Instructions

Attached is the first case that requires each student to digest a fact situation presented in the fictional case and then prepare a business memo for upper management that quantifies how GAAP measures the economic reality of the facts in the case and then reflects that reality in the financial statements.

With respect to grading, which from this point forward will be documented in D2L, each memo will be worth 25 total points scored as follows:
1. 20 points for appropriately i) identifying and articulating the relevant fact issues, ii) identifying and summarizing the relevant GAAP applicable to the issues, and then iii) quantifying the GAAP effect “on a macro basis” that needs to be reflected in the financial statements.
2. 5 points for professionalism (i.e. appropriate grammar, sentence structure, etc.).
3. As noted above, each student will be required to prepare their own individual and unique memo which will be scanned and audited for unauthorized plagiarism, duplication, etc. Memos that are found to have duplication and/or plagiarism will be scored “no credit”.

Please forward your one page business memo to me via e-mail in word format by 9am – or earlier – Eastern Daylight Savings Time on Friday March 27. In addition, please observe the following:
1. Include i) your name, ii) student number, and iii) class section at the top of the memo, and
2. Indicate whether or not you authorize me to share your memo with the class – with your name and student number redacted – as I will be selecting and sharing a couple of excellent memos each week.

Solution

RE: IMPAIRMENT ISSUES

The emerging developments in the global economy will cause a halt and potential collapse of the entire industry because of the limited business and movement. Losses are inevitable, and it is a matter of time before they actualize. The already paid $60 million in the balance sheet fixed asset section ought to be struck off because it is non-refundable. At the same time, proceeding with the entire payment and procuring the ships is a nonviable business idea. Imminent losses facing the industry imply that the investment is due for failure over time…………………………………..To access the rest of the solution for $5, please click on the purchase button.