Question 1
Course Project: Financial Statement Analysis Objectives To analyze the financial statements of a publicly traded company Obtain an annual report from a publicly traded corporation that is interesting to you. Be sure the company has property and equipment, intangible assets, and long-term debt on its balance sheet. Using techniques you have learned in the previous weeks, respond to the following questions (many of your answers will come from the course material, not the company you selected): What is the amount of property and equipment on the balance sheet for the two most recent years? How do companies account for nonmonetary exchange and dispositions of property and equipment? What amounts on the most recent cash flow statement relate to the purchase and sale of intangible assets? Please also describe the calculation of goodwill and how we account for differences between fair value and book value of assets acquired. What are the company's depreciation methods? Please describe how to determine whether an impairment exists and how to calculate the impairment loss. What are the three categories of contingent liabilities and the treatment for each type? What amounts are included in the cash flow statements for proceeds from issuance of debt and repayment of debt for the most recent year? Please describe how bonds payable differ from notes payable and how to account for the issuance of bonds at par, at a discount, and at a premium. What are the four criteria for a lease to be considered a capital lease and what are the additional criteria for the lessor? I have posted in doc. sharing an example using the Hershey Company. Take a look at the example. Be sure to follow the order and repeat the questions as listed in the course project before answering them. Also, be sure to include supporting information "cut and pasted" from the financial statements of the company. Please note the following when formatting you course project: A quality project will use proper APA formatting, including correct in-text citations and a proper reference page. APA Citation and Reference Materials are located at the bottom of the syllabus. Guidelines Back to Top Papers must be 3 to 5 pages in length. Use a 12 point font, with double spacing, and include a cover page, table of contents, introduction, body of the report, summary or conclusion, and works cited. Even though this is not a scientific-type writing assignment, references are still very important. At least three authoritative, outside references are required (articles and web pages with anonymous authors are not acceptable). These should be listed on the Works Cited page. Appropriate citation is required. All DeVry University policies are in effect, including the plagiarism policy. Papers are due on Sunday of Week 6 of this course. Any questions about this paper can be discussed in the weekly Q & A Discussion topic. This paper is worth 125 total points and will be graded on quality of research topic, quality of paper information, use of citations, grammar, and sentence structure. Milestones Back to Top The paper is due the Sunday of Week 6. Grading Rubrics Back to Top Category Points % Description Documentation and Formatting 25 20 Content 100 80 Total 125 100 A quality paper will meet or exceed all of the above requirements. Best Practices Back to Top The following are best practices in preparing this paper. Cover page: Include whom you prepared the paper for, who prepared it, and the date. Table of contents: List the main ideas and sections of the paper and the pages where they are located. Illustrations should be included separately. Introduction: Use a header on your paper. This will indicate that you are introducing the paper. The purpose of an introduction or opening is to 1. introduce the subject and why the subject is important; 2. preview the main ideas and the order in which they will be covered; and 3. establish the tone of the document. Include in the introduction a reason for the audience to read the paper. Also include an overview of what you will cover and the importance of the material. (This should include or introduce the questions you are asked to answer in each assignment.) Body of the report: Use a header with the name of the project. An example is, "The Development of Hotel X: A World Class Resort." Proceed to break out the main ideas: State the main ideas, give the major points of each idea, and provide evidence. Show some type of division, such as separate, labeled sections; separate groups of paragraphs; or headers. Include the information you found during your research and investigation. Summary and conclusion: Summarizing is similar to paraphrasing but presents the gist of the material in fewer words than the original. An effective summary identifies the main ideas and the major support points from the body of the report; minor details are left out. Summarize the benefits of the ideas and how they affect the subject. Works cited: Use the citation format specified in the Syllabus. Additional hints on preparing the best possible project follow. Apply a three-step process to writing: plan, write, and complete. Prepare an outline of the research paper before going forward. Complete a first draft and then go back to edit, evaluate, and make any changes required. Use visual communication to further clarify and support the written part of the report. Examples include graphs, diagrams, photographs, flowcharts, maps, drawings, animation, video clips, pictograms, tables, and Gantt charts.
Question 2
The Topic is on the Creative Process. ? Conduct an internet search to find and read at least three recent articles that relate to the key topic you selected. Articles may be found on any reputable website that focuses on business, such as the Wall Street Journal, Financial Times, or the Economist. Another good source of information is EBSCOhost, accessible through Liberty University Online?s Library. Websites like about.com, britanica.com, Wikipedia.com, etc. do not constitute scholarly academic articles and references. ? Of the three articles you?ve read, select the article that you wish to discuss, and write a review of it. In addition, you must post all three (or more) recent articles to the reference section?even though you review only one of them. You may provide additional references, but references do not replace the articles that relate to your key term. Actually reference the article you review within the article review. Your review must include the following sections (each section must be structured by a heading for each section): a. A definition of the key topic. This does not count in the word minimum requirement. b. A summary, in your own words, of the selected article. c. A discussion, in your own words, of how the article relates to the selected chapter and key topic. d. The complete citation, in APA format, of each of the three articles read and any other additional references; these do not count in the word requirement. e. An annotated bibliography of all three (or more) articles read. f. All references must be annotated. No copy and pasting. Make the references very clear.
Question 3
Byron Bobsleds Ltd. has just refurbished its track at a cost of $500,000. The company is considering 15 new and improved sleds to capture increased interest in this activity. The new bobsleds will cost $21,000 each and have a useful life of 8 years at which time they can be salvaged for an expected $6,000 each. Five [5] old bobsleds will be retired immediately and salvaged for $2,500 each. The new bobsleds will create the excitement to generate an additional 825 rides annually at $125 each. The additional runs down the track will create an incremental annual maintenance cost of $25,000. The inventory and accounts receivable investment will total 5% of sales. Byron has a CCA rate of 20% and a tax rate of 28%. Annual interest charges on debt to finance this project will be $10,560. The current capital structure is 40% debt, 60% equity and this will be maintained. The debt is at 8%. The current overall cost of capital is 12%. a. Compute the NPV of this investment decision. Should the bobsleds be purchased [12 marks] b. How should you adjust for inflation in your analysis [2 marks] III. Lease versus borrow to purchase (6 marks) Sanders Limited is considering whether to lease its equipment as an alternative to borrowing to purchase it. The equipment will cost $170,000. This amount can be borrowed from a local bank at 6% interest with annual payments amortized over 4 years. Payments would be at the end of the year. The CCA rate on this equipment would be 30%, and the expected salvage at the end of 4 years is $25,000. Alternatively, lease payments of $48,000 could be made each year for 4 years, with the first payment due immediately. Sanders? cost of capital is 11%, and its tax rate is 30%. Required: Should Sanders lease or borrow to purchase?
Question 4
Exhibit 3 Page 5: In virtually all of the [SPE] transactions Enron?s accounting treatment was determined with the extensive participation and structuring advice from Andersen, which reported to the Board. Page 17: Various disclosures [regarding Enron?s SPE transactions] were approved by one or more of Enron?s outside [Andersen] auditors and its inside and outside counsel. However, these disclosures were obtuse, did not communicate the essence of the transactions completely or clearly, and failed to convey the substance of what was going on between Enron and the partnerships. Page 24: The evidence available to us suggests that Andersen did not fulfill its professional responsibilities in connection with its audits of Enron?s financial statements, or its obligation to bring to the attention of Enron?s Board (or the Audit and Compliance Committee) concerns about Enron?s internal controls over the related-party [SPE] transactions. Page 24: Andersen participated in the structuring and accounting treatment of the Raptor transactions, and charged over $1 million for its services, yet it apparently failed to provide the objective accounting judgment that should have prevented these transactions from going forward. Page 25: According to recent public disclosures, Andersen also failed to bring to the attention of Enron?s Audit and Compliance Committee serious reservations Andersen partners voiced internally about the related-party transactions. Page 25: The Board appears to have reasonably relied upon the professional judgment of Andersen concerning Enron?s financial statements and the adequacy of controls for the related-party transactions. Our review indicates that Andersen failed to meet its responsibilities in both respects. Page 100: Accountants from Andersen were closely involved in structuring the Raptors [SPE transactions]. . . . Enron?s records show that Andersen billed Enron approximately $335,000 in connection with its work on the creation of the Raptors in the first several months of 2000. Page 107: Causey [Enron?s chief accounting officer] informed the Finance Committee that Andersen ?had spent considerable time analyzing the Talon structure and the governance structure of LJM2 and was comfortable with the proposed [SPE] transaction.? Page 126: At the time [September 2001], Enron accounting personnel and Andersen concluded (using qualitative analysis) that the error [in a prior SPE transaction] was not material and a restatement was not necessary. Page 129: Proper financial accounting does not permit this result [questionable accounting treatment for certain of Enron?s SPE transactions]. To reach it, the accountants at Enron and Andersen?including the local engagement team and, apparently, Andersen?s national office experts in Chicago?had to surmount numerous obstacles presented by pertinent accounting rules. Page 132: It is particularly surprising that the accountants at Andersen, who should have brought a measure of objectivity and perspective to these transactions, did not do so. Based on the recollections of those involved in the transactions and a large collection of documentary evidence, there is no question that Andersen accountants were in a position to understand all the critical features of the Raptors and offer advice on the appropriate accounting treatment. Andersen?s total bill for Raptor-related work came to approximately $1.3 million. Indeed, there is abundant evidence that Andersen in fact offered Enron advice at every step, from inception through restructuring and ultimately to terminating the Raptors. Enron followed that advice. Page 202: While we have not had the benefit of Andersen?s position on a number of these issues, the evidence we have seen suggests Andersen accountants did not function as an effective check on the disclosure approach taken by the company. Andersen was copied on drafts of the financial statement footnotes and the proxy statements, and we were told that it routinely provided comments on the related-party transaction disclosures in response. We also understand that the Andersen auditors closest to Enron Global Finance were involved in drafting of at least some of the disclosures. An internal Andersen e-mail from February 2001 released in connection with recent Congressional hearings suggests that Andersen may have had concerns about the disclosures of the related-party transactions in the financial statement footnotes. Andersen did not express such concerns to the Board. On the contrary, Andersen?s engagement partner told the Audit and Compliance Committee just a week after the internal e-mail that, with respect to related-party transactions, ??[r] required disclosure [had been] reviewed for adequacy,? and that Andersen would issue an unqualified audit opinion on the financial statements.? Question - For purposes of this question, assume that the excerpts from the Powers Report shown in Exhibit 3 provide accurate descriptions of Andersen?s involvement in Enron?s accounting and financial reporting decisions. Given this assumption, do you believe that Andersen?s involvement in those decisions violated any professional auditing standards? If so, list those standards and briefly explain your rationale.
Question 5
3. The Daily Planet Transit Company claims that the mean waiting time for train during rush hour is less than 7 minutes. As random sample of 20 waiting times has a mean of 5.2 minutes with a standard deviation of 2.1 minutes. Assume the distribution is normally distributed. a. Use the critical value t0 method from the normal distribution to test for the population mean ?. Test the company?s claim. Answer: Given data 1. H0 : Ha : 2. ? = 3. Test statistics: 4. P-value or critical z0 or t0. 5. Rejection Region: 6. Decision: 7. Interpretation: Answer: Given data 1. H0 : Ha : 2. ? = 3. Test statistics: 4. P-value or critical z0 or t0. 5. Rejection Region: 6. Decision: 7. Interpretation: b. Use the critical value t0 method from the normal distribution to test for the population mean ?. Test the company?s claim at the level of significance ? = 0.01 (References: example 1 though 5 pages 397 - 401, end of section exercises 23 ? 28 pages 404 - 405) (6 points) Answer: Given data 1. H0 : Ha : 2. ? = 3. Test statistics: 4. P-value or critical z0 or t0. 5. Rejection Region: 6. Decision: 7. Interpretation,A and B and their components are part of the original question, I don't know if I was to seperated but then it would not make sense if I just put B. part
