Writing Application 5.2

As an assistant in the Community Involvement Program of your corporation, you have been given an unusual task. Your boss wants to expand the company’s philanthropic and community relations mission, especially employee volunteerism. She heard about The Seeing Eye, a program in which volunteers raise puppies for 14 to 18 months for guide dog training. She thinks this would be an excellent outreach program for the company’s employees. They could give back to the community in their role as puppy raisers.

To pursue the idea, she asks you to request information about the program and ask whether a company could sponsor a program encouraging employees to act as volunteers. She hasn’t thought it through very carefully and relies on you to raise logical questions, especially about costs for volunteers. Your letter should have about six questions. Remember to include an end date and reason. Write a direct request letter to Susanna Odell, The Seeing Eye, P.O. Box 375, Morristown, NJ 07963-0375. Include an end date and a reason.

Tip: The Seeing Eye is a real nonprofit organization. Do some research to help you write the letter to Susanna Odell. (date and top address; 3 paragraphs minimum required: Introduction, body, and closing paragraph; signature area)

In June 2001, the Financial Accounting Standards Board (FASB) eliminated the use of pooling for merger accounting. Since then, all mergers are handled using purchase accounting.

Consider this case:

Company A buys Company B for $30, when the net asset value of Company B’s assets is $50.

A _ Which of the following statements best describes the effect of the merger on the merged company’s consolidated balance sheet?

1- Company B’s assets will be written up to reflect the purchase price relative to net asset value.

2- Company B’s assets will be written down to reflect the purchase price relative to net asset value.

3- Company B’s common equity will be written up to reflect the purchase price relative to net asset value.

4- Company B’s liabilities will be deducted from Company A’s liabilities in the consolidated balance sheet.

B_ When reporting merger transactions, the asset values acquired are often reappraised, and the change in value is reported in the financial statements. An increase in asset value will lead ………. ( lower or higher ) depreciation charges. This will lead to………….. ( decrease or increase ) in earnings per share.