37) x 0. 0 Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment 55,000. 00* 55,000. 00 275,000. 00 65,949. 37 275,000. 00 65,949. 57 20,905. 06* 20,905. 06 *The lessee depreciates the asset using the straight-line method over the lease term because there is no transfer of ownership or bargain purchase option, resulting in annual depreciation of $55,000 ($275,000 ? 5). RE21-6 PV of lease payments = $25,000 x 6. 710081 = PV of single sum of $4,000 = $4,000 x 0. 463193 = Present value of minimum lease payments RE21-7 PV of lease payments = $25,000 x 6. 710081 = PV of single sum of $20,000 = $20,000 x 0. 63193 = Present value of minimum lease payments RE21-8 (a) (b) (c) Sales-type lease Direct financing lease Operating lease $167,752 9,264 $177,016 $167,752 1,853 $169,605 21-10 RE21-9 Jan, 1 Lease Receivable ($65,949. 37 x 5) Equipment Unearned Interest: Leases Dec. 31 Cash Lease Receivable Unearned Interest: Leases (0. 10 x $250,000) Interest Revenue: Leases *($329,746. 85 – $79,746. 85) x 0. 10 RE21-10 Jan, 1 Lease Receivable Sales Revenue Unearned Interest: Leases Cost of Asset Leased Merchandise Inventory (or Equipment Held for Lease) Dec. 31 Cash Lease Receivable Unearned Interest: Leases (0. 0 x $250,000) Interest Revenue: Lease s *($329,746. 85 – $79,746. 85) x 0. 10 329,746. 85 329,746. 85 250,000. 00 79,746. 85 65,949. 37 25,000. 00 65,949. 37 25,000. 00* 250,000. 00 79,746. 85 200,000. 00 200,000. 00 65,949. 37 25,000. 00 65,949. 37 25,000. 00* 21-11 SOLUTIONS TO EXERCISES Note to Instructor: Although students may use their calculators or software to make the various present value calculations, any present value calculations in the following solutions to exercises and problems are based on the factors from the appropriate tables in the TVM Module of the book. E21-1 Criteria 1. . 3. 4. Transfer of ownership at end of lease Bargain purchase option 1. Determination of Lease Classification Met No No No Remarks Reverts to lessor Lease term is 75% or more of economic life Present value of lease payments is 90% or more of fair value 20% ( 10 year lease life ) 50 year economic life) No PV is $485,098. 79* or 24% of the fair value *PV = (Annual lease payment – Annual executory costs) x PV factor fo r 10 payments at 14% = ($100,000 – $7,000) x 5. 216116 = $485,098. 79 The lease is an operating lease, since none of the above criteria are met. 2. 2010 Dec. 2011 Dec. E21-2 1. . 31 Rent Expense Cash Rent Expense Cash 100,000 100,000 31 100,000 100,000 1. Determination of Lease Classification Criteria Transfer of ownership at end of lease Bargain purchase option Met No No Remarks 21-12 E21-2 (continued) 3. 4. Criteria Lease term is 75% or more of economic life Present value of lease payments is 90% or more of fair value Met Yes Remarks 100% Yes 100% The lease is a capital lease, since at least one of the Column A criteria is met. 2. Present value = Lease payments x PV factor for 5 payments at 12% (asset and liab) = $83,222. 92 x 3. 604776 = $300,000 (rounded) 3. 1) Date January 1, 2010 December 31, 2010 December 31, 2011 December 31, 2012 December 31, 2013 December 31, 2014 aColumn Summary of Lease Payments and Interest Expense for the Sax Company (2) Lease Payment Required $ 83,222. 92 83,222. 92 83,222. 92 83,222. 92 83,222. 92 (3) (4) (5) Interest Expense Reduction at 12% on of Lease Balance of Obligation Balancea Obligationb Obligationc $300,000. 00 $36,000. 00 $47,222. 92 252,777. 08 30,333. 25 52,889. 67 199,887. 41 23,986. 49 59,236. 43 140,650. 98 16,878. 12 66,344. 80 74,306. 18 8,916. 74 74,306. 18 -0- 5 at beginning of year x 12%. – Column 3. alance – Column 4. 1 Leased Equipment Capital Lease Obligation Capital Lease Obligation Interest Expense (12% x $300,000) Cash 300,000 47,222. 92 36,000. 00 b$83,222. 92 cPrevious 4. 2010 Jan. Dec. 300,000 31 83,222. 92 21-13 E21-2 (continued) 4. (continued) Dec. 31 Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment ($300,000. 00 ? 5) Capital Lease Obligation Interest Expense (12% x $252,777. 08) Cash Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment 60,000 60,000 52,889. 67 30,333. 25 2011 Dec. 31 83,222. 92 31 60,000 60,000 5. Under U. S.GAAP, the Sax Company would classify the lease as an operating lease. The lease does not meet either of the first two criteria. The third criterion is not met since the 3-year lease life is 60% of the economic life of 5 years. The fourth criterion is also not met since the present value of the lease payments of $264,201 ($110,000 x 2. 401831) is 88. 1% of the fair value of $300,000. Therefore, the lease would be an operating lease. Under IFRS, the Sax Company would have to exercise judgment but it is likely that it would classify the lease as a â€Å"finance† lease since two of the indicators would probably be considered to be met.The present value of 88. 1% is probably â€Å"substantially all† of the fair value of the asset. Also, it could be argued that 60% is the †major part† of the economic life of the asset. E21-3 1. Application of Criteria for Determination of Lease Classification from Lessee's Viewpoint Group I Criteria 1. 2. 3. 4. Transfe r of ownership Bargain purchase option Lease term is 75% or more of economic life Present value of lease payments is 90% or more of fair value* Met No No Yes 100% Remarks Yes 100% = $20,000 x PV factor for 4 payments in advance at 12% = $20,000 x 3. 401831 = $68,036. 62 21-14 *PV of minimum lease paymentsE21-3 (continued) 1. (continued) Since the lease meets at least one of the Column A criteria, it is a capital lease. 2. (1) Summary of Lease Payments and Interest Expense for the Adden Company (2) (3) (4) Balance of Capital Lease Obligation $68,036. 62 48,036. 62a 53,801. 01c 33,801. 01 37,857. 13 17,857. 13 20,000. 00 0 Date January 1, 2010 January 1, 2010 December 31, 2010 January 1, 2011 December 31, 2011 January 1, 2012 December 31, 2012 January 1, 2013 a$68,036. 62 b$48,036. 62 c$48,036. 62 dAdjusted Interest at 12% Annual Lease on Unpaid Payment Obligation Before the initial payment $20,000. 00 0 0 $5,764. 9b 0 20,000. 00 4,056. 12 0 0 20,000. 00 2,142. 87d 0 0 20,000. 00 â₠¬â€œ $20,000 x 12% + $5,764. 39 for $0. 01 rounding error 1 1 Leased Equipment Capital Lease Obligation Capital Lease Obligation Cash Interest Expense Accrued Interest on Capital Lease Obligation Insurance Expense Property Tax Expense Cash 68,036. 62 20,000 5,764. 39 5,764. 39 1,500 6,000 3. 2010 Jan. 68,036. 62 20,000 Dec. 31 31 7,500 21-15 E21-3 (continued) 3. (continued) Dec. 31 Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment ($68,036. 62 ? 4) Accrued Interest on Capital Lease Obligation Capital Lease Obligation CashInterest Expense Accrued Interest on Capital Lease Obligation Insurance Expense Property Tax Expense Cash Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment 17,009. 16 17,009. 16 2011 Jan. 1 5,764. 39 14,235. 61 4,056. 12 20,000. 00 Dec. 31 4,056. 12 1,300 5,500 31 6,800 31 17,009. 16 17,009. 16 E21-4 1. Rental receipt = = Fair value of assets PV factor for 8 receipts at 14% $500,000 4. 638864 = $107,785 . 01 21-16 E21-4 (continued) 2. Summary of Lease Payments Received and Interest Revenue Earned by the Rexon Company (1) (2) Annual Lease Payment Received $107,785. 01 107,785. 01 107,785. 01 107,785. 1 107,785. 01 107,785. 01 107,785. 01 107,785. 01 (3) Interest Revenue at 14% on Net Investment $70,000. 00a 64,710. 10 58,679. 61 51,804. 86 43,967. 63 35,033. 20 24,847. 95 13,236. 73f (4) Amount of Net Investment Recovered $37,785. 01b 43,074. 91 49,105. 40 55,980. 15 63,817. 38 72,751. 81 82,937. 06 94,548. 28 (5) Lease Receivable $862,280. 08 754,495. 07c 646,710. 06 538,925. 05 431,140. 04 323,355. 03 215,570. 02 107,785. 01 -0(6) Unearned Interest: Leases $362,280. 08 292,280. 08d 227,569. 98 168,890. 37 117,085. 51 73,117. 88 38,084. 68 13,236. 73 -0(7) Net Investment $500,000. 00 462,214. 99e 419,140. 08 370,034. 8 314,054. 53 250,237. 15 177,485. 34 94,548. 28 -0- Date January 1, 2010 December 31, 2010 December 31, 2011 December 31, 2012 December 31, 2013 December 31, 2014 Dec ember 31, 2015 December 31, 2016 December 31, 2017 a$500,000 21-17 x 14% – $70,000. 00 – $107,785. 01 – $70,000. 00 b$107,785. 01 c$862,280. 08 d$362,280. 08 e$500,000 fAdjusted – $37,785. 01 for $0. 03 rounding error 21-17 E21-4 (continued) 3. 2010 Jan. 1 Lease Receivable Equipment Unearned Interest: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases 862,280. 8 500,000. 00 362,280. 08 107,785. 01 70,000 Dec. 31 31 107,785. 01 70,000 2011 Dec. 31 31 107,785. 01 64,710. 10 107,785. 01 64,710. 10 E21-5 Proof that the yield is 1%: PVn=48, i=1% is not given in text; it is 37. 973959; thus PV of lease payments received = Monthly lease payment x PV factor for 48 receipts at 1% = $1,600 x 37. 973959 = $60,758 (This is not required for the problem) 2010 Jan. 2 Lease Receivable Equipment Unearned Interest: Leases Cash Lease Receivable Unearned Interest: Leases Int erest Revenue: Leases [1% x ($76,800 – $16,042)], (rounded) 76,800 0,758 16,042 1,600 31 1,600 31 608 608 21-18 E21-6 1. Annual lease payment = Cost of the equipmet PV factor for 5 years in advance at 14% = $30,000 3. 913712 = $7,665. 36 Summary Table (1) Lessee Company (2) Lease Payment Required Lease Rental Collected (3) Interest at 14% on Unpaid Obligation Interest at 14% on Net Investment (4) Balance of Lease Obligation Net Investmenta Lessor Company Date January 1, 2010 January 1, 2010 $7,665. 36 December 31, 2010 0 January 1, 2011 7,665. 36 December 31, 2011 0 January 1, 2012 7,665. 36 December 31, 2012 0 January 1, 2013 7,665. 6 December 31, 2013 0 January 1, 2014 7,665. 36 aPrevious balance – Column 2 + Column 3 b$22,334. 64 cAdjusted 0 $3,126. 85b 0 2,491. 46 0 1,767. 11 0 941. 38c 0 $30,000. 00 22,334. 64 25,461. 49 17,796. 13 20,287. 59 12,622. 23 14,389. 34 6,723. 98 7,665. 36 0 x 14% for $0. 02 rounding error 21-19 E21-6 (continued) Date 01/01/10 12/31/10 12/31/11 12/31/12 12/31/13 1$7,665. 36 Lease Receivable $38,326. 801 30,661. 44 22,996. 08 15,330. 72 7,665. 36 x5 – $30,000. 00 – $3,126. 85 – Unearned Net = Interest: Leases Investment $8,326. 802 5,199. 953 2,708. 49 941. 38 0 $30,000. 00 25,461. 9 20,287. 59 14,389. 34 7,665. 36 2$38,326. 80 3$8,326. 80 2. Lessor Leasing Company: 2010 Jan. 1 Lease Receivable ($7,665. 36 x 5) Equipment Unearned Interest: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases 38,326. 80 30,000. 00 8,326. 80 7,665. 36 3,126. 85 1 Dec. 31 7,665. 36 3,126. 85 Lessee Company: 2010 Jan. 1 1 Leased Equipment Capital Lease Obligation Capital Lease Obligation Cash 30,000 7,665. 36 30,000 7,665. 36 21-20 E21-6 (continued) 2. (continued) Dec. 31 Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment ($30,000 ? ) Interest Expense Accrued Interest on Capital Lease Obligation Executory Costs (Expenses) Cash 6,000 6,000 3,126. 85 3,126. 85 500 500 31 31 E21-7 1. Selling price (fair value and the net investment) = $50,000 (PVn = 4, i = 12%) = $50,000 x 3. 037349 = $151,867. 45 2. Summary of lease receipts and interest revenue: Information needed to prepare table: Gross investment = Annual lease payment received x Number of payments = $50,000 x 4 = $200,000 Initial PV of the investment: PV of lease payments (see 1) = $151,867. 45 Unearned interest revenue = Gross investment – Initial PV of investment = $200,000 – $151,867. 5 = $48,132. 55 = $151,867. 45 = $130,000. 00 Sales price = PV of minimum lease payments Cost of asset leased = Cost of equipment 21-21 E21-7 (continued) 2. (continued) Gross profit = Sales price – Cost of asset leased = $151,867. 45 – $130,000. 00 = $21,867. 45 (Table follows Requirement 3) 3. 2010 Jan. 1 Lease Receivable Sales Unearned Interest: Leases Cost of Asset Leased Equipment Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases Cash Lease Recei vable Unearned Interest: Leases Interest Revenue: Leases 200,000. 00 151,867. 45 48,132. 55 130,000. 00 50,000 18,224. 09 1 Dec. 31 31 2011 Dec. 30,000. 00 50,000 18,224. 09 31 31 50,000 14,410. 98 50,000 14,410. 98 21-22 E21-7 (continued) 2. Summary of Lease Payments Received and Interest Revenue Earned by the Berne Company (1) (2) Annual Lease Payment Received $50,000 50,000 50,000 50,000 (3) Interest Revenue at 12% on Net Investment $18,224. 09a 14,410. 98 10,140. 30 5,357. 18f (4) Amount of Net Investment Recovered $31,775. 91b 35,589. 02 39,859. 70 44,642. 82 (5) Lease Receivable $200,000 150,000c 100,000 50,000 -0(6) Unearned Interest: Leases $48,132. 55 29,908. 46d 15,497. 48 5,357. 18 -0(7) Net Investment $151,867. 45 120,091. 54e 84,502. 52 44,642. 2 -0- Date January 1, 2010 December 31, 2010 December 31, 2011 December 31, 2012 December 31, 2013 a$151,867. 45 b$50,000 21-23 x 0. 12 – $18,224. 09 – $50,000 – $18,224. 09 – $31,775. 91 c$200,000 d$4 8,132. 55 e$151,867. 45 fAdjusted for $0. 04 rounding error 21-23 E21-8 1. Selling price (fair value) = $100,000 (PV in advance) n = 5, i = 14% = $100,000 (3. 913712) = $391,371. 20 2. Summary of lease payments received and interest revenue: Information needed to prepare table: Gross investment 20-24 = = = (Annual lease payment received x Number of payments) + Unguaranteed residual value ($100,000 x 5) + $20,000 $520,000Initial present value of the investment: PV of lease payments (see part 1) PV of unguaranteed residual value: $20,000 x PV of a single sum for 5 years at 14%: $20,000 x 0. 519369 Total initial PV (this is also the net investment) Unearned interest: leases $391,371. 20 10,387. 38 $401,758. 58 = Gross investment – Initial PV of the investment = $520,000. 00 – $401,758. 58 = $118,241. 42 Sales price = = Present value of lease payments $391,371. 20 (see part 1) = Cost of asset – PV of the unguaranteed residual value = $313,000. 00 – $10,387. 3 8 = $302,612. 62 Cost of asset leased 21-24 E21-8 (continued) 2. continued) Gross profit = = = Sales price – Cost of asset leased $391,371. 20 – $302,612. 62 $ 88,758. 58 Summary of Lease Payments Received and Interest Revenue Earned by the Edom Company (1) (2) Annual Lease Payments Received $100,000. 00 100,000. 00 100,000. 00 100,000. 00 100,000. 00 (3) Interest Revenue at 14% on Net Investment (4) Lease Receivable $520,000. 00a 420,000. 00 320,000. 00 220,000. 00 120,000. 00 20,000. 00 (5) Unearned Interest: Leases $118,241. 42b 75,995. 22 41,834. 55 16,891. 39 2,456. 18 0 (6) Net Investment $401,758. 58 301,758. 58 344,004. 78d 244,004. 78 278,165. 45 178,165. 45 203,108. 61 103,108. 61 117,543. 2 17,543. 82 20,000. 00f Date Jan. 1, 2010 Jan. 1, 2010 Dec. 31, 2010 Jan. 1, 2011 Dec. 31, 2011 Jan. 1, 2012 Dec. 31, 2012 Jan. 1, 2013 Dec. 31, 2013 Jan. 1, 2014 Dec. 31, 2014 a($100,000 b$520,000 $42,246. 20c 34,160. 67 24,943. 16 14,435. 21 2,456. 18e x 5) + $20,000 x 1 4% + $42,246. 20, or $420,000 – $75,995. 22 residual value Lease Receivable Cost of Asset Leased Sales Equipment (or Inventory) Unearned Interest: Leases 520,000. 00 302,612. 62 – $401,758. 58 c$301,758. 58 d$301,758. 58 eAdjusted for $0. 05 rounding error fUnguaranteed 3. 2010 Jan. 1 391,371. 20 313,000. 00 118,241. 42 21-25 E21-8 (continued) 3. (continued) Jan. Dec. 011 Jan. Dec. E21-9 Summary Table for First 3 Months (1) Bullard Company: Month Anson Company: Month Beginning of 1 Beginning of 1 End of 1 Beginning of 2 End of 2 Beginning of 3 End of 3 (2) Lease Payment Required (3) Interest Expense (4) Balance of Lease Obligation 1 31 Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases 100,000 42,246. 20 100,000 42,246. 20 1 31 100,000 34,160. 67 100,000 34,160. 67 Lease Receipt $2,000 0 2,000 0 2,000 0 Interest Revenue 0 $588b 0 574 0 560 Net Investmenta $60,817 58,817 59,40 5c 57,405 57,979 55,979 56,539 1-26 E21-9 (continued) Receivable $70,0001 68,000 66,000 64,000 1($2,000 2$58,817 b1% aLease – Unearned = Interest: Leases $9,183 8,595 8,021 7,461 Net Investment $60,8172 59,405 57,979 56,539 x 35) + $2,000 + $588 Lease Receivable Sales ($58,817 + $2,000) Unearned Interest: Leases ($72,000 – $60,817) Cost of Asset Leased Merchandise Inventory 72,000 60,817 11,183 50,000 2,000 588 2,000 574 2,000 560 50,000 2,000 588 2,000 574 2,000 560 x $58,817 c$58,817 1. At inception Initial receipt At end of 1st month Cash Lease Receivable Unearned Interest: Leases Interest Revenue: LeasesSecond Cash Installment Lease Receivable At end of Unearned Interest: Leases 2nd month Interest Revenue: Leases Third Cash installment Lease Receivable At end of 3rd month Unearned Interest: Leases Interest Revenue: Leases 21-27 E21-9 (continued) 2. Computation of Lessee's Obligation Using the Implicit Interest Rate PV of lease payments = $ 2,000 + PV of remaining 3 5 payments of $2,000 each at 1% = $ 2,000 + $58,817 = $60,817* *Note: By definition, the present value of the lease payments equals the initial payment plus the present value of the remaining lease payments, since the initial payment is at the beginning of the period.At inception Initial payment At end of 1st month Leased Equipment Capital Leases Obligation Capital Lease Obligation Cash Interest Expense Accrued Interest on Capital Lease Obligation Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment ($60,817 ? 36) Second Accrued Interest on installment Capital Lease Obligation Capital Lease Obligation Cash At end of Interest Expense 2nd month Accrued Interest on Capital Lease Obligation Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment 60,817 2,000 588 588 1,689 1,689 588 1,412 574 574 1,689 1,689 60,817 2,000 ,000 21-28 E21-9 (continued) 2. (continued) Third Accrued Interest on installment Capital Lease Obligation Capital Lease Obligation Cash At end of 3rd month Interest Expense Accrued Interest on Capital Lease Obligation Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment E21-10 Computation of the effect on income before income taxes using the sales-type lease method Sales = PV of lease payments receivable = (PV factor for 8 payments in advance at 12%) x $60,000 = 5. 563757 x $60,000 = $333,825 Cost of asset leased = = Cost of the property $275,000 574 1,426 560 560 1,689 1,689 ,000 21-29 E21-10 (continued) Interest revenue: leases = 12% x [(Lease receivable – Initial payment) Unearned interest: leases] = 12% x [($60,000 x 8) – $60,000) – (Lease rec. – Sales)] = 12% x ($420,000 – $146,175) = $32,859 Incremental effect on income before income taxes Sales Less: Cost of asset leased Gross margin Add: Interest revenue Incremental revenue recognized $333,825 (275,000) $ 58,825 32,859 $ 91,684 Computation of the effect on income before in come taxes using the operating lease method Rental revenue Depreciation expense = $60,000. 0 = = Cost – Residual Value Economic life $275,000 – $0 8 = $34,375 Incremental effect on income before income taxes Rental revenue $60,000 Less: Depreciation expense (34,375) $25,625 Effect on income before income taxes Sales-type lease income Operating lease income Income before income taxes $91,684 (25,625) $66,059 understated 21-30 E21-11 1. Computation of Income Before Income Taxes Derived by Reuben Company for Year Ended December 31, 2010 Rental revenue Maintenance expense Depreciation expense Income before income taxes *10/12 x $180,000 #$900,000 150,000* (20,000) (90,000)# $ 40,000 ? 10 (It should be depreciated for a full year) 2. Rent expense = 10/12 x $180,000 = $150,000 E21-12 1. Application of Criteria for Determination of Lease Classification from Lessor's Viewpoint Column A Criteria 1. Transfer of ownership at end of lease 2. Bargain purchase option 3. Met Yes No Y es 80% ( Remarks Lease term is 75% or more of economic life 4 year lease life ) 5 year economic life 4. Present value of lease payments is 90% or more of fair value Column B Criteria 1. Collectibility assured 2.No uncertainties Yes Present value is $8,400, or 100% of the fair value Yes Yes Since the lease meets at least one of the Column A criteria and both of the Column B criteria, and there is no dealer's profit (PV of lease payments – Cost of car = $8,400 – $8,400 = $0), the transaction should be classified as a direct financing lease. 21-31 E21-12 (continued) 2. Summary of lease payments received and interest revenue: Computation of amount of lease receipts: Yearly lease receipt = Cost of the car PV factor for 4 payments at 10% $8,400 3. 169865 = $2,649. 96 (Table follows Requirement 3) 3. 2010 Jan. 1 1 Automobile Held for Lease Cash Lease Receivable Automobile Held for Lease Unearned Interest: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue : Leases (from table) Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases (from table) 8,400. 00 10,599. 84 8,400. 00 8,400. 00 2,199. 84 2,649. 96 Dec. 31 31 2,649. 96 840. 00 840. 00 2,649. 96 659. 00 659. 00 2011 Dec. 31 31 2,649. 96 21-32 E21-12 (continued) 2.Summary of Lease Payments Received and Interest Revenue Earned by the Ravis Rent-A-Car Company (by Interest Method) (1) (2) Annual Lease Payments Received $2,649. 96 2,649. 96 2,649. 96 2,649. 96 (3) Interest Revenue at 10% on Net Investment $840. 00a 659. 00 459. 90 240. 94f (4) Amount of Net Investment Recovered $1,809. 96b 1,990. 96 2,190. 05 2,409. 02 (5) Lease Receivable $10,599. 84 7,949. 88c 5,299. 92 2,649. 96 -0(6) Unearned Interest: Leases $2,199. 84 1,359. 84d 700. 84 240. 94 -0(7) Net Investment $8,400. 00 6,590. 04e 4,599. 08 2,409. 02Date January 1, 2010 December 31, 2010 December 31, 2011 December 31, 2012 December 31, 2013 a$8,400. 00 b$2,649. 96 21-33 x 10% – $840. 00 – $2 ,649. 96 – $840. 00 – $1,809. 96 c$10,599. 84 d$2,199. 84 e$8,400. 00 fAdjusted for $0. 04 rounding error 21-33 E21-13 1. Present value of lease payments = $10,000 x PV factor for 6 payments at 10% = $10,000 x 4. 355261 = $43,552 (rounded down for simplicity) = $50,000 fair value of the machine – $43,552 = $6,448 = $6,448 x FV of 1 factor for 6 periods at 10% = $6,448 x 1. 771561 = $11,421 (rounded) Present value of residual valueResidual value at the end of the lease term 2. 20-34 Since the first three criteria are not met, the classification of the lease depends on the fourth criterion. A guaranteed residual value is not included in the minimum lease payments. Therefore, Baker Company would classify the lease as a capital lease because the fourth criterion is met as follows: Present value of minimum lease payments = = $43,552 + $6,448 $50,000, or 100% of the fair value of the machine 3. Since the first three criteria are not met, the classification of the leas e depends on the fourth criterion.An unguaranteed residual value is included in the minimum lease payments. Therefore, Baker Company would classify the lease as an operating lease because the fourth criterion is not met as follows: Present value of minimum lease payments = $43,552, or 87. 1% of the fair value of the machine E21-14 1. 2010 Jan. 1 Cash Land Unearned Profit on Sales-Leaseback Leased Land Capital Lease Obligation Insurance and Property Tax Expense Cash 31 Capital Lease Obligation Interest Expense – Leases (14% x $2,500,000) Cash 21-34 2,500,000 2,000,000 500,000 2,500,000 12,000 1 During the year Dec. ,500,000 12,000 7,007 350,000 357,007 E21-14 (continued) 2. The $500,000 unearned profit is amortized by the straight-line method over the 25 year term of the lease. The yearly entry is 2010 Dec. 31 Unearned Profit on Sales – Leaseback Realized Profit on Sales – Leaseback 20,000 20,000 21-35 SOLUTIONS TO PROBLEMS P21-1 1. Application of Criteria for De termination of Lease Classification Column A Criteria 1. Transfer of ownership at end of lease 2. Bargain purchase option 3. Met No No No Remarks Lease term is 75% or more of economic life 5 year lease life 50% ( ) 10 year economic lifePV of $268,685. 58* is 88% of fair value 4. Present value of lease payments is 90% or more of fair value *PV No = (Yearly lease payments – Executory costs) x PV factor for 5 payments in advance at 12% = ($70,000 – $3,450) x 4. 037349 = $66,550 x 4. 037349 = $268,685. 58 This lease is an operating lease for both the Alice Company (lessee) and the Superior Equipment Company (lessor). Reasons: None of the Column A criteria are met. 2. Alice Company (lessee): 2010 Jan. 1 Rent Expense Cash 70,000 70,000 21-36 P21-1 (continued) 2. (continued) Superior Equipment Company (lessor): 2011 Jan.During the year Dec. 31 1 Cash Rental Revenue Property Tax Expense Maintenance Expense Insurance Expense Cash 70,000 650 1,600 1,200 70,000 3,450 Depreciation Expense: Equipment 49,500 Accumulated Depreciation: Equipment [($500,000 – $5,000) ? 10] Application of Criteria for Determination of Lease Classification 49,500 3. Column A Criteria 1. Transfer of ownership at end of lease 2. Bargain purchase option 3. Met No No No Remarks Lease term is 75% or more of economic life 5 year lease life 50% ( ) 10 year economic life PV of $305,000* (rounded) 100% of fair value . Present value of lease payments is 90% or more of fair value *PV Yes = [(Yearly lease payments – Executory costs) x PV factor for 5 payments in advance at 12%] + PV of guaranteed residual value = = = = [($70,000 – $3,450) x 4. 037349] + ($64,000 x 0. 567427) ($66,550 x 4. 037349) + $36,315. 33 $268,685. 57 + $36,315. 33 $305,000 (rounded) This lease is a capital lease for both the Alice Company (lessee) and the Superior Equipment Company (lessor). Reasons: †¢ The lessee would classify the lease as a capital lease because one of the Column A criteria i s met. The lessor would classify the lease as a direct financing lease because (a) one of the Column A criteria is met, (b) both of the Column B criteria are met, and (c) there is no profit at the inception of the lease (fair value = present value of the minimum lease payments). 21-37 P21-1 (continued) 3. (continued) Alice Company (lessee): 2010 Jan. 1 1 Leased Equipment Capital Lease Obligation Executory Costs Expense Capital Lease Obligation Cash Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment [($305,000 – $64,000) ? ] Interest Expense [12% x ($305,000 – $66,550)] Accrued Interest on Capital Lease Obligation Executory Costs Expense Accrued Interest on Capital Lease Obligation Capital Lease Obligation Cash Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment Interest Expense [12% x ($305,000 – $66,550 – $37,936)] Accrued Interest on Capital Obligation 305,000 3,450 66,550 305,000 70,000 Dec. 31 48,200 48,200 28,614 28,614 3,450 28,614 37,936 31 2011 Jan. 1 70,000 Dec. 31 48,200 48,200 24,061. 68 24,061. 68 31 21-38 P21-1 (continued) 3. continued) 2014 Dec. 31 Capital Lease Obligation Cash 64,000 64,000 Superior Equipment Company (lessor): 2010 Jan. 1 1 Equipment Leased to Others Cash Lease Receivable ($66,550 x 5 + $64,000) Equipment Leased to Others Unearned Interest: Leases Cash Lease Receivable Property Tax Expense Maintenance Expense Insurance Expense Cash Unearned Interest: Leases Interest Revenue: Leases Cash Lease Receivable Property Tax Expense Maintenance Expense Insurance Expense Cash Unearned Interest: Leases Interest Revenue: Leases Cash Lease Receivable 305,000 305,000 396,750 05,000 91,750 66,550 1 During The Year Dec. 31 2011 Jan. During The Year Dec. 31 2014 Jan. 66,550 650 1,600 1,200 28,614 3,450 28,614 1 66,550 650 1,600 1,200 24,061. 68 66,550 3,450 24,061. 68 1 64,000 64,000 21-39 P21-2 1. Application of Criteria for Determination of Lease Classific ation Column A Criteria 1. 2. 3. 4. Transfer of ownership at end of lease Bargain purchase option Lease term is 75% or more of economic life Present value of lease payments is 90% or more of fair value Met No Yes Yes 100% Present value is $185,090. 68 or 100% of fair value Remarks YesThis is a sales-type lease for Ballieu Company, since one or more of the Column A criteria are met, both of the Column B criteria are met, and there is a dealer's profit (PV of lease payments – Cost of asset = $185,090. 68 – $150,000 = $35,090. 68) 2. (1) Two-Year Table of Lease Payment Receipts and Interest Revenue Recognition (2) Annual Lease Payments Received $35,000. 00 35,000. 00 (3) Interest Revenue at 14% on Net Investment (4) Lease Receivable $280,000. 00a 245,000. 00 210,000. 00 (5) Unearned Interest: Leases $94,909. 32b 73,896. 62 (6) Net Investment $185,090. 8 150,090. 68 171,103. 38d 136,103. 38 155,157. 85 Date Jan. 1, 2010 Jan. 1, 2010 Dec. 31, 2010 Jan. 1, 2011 Dec. 31, 2011 a$35,000 $21,012. 70c 19,054. 47 x8 – $185,090. 68 x 14% + $21,012. 70 b$280,000 c$150,090. 68 d$150,090. 68 21-40 P21-2 (continued) 2. (continued) 2010 Jan. 1 Lease Receivable ($35,000 x 8) Sales Unearned Interest: Leases ($280,000 – $185,090. 68) Cost of Asset Leased Specialty Equipment (Inventory) Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases 280,000. 0 185,090. 68 94,909. 32 1 1 Dec. 2011 Jan. Dec. 3. 31 150,000. 00 35,000 21,012. 70 150,000. 00 35,000 21,012. 70 1 31 35,000 19,054. 47 35,000 19,054. 47 The lessor must disclose: a. A general description of the leasing arrangements b. (1) The components of the net investment at the date of each balance sheet presented: (a) The future lease payments to be received (b) The unearned interest revenue: leases (2) Future lease payments to be received for each of the 5 succeeding fiscal years as of the date of the latest ba lance sheet presented P21-3 1.Present value = Lease payments x PV factor for 5 payments at 12% (asset and liab) = $83,222. 92 x 3. 604776 = $300,000 (rounded) 21-41 P21-3 (continued) 2. (1) Date January 1, 2010 December 31, 2010 December 31, 2011 December 31, 2012 December 31, 2013 December 31, 2014 a$300,000 Summary Table of Lease Payments and Interest Expense for Timmer Company (2) Lease Payment Required $83,222. 92 83,222. 92 83,222. 92 83,222. 92 83,222. 92 (3) Interest Expense at 12% on Obligation Balancea $36,000. 00a 30,333. 25 23,986. 49 16,878. 12 8,916. 74d (4) Reduction of Lease Obligation $47,222. 2b 52,889. 67 59,236. 43 66,344. 80 74,306. 18 (5) Balance of Lease Obligation $300,000. 00 252,777. 08c 199,887. 41 140,650. 98 74,306. 18 -0- x 12% – $36,000. 00 – $47,222. 92 b$83,222. 92 c$300,000. 00 3. 2010 Jan. Dec. 1 31 Leased Equipment Capital Lease Obligation Capital Lease Obligation Interest Expense Cash Insurance Expense Property Tax Expense Cash Depre ciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment ($300,000. 00 ? 5) Capital Lease Obligation Interest Expense Cash Insurance Expense Property Tax Expense Cash 21-42 300,000 47,222. 2 36,000. 00 3,760 5,440 300,000 83,222. 92 31 9,200 31 60,000 60,000 52,889. 67 30,333. 25 3,100 5,330 2011 Dec. 31 83,222. 92 31 8,430 P21-3 (continued) 3. (continued) Dec. 31 Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment TIMMER COMPANY Balance Sheet (Partial) December 31, 2010 Assets Property, Plant, and Equipment Leased property less accumulated amortization $240,000. 00 (Note X) a$83,222. 92 60,000 60,000 4. Liabilities Current Capital lease obligation Noncurrent Capital lease obligation (Note X) $ 74,306. 17a,c $178,470. 1b,c x 0. 892857 – $74,306. 17 b$252,777. 08 cThese amounts computed by the â€Å"change in present value approach† are $52,889. 67 and $199,887. 41, respectively Under U. S. GAAP, the Timmer Company would classify the lease as an operating lease. The lease does not meet either of the first two criteria. The third criterion is not met since the 3-year lease life is 60% of the economic life of 5 years. The fourth criterion is also not met since the present value of the lease payments of $269,507 ($120,000 x 2. 245890) is 89. 8% of the fair value of $300,000.Therefore, the lease would be an operating lease. Under IFRS, the Timmer Company would have to exercise judgment but it is likely that it would classify the lease as a â€Å"finance† lease since two of the indicators would probably be considered to be met. The present value of 89. 8% is probably â€Å"substantially all† of the fair value of the asset. Also, it could be argued that 60% is the â€Å"major part† of the economic life of the asset. 5. 21-43 P21-4 1. Summary Table of Lease Payments Received and Interest Revenue Earned by the Calden Company (1) (2) Lease Payment Received $65,000. 0 65,000. 00 65,000. 00 65,000. 00 65,000. 00 65,000. 00 65,000. 00 65,000. 00 (3) Interest Revenue at 15% on Net Investment $46,203. 16c 43,383. 63 40,141. 17 36,412. 35 32,124. 20 27,192. 83 21,521. 76 14,999. 87h (4) Reduction of Net Investment $18,796. 84d 21,616. 37 24,858. 83 28,587. 65 32,875. 80 37,807. 17 43,478. 24 50,000. 13 (5) Lease Receivable $570,000a 505,000e 440,000 375,000 310,000 245,000 180,000 115,000 50,000 (6) Unearned Interest: Leases $261,978. 97 215,775. 81f 172,392. 18 132,251. 01 95,838. 66 63,714. 46 36,521. 63 14,999. 7 -0(7) Net Investment $308,021. 03b 289,224. 19g 267,607. 82 242,748. 99 214,161. 34 181,285. 54 143,478. 37 100,000. 13 50,000. 00i Date January 1, 2010 December 31, 2010 December 31, 2011 December 31, 2012 December 31, 2013 December 31, 2014 December 31, 2015 December 31, 2016 December 31, 2017 a$570,000 21-44 is the undiscounted value of the lease payments plus the unguaranteed residual value is the present value of the lease payments plus the present valu e of the unguaranteed residual x 15% b$308,021. 03 value c$308,021. 03 d$65,000. 00 e$570,000 $46,203. 16 – $46,203. 16 – $18,796. 84 residual value – $65,000 f$261,978. 97 g$308,021. 03 hAdjusted for $0. 15 rounding error iUnguaranteed 21-44 P21-4 (continued) 2. Criteria for direct financing lease: Application of Criteria for Determination of Lease Classification Column A Criteria 1. Transfer of ownership at end of lease 2. Bargain purchase option 3. Lease term is 75% or more of eonomic life 4. Present value of lease payments is 90% or more of fair value *PV of minimum lease payments Met No No Yes 89% ( 8 year lease life ) 9 year economic life Remarks 0-45 Yes PV is 94. 7% of the fair value of the leased asset* = $65,000 x PV factor for 8 payments at 15% = $65,000 x 4. 487322 = $291,675. 93 Column B Criteria 1. Collectibility assured 2. No uncertainties Met Yes Yes Remarks The lease is properly classified as a direct financing lease because at least one of the Column A criteria is met, both of the Column B criteria are met, and there is no dealer's profit. 3. 2010 Jan. 1 1 Equipment Leased to Others Cash Lease Receivable ($520,000 + $50,000) Equipment Leased to Others Unearned Interest: Leases 308,021. 3 308,021. 03 570,000 308,021. 03 261,978. 97 21-45 P21-4 (continued) 3. (continued) Dec. 31 31 2011 Dec. Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases CALDER COMPANY Balance Sheet (Partial) Assets Current Assets Net investment in direct financing leases (Note X) Noncurrent Assets Net investment in direct financing leases (Note X) a$65,000 65,000 46,203. 16 5,000 46,203. 16 31 31 65,000 43,383. 63 65,000 43,383. 63 2012 Dec. 31 31 65,000 40,141. 17 65,000 40,141. 17 4. December 31, 2011 2010 $ 56,521. 73a,d $ 56,521. 73a,c $211,086. 09b,d $232,702. 46b,c x 0. 869565 $289 ,224. 19 – $56,521. 73; 12/31/11: $267,607. 82 – $56,521. 73 b12/31/10: cThese amounts computed by the â€Å"change in present value approach† are $21,616. 37 and $267,607. 82, respectively amounts computed by the â€Å"change in present value approach† are $24,858. 83 and $242,748. 99, respectively dThese 21-46 P21-5 1. a) Landlord Company computation of annual rental amount Annual rental amount = = Cost of equipment PV factor for 6 receipts in advance at 14% $300,000 4. 433081 = $67,673. 02 (b) Tenant Company computation of the present value of the lease rights: To find the present value of the lease rights, Tenant Company would multiply the annual rental payment ($67,673. 02) by the PV factor for 6 periods paid in advance at i%. The percentage i would be the lower of 14% or Tenant Company's incremental borrowing rate. This incremental borrowing rate is the additional information needed.Summary Table of Lease Payments Received and Interest Revenue Recog nition for the Landlord Company (1) (2) Annual Lease Payments Received $67,673. 02 67,673. 02 67,673. 02 67,673. 02 67,673. 02 67,673. 02 2. Date Jan. 1, 2010 Jan. 1, 2010 Dec. 31, 2010 Jan. 1, 2011 Dec. 31, 2011 Jan. 1, 2012 Dec. 31, 2012 Jan. 1, 2013 Dec. 31, 2013 Jan. 1, 2014 Dec. 31, 2014 Jan. 1, 2015 a$67,673. 02 (3) Interest Revenue at 14% on Net Investment (4) Lease Receivable $406,038. 12a 338,365. 10 270,692. 08 203,019. 06 135,346. 04 67,673. 02 0 (5) Unearned Interest: Leases $106,038. 12b 73,512. 4 45,907. 18 23,911. 52 8,310. 69 0 (6) Net Investment $300,000. 00 232,326. 98 264,852. 76d 197,179. 74 224,784. 90 157,111. 88 179,107. 54 111,434. 52 127,035. 35 59,362. 33 67,673. 02 0 $32,525. 78c 27,605. 16 21,995. 66 15,600. 83 8,310. 69e x6 – $300,000. 00 x 14% d$232,326. 98 eAdjusted + $32,525. 78 b$406,038. 12 c$232,326. 98 for $0. 04 rounding error This table would also be suitable for Tenant Company if Tenant's incremental borrowing rate is ? 14%. 21-47 P21-5 (continued) 3. Journal entries: Tenant Company (lessee): 2010 Jan. 1 1 During the year Dec. 1 Leased Equipment Capital Lease Obligation Capital Lease Obligation Cash Insurance Expense Property Tax Expense Cash Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment ($300,000 ? 6) Interest Expense Accrued Interest on Capital Lease Obligation Accrued Interest on Capital Lease Obligation Capital Lease Obligation Cash Insurance Expense Property Tax Expense Cash 31 Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment Interest Expense Accrued Interest on Capital Lease Obligation 300,000 67,673. 2 700 800 300,000 67,673. 02 1,500 50,000 50,000 32,525. 78 32,525. 78 31 2011 Jan. 1 32,525. 78 35,147. 24 600 750 67,673. 02 During the year Dec. 1,350 50,000 50,000 27,605. 16 27,605. 16 31 21-48 P21-5 (continued) 3. (continued) Landlord Company (lessor): 2010 Jan. 1 1 Equipment Leased to Others Cash Lease Receivable ($67,673. 02 x 6) Equipm ent Leased to Others Unearned Interest: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases 300,000. 0 406,038. 12 300,000. 00 300,000. 00 106,038. 12 67,673. 02 32,525. 78 1 Dec. 2011 Jan. Dec. 4. 31 67,673. 02 32,525. 78 1 31 67,673. 02 27,605. 16 67,673. 02 27,605. 16 Income statements and balance sheets: Tenant Company Disclosure (Lessee) Comparative Balance Sheets (Partial) December 31 Assets 2011 2010 Liabilities 2011 2010 Leased equipment less accumulated amortization (Notes 1 and 2) $200,000. 00 $250,000. 00 Current Capital lease obligation $ 67,673. 02 Noncurrent Capital lease obligation 157,111. 88 (Notes 1 and 2) $ 67,673. 02 197,179. 74

Apple Inc Marketing Report Essay

Apple Inc. is an American multinational corporation, which designs, manufactures and sells personal computers, consumer electronics and software, and provides related services. The business has experienced a tremendous growth from 2001 when it has introduced its iPod mp3 player. Apple Inc. is considered to be the most successful electronics company in the world. Introduction Executive Summary Marketing Mix Today, Apple unveiled its new product, the iPad. The much publicized rumour about a tablet created by Apple is now a reality. Tablet pc’s have been around for a long time, but what makes the iPad different from the other market offerings? What strategy does Apple have in place in order to make this a runaway hit like its iPhone and iPod product lines? We’ll use the marketing mix (4 P’s) to see how Apple strategized its goal to make the iPad a bestseller. Marketing Mix is the set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market. Price, product, place and promotion are the 4 P’s or components that make up a marketing mix. Product Apple sells a variety of electronic devices. In 2010, Apple introduced their first tablet, iPad. Ipad is a tablet device that has several features. It looks like a bigger iPhone or iPod Touch and possess a led touch screen interface. Its dimensions are 9.56 in x 7.47 in. It is also very thin and has a battery life of ten hours. This product has the ability to surf the internet, listen and purchase music, watch videos, view photos, read e-mail, read and purchase e-books and execute multiple applications. In fact, the multiple applications available for the iPhone will be fully compatible with the iPad! There will be different versions of the iPad at launch with different hard drive capacities and 3g capability. There will be a 16 GB, 32 GB, and 64 GB variants. Also all iPads will have Wi-Fi and are wireless-n capable. The iPad will also feature the latest Bluetooth profile and will have an on-screen keyboard for inputs. Price The base model of IPad (16 GB) without 3g capability is the cheapest at $499, 32 GB at $699, this is I pad and I phone 5 prices and 64 GB will retail for $699. If a customer wants 3G capability they will have to pay an additional $130 on top of the base price. The consumer also has the option to sign up for AT&T data plan that allows them to have access to the internet virtually anywhere and in areas without Wi-Fi connections. The data plan is two tiered: the customer has a choice between $14.99/month for 250mb and $29.99/month for unlimited access. The data plan will also allow the consumer to access various AT&T hotspots for free. Unlike the iPhone, the customer will not be locked into multi-year contractual obligation and they can terminate it at any time. As far as discounts go, Apple is known for charging higher, premium prices however, they usually offer $100 off certain products to college and University students. They also do special bundles for purchasing certain products during different times of the year. For example, I purchased a MacBook Pro during the summer and they had a promotion that gave me a free iPod and a free printer plus the $100 discount because I was a University student. They have done the same promotion for the previous two years as well. Place There are multiple Apple stores across the Australia, 20 of them, in which all the apple products will be sold. Apple’s retail stores ensure high quality customer experience; provide direct contact with knowledgeable staff and increases brand awareness. Customers can also purchase the products online in Apple’s official website. Best Buy, one of Apple’s partners, also sells Apple products and also has a large retail footprint in the Australia. Amazon, one of the largest online retailers, also carries Apple products. Apple should gauge consumer demand and produce enough in order to satisfy the market. Promotion In the past two decades, Apple has become well known for its advertisement. Its most significant ad campaigns include the â€Å"1984† Super Bowl commercial, the 1990s Think Different campaign, and the â€Å"iPod people† of the 2000s. Other than that Apple Inc. also held press conference to before each products launch debut the products. Several of the major techblogs, forums and websites also invited to cover the event. Given Apple’s track record of heavy promotion and advertisement of its marquee products, the future apple new product has a high probability of getting the same advertising treatment. The Mac, Iphone 5 and iPad is already highlighted on the front page of Apple website and the hour long keynote by Steve Jobs regarding the Mac, IPhone 5 and iPad are also available on the website.

Audit Assurance and Compliance Services

Auditing is the important aspect in any financial managing company to keep all their data safe, secured and perfect without any missing information for any firm. This report talks about the work given to the auditors for making assessments of the statements related to the financial data by the management. The authorization of auditing the files are given only to those examiners who are found responsible and could present the data to the stakeholders by taking the leadership authentication and ruling out any glitches found in the information while maintaining professionalism and giving them overall finance required to the company by appropriate estimations (Audit.ucsf, 2016).   Any information related to the organization is provided to the auditor as a part of morality and competence obligations. Any suggestions specified by the auditor to the company are given prior importance to execute by the management. The information related to the company should be perfect and complete withou t any unclear data, so the auditors will have a keen view on all these aspects and wants it to be highly standard and accurate. If found any missing or unrelated information then they would enquire about it and clear the doubts (Cso, 2016). The task of assessing the financial statements is completed only after noting the ambiguities like revenue of the company, important assets and expenditure for that particular duration. Any accountant who has accepted for auditing the financial statements should be complaint to the laws by considering the fact that he should not get threatened by the organizations group or overlook the conducts of ethical rules as it is the suggested criteria from the ethical guidelines. It should be noted that accepting the task that leads to the cause of threats should be avoided by the auditor which is an essential point to be kept in mind (Isaca, 2016). So the rules in ethical guidelines specifies that before considering to execute any task for auditing you need to be aware of the factors that are mentioned in the guidelines. All the necessary information related to the clients and records of the business are needed to be gathered by the auditor for the present work and need to give the brief outlook of the work and issues if found so that it would not mess up at the end of the audit as it is dealt with the client outside (PwC, 2016). There is always a chance of rejecting the given task if found any proposed threat or insecurity. It clearly implies that every accepted task should be dealt carefully nevertheless of taking long time in assessing the audit files while it gives an opportunity of knowing the customer in depth. As the client gets approval from the auditor for auditing the files they take into consideration those formalities while never getting compromised on their objectives (Rbk, 2016). Threats can be expected from the new firms as a part of their job if any of the auditing team is related to the organization members in terms of share. Expectations of any threat to the auditing team from the client never says that the proposal has to be taken off or stop in between it can even been carried out under proper protection by safeguarding themselves from opponents. Measures should be taken to get away from the issue repeatedly and demolish it completely to avoid any further threats in future (Isaca, 2016). T he later level of audits are accepted by identifying if there are any further issues involved with them. Solutions should be designed for safeguarding the audit team from being threatened by the clients. Auditor efficiency varies based on the organization they are chosen for. It drastically varies if greater organizations are involved in auditing work. Clients such as BSF which is a high level industry the auditor is expected with special skills of efficacy and should be highly capable in order to understand the terms and policies of that firm in regards to their context (Rbk, 2016). In these aspects evaluation should be to the greater extent if auditor is accepting the task and it is a sign of inviting the threat on their own if they are not eligible for this task to complete and accepting it if unable to sketch out the business details at a prospective level. The satisfaction of expectations of clients , reaching the deadlines specified by them are need to be carefully understood by the auditor and should fulfill this requirements before approving the assigned task (Audit.ucsf, 2016). Not presenting the accurate solution that is according to the situation then it creates the way to the threats related to audit firm while giving the suitable conditions for the beneficial of the financial statements. Three kinds of risks are involved in auditing they are: Any possibilities of missing the data and taking commissions or interpreting the data in a wrong way in the financial statements then these are considered to be the inherent risks. These consequences vary from the controls and should be noted that are important to be verified. If the risk is at high level, certainly the industry has to face the risk of inherent which is similarly found with BSF limited (Rbk, 2016). The standards of BSF limited are independent from other firms and have their own judgments which are personal and voicing the nature with no restrictions are the rules required to step ahead. This implicates that risk of inherent is pretty high. There is no significant risk of control identified with BSF limited in such case as it is less than 5 percent involved. If mechanism required to control the process is not properly handled then that leads to control risk which can be aptly defined by this and it apparently makes a way to the threats if failing to recognize the statements that are materialistic (Isaca, 2016). Appropriate control measures internally are to be proposed to solve the misinterpretation regarding the BSF. Auditor should give an opinion on the control measures that are being input in the BSF. By implementing such measures it seems to work out well at BSF and efficient. BSF is comparatively having higher threats as it is the top level industry and the details related to their organization are not clearly given to the auditing team. This figure out the control measures and identifies that situation is controllable (PwC, 2016). If failing to recognize the missing statements from the financial bills of the company then the risk of detection comes into the picture. And it describes the inability of the auditor or giving an opportunity for the company by the auditor (Audit.ucsf, 2016). A customized systematic manner is to be followed while auditing the financial statements and has to rule out the missing of data or any other manipulations in the statements and appropriate corrections are to be proposed as it is not expected to record it in the books without necessary corrections as it affects the user’s interests at later stages. Multiple audit visits can be carried out to verify the mistakes and to reduce the chance of risks (Rbk, 2016). Mixture of three risks of audits is finally presented by the audit team after the completion of entire auditing process (Isaca, 2016). Increase in the three different risks such as risk of inherent, Risk of control and risk of detection are to be determined to know the risk involved in audit. Risk in Audit = Risk of control x Risk of detection x Risk of Inherent To identify the threats involved in auditing the task the audit team has found the process and has to report the possible ways to reduce the threats by acknowledging them is the work given to the team to make a final decision on the entire threats reduction. If the risk level is unmanageable, then the proposed suggestion is at rejection (Rbk, 2016). The risk level is proposed with number of safeguards process in case of risk of detection since the risk is at insignificant level. High labor and lengthy duration is required for this and approval is taken from the management before accepting any task (Isaca, 2016). Risk of inherent and risk of control levels are inversely proportional to the risk level of detection. Risk of detection is chosen to be at lower level by the audit team if threat of inherent is pictured in the situation while giving way to the risk of inherent at high peaks (Audit.ucsf, 2016). The final threat for BSF appears to be at higher level in auditing process for threat levels of detection and inherent. The calculations involved in audit risk are as follows: Risk in Audit = Risk of control x Risk of detection x Risk of Inherent The threat level less than 10% is expected by the audit team to be moderate in general. Hence it is considered that threat of audit on BSF is on the safer side. This reveals that there are no restrictions in taking the task for auditing the financial statements. The adequate amount of proofs related to the audit is to be collected by the audit team as a part of the auditing program in order to follow the appropriate systematic procedure of auditing the financial statements. The auditing process is carried out only if the account system of the client industry is evaluated by the team for example here it is the BSF limited. The accounting system is studied in detailed by the auditing team is the strategy followed on the clients tasks (Rbk, 2016). This at later stages are tested   by conducting control and other tests which are related to this process to make sure that all proofs are gathered in the given duration of time. At the end the audit team has to be sure of providing the evidence correctly about the client’s financial statements. The audit programs that are certainly recommended are as follows: Reports related to finance- on monthly basis Suggestions to be followed from the previous audits Proposing the financial balance at year end Reports to be sent to the required clients and list of funds needs to be received Predictive check on the account balance thoroughly Ledgers are maintained by the clients which are to be checked keenly and other related files The data from all the sectors should be matched after totaling the accounts The office accounts are to be linked to banks statements Number of transactions occurred should be verified and amount taken for the purpose is utilized accordingly or not should be checked The auditors from external team need to follow the entities regarding the irregularities on financial statements from the journal. The audit process is regulated using the journal from the department of accounting for accurate verification. The managing is enquired regarding the entries by the audit team and accordingly the funding is given (Cso, 2016). BSF has designed a success factor that the success in business is based on the development and research carried out. The uncertainty of research depends on the external factors. After attaining the success from such a research program then it can be taken for benefiting the needs of customers. The activities of research and development are to be carried out properly to get a success and the necessary targets should be identified. The targets which are in between should be executed depending on the budget allocated and the duration of time. BSF follows the journal guidelines to show the report effectiveness before marketing them (Audit.ucsf, 2016). The performance from the research that is undertaken newly by BSF is found to be quite complex but cost on research are given on daily basis of expenses and revenue. Collection of material and major equipment’s is given huge capitals (Rbk, 2016). The decision of fixing the funds is decided by the audit team as it has to be carefully tasked based on the requirements of work in the industry. The three entities that are involved in triple bottom line addendum are the environmental, social and economic production in the organization. For the audit to be in a signature process Spreckly has designed this system in 80’s and made a first approach. BSF limited is corresponding to this triple bottom line terms and standards hereafter. The credit’s for the work executed on the financial statements is appreciated (Gay & Simnett, 2000). Though the auditing process looks extended because of the procedure but the company management is pleased with the friendly approach environment and the respectful communication (PwC, 2016). The media reports that these rules are criticized by industries of other firms because of their diversion to the fish production company rather than the suppliers of food materials. This has made an attempt of getting food for next generations. It created a bias between the extremely poor and high people so the approach was not taken into account ( Gay & Simnett, 2000). On the progress of working on this account though the initial take off was not appreciated it was considered as better solution in the later stages. In the scientific research, the triple bottom line is considered to be the success measure but it is not really accepted by the auditor to sign off as they were reluctant to accept (Whittington & Pany, 2001). From the conclusions it is evident that auditor has to get convinced and sign off the document because of the huge information that is available and processed through the auditing process is correct. After performing the extensive research the information is given based on the conditions in the market place and the predictions derived from the situations are submitted. The management is provided with the patent value that is capable of in producing the efficient output in future (Whittington & Pany, 2001). The less availability of advanced technology is providing very less competition to the management and as the time progress it will change the opinion. There might be drastic change in regards to competition which is not exactly related to the market research (Gay & Simnett, 2000). After a proper understanding is created in the market then we can notice a great interest on the patent value in another one or two years or so (Gay & Simnett, 2000). The price is however fixed based on t he popularity of product in the market and its sales conditions. The management is extremely not worried as it can get back the value of it in the later stages after fine evaluation in the market. Audit.ucsf.edu. 2016.  Audits (Assurance and Compliance) | Audit & Advisory Services. [online] Available at: https://audit.ucsf.edu/audits-assurance-and-compliance [Accessed 11 Sep. 2016]. Cso.ie. 2016.  Chapter 5 - Audit, Assurance and Compliance Arrangements - CSO - Central Statistics Office. [online] Available at: https://www.cso.ie/en/aboutus/governance/corporategovernancestandard/chapter5-auditassuranceandcompliancearrangements/ [Accessed 11 Sep. 2016]. Isaca.org. 2016. [online] Available at: https://www.isaca.org/knowledge-center/research/pages/audit-assurance-programs.aspx?cid=1003563&appeal=pr [Accessed 11 Sep. 2016]. Gay, G.E. and Simnett, R., 2000.  Auditing and assurance services in Australia. Mcgraw-hill. PwC. 2016.  Points of view. [online] Available at: https://www.pwc.com/gx/en/services/audit-assurance/publications/regulatory-debate.html [Accessed 11 Sep. 2016]. Rbk.ie. 2016.  Audit, Assurance & Compliance. [online] Available at: https://www.rbk.ie/services/audit-assurance [Accessed 11 Sep. 2016]. Whittington, R. and Pany, K., 2001.  Principles of auditing and other assurance services. Irwin/McGraw-Hill.

Past Affecting the Present in Death and the Maiden and Ghosts Essay

Past Affecting the Present in Death and the Maiden and Ghosts - Essay Example Such frustration is expressed many times in the arts and literature, which are the creative means of expressing one’s sentiments. This natural tendency to express frustration over the fact that the past always has an impact of the future transcends cultures and generations. Ariel Dorfman is Chilean, his play Death and the Maiden highlights this frustration. Henrik Ibsen is a Norwegian who belonged to an earlier era and wrote Ghosts, which also dealt with the subject of the past haunting the present. In both Death and the Maiden and Ghosts, the main characters of the story are all troubled by the past. Ariel Dorfman’ Death and the Maiden is set in country that has gotten rid of a despotic ruler after many years of suffering tyranny. While Dorfman does not specifically indicate what country this is, it may be safe to assume that the playwright based his plot on the experiences of the Chilean people in the post-Pinochet era. Whether he intentionally did or did not mention the name of the country, Dorfman managed to push his message across. The playwright knew that it was not just the Chilean people who experienced severe forms of oppression and injustice in the hands of autocratic rulers. Death and the Maiden is a play with only three characters. Its story revolves around the encounter of Paulina, her husband Gerardo, and Roberto, a doctor. Paulina was one of the many victims of a deposed dictator. She was part of the political opposition and was therefore considered by the dictatorship as an enemy. Captured for her political convictions, she was tortured and raped while blindfolded by members of the state forces. In the play, she recognizes the voice of Roberto as the doctor who raped and tortured her. She then attempts to take vengeance on Roberto. Gerardo, however, who takes Roberto to their home, tries to prevent Paulina from killing the doctor. Roberto insists that Paulina has mistaken him to be one who violated her, which Gerardo also believes. The conflict of the story can be found in Paulina’s assumptions and Roberto and Gerardo’s defense against it. Gerardo too despises the previous regime for its gross violations of human rights, but he believes that those involved in committing these should face a fair trial. Paulina, being a victim, has a more drastic and emotional approach to the prosecution of the offenders. Gerardo’s membership in the commission that investigates those who are involved in the killings under the regime is a contentious issue between him and his wife. Paulina is skeptical over the actual results of the investigations, which is what she means when she says â€Å"you hear the relatives of the victims; you denounce the crimes, what happens to the criminals?† (Act I, Scene 1). Gerardo knows that such issue could create problems in the marriage. When Roberto appeares, such issue of how the events of the past must be handled is highlighted in the ensuing conflict. In the entir e play, it is clear that Paulina is more emotional when it comes confronting her past. Although Gerardo himself is affected by it, considering that he is Paulina’s husband, he is not the one violated. It was Paulina who was raped repeatedly by different men who were part of the state’s security forces, including Roberto. It was her who was tortured. When Paulina already has Roberto tied and gagged; the tiff between her and her husband centers on how she considers Gerardo’

Modernity Essay Example | Topics and Well Written Essays - 250 words - 1

Modernity - Essay Example These aspects are either descriptive or analytical based on social, political, or economic aspects that characterize modernity. A political approach of defining modernity is quite analytical. It states that the earliest stages of modernity began with the Niccolo Machiavelli’s works, which seemed to favor the free republics over monarchies. The modernization initiated at this time continues to grow with liberalism and democracy being quite characteristic in today’s political view. On the other hand, the changes in the social discourse, processes, and conditions take a descriptive approach. In this case, modernity is described in accordance to the descriptions of people’s social aspects. The philosophical view also takes the same descriptive dimension as the social approach. In this regard, it is described as the period where the realization that it is impossible to achieve certainty came up. On the same frequency, modernity achieves a descriptive approach as the a ge in which ideologies were developed. The descriptive aspect of modernity supersedes the analytical. This is because across generations what predominates is the evidence of what has taken place. Therefore, when this is described, it supports the evidence of the transition that is characterized by

Bowmore Islay Single Malt Scotch Case Study Example | Topics and Well Written Essays - 3000 words

Bowmore Islay Single Malt Scotch - Case Study Example This distillery is famed for its single malt scotch whiskey. Rather than marketing a blended scotch whiskey, Bowmore prides itself in marketing the best aged and single brandy whiskies. Their brand Bowmore Islay Single Malt Scotch is wildly famous not only in the united kingdom but also in other parts of the world like Japan and china. The success of this brand can be attributed to the marketing strategies that had been adopted by the marketers of this distillery. One of them is creating a brand that is unique in quality. This means that the scotch is priced highly and this sets it apart from other run-of-the-mill scotches. The marketers have long realised that sophisticated consumers are looking for the expensive scotch and not necessarily the best scotch. As such, when a brand is able to combine expensive and good, it is bound to succeed. This is what Bowmore Distillery has done; they have produced a very expensive and a very good scotch whiskey. This report is a culmination of a market research that was carried on Bowmore Islay Single Malt Scotch. It was commissioned by Bowmore Distilleries and conducted by this research outsourcing company. The major aim was to analyse the domestic and international markets of this brand. The aim of this research was to determine how these trends in the domestic and international markets may affect sales of the product. ... 1) definition of the problem of the study 2) methodology for the research 3) presentation of the findings of the research a). an analysis of the domestic market b). an analysis of the international market c). competitor analysis at both international and domestic markets d). impacts of the domestic and international market dynamics on sales of the product e). Bowmore use of different market research methods to enter the African market Problem of the Study It has come to the realisation of the marketing department in Bowmore that the domestic sales have dropped below those of the international market. In fact, when the sales accrued from the international market increase at a high rate, those of the domestic market seem to decrease at a very low rate or stagnate at times. The executives of the distillery needed to know where this discrepancy was stemming from. Another impetus for this research was the fact that the marketing department wanted to launch the product into the African market. Kenya, a country in the eastern part of the continent, has been chosen as the entry point into the region. The executives needed to know the different types of marketing research that they can use to make inroads into this market. Methodology of the Research There are various methods that the researcher used to collect information for this study. Liang (2003) opines that the success of any market research lies on the methods that were used to execute it. If the research design was poor, this will be reflected in the findings of the research and vise versa. The accuracy of the research is of paramount importance given that the policy makers rely on the findings and recommendations to make their decisions. As such, if they are presented with a