Chapter 1, Introductory Cases Dublin Small Animal Clinic, Inc. 1 page; introductory
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- Business combinations Divestitures
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- Revaluation model (fair value) for fixed assets
17 pages; intermediateDepreciation expenseFinancial disclosuresThis case provides depreciation disclosures for six semiconductor manufacturers, two headquartered in Europe (STMicroelectronics NV and Infineon Technologies), two headquartered in Taiwan (Taiwan Semiconductor Manufacturing Company (TSMC) and United Microelectronics Corporation (UMC)), and two headquartered in the U.S. (Intel and Texas Instruments). Even though depreciation is one of the two largest costs for a semiconductor manufacturer (with R&D), some of the disclosures are very limited, particularly for the two U.S. firms. I use the case to discuss information that is available in annual reports. The case is useful as background for discussing both depreciation expense and fixed assets. It is also useful for discussing the quality of financial disclosures by different companies. The case also includes information provided by the former CFO of both Taiwan companies. That information can be used to discuss product pricing and competitive advantages. Best uses:Undergraduate intermediate accounting First-year MBA/Executive MBA financial accounting Financial reporting Financial statement analysis 26.Thomson’s Acquisition of Reuters (A) 24 pages; intermediateBusiness combinationsDivestituresIFRSPro-forma resultsValuationThe (A) case is a good introduction to business combinations and to measuring the fair value of acquired assets and liabilities, including intangibles. The case is easy to understand and is interesting. It has an international flavor since the case discusses the acquisition of Reuters, a British company that reports under IFRS, by Thomson, a Canadian company that reports under Canadian GAAP, but that is headquartered in Stamford, Connecticut. The case covers several interesting issues. First, it describes how Thomson grew through acquisitions, primarily in the newspaper industry, but also in oil and gas exploration and the travel industry. Firms often overpay for acquisitions and have difficulty integrating the acquired firms. Thomson was incredibly successful with nearly all of its acquisitions. The case then describes how Thomson entirely transformed itself by selling off its oil and gas interests and travel interests to enter electronic publishing, and how it sold off its entire newspaper holdings at the height of their value, and shortly before the entire newspaper industry collapsed. Thomson used those funds to expand its electronic publishing. Finally, Thomson sold its major book publishing division, Thomson Learning, to a private equity firm in 2007 at what was probably the height of value for book publishers, and acquired Reuters. The case can also be used to consider the validity of fair value accounting. Thomson was required to record the fair value of various intangible assets it obtained when it acquired Reuters. Thomson valued four significant intangibles: trade names; customer relationships; developed technology, and; other. Thomson also reported pro-forma results that show operating profit had the acquisition occurred a year earlier, and pro-forma results for the current period so readers could determine how the combined firm performed relative to the prior year. The case provides enough information for a discussion of whether the acquisition was worth its value.
Best uses:Undergraduate intermediate accounting First-year MBA/Executive MBA Financial accounting Financial reporting Financial statement analysis Valuation
Use with:Business Combinations (Chapter 7) 27.Thomson’s Acquisition of Reuters (B) 7 pages; intermediateIFRS reportingChange to IFRS reportingThis case shows reported net income and shareholders’ equity under both Canadian GAAP and IFRS. It also includes an explanation of Canadian GAAP and IFRS rules for each item that Thomson Reuters would report differently under IFRS. The case can be used in combination with Thomson (A) to consider differences between Canadian GAAP (which is similar to U.S. GAAP) and IFRS. It can also be used to discuss how difficult it would be to change from either Canadian or U.S. GAAP to IFRS. To facilitate that discussion, the case includes Thomson Reuters’ request to adopt IFRS early. The firm expects that to be a simple conversion because Reuters already reports using IFRS. Most U.S. firms own overseas operations that also report locally using IFRS, so many of them could easily convert to IFRS. Best uses:Undergraduate intermediate accounting First-year MBA/Executive MBA Financial accounting Financial reporting Financial statement analysis 28.Mitchells & Butlers plc 15 pages; advancedRevaluation model (fair value) for fixed assetsIFRS reportingSecuritization of fixed assets (pubs)Losses on hedges of anticipated transactionsSegment analysisThis is an interesting case that covers several advanced topics. Mitchells & Butlers is a British pub-restaurant chain. One main issue is that Mitchells & Butlers uses the revaluation method to value its land and buildings. The case describes IFRS cost and revaluation model rules and also includes the firm’s fixed asset disclosure note. Mitchells & Butlers also reports exceptional items. IFRS specifically prohibits extraordinary items, which U.S. GAAP allows in very limited circumstances. IFRS does not even mention exceptional items, but many European firms report exceptional items separately from normal operating income. There appears to be no difference between extraordinary and exceptional items, other than the name. Mitchells & Butlers reported a $500 million loss on derivatives contracts over a two year period. Those derivatives were obtained to protect an anticipated real estate transaction that was cancelled. The derivatives included one contract to fix the price at which the firm would acquire real estate, and a second contract to fix the rate at which it would borrow funds to acquire the real estate. Mitchells & Butlers lost money on both contracts, as real estate prices and interest rates both plummeted. Mitchells & Butlers also used its land and buildings as collateral in a securitization issue that included ten different tranches, four for fixed income notes and six for floating interest rate notes. The securitization note discloses that Mitchells & Butlers purchased interest rate swaps to convert the six floating rate debt tranches to fixed interest rate notes. Best uses:Undergraduate intermediate accounting First-year MBA/Executive MBA financial accounting Financial reporting Financial statement analysis Valuation
Use with:Brief Excel Case: Securitization (Chapter 8) 29.Barclays’ Acquisition of Lehman Brothers Directory: resource uploads -> downloads downloads -> Chapter 19 Chapter Outline downloads -> Chapter 1 Practice Quiz Introducing the Economic Way of Thinking downloads -> Bltc-8e Case Problem with Sample Answer Chapter 30: Partnerships 20. 5 Case Problem with Sample Answer downloads -> Cross-7e: Case Problem with Sample Answer downloads -> Atmospheric circulation downloads -> September 3, 2007 downloads -> August 30 2009 Website Update downloads -> Chapter 3 exercises downloads -> Review Sheet: Chapt. 1: The Moral Point of View Moral concerns are unavoidable in life. Ethics downloads -> Chapter 17 Chapter Outline Download 123.35 Kb. Share with your friends:
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