1) Explain how to account for the difference between implied and book value interest of
an in-vestment in preferred stock of a subsidiary.
2) The Shady Tree Company is preparing to announce their quarterly earnings numbers.
The company expects to beat the analysts forecast of earnings by at least5cents a share.
In anticipation of the increase in stock value and before the release of the earnings
numbers, the company issued stock options to the top executives in the firm, with the
option price equal to todays market price.
1> This type of executive stock option is often referred to as spring-loading. Do you
think this practice should be allowed? Does it provide in-formation about the integrity
of the firm or is this just good business practice?
2> Do you think this practice violates the insider trading rules?
3) In the preparation of a consolidated statement of cash flows, what adjustments are
necessary because of the existence of a noncontrolling interest? (
4) Discuss the types of ADRs that non-U.S. companies might use to access the U.S.
markets.
5) What is the general rule regarding the treatment of costs and expenses associated
directly with revenues for interim reporting purposes?
6) AOL announced that because of an accounting change (FASB Statements Nos. 141R
[ASC 805] and142 [ASC 350]), earnings would be increasing over the next 25 years by
$5.9 billion a year. What change(s) required by FASB (in SFAS Nos. 141Rand 142)
resulted in an increase in AOLs in-comeincome? Would you expect this increase in
earnings to have a positive impact on AOLs stock price? Why or why not?
7) List the types of information that must be presented for each reportable segment of a
company under the rules of SFAS No. 131 [ASC 280].
8) List the primary types of contractual agreements between a debtor company and its
creditors and briefly explain what is involved in each of them.
