MN3245K
Accounting for Corporate Accountability
Assignment 1
Student ID : 100797577
Fair Value Measurement
Fair value measurement is defined as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants on the measurement date. Another important criteria in fair value measurement is that all the measurement are market-based but not entity-based and, the measurement requires to take market conditions to account, especially the principal market and it is basically measured using the assumptions that would be used by market participants in order to price an asset or liability. However, under some circumstances, principal markets are not always available.
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They have to make sure that the sale of the asset to be happened likely within and year and also to assure to have no withdrawing. Another asset that relies on numerous assumptions is their brand. Apparently, evaluating fair value for the brand not a simple and straight forward task to be carried out . The consolidated balance sheet shows that the fair value of the brand is $4963 million as of the end of year 2014 and it was a decreasing result if compared to the figure in end of 2013 which is $5013 million. There are many hotels being operated and franchised under the brand portfolio of Hilton Worldwide that includes Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Embassy Suite Hotels, Hilton Garden Inn, Hampton Inn & Suites, Homewood Suites by Hilton, Home2 Suites by Hilton and some timeshare properties under the brand name “Hilton Grand Vacations”. Except for Home2 Suites by Hilton, fair value for the rest of the brands are evaluated by a method known as the relief from royalty approach (a hypothetical royalty typically calculated as a percentage of forecasted revenue that the owner would otherwise be willing to pay …show more content…
According to the evaluation, even though it is very unlikely that fair value will be lower than the carrying value, if it happens that fair value goes lesser than carrying value, the excess of carrying value over the fair value will be considered to put into the consolidated balance sheet. Another critical non-current asset that needed to be taken into account is the intangible assets with finite useful lives, that basically consists of management agreement, franchise contracts, leases, certain proprietary technologies and their guest loyalty program (Hilton HHonors). Hilton Worldwide considered management and franchise contracts acquisition costs as finite-lived intangible assets and the useful lives of these assets are gradually written off (amortized) by using straight line method along their estimated useful lives. Based on the reviews carried out by the company, the carrying amount of those intangible results are likely to be in recoverable and in such case, the company has to set them as impairment loss over the fair value in consolidated balance
Last, their total assets have a higher value than their total liabilities, even if their total asset value had decreased. Additionally, Loblaw Company is known for their high quality of supermarket
CONSOLIDATED STATEMENT OF EARNINGS (INCOME STATEMENT) The Home Depot, Inc. Income Statement can be found on the SEC 10-K Annual Report on page 33, where it reflects the financial results of how the company operating activity faired in the 52-53 week / fiscal period ending January 29,2017, for 2016, in generating revenue. Per The Home Depot Subsidiaries Consolidated Statement of Earnings (Income Statement) of 2016 fiscal year, the net sales of $94,595 (amount in USD millions).
The question is whether historical cost accounting or fair value must be used is questioned and for the instant, as Zeff (2007) opinion, fair value is becoming more prominent in the standards of the International Accounting Standards Board (IASB) as well as in the standards of its U.S. counterpart, the Financial Accounting Standards Board (FASB). This shows that the universal financial reporting comparability is developing, as Zeff (2007) further argues. After the IAS regulation of 2002 went into influence, approximately 800 registered companies in the European Union are started to get ready their consolidated financial statements with the help of using
DEPRECIATION – IT’S PROS AND CONS Introduction The term “Depreciation” is used to denote the reduction in the monetary value of an asset class due to • Wear and tear, obsolescence or price decline. • Reduction in the value of a currency due to economic, social or security reasons. The core connotation of the term “Deprecation” is reduction in value. This term is widely used in two contexts • Accounting.
Weaknesses: 1. The high seasonal dependency for most of the hotel facilities. 2. The imbalanced market coverage and business portfolio. 3.
Abstract Charlene Battle, controller for Castle Corporation is preparing the company’s financial statements at year-end. She notes that the company lost a considerable amount on the sale of some equipment it had decided to replace. Since the company has sold equipment routinely in the past, Battle knows the losses cannot be reported as an unusual item. She also does not want to highlight it as a material loss since she feels that will reflect poorly on her and the company. She reasons that if the company had recorded more depreciation during the assets’ lives when they were in use, the losses would not be so great.
And achieve as a result, the growth for its brand, market share, and sales
It is also important to note that the enterprise value is influenced by the amount of cash that Six Flags will hold after the reorganization. The enterprise value can be inflated by lowering the amount of cash that Six Flags is going to hold, however, the less cash they have available to them, the higher the chance of falling back into liquidity problems, therefore, we feel that taking an average is a reasonable way to determine the amount of
Weighted average cost of capital for Marriot Corporation: In order to determine cost of capital, first we need to find out cost of equity and cost of debt. For determining the cost of equity we need to determine the beta for the target leverage ratio. According to the information provided by exhibit 3 equity beta is estimated at 0.97 when equity-to-total capital ratio is 0.59. Therefore we need to find unlevered beta value so that we can find firm’s equity beta at the desired leverage ratio as mentioned in Table A. Tax bracket of 44% is used based on ratio of income taxes to income before income taxes (175.9/398.9) in Exhibit 1.
Franchising and decision variables The article in Franchising versus company-run operations: Modal choice in the global hotel sector discusses the various aspects considered by well-established hotels when they face the dilemma of whether to franchise a new hotel in a new geography or actually own the hotel themselves. The article is helpful in drawing the parallels for franchising decisions in service industry and especially pretty apt for the services which include high initial capital investment. The authors (F J Contractor & S K Kundu) borrow the definition of franchising from Caves & Murphy 1976 at the onset of the article and visualize the prospective franchisee as the sales agent or distributor of the brand owner.
In the case of hotels, suppliers create different consumer segments, we can relate to them as lower-end consumers, and higher-end consumers. Obviously, hotels cannot set the price that higher-end consumers are willing to pay, because all lower-end consumers will not be able to afford the good. Inversely, if hotels set the price that lower-end consumers are willing to pay, higher-end consumers gain huge consumer surplus, thus lowering the profit for the suppliers. In order to take the consumer surplus, hotels keep lower prices for some rooms in order to target lower-end consumers and offer some higher quality rooms (for example presidential suits) to target higher-end consumers. The difference in revenues providing different rooms and the same ones is seen below.
Introduction: Here in this assignment a management accounting report needs to be prepared for analyzing how management accounting can be useful in providing the managerial information for the purpose of decision making. The organization selected to make this analysis is Southwest Airline. It is a management accounting report in which starting from the background of the company, the management accounting system of the company has been analyzed and how its’ providing the information for the purpose of management decisions being evaluated. Background of the company: Southwest Airlines was shaped in 1978 with reason to serve voyaging service via air course. What's more, after consolidation southwest aircrafts persistently succeed regarding productivity, great worker and union connection and consumer loyalty.
This is the comparison of the benefits offered by a company's product to its customers relative to the price it asks customers to pay. To do this, companies can influence the value proposition in one of two ways mainly. This can be done through long term brand building. They can also offer a relatively low cost to enhance value. Ultimately, the key is that customers perceive that the product's merits exceedingly justify its price.
Marriott International vs. Airbnb Although Marriott International has a competitive advantage of being the largest hotel company in the world, experiencing years of remarkable growth with the acquisition of Starwood Hotels, and ranking at number 163 on this year’s Fortune 500, it operates in a highly competitive market. The recent success of Airbnb, for example, has had major effects on the hotel industry as it has quickly become a threat. Airbnb, founded in 2008, is an online hospitality service that provides short-term lodging and unique travel accommodations around the world with more than 3,000,000 lodging listings in 65,000 cities and 191 countries.
Intercontinental Hotels is using the market differentiation strategy in segmenting its market into appropriate market divisions based on characteristics of the varying needs and characteristics of the target markets. The company has more than 3500 hotels in over 100 countries with around 535000 guest rooms. It has established a substantial customer base with over 120million customers whose preferences vary based on price and quality expectations. The Intercontinental group is made up of many brands such as the Intercontinental Hotels and Resorts, Holiday Inn Garden Court, Crown Plaza Hotels & Resorts, SunSpree, Holiday Inn, Staybridge Suites, Holiday Inn Family Suites Resort, Holiday Inn Express, Holiday Inn Select, Holiday Inn, and Candlewood