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Case 12-2

To Recognize or Not to Recognize, That Is the Question

Shakespeare Inc. (Shakespeare or the “Company”) is a privately held book printing and publishing company with a December 31 year-end. The summary balance sheet as of December 31, 2011, included:

Current assets $ 6,500,000

Noncurrent assets 28,250,000

Total assets $34,750,000

Current liabilities $ 4,500,000

Noncurrent liabilities 13,750,000

Total liabilities $18,250,000

Total shareholder equity $16,500,000

The summary results of operations for the year ended December 31, 2011, included revenue of $10.7 million and net income of $1.2 million.

Shakespeare is planning to issue its financial statements on March 20, 2012. On March 18, 2012, Shakespeare’s management will evaluate new information about one of its accruals and two subsequent events to determine if this information or events represent items that should be recognized or disclosed in the December 31, 2011, financial statements.

Medical Benefits Payable

For the past several years, Shakespeare has self-insured medical benefits (health and dental) for its employees. The Company records the costs of medical care in the period in which covered events occur and includes its best estimate of the costs that have been incurred but not yet reported (IBNR) in its estimate of the medical benefits payable. Shakespeare looks to the FASB Accounting Standards Codification, which defines IBNR in the Master Glossary as “[l]osses incurred by the insured entity that have not yet been reported to the insurance entity.” Shakespeare’s management estimates its liability with the assistance of third-party experts using actuarial techniques, assumptions, and observations that are based on past experience of claims paid through the balance sheet date. The Company monitors the continued reasonableness of the assumptions and methods used to estimate the IBNR liability each reporting period. Management’s process for estimating its medical benefits payable is disclosed in its “Significant Accounting Policies” footnote. Management has a history of accurately estimating the IBNR liability using these techniques as validated by the actual claims received. Historically, all claims are received by Shakespeare within two months of the medical services being provided to its employees.

Using this process, management estimated an IBNR liability of $1.25 million as of December 31, 2011. As of management’s review on March 18, 2012, Shakespeare had received claims totaling $0.75 million for medical care costs incurred before December 31, 2011.

Line of Credit Modification

As of December 31, 2011, Shakespeare had a line of credit with a bank of $8 million (with a $10 million maximum amount available) due in approximately three years from the balance sheet date. Interest accrues on amounts drawn under the line at the London Interbank Offered Rate (LIBOR) (subject to a 3.5 percent floor) plus 7.5 percent per year. Shakespeare is also required to pay a commitment fee equal to 2 percent per year on the portion of the line of credit that was not drawn upon.

On March 1, 2012, the Company completed its modification of the terms of the line of credit with the bank to finance the acquisition of a competitor printing and publishing company (see further facts of acquisition below). The key modified terms are as follows:

• The maximum amount available under the line of credit was increased from $10 million to $20 million.

• The term was extended another three years past the original due date (i.e., now due in approximately six years from the balance sheet date).

• The interest rate on amounts drawn was reduced to LIBOR plus 3 percent (still subject to a 3.5 percent floor).

• The commitment fee on undrawn amounts reduced to 0.5 percent.

Acquisition of a New Publishing Company

Using the funds from the modified line of credit, Shakespeare’s management drew $10 million from the additional capacity on March 10, 2012, to acquire a competitor publishing company in the northeast United States, Hamlet. On the basis of its initial assessment from the Company’s due diligence (that started shortly before the balance sheet date), management’s best estimate of the allocation of the $10 million purchase is as follows: $2 million of current assets and $8 million noncurrent assets (comprising $5 million of identifiable noncurrent assets, $2 million of intangible assets, and $1 million of goodwill). Hamlet’s prior-year audited financial statements included revenue of $3.2 million and Earnings Before Income Taxes, Depreciation, and Amortization (EBITDA) of $1.1 million. The estimated purchase price allocation has not been finalized and is expected to be after the financial statements are issued.

Required:

1. Should the information pertaining to actual claims incurred as of the balance sheet date that became available after the balance sheet date be considered in determining management’s best estimate of the medical benefits payable? If so, how does this information impact the amount recognized or disclosed?

2. How, if at all, is the modification to the line of credit recognized or disclosed in the financial statements?

3. How, if at all, is the acquisition of Hamlet recognized or disclosed in the financial statements?

4. What should Shakespeare disclose about the date through which the financial statements were evaluated for subsequent events? How would this disclosure change if Shakespeare were an SEC filer?

5. Shakespeare is contemplating adopting IFRSs in the coming year. What guidance in IFRSs addresses events that occur after the balance sheet date but before the financial statements are issued? What does this guidance state about the recognition, measurement, or disclosure of such events?

Auditing class 2pg

 

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This class is ENglish 135.I need to write a position paper about animal rights.I also need to have a Clear Topic:A research question:A clear thesis that offers the problem and two solutions.The Research Paper will be a longer version of your position paper, just expanded with outside sources. The research proposal and outline let the reader know your topic, research question, and how you plan to expand your position paper. The research outline provides a road map of your ideas for the research paper, including your thesis, organization, and major ideas.The research proposal and outline assignment, due at end of week 4 in the Dropbox, is worth 60 points and should be 1-2 pages.Submit your assignment to the Dropbox located on the silver tab at the top of this page. For instructions on how to use the Dropbox, read these Step-by-Step Instructions or watch this Dropbox Tutorial.See Syllabus “Due Dates for Assignments & Exams” for due date information.Course ProjectThe research proposal and outline are partly based on the position paper, which was last week’s assignment. The Research Paper, due at the end of the course, will be an extension of this week’s proposal and outline. Be sure to start your research process if you haven’t done so already, and compile your sources. These sources will be used for next week’s assignment, the annotated bibliography.Refer to the Course Project item under Course Home for information about the Research Paper.See Syllabus “Due Dates for Assignments & Exams” for due date information.

 

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Create a 5 page essay paper that discusses Human Rights and Economic Development.

The present time and age has witnessed human rights falling to its lowest ebb, which has essentially meant that it is indeed one of the most talked about subjects within the domains of the people and the society takes the brunt for the same anomalies (Gosine 2011).

Human rights are universal and do not come about just because they are accepted by a culture or a society or completely shunned by it. They remain equal to all men and women present on the face of this world. This is the reason why it is seen in a similar perspective within the first world (developed) nations as it is perceived within the third world (underdeveloped) countries. The need is to understand how human rights, as a composite factor is able to sustain itself and be deemed as the savior for all human beings. However, it is an entirely different matter altogether that human rights are given more significance in the developed nations than the underdeveloped ones. These distinctions essentially outline the shortfall on the part of the human rights undertakings and actions happening on a global basis (Gavrielides 2011). The universal basis of human rights ensures that it is a problem for the entire world and not selected to a certain area or population. Thus the need is to find out how these anomalies can be taken care of and what more could be done to thwart such instances in the coming times.

As far as understanding particular issues with human rights in the world, the need is to comprehend where human rights come about or pose as a problem. They are more often witnessed within the underdeveloped countries where people do not have access to proper clothing, quality food and shelter above their heads. This is the aspect that draws attention towards the point that human rights in all its forms and manifestations, remains a much quintessential factor. Men and women are being slaughtered in the name of cultural issues which is apparently a human rights

 

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Hi I need help

Business Ethics

1.  Which of the following statements is most accurate?

  A. Ethics of principles is based on consequences, whereas utilitarianism is based on rules.

B. Ethics of principles is based on self-interest, whereas utilitarianism is based on human rights.

C. Ethics of principles is based on human rights, whereas utilitarianism is based on self-interest.

D. Ethics of principles is based on rules, whereas utilitarianism is based on consequences.

2.  Which of the following statements reflects the approach of a principle-based ethical tradition?

 A. Obey the law.       B. Maximize the overall good.

C. Ends justify the means.    D. The fittest will survive.

3.  _______ is the final step in the ethical decision-making process.

  A. Identifying new ethical dilemmas to tackle

B. Monitoring and learning from outcomes

C. Corresponding with the stakeholders

D. Listing the eventualities that may result from the decision

4.  The omission known as change blindness occurs when decision makers

  A. want to bring about a change on a whim.

B. fail to notice gradual changes over time.

C. are adamant on maintaining status quo due to a fear of change.

D. overlook a sudden change.

5.  The failure of personal ethics within companies like Enron and WorldCom led to the passage of the _______ Act.

 A. Brooks      B. Sarbanes-Oxley     C. Clinger-Cohen      D. Gramm-Leach-Bliley

6.  The _______ Act was passed in April 2009 to amend the executive compensation provisions of the Emergency Economic Stabilization Act of 2008 and to prohibit unreasonable and excessive compensation and compensation not based on performance standards.

 A. Grayson-Himes Pay for Performance   B. Statutory Pay-As-You-Go

C. Employee Pay Comparability       D. Gramm-Rudman-Hollings Performance and Results

7.  The concept of individuals’ completeness within themselves and consistent alignment of their actions with deeply held beliefs is known as

A. honesty.   B. human well-being.   C. personal integrity.    D. virtue ethics.

8.  Theoretical reasoning is reasoning about what we

 A. actually do.     B. should do.    C. should believe.     D. actually believe.

9.  Which of the following best describes ethics?

 A. An academic discipline that originated in the early 1900s

B. A descriptive approach that provides an account of how and why people act the way they do

C. A scientific approach such as psychology and sociology

D. The study of how human beings should properly live their lives

10.  Dramatic examples of tyrannical regimes in history demonstrate that

 A. just societies can be achieved only through strict enforcement of ethical codes.

B. societies valuing freedom welcome laws that require more than the ethical minimum.

C. one’s ethical responsibility may run counter to the law.

D. obedience to the law almost always makes people indifferent toward their ethical duties.

11.  _______ understanding of social justice argues that freedom from coercion by others is the most central element of social justice.

 A. Libertarian    B. Egalitarian     C. Anarchist     D. Conservative

12.  Ethics has been a focus of discussion for human beings for millennia because, generally speaking, people are interested in the question of what makes a/an

 A. meaningful human life.  B. ethical description. C. legal right. D. economically viable business.

13.  _______ are fundamental to theories of social justice upon which capitalist economies have been built.

A. Fraternity and autocracy       B. Consideration and kindness

C. Kinship and cooperation        D. Liberty and equality

14.  _______ directs us to make decisions based on overall consequences of our actions.

 A. Utilitarianism    B. Role ethics      C. Virtue ethics     D. Deontology

15.  _______ ethics assert that individual rights and duties are fundamental, and thus can also be referred to as a rights-based or duty-based approach to ethics.

 A. Virtue-based    B. Principle-based    C. Pragmatic     D. Role

16.  No group could function if members were free at all times to decide for themselves what to do and how to act. Which of the following functions serves to organize and ease relations among individuals?

 A. Autocracy     B. Social contract    C. Self-rule      D. Personal norms

17.  Morality is the aspect of ethics that we can refer to as

A. leadership.    B. independence.     C. rationality.    D. personal integrity.

18.  _______ functions ensure the integrity and proper functioning of economic, legal, or financial systems.

A. Gatekeeper     B. Marketing       C. Administrative      D. Social

19.  Social sciences such as psychology and sociology are different from ethics because they’re _______ in nature.     

 A. descriptive   B. clinical   C. conjectural    D. normative

20.  Within a business setting, individuals must consider the ethical implications of both personal and professional

 A. laws.      B. decision making.    C. desires.    D. self-interest.

 

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