Solutions to Supplementary Problems from Scott Textbook 6th Edition Essay Example for Free

Solutions to Supplementary Problems from Scott Textbook 6th Edition Essay Several reasons can be suggested why oil company managers have reservations about RRA: †¢ The discount rate of 10% might not reflect the firm’s cost of capital. †¢ Low reliability. RRA involves making a large number of assumptions and estimates. While SFAS 69 deals with low reliability in part by requiring end-of-period oil and gas prices to be used (rather than prices anticipated when the reserves are expected to be sold), management may feel that end-of-year prices bear little relationship to the actual net revenue the company will receive in the future. Furthermore, management may be concerned about low reliability of other estimates, such as reserve quantities. †¢ Frequent changes in estimates. Conditions in the oil and gas market can change rapidly, making it necessary for the firm to make frequent changes in estimates. †¢ Investors may ignore. Investors may not understand the RRA information. Even if they do, management may believe the RRA information is so unreliable that investors will ignore it. If so, why prepare it? †¢ Legal liability. Management may be concerned that if the RRA estimates are not realized, the firm will be subject to lawsuits from investors. Management’s reservations may be an attempt to limit or avoid liability. 12. a. Most industrial and retail firms regard revenue as earned at the point of sale. Since sale implies a contract with the buyer and change of ownership, this is usually the earliest point at which significant risks and rewards of ownership pass to the buyer, the seller loses control of the items sold (e. g.. , title passes to buyer) and at which the amount of revenue to be received can be determined with reasonable reliability. b. Under RRA, revenue is recognized when oil and gas reserves are proven. This point in the operating cycle does not meet the IAS 18 criteria for revenue recognition. Since the oil and gas are still in the ground and the reserves are not sold, the significant risks and rewards of ownership have not been passed on and control remains with the producer. Also, the large number of revisions to estimates under RRA casts doubt on the reliability of the amount of revenue recognized. Presumably, this is why RRA is presented as supplementary information only. Presumably, however, collection is reasonably assured since oil and gas have ready markets. Note: This question illustrates that the tradeoff between relevance and reliability can be equivalently framed in terms of revenue recognition as well as balance sheet valuation. In effect, balance sheet valuation is in terms of the debit side of asset valuation whereas criteria for revenue recognition are in terms of the credit side. The basic tradeoff is the same, however. In particular, it should be noted that early revenue recognition increases relevance, even though it may lose reliability. 13. a. From a balance sheet perspective under ideal conditions, inventory is valued at current value. This could be the present value of expected future cash receipts from sale, that is, value-in-use. Alternatively, if market value of the inventory is available, it could be valued at its market value, that is, its fair value (the 2 values would be the same if markets work reasonably well, as is the case under ideal conditions). From a revenue recognition perspective, revenue is recognized as the inventory is manufactured or acquired. b. Cost basis accounting for inventory is due to lack of ideal conditions. Then, inventory markets may not work well. If so, Samuelson’s (1965) demonstration does not apply. As a result, market value requires estimation, opening up inventory valuation to error and possible manager bias. Accountants must feel that this reduction in reliability outweighs the greater relevance of current inventory value. Historical cost accounting for inventories is not completely reliable, since firm managers still have some room to manage (i. e. , bias) their reported profitability through their choice of cost methods (FIFO, LIFO, etc. ). Also, historical cost accounting for inventories is accompanied by the lower-of-cost-or-market rule. Then, reliability issues of current valuation re-arise. Furthermore, even the cost of inventories is not always reliable. For example, overhead costs are usually allocated to the cost of manufactured inventory. These costs are affected by manager decisions about allocation rates and production volumes. 14. 25. a. Relevant information is information that enables the prediction of future firm performance, such as future cash flows. Early revenue recognition anticipates these future cash flows, hence it is relevant. Thus, Qwest’s revenue recognition policy provided relevant information.b. Reliable information is information that faithfully represents the firm’s financial position and results of operations. When significant risks and rewards of ownership are transferred to the buyer and the seller loses control over the items transferred, the amount of future cash flows is determined with reasonable representational faithfulness and verifiability, since the purchaser has an obligation to pay. Also, if the amount of cash to be received is determined in an arms-length transaction, the amount of sale is reliable due to lack of possible manager bias. It seems that Qwest’s revenue recognition policy met none of these reliability criteria. The future cash flows were not representationally faithful since there appeared to be no provision for returns, obsolescence, or unforeseen service costs. Furthermore, as evidenced by the later SEC settlements, substantial manager bias is apparent. Obviously, amounts ultimately collectible were not reasonably assured, since the SEC came up with materially different valuations. c. Under ideal conditions, revenue is recognized as production capacity is acquired, since future revenues, or expected revenues, are inputs into the present value calculations. For an oil and gas company, revenue recognition is analogous—revenue is recognized as reserves are discovered or purchased. The reason is that under ideal conditions, future cash flows, or expected future cash flows, are perfectly reliable. There is thus no sacrifice of usefulness in recognizing revenue as early as possible. Note: A superior answer will point out that under ideal conditions net income consists of interest on opening present value (i. e. , accretion of discount), plus or minus abnormal earnings under ideal conditions of uncertainty). These are not operating revenues, however, but simply an effect of the passing of time.

Macbeth Irony Essay -- essays research papers

MACBETH & DRAMATIC IRONY   Ã‚  Ã‚  Ã‚  Ã‚  The story of Macbeth written by the infamous William Shakespeare is an excellent storyline known and taught as a great piece of literature. Even after the creation of this tale almost 400 years ago, this wonderful written work is still admired and known all over the world. It is an adventure of a noble and truthful hero who is overcome by the lust for power and by greed. His aroused hunger for authority and supremacy leads to him losing his path and turning to the way of malice. The play progresses, as this character plays deeper and deeper into Satan’s evil hand. Through the growth of this malevolent character, the story grows and develops as well. Each and every move this character makes affects someone directly or indirectly, making him the centrepiece of the play. Shakespeare uses many literary devices in the play including dramatic ones to contribute to the advancement of the story and its characters. One of the most used dramatic devices in this play is dramatic irony. This mechanism predicts the events that are to occur by giving the audience a foresight of something that has not yet taken place but will eventually be fulfilled. Through the audience’s knowledge of trials and tribulations for different characters, the story becomes even more mysterious and interesting. Dramatic irony is used so often in the play that almost every major event like war and death is foretold, the theme is further developed and the audience is kept in suspense and anxiety. Such events occurred when Macbeth was crowned Thane of Cawdor, when regicide was committed against King Duncan by Macbeth, when the porter of Macbeth’s home pretended to be the gatekeeper of hell and also when Macbeth ordered his servants to kill Macduff. These parts not only grow the characters’ roles but also make the story even more exciting and leave the audience hungry for more action. They also introduce us to the themes of the play such as the deadly st rength of unbridled ambition and even differences between brutal tyranny and fair monarchy. Every one of these scenes is significant because they develop Macbeth’s character and expand the storyline and theme of the play.   Ã‚  Ã‚  Ã‚  Ã‚  Power is a very important factor of everyday life. Throughout the ages, from kings to presidents, and even before that mankind has always b... ...howed that Macbeth was no monarch but a brutal heartless tyrant.   Ã‚  Ã‚  Ã‚  Ã‚  Dramatic irony is used many times throughout the play to intensify the themes of the story. This dramatic device can be found when Macbeth was given the title thane of Cawdor, when Macbeth murdered the king, when Macbeth’s castle’s porter acted as if he was the porter of the gates of hell and also when Macbeth ordered his servants to kill Macduff. These dramatic ironies also support the themes of the play such as the deadly strength of unbridled ambition and differences between tyranny and monarchy. Through these scenes, foresight was given to the audience on events that were going to happen but it did not reveal how they would occur. This element made the story even more interesting and exhilarating by leaving the mind of spectators to imagine the events yet to occur and be surprised to see how they really occur in the play. As the character of Macbeth developed further, the story became much more fascinating and the audience was kept anxious. This is a wonderful work that is performed on stages everywhere and the name of William Shakespeare continues to be heard throughout the world.

A Man Named Dave Essay

A Man Named Dave, by Dave Pelzer is the story of hope and eventual love and how a child called â€Å"It† finally found himself as a man free at last, after early childhood experiences as the son of a brutal, alcoholic mother. When his father is dying of cancer, Dave attempts to reestablish contact with him, he spends innumerable hours with his father, trying to disentangle in his mind the broken family relationships. Much later, after his mother’s death, Dave realizes that his mother’s maniac actions were picked up from her own childhood experiences. Having rushed into marriage Dave enjoys the son that was born, and is determined that his child will never know the disapproval he felt as the child called â€Å"It. † I find Dave Pel . . . zer admirable because he demonstrates remarkable qualities, such as independence, determination, and courage- quality’s I would like to strengthen in myself. After a horrible childhood, he strives for the best he can do all by himself, not depending on others to help him. One day you’ll see, I’m going to make something of myself. He becomes an in-flight fueling technician for the Air Force, a highly regarded job. Dave has displayed a lot of courage, being fearless and brave, in his trilogy; courage to survive, courage to make it on his own and various others. With his determination to succeed from his setbacks, and gain power from his calamity’s Dave is the man he is today. Independence means to me being able to make it on your own, and not having to depend on others. Another display of his independence (is his desire to be standing on his own two feet) when he gave to his mother his statement to be independent â€Å"All those years you tried your best to break me, and I’m still here. Another is being able to go back to his father who deserted him when Dave needed his father most. His courage to be able to deal with his past, and start a new life is one good example of his courage. Dave’s father didn’t protect Dave from his mother. But his wonderful trait of determination, which is never giving up and going for your goals and not quitting until you’ve achieved it, pulls him past these obstacles in his journey for recognition. Dave Pelzer strongly demonstrates independence in A Man Named Dave, and his life. Dave demonstrates independence by being capable of starting over a new life on his own.

Active and Passive Indexing

The first index fund began in 1971, with $6 million funded by Samsonite, the luggage-maker. Since then, there have been many arguments of whether an active index fund or a passive index fund offers better long-term results for investors. Index funds are already the fastest growing sector of the mutual fund business. From 1986 to 1996, the amount of money invested in index funds grew from $556 million to $65 Billion. And if anything, individual investors have been slow to embrace passive management. Institutional investors invest a far larger percentage of their assets passively. Many individual investors are simply uneducated and unaware of the arguments and experimental evidence supporting passive management. Institutional investors and academics have known for years (many for decades) that passive investing is extremely difficult to beat and that the majority of active investors will fail in their attempt to outperform the market. Active indexers assert they can outperform the marketplace. Passive (index) portfolios state they can mirror the performance of the indices. Both have their good times and their bad times. Active indexers raise cash in times of increased risk and instability while passive indexers remain fully invested. This can be quite painful during times of large declines in the market. Passive portfolios mirror the gains of the indices during roaring bull markets and eventually outperform the majority of active money managers who must remain diversified and who sometimes take on additional risks in an attempt to produce the performance and safety that they have promised their clients. The evidence has piled up during today's bull market that the average dollar managed by active managers does not keep up with the market index. Finally, indexing is a way to avoid being blind-sided in certain areas of the marketplace. Active management themes can easily find themselves on the wrong side of an investment. There is a perception among investors that a strategy designed to match stock market returns is less risky than a comparable actively managed portfolio. Since the index approach invests in a manner that is most friendly with the market's natural liquidity, it produces the least disturbance. The passive investor also has diversified his risk. Specific negative things can happen to individual companies or groups. As a passive investor, one is not exposed to any of these things. However, it does not mean you have a risk-free investment. The downside to passive index investors is that they â€Å"fuel the fire† of a market that appreciates well beyond its true value. Index mutual funds must put new money to work†¦ they can not hold cash†¦ and their investors all buy the exact same stocks. When stocks go down, index funds, being fully invested, will receive the ultimate effect of the decline. Combined with this loss is the fact that they will also have to sell shares to cover shareholder redemptions. These funds will get hit harder than many active portfolios with a cash cushion. Most active managers of investment portfolios raise cash as they perceive higher valuations, excessive instability, and extreme risks, therefore; reducing the display to loss during declining markets. Another downside to passive indexing is the impact they have on market instability. This gives the patient active money manager a welcome opportunity to take advantage of stock selection at very attractive prices and, to some extent, time the market in making their decisions of when to buy and when to sell. Index investing is a tricky business that can roil markets. Actively indexed funds have gone upward over the last decade. This has occurred despite the fact that investors have poured huge amounts of money into active funds over this period. The costs of investing in index funds have trended downward as they have become more popular with investors. The costs of active index funds just might decrease in the future, thereby narrowing the cost gap with passive index funds. But all evidence to date has shown just the opposite trend – the costs of active funds continue to go up and the costs of index funds continue to go down. Actively indexed funds typically generate relatively large amounts of taxes while passive index funds generate relatively small amounts. Some of the resulting gap in performance caused by taxes would seemingly be narrowed if the federal government were to lower tax rates. Congress did this at the end of July 1997 when it reduced the maximum long term capital gains tax rate from 28% on investments held more than one year to 20% on investments held 18 months or longer. The tax bill provides that in the year 2001 this rate will be reduced to 18% for investments held five years or longer. Finally, active money managers serve the specific needs of their clients. They manage portfolios based exactly on the investor's objectives and tolerance for risk. They make decisions based on a stated time frame and they are capable of changing the goals and direction of a portfolio on a moment's notice. They are the investor's personal link to the market and the protector of their capital. The value of these services is immeasurable to most investors. One thing that really does not influence the investor as much as it should is the lack of appreciation with respect to the tax consequences of passive index management. The capital gains, created during the year by a fully active index manager, is reported to the IRS, and the investor ends up being taxed. For a taxed investor, the buy-and-hold is a winning strategy. Turnover is the enemy of the investor who pays taxes. Conversely, most investors would be more than happy to pay taxes on the returns produced by active money managers during periods of declining markets. Not many investors prefer losses to earning some gains and interest, even with the tax man waiting. The effect of so many investors buying index funds is that they tend to guard the money market. An investor could actually, in a cost-effective manner, buy and sell the market. The asset funding of active managers, combined with the efficiency of the passive manager, allows one to implement strategies that provide an optimal mix of securities to match a particular scenario, objective, or risk aversion. From time to time, it is possible that the major assets can get out of balance. Investors can run up prices where the lawfulness market is overvalued. When this reaches a untrustworthy level, more self-corrective measures are needed. This is where the expertise of the active manager becomes useful. As an investor, you are always trading off what Jeremy Bentham, the British economist, referred to as the â€Å"pain-pleasure calculus. † Good returns produce pleasure. Bad returns produce pain. An active money manager is always balancing off the pleasure vs. e potential pain. The active manager tends to determine what that balance is and if it finds that the market is deployed otherwise, it works in balancing the portfolio. Tactical asset funding combined with a passively managed portfolio has been called the â€Å"holy grail† of investing by Jonathan Burton, of Dow Jones' Asset Management magazine. During declining markets, index funds take the full force of the market's loss. Managers of these funds are forced to sell stocks in order to meet the demand for redemptions as their investors got out of the market. During markets of very little movement, investors quickly drain of insufficient or no returns on their investment. Finally, a philosophy of capital preservation causes the active manager to raise cash, providing a cushion for portfolios during times of extreme risk. Active or passive? Both have their advantages and their risks, but the two are found to be the best long-term plans for both performance and safety. Index (passive) funds are likely to beat active funds, yet the Morningstar data show that 92% of all the money is U. S. stock funds is in active funds.

Film Version of A Midsummer Nights Dream essays

Film Version of A Midsummer Night's Dream essays A Midsummer Night's Dream by English poet and dramatist William Shakespeare is a comedy combining love, fairies, magic, and dreams. Today, William Shakespeare's literary works are just as contemporary as when they were being written. In the modern day film version of 'A Midsummer Night's Dream,' director Michael Hoffman successfully combines the different elements of drama to awaken the audience's imagination to the themes of enchantment and illusion. This is achieved by emphasizing place, characterization, mood, a tension of relationships and dramatic meaning. In retrospect, 'A Midsummer Night's Dream' is an opulent, magical and enchanting movie that seeks to explore the realms of illusion. Set in Tuscany at the end of the 19th century, the film successfully explores the themes of enchantment and illusion by choice of setting and place. Unlike the text, the film version takes place in Tuscany, Italy in the Victorian Age. Perhaps Hoffman chose Italy instead of Greece due to the universal romantic feeling that it creates. Unlike today, Greece was the center of classical history, therefore popular within the people of his day. The invention by Hoffman of the town, Monte Athena, located in Tuscany draws parallels between the text and film versions. 'A Midsummer Night's Dream' is the most romantic and intricate of Shakespeare's works and therefore a beautiful setting such as Tuscany was needed to fulfill the play's themes of enchantment and illusion. A talented cast including popular romantic leads Rupert Everett and Michelle Pheiffer attempt to bring this beautiful 'dream' to life. 'A Midsummer Night's Dream encompasses three worlds: the romantic world of the lover s; the working day of the rude mechanicals and the fairy world of Titania ...

Amis Icy Creams

Describe the service organization culture at Amy’s Ice Cream. Amy’s Ice Cream culture is rather laid back. The atmosphere in the parlor is cheery and everyone exhorts a friendly and happy attitude. Amy encourages employee empowerment by allowing the employees to dress as they wish and to interact with customers in a way that is more suitable to their personality. The customers’ attitude is very important to the management as well as the employees so they make sure that customers are always satisfied and receives a high quality consistent product. The store service is conducted in a highly autonomous manner and so far it appears to be not only successful but efficient as Amy’s ice cream has been in existence for a number of years. 2. What are the personalities attributes of the employees who are sought by Amy’s Ice Cream? Amy’s Ice cream has a few specific criteria which future employees must fit. These criteria are not however rigid. Employees should possess a personality that is suitable to a service industry that interacts with customers on a daily basis. They must also feel comfortable expressing themselves with confidence and finesse. One of the most important attributes is the ability to recognize the different types of customers that come into the store and how to deal with them. 3. Design a personnel selection procedure for Amy’s Ice Cream using abstract questioning, a situational vignette, and/or role playing? * Abstract questioning: * Which flavor of Ice Cream best describes your personality? * What kind of customers would you find annoyed? How you would handle it? * What do you know about Ice Cream? * How your past job’s experiences can influence you? * A situational vignette: * How would you face a situation where a customer faint while being serviced? What would you do if the store is being robbed * What would you do if the customer doesn’t have money? (i. e. forgot his/her wallet) * A customer complaining about a hair in the purchased Ice Cream after it’s finished * Role playing: * A particular customer has the habit of always showing up about two minutes before closing and staying late. Often this occurs on the night when weekly store meeting are held after closing time. This delays starting the meeting and furthermore employees are on the clock waiting for the customer to leave. What would you do?

Historical events that have shaped America Essay

Historical events that have shaped America - Essay Example When breaking down the essence of America in this way, it becomes possible for a few key events to float to the top of each category as being critical in the evolution of the United States. Of course, this determination is largely a matter of opinion. Nevertheless, a concrete case can be made for three major historical developments as the most essential factors shaping America. In the political realm, the Enlightenment is the first factor. In the economic realm, the Industrial Revolution is the second factor. And in the military realm, World War II is the third factor. Taken together, these three factors comprise a triad of events in whose absence the America we know today could never have possibly come into being. The Enlightenment was arguably the most important historical event influencing the United States governmental and political system. Not only did it spawn a philosophy of good government and a view of human rights that directly impacted the thinking of the Founding Fathers as they crafted the American system of government, but it also indirectly informed modern views of social justice that precipitated such developments as the Civil Rights movement, universal suffrage, and social security. The Enlightenment, while more of a European phenomenon than an American one, took place at just the right time, directly preceding the American Revolution and heavily influencing the thinking of the great men who would be instrumental in setting the initial course of America (http://www.wsu.edu/dee/AMERICA/ENLIGHT.HTM). The Enlightenment was the point in history when some of the most influential political philosophers of history wrote their seminal works. These include the writings of John Locke, Jean-Jacques Rousseau, Thomas Hobbes, and John Stuart Mill. Together, these great thinkers laid out the philosophical underpinnings of what would become the American government. Such concepts as separation of powers, the right to life, liberty and property, the importance of a strong central government, and the common good, all came into play as the Framers developed their formula of "good government" that is laid out within the U.S. Constitution. These "enlightened" thinkers, among others, brought about a fundamental shift in the way humans viewed their world and their natural place in it. The Enlightenment essentially set the philosophical parameters surrounding the way humans interact with one another and agree to govern one another. The Founding Fathers, most notably James Madison and Thomas Jefferson, injected a heavy dose of Enlightenment philosophy into the American governmental system, with its protection against the tyranny of the majority, its preservation of individual liberty and property rights, and its perpetuation of the sovereignty of the states in the face of a strong central government. As such, the Enlightenment provided the cornerstone of American government, and was perhaps the most critical world historical event shaping America. The Industrial Revolution Just as the Enlightenment was key to America's political development, the Industrial Revo