Business Economics: Questions and Answers

Apple Incorporation is one of the biggest high technology company that operates worldwide. Is was established on April 1, 1976 in California by Steve Wozniak, Steve Jobs and Ronald Wayne.The company is known for designing and manufacturing several technology devices include Smart Phones (iPhone), Tablets, iPods, iPads, Mac, Apple TV, Apple watches as known as smart watches, it also produce software’s like the OS X and iOS operating systems, and offers several online services such as iCloud, Apple Pay, Apple Care. The company strategy is to designee and enhances its own operating systems, software, hardware and other services by providing customers with new developed technology.

When the FASB originally deliberated Statement 144, it considered and rejected requests for a limited exception to the fair value measurement for impaired long-lived assets that are subject to nonrecourse debt. Some constituents believed that the impairment loss on an asset subject entirely to nonrecourse debt should be limited to the loss that would occur if the asset were put back to the lender. The FASB decided not to provide an exception for assets subject to nonrecourse debt. In its basis for conclusions, the FASB explained that the

The CEO of this company began to take steps into making the company better. Both external and internal driving forces drove this change. The definition of these two terms needs to be looked at in order to understand what they were. External factors are the factors that occur outside the scope of the company or organization, for example, the economy. These factors are outside the influence of the company (Lindbald, 2014). On the other hand, internal factors are factors that occur within the scope of the organization and are within the control of the company.

This issue started to arise when IASB was developing IFRS 11 Joint Arrangements. The IASB have decided to remove the option to apply proportionate consolidation to jointly controlled entities that existed under IAS 31 Interests in Joint Ventures and this has widened the scope of equity method under IFRS (European Financial Reporting Advisory Group, 2014). Since then the IASB has been doing research project on equity method of accounting and considering various requests for guidance through narrow-scope amendments to IAS 28. Hence, Exposure Drafts has been published. They have addressed the diversity in practice. However, these proposed amendments are lacked of a clear conceptual basis and they were inconsistent with each other. They found out that components of consolidation techniques and measurement basis exist in IAS 28 and there is no

Helen’s is an upmarket fashion boutique store in Sydney’s east. Falling sales have been reflected by surveys that reveal consumers view the business as outdated and no longer relevant to consumers’ needs. Strong competition in the area has placed considerable pressure on pricing. The business’s target market, 50-65 year old females, no longer dominated the now younger demographic character of the area.

ASC 820 requires that the measurement of fair value of assets acquired and liabilities assumed should be based on the

One major criticism of the equity method is that the method does not consider market values. As of now the equity method uses book value which is based on original cost plus a portion of the investee’s adjusted income minus dividends cite?. The equity method’s book value

If the price paid was below the fair value of the assets and liabilities, the accounts of the acquired company were still recorded at fair value except that the values of certain noncurrent assets were reduced in total by the excess cost. If these

1. All of the following are the general principles underlying the valuation of liabilities e xcept:

If you go ahead and stay in the business for two years, your business might earn either {$180,000} (success), or lose {-$100,000} (slight failure), or lose {-$700,000} (major failure), all with 1/3 probability. The numbers are expressed in terms of net profits, your profits after deducting ALL costs (including sunk equipment costs). The day after your business opens, it will be reviewed in the Sydney Morning Herald, and that review will tell you with almost perfect certainty whether the business will be a success, a slight failure, or a major failure. What do you do at that stage?

The fair value of an asset is defined as ‘the price that would be received to sell an asset paid to transfer a liability in an orderly transaction between market participants at the measurement date” (Kieso, Weygandt, & Warfield, 2012). It is a market based measure (Averkamp, 2014). Over the past few years, Generally Accepted Accounting Principles has called for the use of fair value measurement in a company’s financial statements. This is what is referred to as the fair value principle (Kieso, Weygandt, & Warfield, 2012). The fair value of an asset or liability is based on an estimate of what the asset should be worth at the time of sale. This gives rise to some conflict among accounting professionals. It is believed that fair value may not be as accurate

* To reassess the identification and measurement of the acquiree’s identifiable assets, liabilities and contingent liabilities and the measurement of the cost of the business combination if the acquirer’s interest in the net fair value of the items recognised exceeds the cost of the combination. Any excess remaining after that reassessment must be recognised by the acquirer immediately in profit or loss.

External growth involves the acquisition of other firms by a merger or takeover The distinction between the two is often blurred but merger implies that a measure of voluntary agreement, and by fusing of the organizations rather than just a change in ownership. Takeover implies that a predator firm swallows up another firm by buying its shares. Usually the company, which is taken over, remains distinct, but now the predator firm enjoys a controlling interest. In a friendly takeover the company being taken over actually encourages it, and in a hostile takeover the company being taken over fights to prevent the predator from obtaining a controlling interest.

3. The actual information needed by the management, investors, creditors etc. may be current values of assets therefore values based upon historical cost may not be useful for their purposes.

Many factors shape and form the operations strategy of a corporation, for example, the ever increasing need for globalizing products and operations and thus reducing the unit cost, creating a technology leadership position, introducing new inventions, taking advantage of mass customization, using supplier partnering, and looking for strategic sourcing solutions. All of these factors require an external or market-based orientation; these are the changes that take place in the external environment of the company.