You are an accountant for Davanzo Company. The president of the company calls you into her office and says, “I want to ask you about two issues. First, we need to sell one of our investments to raise $1 million because I think I have found a better investment. We could sell the bonds of Company X, which are currently worth $1 million even though they have an amortized cost basis of $950,000. But I don’t want to sell them because I like the steady stream of cash flow we get related to interest. Or we could sell the bonds in that dog, Company Z. These bonds are also worth $1 million, but they cost us $1.2 million. I hate to admit we made such a big mistake, and if they can somehow avoid bankruptcy, we may actually recover our investment. And then there’s that loss. I don’t want to report that. Second, I am going to use the $1 million to buy about 20% of the shares of Company M, but I seem to remember that there is some accounting rule that might affect how much we buy. I was also wondering about buying some of Company M’s convertible preferred stock so we can convert that into a large ownership position in the future. Let me know what you think.” You are aware that Company M is a new company that is not yet listed on the stock market, has been making losses, and is expected to continue making losses for a few more years.
In my opinion as we aware about that the company M is a new company and is going to make a loss for few more years as of now we should not invest in that company. If the track record of company is not good or profitable in that case even after listing there value goes down. As company is occurring loss definetely at lower price shares will be available in future.
Further if we talk about Bond in Z ltd. we can wait untill we invest that amount in other options. It may be possible that during that time period company avoids the bankruptcy and company would recover all the amount without incurring any loss.
So in my opinion as of now we have to wait and thenafter only can take some steps.
Discuss the issues raised in Case C13-7 from a financial reporting and ethical perspective. You are...
CASE 2.5 Ethics and Window Dressing LO2-49 The date is November 1S. current year. You are the chief executive officer of Omega Software-a publicly owned company that is currently in financial difficulty. Omega needs new large bank loans if it is to survive. Page 86 You have been negotiating with several banks. but each has asked to see your current year financial statements. which will be dated December 31. These statements will. of course. be audited. You are now meeting...
Business Ethics Case Study: Discuss the important ethical issues in this case. In your response examine the ethical issues in this case especially from the viewpoint of the consumer. In your response, please identify and evaluate the systems (if any) that were put into place to regulate the product, protect consumers, and ensure corporate compliance. Please use the text box of this journal link to enter your response (minimum 200 words) for the case study. CASE STUDY 7.1 Hazardous Homes...
I really need help with my case study please The case study references IKEA Soenso’s Furniture Company THE SITUATION: You’ve recently been hired by a furniture manufacturer in Columbus, Ohio. Your title is “Logistics Manager” and your job, according to the owners, is to help them “…with this ‘logistics’ thing.” The owners, John and Jane Soenso, are industrial designers that met in school due to their love of designing modern furniture. Over the years they built furniture in their garage...
Abstract This case deals with the capital budgeting techniques of Net Present Value (i.e. NPV) and Internal Rate of Return (i.e. IRR). In this case, students will compare two mutually exclusive projects using NPV and IRR, and choose the best project. They will learn about NPV and IRR methods and their advantages and disadvantages. Students will also learn the weakness of the IRR method when comparing two or more projects. Finally, they will evaluate the two projects assuming that the...
CASE 1: Two former roommates from college contact you about an opportunity to make big money. Their idea is to start a business to market a new video game system (the computer science major developed the software, the engineer created the hardware). They estimate it will take $5 million to $10 million to begin production, and they want to raise money by selling shares in the company to investors. They think their product is superior,and they are aware of the...
Questions to be answered In reference to the Avion Inc case study, identify and summarize the reasons it is important for a firm to evaluate its suppliers. Identify and describe an effective supplier evaluation method the firm in the Avion Inc case study could have used to evaluate its supplier. Explain why your selected supplier evaluation method would work for said firm. Define performance measurement and explain the role of performance measurement in managing supply chain activities. Describe the methods...
Case Study 815 Susan: What are you talking about? Kevin: I spent a good part of the day over at Foster and learned some interesting things. For example, do either of you remember what we told Foster the monthly volume requirements for the product would be? Bill: I remember exactly. The volumes were projected to be 2,500 units a month. So what's the problem? Kevin: We need to talk with our production group more often. The monthly volumes are now...
Ethical Issues “Maria, do you have a minute?" Josey asked the COO after stopping her in the hall. "If it's quick, I do. I'm on my way to a meeting in a few minutes with the rest of the executive team." "I'll only take a minute. I've been going through the numbers your team gave me about the new line," Josey said as they slipped into an alcove in the lobby, out of the foot traffic of Wedgewood's main offices....
Ethical Issues "Maria, do you have a minute?" Josey asked the COO after stopping her in the hall. "If it's quick, I do. I'm on my way to a meeting in a few minutes with the rest of the executive team." "I'll only take a minute. I've been going through the numbers your team gave me about the new line," Josey said as they slipped into an alcove in the lobby, out of the foot traffic of Wedgewood's main offices....
Ethical Issues “Maria, do you have a minute?" Josey asked the COO after stopping her in the hall. "If it's quick, I do. I'm on my way to a meeting in a few minutes with the rest of the executive team." "I'll only take a minute. I've been going through the numbers your team gave me about the new line," Josey said as they slipped into an alcove in the lobby, out of the foot traffic of Wedgewood's main offices....