Early 2011, Yung Limited acquired 75% interest in Chum Limited. This is the first time of Yung Limited preparing the consolidated statement. A few issues regarding to the first consolidated financial statement have been raised up. This report is used to solve the raised issues and explain general principle of consolidation accounting. Before the acquisition, Yung and Chum was a competitor to each other. Their financial statement only reflects their own financial position. Thus, the balance and transaction would state in the financial statement. The reason is that they are viewed as two entities from different aspect. However, after the acquisition, Yung and Chum became a single combined entity as Yung held 75% interest in Chum. It means Yung can direct business decision of Chum according to its preference. This view would be reflected in the consolidated financial statements. Since the consolidated financial statements view Yung and Chum as a single combined entity, the balance due to each other would be eliminated as a result. As Yung and Chum are the single entity, the amount due to Yung is set off by the amount due from Chum. One entity cannot lead money to itself in order to create a liability or asset. See more: Capital budgeting essay As Yung and Chum are a single entity, transactions with each other are just a transfer of assets or liabilities, or a relocation of assets, this would not recognise as a transaction in the consolidated financial statements. Generally, profit margin is added to those transactions. These profit margins would raise book value of assets in the transactions. The common example is inventory and non-current assets. Those profit margins can only be realised in the sales or disposal to external parties. Thus, the consolidated financial statements would eliminate those unrealised profit also. According to the above statement, Yung gets the power of control in the Chum. It means every transaction can be related to Yung and its decision. The relationship between Yung and Chum would be a parent-subsidiary, and not just similar to other associate as investor-investee. Therefore, it is required to show consolidated financial statement of Yung and Chum. The distinction between consolidation and equity basis of accounting is power of control. Generally, if an entity holds more than 50% interest of another entity, the entity is required to consolidate the controlled entity. However, if an entity holds about 20% to 50% interest of another entity, the entity is required to practising the equity basis of accounting. Comparing with the two methods, consolidation basis of accounting would reflect a smaller net income if there are a large amount of inter-company transactions. Equity basis of accounting only show the share of profit in associate as an extra item in the income statement of investor (parent in consolidation). Thus, it would be a greater net income unless there is a net loss in the associate. In conclusion, different methods change the net income. The financial statements for equity basis of accounting are only included the investment in associates as non-current assets, and recorded as cost plus fair value adjustments in the net shares of equity. The consolidated financial statements are the combination of the parent and subsidiaries, and goodwill, excluding inter-company balance and cost of control. Thus, Yung’s financial statements would be greater value in statement of financial position if all investments were consolidated, but smaller value in income statement as there are large amount inter-company transactions between Yung and Chum. Equity basis of accounting could provide a greater asset value to Yung, but a smaller net income to Yung also. Dear Mr. Li, Memo regarding the revenue cut-off problem of Yung Limited According to the recent conference with John Au, President of Yung Limited, he reported that the sales of Yung Limited in 2010 incorrectly included sales in 2011. However, we did not discover this material error by our audit work. This material error overstated the profit of Yung in 2010 by 10%, but understated the profit of Yung in 2011 by the same rate. John Au also mentioned that he prefers to ignore this error because he can get benefit from this error as the understated profit. Ignoring revenue cut-off problem leads to conflicts in ethical and professional. This conflicts with fundamental ethical principles, such as integrity, objectivity and professional behavior. In the integrity aspect, we should not disclose any untrue financial statements. In the objectivity aspect, our professional judgments should not be influenced by reputation of our audit firm and any potential legal sue. In the professional behavior, we should comply with relevant laws and regulations relating to this revenue cut-off problem. The following are some of my recommendation on this revenue cut-off problem. The first recommendation would be reporting to the board of directors directly. This material error should be report the board of directors of Yung Limited. This report could give directors’ chance to decide the treatment of this material error. They could estimate effect of this material error. The second recommendation would be following John Au’s suggestion, ignoring this material error. This could be a way to accommodate our client. The third recommendation would be requiring John Au to correct this material error. This could reflect the true financial position of Yung Limited. The fourth recommendation would be convening an extra-ordinary general meeting with all shareholders of Yung Limited. This EGM could give shareholders opportunity to aware this material error, and understand the potential. Finally, I would recommend asking John Au to correct this material error. Although this correction would make him loss of a bonus, this is a fair treatment to all stakeholders at all. Also, this solution could reflect the professional position of our company.
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12/25/2019 0 Comments Alternative Energy Essay Example | Topics and Well Written Essays - 2250 wordsAlternative Energy - Essay Example They do not believe that alternative energy is the solution to dependence on oil. This essay presents and analyzes both sides of the debate, and critically examines its implication for sustainability. Argument for Alternative Energy Sources Numerous factors have triggered the debate over the capacity of alternative energy sources to solve dependence on oil. Some scholars claim that there is an urgent need to use alternative and renewable energy sources. Most energy scholars have the same opinion that, in the future, the world will completely drain its limited supply of oil. Scholars have the same opinion about the availability of coal in the future; as reported by the United States Energy Information Administration (EIA), supply in the U.S. alone can meet present energy demands for two centuries (Smith & Taylor, 2008, 38). The remaining supply of natural gas and oil are a much more disputed subject. Scholars vary considerably in their estimates of the peak of oil reserves, also referred to as the ‘topping point’ (Smith & Taylor, 2008, 38-39). Oil’s topping point will occur when the world has used up precisely one-half of the total amount of remaining oil. This implies that the topping point of oil has been reached and that oil reserves will start to dwindle because oil is a nonrenewable energy source (Smith & Taylor, 2008, 39). The supply of natural gas, which is dependent on the availability of oil, is directly connected to this topping point (Podobnik, 2006). The United Nations (UN) made a decision to build the World Commission on Environment and Development in 1983. The name of the commission was eventually replaced with Brundtland Commission (Elliott, 2003, 7). Its objective was to look for sustainable environmental approaches. By raising awareness about the issues with nonrenewable, non-sustainable sources of energy, the Commission fueled and exposed the debate over the limited supply of fossil fuels and other justifications for the necessity of using alternative and renewable sources of energy. Energy issues have been at the center of economic, political, scientific, and environmental discourses from then on. Those supporting a rapid adoption of alternative and renewable sources of energy believe that the calculated dates for the peak of oil production are mostly immaterial (Elliott, 2003, 18). Environmental issues and the likelihood of tipping points imply that continuous dependence on oil may bring about permanent harm to the natural world. The worst possible damage is a global extermination of species, as well as human beings. Since fossil fuels have to be burned to produce energy, air pollution has been a problem since the advent of the Industrial Revolution. Air pollution has largely been the outcome of burning fossil fuels to produce electricity and supply energy to transportation. Hence, air pollution contains chemicals emitted from burning of fossil fuels (Schmidt, 2007). Air pollution does not only bring about a huge number of untimely deaths annually in developed countries, it also causes environmental destructions. Bodies of water can also be damaged by the use of fossil fuel not merely through acid rain, but through contamination of surface water as well. A case in point is the Exxon Valdez oil leakage. Valdez, the oil
Lovers My mother went to Barnard on a full scholarship. She commuted from home, two hours a day on the subway. One night after a Columbia party, she was up a ladder taking down crepe paper when an orange hit her on the back of the head. It thumped to the ground and rolled under a stool, where my father knelt to retrieve it. He tossed the orange across the room to a friend — his intended target — and offered my mother his hand. In my version, she shakes off his attempts to help her down from the ladder. Does not speak to him for months because she’s so offended at being hit on the back of the head with the orange. Looks the other way when he passes on the street. Starts dating his roommate. In my version, the roommate can’t be there for a date they’re supposed to have. He has an emergency to deal with — a death in the family, a last-minute pinball competition at the pizza place, what have you. My father answers her knock with as much grace and charm as he can muster. "Hello," he says. "Are you here to see Bob?" "Yes," she says, stepping cautiously over the threshold. "He isn’t here," my father says. "He had to go to a funeral/pinball semi-final/what-have-you." My mother: "Oh." Of course, she could just step back across the threshold and find another way to spend her evening. But in my version she does not. She sits on the couch, tugging her mini skirt to cover more of her nicely shaped legs. My father brings out a basket of butter crackers and wedges of cheese. They talk about politics, literature. Something. What would my parents discuss during their first conversation? Now, after thirty years of marriage, their communication isn’t even verbal; each speaks through the other’s eyes. But how did they communicate then, when they were still new? Of course, this night kicked off the ravenous affair that would become my parents’ marriage. In my version, they could not keep their eyes (or their hands) off each other. They went everywhere in each others’ company: the dining hall, where my mother sneaked my father in on her meal ticket; the library, where he tossed spitballs into her hair; the movies, where they nuzzled at the back of the room, my father attempting a hand on her thigh, my mother staring straight ahead, her arms and legs rigid.
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