A case study. Journal of the International Academy for Case Studies

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Read the case study indicated below, and answer the following questions:

 

James, M. L. (2010). Accounting for business combinations and the convergence of International Financial Reporting Standards with U.S. Generally Accepted Accounting Principles: A case study. Journal of the International Academy for Case Studies, 16(1), 95-108.

 

1. What key financial ratios will be affected by the adoption of FAS 141R and FAS 160? What will be the likely effect?

2. Could any of the recent and forthcoming changes affect the company’s acquisition strategies and potentially its growth?

3. What were FASB’s primary reasons for issuing FAS 141R and FAS 160?

4. What are qualifying SPEs? Do they exist under IFRS? What is the effect of FAS 166 eliminating the concept of qualifying SPEs on the convergence of accounting standards?

5. If the company adopts IFRS, what changes should management be aware of?

6. What are the principle differences between IFRS and U.S. GAAP?

7.

Your submission should be a minimum of three pages in length in APA style; however, a title page, a running head, and an abstract are not required. Be sure to cite and reference all quoted or paraphrased material appropriately in APA style.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounting for business combinations and the convergence of international financial reporting standards with U.S. generally accepted accounting principles: a case study.

Authors:

James, Marianne L.

Source:

Journal of the International Academy for Case Studies. 2010, Vol. 16, Issue 9, pages. 14

Publisher Information:

Jordan Whitney Enterprises, Inc., 2010.

Publication Year:

2010

Subject Terms:

Financial statements — Standards

Subject Geographic:

United States

Description:

CASE DESCRIPTION The primary subject matter of this case concerns changes in accounting for business combinations and the convergence of International Financial Reporting Standards (IFRS) with U.S. Generally Accepted Accounting Principles (GAAP). The case focuses on the effect of the changes on financial statements of global entities, as well as strategic decisions made by company executives. Secondary, continuing significant differences between U.S. GAAP and IFRS and future potential developments in accounting for consolidated multinational entities are explored. This case has a difficulty level of three to four and can be taught in about 50 minutes. Approximately three hours of outside preparation is necessary to fully address the issues and concepts. This case can be utilized in an Advanced Accounting course, either on the graduate or undergraduate level to help students understand changes in and differences between U.S. GAAP and IFRS. Two sets of questions address U.S. GAAP and IFRS and include researchable questions that are especially useful for a graduate level course. The case has analytical, critical thinking, conceptual, and research components. Utilizing this case can enhance students’ oral and written communication skills. CASE SYNOPSIS Financial reporting in the U.S. is changing dramatically. Consistent with the Securities and Exchange Commission’s proposed “Roadmap” (SEC, 2008), the U.S. likely will join the more than 100 nations worldwide that currently utilize International Financial Reporting Standards (IFRS), and require the use of IFRS in the U.S. Because of the globally widespread use of IFRS, multinational entities with subsidiaries that prepare IFRS-based financial statements already have to be knowledgeable about IFRS as well as the current differences between U.S. GAAP and IFRS. Fortunately, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are working together to bring about convergence between the two sets of accounting standards. Recently, FASB and the IASB issued new and revised several existing standards that eliminate many differences between U.S. GAAP and IFRS with respect to business combinations and consolidated financial statements. However, some significant differences persist. Until the SEC makes a final decision regarding the mandatory use of IFRS, and during the proposed multi-year transition period, current and future accounting professionals must continue to keep abreast of changes in U.S. GAAP, be knowledgeable about differences between U.S. GAAP and IFRS, and, at the same time, prepare for the likely transition to IFRS. In addition, company executives should be cognizant of developments that may affect their strategic decisions as the U.S. moves toward a likely adoption of IFRS during the next five years. This case focuses on the effect of changes in financial reporting for business combinations. Changes as well as continuing differences between U.S. GAAP and IFRS are explored. Secondarily, strategic decisions arising from the changes and the likely future adoption of IFRS are addressed. This case, which can be utilized in Advanced Accounting on either the graduate or undergraduate level can enhance students’ analytical, technical, critical thinking, research, and communication skills.

Document Type:

Case study

Language:

English

ISSN:

1078-4950

Rights:

Copyright 2010 Gale, Cengage Learning. All rights reserved. COPYRIGHT 2010 Jordan Whitney Enterprises, Inc.

Accession Number:

edsbig.A243526770

Database:

Business Insights Global

 
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Electronic Commerce

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Assignment Format

Format Requirements

Use the following format requirements on all submissions.

Writing Style APA (American Psychological Association)   Note: To find detailed information on APA manuscript style guidelines on the Internet, go to www.apastyle.org.   Margins 1” all sides   Paragraphs The entire document should be double-spaced on standard-sized paper (8.5″ x 11″)   Headings Bold   Type Style and Size Times New Roman, 12 point   Software MS Word

Directions: Be sure to make an electronic copy of your answer before submitting it for grading. Unless otherwise stated, answer in complete sentences, and be sure to use correct English spelling and grammar. Sources must be cited in APA format. Your response should be four (4) pages in length; refer to the “Assignment Format” page for specific format requirements.

Read the case eBay Evolves on pp. 762-765 of your text. Respond to the following.

Part A: List and describe four different types of auctions.

Part B: Contrast eBay’s original business model with its current business model.

Part C: What are the problems that eBay is currently facing? How is eBay trying to solve these problems?

Part D: Are the solutions eBay is seeking to implement good solutions? Why or why not? Are there any other solutions that eBay should consider?

Part E: Who are eBay’s top competitors online, and how will eBay’s strategy help it compete?

Pg. 762 -765

CHAPTER 11 Social Networks , Auctions , and P ortals CHAPTER 11 Social Networks , Auctions , and P ortals CASE STUD Y eBay Evolves F

ounded in 1995 as an offbeat, quirky place to buy and sell almost anything via online auctions, eBay now derives the majority of its revenue from traditional e-commerce. Over the past ten years, the company has steadily transformed its business model away from its initial auction-based model and towards the

fixed-price model popularized by Amazon. After rapid early growth, eBay struggled from 2007 to 2009. For many buyers, the

novelty of online auctions had worn off, and they were returning to easier and simpler methods of buying goods from Amazon and other fixed-price retailers, which, by com-parison, had steady growth during the same time period. Search engines and comparison shopping sites were also taking away some of eBay’s auction business by making items easier to find on the Web. Former CEO John Donahoe instituted an ambitious three-year revival plan that moved eBay away from its origins as an online flea market, and at first it began to resemble an outlet mall where retailers sold out-of-season, overstocked, refurbished, or discontinued merchandise. From there it was a straightforward progression to partnering with retail chains to simply serve as another channel for current merchandise. Today, 80% of eBay’s listings are brand new, and eBay has 1.1 billion live listings.

Pg.763

The small sellers who had driven eBay’s early growth were encouraged to shift away

from the auction format and move toward the fixed-price sales model. The fee structure was adjusted, listing fees for fixed-price sales were lowered, improvements were made to the search engine, and rather than displaying ending auctions first, a formula was devised that took into account price and seller reputation so that highly rated merchants appeared first and received more exposure. The hundreds of thousands of people who supported themselves by selling on eBay and many millions more who used eBay to supplement their income were unhappy with the change, and analysts’ faith that Donahoe could turn things around dwindled as its stock continued to drop. However, eBay’s purchase of PayPal in 2002 helped it survive these lean years, with

PayPal accounting for as much as 40% of eBay’s revenues in some years. eBay also was very quick to embrace the mobile platform, even before the iPhone hit the market. This prescience resulted in eBay achieving its 100 millionth app download and 100 millionth mobile listing relatively early on, in 2012. Dating back to 2010, eBay has acquired many startup companies specializing in mobile technologies, including RedLaser, CriticalPath, Zong, Fig Card, Braintree, and many more. eBay has also been quick to develop apps for wearable devices, including an app for the Apple Watch that allows users to see an overview of their notifications and bid statuses and a version of its Marketplace app for Android Wear devices. In 2016, eBay redesigned its core mobile platform and added biometric touch identification support. Over 50% of eBay’s business now involves a mobile device, and the company continues to make improvements to the mobile experience on many platforms and across all of its different services. eBay’s embrace of the mobile platform has helped to stabilize the company during its transition to the fixed-price sales model. The company says that it receives 10 million new mobile listings each week in 2017.

In 2017, the company has continued the process of modernizing its platform with

analytical tools. Beginning in 2016, eBay has started to convert its catalog of items from its traditional unstructured “listing” format, where two identical items can appear totally different to shoppers, to a structured data format. This will allow eBay to more easily gain information about different items and about purchasing trends, and also helps its product pages perform better in Google searches. eBay is also using machine learning to customize, update, and generally improve its product pages, as well as to fine-tune its search capability beyond simply matching search terms with keywords and tags. To support these efforts, the company purchased machine-learning startup SalesPredict, whose technology helps businesses predict consumer buying behavior and sales conver-sion. The company’s revamped Seller Hub will also offer many of these analytical tools and metrics to individual sellers, including inventory, order, and listing management, performance insights, and streamlined business process management. eBay has also redesigned its site interface to emphasize images over text and to

allow users to perform visual searches for the items they are interested in. In 2016, eBay purchased visual search engine startup Corrigon, whose technology allows shoppers to click on items within an image to search for items on eBay that best resemble that item. In 2017, the company announced two new types of image search, one where you can take a picture or upload a picture from a smartphone to find items that match the photo, and the other, called Find it on eBay, which allows users to do the same type of search with images found on the Web or on social media. Machine learning powers these techniques

763

SOURCES: eBay Launches New Dedicated Music Marketplace,” by Ben Homewood, Musicweek.com, September 7, 2017; “Is eBay Stoc

 

Pg. 764

 

764 CHAPTER 11

a Buy?,” by John Ballard, Fool.com, September 1, 2017; “How eBay Offers a Personalized Mobile Experience with AI,” by Daniela Forte, Multichannelmerchant. com,August 22, 2017; “Facebook Adds eBay’s Daily Deals to its Marketplace on Mobile,” by Sarah Perez, Techcrunch.com, August 15, 2017; “eBay to Launch Visual Search Tools for Finding Products Using Photos from your Phone or Web,” by Sarah Perez, Techcrunch. com, July 26, 2017; “Ebay’s Gross Merchandise Sales, 2012–2016,” by Fareeha Ali, Digitalcom-merce360.com, July 21, 2017; “For eBay, AI is Ride or Die,” Venture-beat.com, July 8, 2017; “Ebay’s Homepage Is for Everyone,” Ebayinc.com, June 28, 2017; “Ebay Accused of Failing Its Sellers as Fraudulent Buyers Manipulate the System,” by Anna Tims, The Guardian, May 21, 2017; “EBay Jumps into the Faster Delivery Race,” by Fareeha Ali, Digitalcom-merce360.com, March 20, 2017; “eBay’s New High-End Furniture Shop, eBay Collective, Includes a Visual Search Engine,” by Sarah Perez, Techcrunch.com, October 17, 2016; “eBay Acquires Visual Search Engine Corrigon for Less Than $30M,” by Ingrid Lunden, Tech-crunch.com, October 5, 2016; “What eBay’s Machine Learning Advances Can Teach IT Profes-sionals,” by Charles Babcock, Information Week, September 6, 2016; “At eBay, Machine Learning Is Driving Innovative New Approaches to Search Experi-ences,” by Sebastian Rupley, Ebayinc.com, August 22, 2016; “Ebay’s Seller Hub Now Live for All U.S. Sellers,” by Shan Vosseller, Ebayinc.com, August 10, 2016; “EBay’s Mobile App Wraps In One Time Password, Touch ID, and Android Wear Support,” Ebayinc. com. “EBay Completes the Acquisition of SalesPredict,” Ebayinc.com, July 22, 2016; “One Year In, Building eBay for the Future,” by Devin Wenig, Ebayinc. com, July 20, 2016; “Replatforming eBay: How We Are Delivering the Shopping Destination of Choice,” by Steve Fisher, Ebayinc.com, July 14, 2015; “Here’s Why eBay is Acquiring SalesPredict,” Forbes, July 14, 2016; “How eBay is Advancing New Shopping,

Social Networks , Auctions , and P ortals

as well, and eBay expects that its image search capability will become more and more accurate as more shoppers use the technique to find products. eBay has also incorporated similar AI and machine learning techniques in other areas of its business, including its newly launched eBay ShopBot, a personalized shopping assistant that allows customers to text, talk, or provide a picture of a desired item. ShopBot will ask users questions and then generate what eBay hopes will be highly accurate recommenda-tions. In 2017, eBay also announced that it would offer the ability for prospective buyers of an item to ask questions that other purchasers of that item can answer. Machine learn-ing techniques will identify experienced buyers who are best able to answer the question, and as more questions are asked, the system will improve at prioritizing good questions and finding appropriate people to answer them. eBay has also dramatically improved the accessibility of its site, which can now be navigated without a mouse and is far easier to use with screen-reading software used by visually impaired shoppers. eBay’s continued revitalization is not without challenges. In 2014, eBay was the victim

of a hacking attack that compromised the information of nearly 150 million of its custom-ers. Paypal was unaffected, and the company doesn’t believe that any financial informa-tion was stolen, but the incident underscored the need for eBay to remain vigilant with its security measures. eBay sales decreased steeply in the wake of the breach, dropping 5.4% in 10 days. The company has also rededicated itself to cracking down on fraud on the part of both buyers and sellers. To limit seller fraud, eBay is now authenticating items that are commonly counterfeited, such as handbags, footwear, and jewelry. Sellers can pay for the authentication service to increase their appeal to buyers, and buyers can pay to guarantee that their purchase will be voided if the product turns out to be counterfeit. Sellers are also hoping that the company will do more to prevent buyer fraud in the near future. In 2015, eBay elected to spin off PayPal as its own separate company, leaving eBay

with its Marketplaces segment, its StubHub ticket sales segment, and a handful of other business units. Although Donahoe and the rest of eBay’s leadership had resisted a spinoff for years, the move was prompted by a desire for PayPal to distinguish itself from eBay and become more agile within the rapidly developing marketplace of online payments. Donahoe also stepped down as CEO of eBay to mark the move, with the former head of its Global Marketplaces unit, Devin Wenig, taking his place. As part of the split, eBay has agreed to route 80% of its sales through PayPal, but PayPal is free to pursue deals with other merchants, potentially boosting its market share even further. Many investors believed that PayPal had been the true driver of eBay’s bottom line.

But while analysts had prepared themselves for disappointing earnings after the spinoff, the company has instead posted several straight quarters of sales growth under Wenig as of 2017. eBay is on track to earn $9.5 billion in revenue in 2017, up from $9 billion in 2016. Although this isn’t the type of explosive sales growth that gets investors excited, it’s impressive from a company that some analysts weren’t sure would survive a decade ago. Despite Amazon’s ongoing dominance in online retail, eBay remains one of the most trusted online brands and e-commerce leaders, and it has worked hard to offer services that compete with Amazon, such as its eBay Plus program in Germany, which functions similarly to Amazon Prime, as well as its Guaranteed Delivery program, which ensures that 20 million of its top selling products will be delivered in 3 days or less or the buyer will receive coupons or full refunds. eBay has also partnered with Facebook to allow its

 

Pg. 765

 

eBay Daily Deals to appear on Facebook’s Marketplace platform, and launched a dedicated segment called the Entertainment Shop that offers music, books, movies, and games. eBay continues to market itself as a quirky alternative to Amazon, and after some ups and downs, the company appears to have found its niche.

 
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FIN/375 » Assignment / Financial Ratios

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Purpose of Assignment

This assignment helps you to explore financial ratios and compare your business financial health to similar organizations. There are two parts to this assignment.

Assignment Steps

Part I:

Review the assigned Moserk Company’s financial statements in the Financial Ratio Worksheet, and calculate the financial ratios for the assigned company’s financial statements.

Show all financial calculations in the Financial Ratio Worksheet included in the Student Materials.

Part II:

Write a 525- to 700-word summary of your Financial Ratio Worksheet analysis.

Explain the possible reasons for any differences between the company’s ratios and those of the industry average (cross-sectional).

Compare the calculated financial ratios against industry averages, and state possible reasons for the differences.

Format your paper consistent with APA guidelines.

Financial Ratio Worksheet

Financial Statements for Moserk Company
See further instructions below
Income Statement for year ending December 31st
Year
2018
Sales (Revenues) $119,299
Costs and Expenses:
Cost of Goods Sold 93,438
Operating, selling and admin expenses 9,358
Interest Costs:
Debt 555
Capital leases 229
Total Costs and Expenses 103,580
Income Before Income Taxes 15,719
Taxes 4,716
Net Income $11,003
______________________________________________________________________________
Balance Sheet for year ending December 31st
2018
Assets
Current Assets:
Cash and cash equivalents $1,447
Receivables 976
Inventories 16,497
Prepaid expenses and other 432
Total Current Assets 19,352
Property, Plant and Equipment, net 21,469
Property under Capital Lease, net 2,137
Other Assets and Deferred Charges 2,426
Total Assets $45,384
Liabilities and Shareholders’ Equity
Current Liabilities:
Total Current Liabilities $14,460
Long-Term Debt 7,191
Long-Term Obligations Under Capital Leases 2,483
Deferred Income Taxes and Other 809
Total Long-term Liabilities $10,483
Total Liabilities $24,943
Shareholders’ Equity
Private Common stock ($.10 par value; 2,241
issued and outstanding) $224
Capital in excess of par value 585
Retained earnings 19,632
Total Shareholders’ Equity 20,441
Total Liabilities and Shareholders’ Equity $45,384
Note — after the ratios have been calculated in this column below, save it to your hard drive, then attach and submit it as a part of the assignment.
Calculate Moserk Industry
Ratios to be calculated (show work) Ratios in this column Average
Current Ratio 1.34 2.10
Quick Ratio 0.20 0.75
Gross Profit Margin 21.68% 25.00%
Net Profit Margin 9.22% 10.00%
Debt Ratio (Debt to assets) 0.55 0.45
Debt Ratio (Debt to equity) 1.22 1.20
Times Interest Earned 21.05 15.00
ROA 24.24% 14.50%
ROE 53.83% 28.75%

Sheet2

Sheet3
 
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Management Course: Discussion Topic 12

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PROMPT: Senior management of a large multinational corporation is planning to restructure the organization.  Currently, the organization is decentralized around geographic areas so that the executive responsible for each area has considerable autonomy over manufacturing and sales.  The new structure will transfer power to the executives responsible for different product groups; the executives responsible for each geographic area will no longer be responsible for manufacturing in their area but will retain control over sales activities.  Describe and evaluate two types of resistance senior management might encounter from this organizational change.  Also consider what management response should be.

 

Support your answer by utilizing research that you have gathered from at least 2 sources other than your text. Finally, be sure to cite your sources in proper APA formatting.

 

A detailed and thoughtful response to the topic is required (minimum of 500 words). RUBRIC IS ATTACHED BELOW.

 

Additionally, emphasis is placed on your ability to conduct and synthesize scholarly research. 

 

Your posts should be professional in content and follow the APA standards. Be sure to city your sources in APA formatting.

 

 

SAMPLE RESPONSE:

 

Many employees in any type of company do not like change.  This resistance can come from a number of different sources, including a person’s personality type or a lack of motivation (McShane & Glinow, 2013).  Companies cannot avoid change as the external environment is never going to stay consistent.  New technology will be produced, client’s tastes will change, and the economy will face its ups and downs.  The leaders of a company need to encourage change within the organization and handle the resistance as best they can.

 

In this situation, the employees who are being switched from manufacturing and sales activities to just sales activities will likely resist this change.  They have become comfortable with their roles within the company and the change may cause their pay structure to differ.  Since they are retaining part of their old jobs and do not have to learn any new skills, there should be little fear of the unknown in this situation.  The team dynamics will not be much different either as the groups will be performing the same tasks, just with a few additional people.

 

One type of resistance to change that this situation is likely to cause is loss of job security.  The restructuring of the departments will cause resentment and fear because the employees are losing part of their responsibilities (Quast, 2012).  People become afraid that the relationships, skills, and work space may be changed and disrupted.  When people become comfortable with a certain situation and are happy with how the situation is going, it is much harder for them to accept a change that will cause all of that to leave.  By resisting the change, they feel that there is a change to keep that normalcy and potentially keep their job security.

 

Another type of resistance management might face in this situation is resistance to breaking routines (McShane & Glinow, 2013).  The executives are used to their job responsibilities, power, and established routines and adding more people to the structure will change these dramatically.  They will have to learn new role patterns as they will no longer be in charge of the manufacturing processes.  The manufacturing workers may also be resistant in this situation because of the change in leadership.  If the executive that used to be in charge of manufacturing was someone that the workers respected and valued, having a new leader may cause unhappiness and a loss of loyalty.

 

When management encounters these types of resistance to change, they need to make the situation as clear as possible to the employees.  Explaining why the change is taking place, what is going to happen, and what the employees’ new roles will be is imperative to reduce the resistance (Eisold, 2010).  Instead of dismissing the resistance and simply enforcing the change, management needs to figure out the exact causes of distress and address them.  Employees will be more open to the situation if they feel that management cares about their concerns and is willing to work on the issues (Eisold, 2010).  The timing should be planned out and the schedule told to everyone involved in the process in order to avoid surprising situations.

 

 

 

 

 

Eisold, K.  (2010, May 26).  Resistance to change in organizations.  Psychology Today. Retrieved from http://www.psychologytoday.com/blog/hidden-motives/201005/resistance-change-in-organizations

 

McShane, S. L., & Glinow, M. A. (2013). Organizational behavior: emerging knowledge, global reality (6th ed.). New York: McGraw-Hill Irwin.

 

 

 

Quast, L.  (2012, November 26).  Overcome the 5 main reasons people resist change.  Forbes.  Retrieved from http://www.forbes.com/sites/lisaquast/2012/11/26/overcome-the-5-main-reasons-people-resist-change/

 

MGMT 645 Forum Description and Grading Rubric

 

Exemplary Level

Meeting all requirements that include this criterion will earn a maximum of 50 points

Core Concepts: 25
Student analyzes and synthesizes research to demonstrate core concepts. Posts reflect student’s critical thinking abilities. Student demonstrates comprehension of breadth and depth of material.
X/25

 

Mastery Level

Meeting all requirements that include this criterion will earn a maximum of 40 points

Engagement: 10
Student participates and is interactive in the dialogue with thoughtful peer replies that further the discussion.

 
X/10

 

 

Competency Level

Meeting the requirements of the four criteria areas will earn a maximum of 15 points

APA: 5 Mechanics: 5 Organization: 5
Student follows APA formatting guidelines with at least two citations (in-text and reference list match) in each post from peer-reviewed journals. Sentence structure, grammar, diction; correct use of punctuation; minimal to no spelling errors; no run-on sentences or comma splices. Posts contains an introduction, supporting body, conclusion and reference page. Ideas are arranged logically to support the purpose or argument. They flow smoothly from one to another and are clearly linked to each other.

The reader can follow the line of reasoning.
X/5 X/5 X/5

 

Every week you will research & respond to two topics posted in the weekly forum. A detailed and thoughtful response to both topics is required (minimum of 500 words per response).

Additionally, emphasis is placed on your ability to conduct and synthesize scholarly research.

Your posts should be professional in content and follow the APA standards.

July 14, 2011

 
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