FAC 408 Case studies solutions

Case study 4.1

1. What is the purpose of the measurement?

To determine the penalty on whose thieve cats, and to determine the value of cat.

2. What is the measurement unit or scale proposed?

The measurement unit is the cat

3. What attributes are to be measured?

Attributes of cat is qualitative variables such as Original cat should be perfect to ear,
eye and teeth claw.

4. How reliable do you believe the proposed measurement method would

be?

The value of something should be measured in currency not quantity so it is not

reliable.

5. What is true value of a cat?

The weight of wheat that equal weight of cat or is the number of mice a cat could be
expected to catch over its lifetime.

6. Do you think the measurement method proposed is appropriate? Can

you suggest any other?

May be appropriate if there’s no currencies, but if we can measure value by currency

it‘s more appropriate

7. If cats were assets today, how do you think accountant would measure
them?

Measured by monetary value according to demand and supply.

Case study 5.2

1. The company must take in account corporate social responsibility only to

enhance the firm’s profitability .
2. Corporate social responsibility enhances the firm reputation and investor
confidence.
3. Sure because if the company want to be more transparency it should realize
losses.
4. NAB take in account anti discrimination policy , assets under management
with a high social benefit. biodiversity and environmental issues.
5. ANZ concern only on accountability theory involves the monitoring and
evaluation the organizational agents , and relationship between a corporation
and its stockholders.
Case study 6.1.

1. the ethical cultural is set by top management all employees must follow these
cultural, so if employees see rules being bent they will bend the rules. Enron
board of director twice voted to suspend their own ethical code.
2. Market to market is prime reason for Enron collapse because it claims the
projected profit on its financial statement. Market to market accounting aids
Enron's managers to hide the losses and appear to be more profitable than it
really was.
3. Corporation should motive its employees to announce any mistakes and to
follow the laws and code of ethics.
4. The corporation must be follow effective good corporate governance and
follow its own code of ethics and conducts.
5. Decision are issued based on who are have major stocks , Enron manipulated
the financial statement by increasing profits and decreasing losses and
investors or creditors depending on financial statement only to buy or sell the
stock. concentration on price of stock only may lead to crisis in the future.
Case study 6.2

Q1. Aspects or practices should be examined are: board of director independency,

Independent audit committee and Size of board of directors

Q2. Quantitative measures is good but not shows differences between high or low
rates. So we need also qualitative measurement and interpretation of the scorecards.

Q3. There are many factors such as board of directors and audit committee
independency , Compliance with laws and regulations and the profitability of the firm

Q4. if the BOD follow the orders of CEO the members are being dependent and not
realize the interest of the shareholders.

Q5. corporate governance disclosure means corporations clarify and publically

known the responsibilities and roles of board of directors, corporate governance
assessment refers to how the corporations are compliance and integrity with their
stockholders, through assess the independency of board of directors and audit
committee .
Case study 7.1

Q1. Oil and coal based energy pollution and bad diseases.

nuclear power remove solid waste or unexpected events

Q2. The individual oil corporation?

People work with each other to reach the company goals.

 The industry group?

Multiple firms want to enhance its position in market and keep its interests safe.

 The planet earth ?

All people they must coordinated to live in peace.

Q2. Issues on the firm level: calculating or measuring the pollution and The cost
of safety and health .

Issues on the industry level: cost of treating the pollution and radiations and cost
of clean nuclear sites.

Q3.yes, the right decision that generate the most benefit to my company.

Q4. Sure , because it effect on the company cost and price.

Case study 9.1

Q1. The greater shareholder power ( ownership concentration ) the lacks of share
holders participation in decision process

Q2. Because Delaware prohibits business combination between company and an

interested stockholders., information reveals that news corp US has elected not to be
governed by this Delaware status , Murdoch is super voting shares Man to enhancing
Murdoch control.

Q3.Preferred stock represents partial ownership in a company, although preferred

stock shareholders do not enjoy any of the voting rights of common stockholders.

Q4. To remains the greater shares and thus take key decisions and control the media.

Q5. Corporate governance is the way a corporation polices itself. In short, it is a

method of governing the company like a sovereign state, instating its own customs,
policies and laws to its employees from the highest to the lowest levels. Corporate
governance is intended to increase the accountability of your company and to avoid
massive disasters before they occur.

Q6. News corporation will no longer be subject to Australian takeover threshold

It means Murdoch could sell out without triggering a full takeover or he could buy
more to cement his control and make combine without triggering the takeover
threshold.

Q7. To maintain the interest of the shareholders, super voting shares , that is
shares that would not have more than one vote per share until they were sold
enhancing Murdoch's control.
Q8. Because the net effect is that takeover blocked, Murdoch can sell or premium
without triggering a bid.

Q9. No, because control of the firm on the Murdoch hand and he will realize his
own interest. If I bough these shares I will keep it until it prices increase and sell it
.

Q10. Because US accounting roles more flexible than Australian roles