Role: As the newly hired CFO for Telco Corporation, a private Canadian company, it is my goal to rectify accounting instabilities, recommend policies, and disclose financial requirements. I will provide a recommendation that will fit the constraints and will correspond with the owner’s objectives for the business.
Users and Objectives:
¥ David Johnston and Telco Corporation- David is the primary stakeholder and owner of Telco Corporation. His objective is to raise $2 million in capital in order to expand the business and maximize revenue generation. In order to generate the funds, his objective is to go public and offer 40% of the business on the stock market. Telco Corp. must sustain a positive image and maximize all streams of revenue.
¥ Shareholders
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Analysis: The business is only including acquisition costs within the cost of inventory; whereas there are many other costs associated with inventory before it is sold to a purchaser. Telco Corporation is defying the matching principle by not recognizing all correlated expenses with their revenue. The cost principle is being defied as assets are not being portrayed at bought price.
Recommendation: Telco must obey all IFRS constraints; they must recognize all costs associated with inventory. For purchased inventory, costs include all costs incurred to ready the inventory for sale: inventory purchase price, import duties and taxes, shipping and handling, and any other costs directly related to the purchase of the inventory. In order to accommodate the needs of the CRA, Telco must provide accurate financial statements in order to have a strong financial structure when going public. Issue Three: Telco is reporting used equipment under the inventory account on the company’s balance sheet leading to an understatement of the equipment
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Analysis: David Johnston is defying the business entity principle by divulging his private interests with the business. Under the business entity concept, the owner’s finance must be separated from the financials of the business. The business must be treated as its own legal entity void from repercussions of the owner.
Recommendation: David Johnston must separate any legal costs reflecting upon his own personal matter away from the business. Divorce filing must be filed and payed under his own name, not the business. The patent registration should have been identified when it was incurred, however, it is a business related cost and should have been paid by the corporation. It is in the company’s best interest to separate all legal invoices between the business and owner in order to sustain an accurate financial image for the CRA and their shareholders.
Conclusion: It is evident that if these financial practices were to be followed, David Johnston, the CRA, the business, and its stakeholders will be satisfied. A business must obey IFRS standards, as it provides a corporation with accurate measures of finance and
In the second year of business at Golf Challenge Corporation the company is struggling. The cost of their inventory is rising, and they are in grave danger of losing their bank loan (their prime source of financing) due to not meeting the required financial ratios agreed and set forth by the bank at the time the loan was given. The owner comes up with a solution, and figures that instead of using Last in-First out (LIFO) the company can use First in-First Out inventory cost system (FIFO) and meet their required financial ratios set forth by the bank. Ultimately, Golf Challenge Corporation should not submit documents to the bank using FIFO as opposed to their previous system LIFO in order to meet the bank requirements
ARB43, Ch.4, Par.9 ?Where evidence indicates that cost will be recovered with an approximately normal profit upon sale in the ordinary course of business, no loss should be recognized...?
However, making the purchase before year-end would be unethical and have a significant impact on the Income Statement. The purchase would increase cost of goods sold (COGS) by $200,000, sales revenue on the other hand, would be unaffected. The increase would lower the gross profit. A lower gross profit decreases the amount of income tax, but also lowers net income by $160,000. The impact on the income would result in a lower Net income and a higher cost of goods sold. The retained earnings on the Balance Sheet would decrease. To compare the outcome of each decision (See Summary & Journal). (Accounting Coach COGS and I/S
There is a memo outlining the accounting treatment of the stock options that has been sent to the SVP of Finance, copying the CFO, external auditor, and the Tax Manager. This memo summarizes the accounting requirements and disclosure requirements for the Company’s stock option plan adopted in Q3, 2009. It also identifies the model used for valuation of the options and where the parameters are derived from.
Founded in 1966 and based in Calgary, Shaw Communications is a Canadian telecommunications company that provides telephone, Internet and television services as well as mass media related services. The Company operated through three principal business segments such as Cable, consisted of cable television, Internet, Digital Phone and Shaw Business operations. Satellite, consisted of direct-to-home (DTH) and Satellite Services. Lastly media consisted of television broadcasting. Shaw Media operates as conventional television networks in Canada, Global Television, and numerous specialty networks. It provides customers with entertainment, information and communications services, utilizing a variety of distribution
By lowering selling prices across the board, Opossumtown, Inc. reduced its inventory turnover ratio, cutting the number of days to sell inventory from 174 days to 104 days; that is a 40% improvement. Opossumtown, Inc. also cut the number of days it takes to collect its credit accounts from 68 to 44 days, again that is 35% better than the previous year. The company is able to do this while cutting its debt ratio by 10% and increasing its current ratio by 25%, making it appear more favorable in terms of liquidity. As promising as this may look, this is not the whole picture. Opossumtown, Inc. shows an 11% decline in gross profit as well as operating income ratios, and a 3% decrease on the profit margin ratio. The decline of these ratios is a result of the company’s new strategy of decreasing the selling price and increasing its marketing and selling expenses. Opossumtown, Inc. made some noteworthy advancements with the implementation of its new plan for 2014. However, based on the assessment of the balance sheet, income statement and the ratios, the corporation did not achieve its goal to increase operating income by 6% and net income by 4%. Opossumtown, Inc. was only able to grow its operating income by a little more than half of one percent and net income by
Telecare unit. Being the nurse manager, he assumes the leadership in developing professional relationship among the multidisciplinary team. Mr. Thathamkulam has an open door policy and instructs all his staff to report to him any problems, which arise time to time so that it can be taken care of in the initial stage. He monitors all the team members on a daily basis. Mr. Thathamkulam functions as the chair of the safety committee for Eye Care Line; he monitors for Joint Commission safety compliance in the care line, identifies safety hazards, follows up with fire drills, attends hospital wide safety meetings, conducts quarterly safety meetings in the care line and reports to the hospital wide safety committee chair. He attends nurse manager
William Evan and Edward Freeman, in their essay “A Stakeholder Theory of the Modern Corporation,” argue that the objective of a company and its managers is not only to maximize profit for its owners and stockholders, but also to balance the benefits received or losses incurred by other stakeholders—employees, suppliers, customers, and the local community, all of whom may be influenced by company decisions. As the owner of MSO, your aim is ostensibly to maximize profits for yourself, but unlike most other indicted CEOs, you have not tried to obtain personal gains at the expense of the stakeholders of your enterprise. Rather, the charges that have been brought against you are for your dealings with another company; in this day and age where investors bemoan the lack of ethics of CEOs who use the power of their position in the boardroom to achieve selfish gains at the expense of their own company and its stakeholders, the charges of insider t...
Enter Dan’s longtime friend Mike Roth. Mike, an investment broker with a track record of using an aggressive philosophy to grow a brokerage firm
Costco Wholesale Corporation is an international chain of membership warehouses operating on the concept that offering members lower prices will produce high sales volume and rapid inventory turnover (“Annual Report” 4). While Costco warehouses are designed to help reduce costs for small-to-mid-sized companies, memberships are also available for individuals (“Company Profile”). The two memberships offered by Costco include Business and Gold Sta...
first quarter of FY2012, prolonged, shortages in supplies due to capacity issues or other factors affecting the manufacturing process alter the price of these products. When there is a shortage in supplies the company may not be able to source required components in adequate quantities in a timely manner (Cisco Systems, Inc. SWOT Analysis, 2013).The company may be obligated to purchase components at higher than normal prices in the current market because of purchase commitments. When this happens its gross margin is affected. Supply chain issues also lead to delay in order fulfillment, affecting the revenues and margins of the company (Cisco Systems Inc. SWOT Analysis, 2013)
It was the year 1987 when the Gartner Group popularized the form of full cost accounting named Total Cost of Ownership (TCO)(author, Gartner Total Cost of Ownership). Originally TCO was mainly used in the IT business sector. This changed in the 1980’s when it became clear to many organizations that there is a distinct difference between purchase price and full costs of a products ownership. This brings us towards the main strength of conducting a TCO analysis, besides taking the purchase costs into account, which consist of the amount a money an organization pays for the required service, product or capital outlay. It also considers 1. Acquisition costs; these can consist of sourcing, administration, freight, and taxes. 2. Usage costs, which consists of the costs associated with converting the given product or service into a finished product. And finally 3. End of life cycle costs; the costs or profits incurred when disposing of a product. TCO can be seen as a form of full cost accounting; it systematically collects and presents all the data for each proposed alternative.
...ant improvement. The decline in property, plant, and equipment may be hurting Rondo and contributing to overall inefficiencies. Sales are growing but profits are not. Rondo's costs are too high and need to be reduced. In addition, inventory turns are degrading and inventory reduction strategies need to be investigated. A major problem for Rondo is the number of days it takes to collect accounts receivable. Significant focus is required in this area to free up cash, which can then be used to invest in property, plant, and equipment. These problems areas contribute significantly to an inefficient operation. This inefficiency inhibits profitability at Rondo and has led to a loss of investor confidence. Rondo's sales and net income have grown year over year and if the company can improve its efficiency in the areas noted above, investor confidence can be recaptured.
Background One. Tel was launched by Jodee Rich and Brad Keeling in 1995 (Cook, 2001). At first, it looked to get the advantages from deregulation of the telecommunication industry by reselling other network’s capacity and making money through stock market speculation. Rich and Keeling tried to increase the company’s shares rather than profit the company (Cook, 2001). Initially, One.
Transactions in business to business are usually in huge quantities and involve huge cash expenditure. Businesses usually buy in large quantities to sell to many customers. Businesses also buy raw materials in large quantities to finish the raw materials into final products and sell them in large quantities. On the other hand, business to customer involves transactions related to the sale of one product and this involves less capital expenditure (Barschel, 2007). Most of the customers do not buy in large quantities. No customer will buy two vehicles since this would be expensive. Even though business to business transaction may be for final consumption, the quantity dealt with is usually large because the number of users in the organization is usually high.