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Ethics Challenge — BTN C-3
1. Kasey’s bonus is not contingent on the classification of available-for-
sale versus held-to-maturity. Designation of the bonds as available-for-
2. Generally, Kasey must classify its debt securities as either short or long
term and as available-for-sale or held-to-maturity. Since the bonds are
5-year bonds they should be classified as long-term investments unless
3. The company’s auditors (internal and external) and/or its board of
Communicating in Practice — BTN C-4
TO: Mary Jolee
FROM: (Your Name)
SUBJECT: Sale of Kemper Common Stock
The $6,000 loss on the sale of Kemper common stock is correctly stated.
Jolee Company owned 40% of the outstanding shares, and therefore
accounts for the investment according to the equity method. Under the
Taking It to the Net — BTN C-5
($ millions for Parts 1 through 4)
1. At June 30, 2013 (total cost-basis) .................................................... $85,077
2. Mutual funds; Commercial paper; Certificates of deposit; U.S.
Teamwork in Action — BTN C-6
There is no specific solution to this activity. The instructor should serve as
a facilitator during this learning reinforcement activity.
Entrepreneurial Decision — BTN C-7
1.
2015
Jan. 1
Internet Rights ...................................................
106,920
Accounts Payable .......................................
106,920
Agreed to pay for Internet rights
12,000,000 yen x $0.00891/yen
2.
Mar. 31
Accounts Payable* ............................................
26,730
Loss from Currency Translation .....................
60
Cash ..............................................................
26,790
Paid ¼ of total amount due
*$106,920/4 **3,000,000 yen x $0.00893/yen
June 30
Accounts Payable .............................................
26,730
Loss from Currency Translation .....................
300
Cash* .............................................................
27,030
Paid ¼ of total amount due
*3,000,000 yen x $0.00901/yen
Sept. 30
Accounts Payable .............................................
26,730
Loss from Currency Translation .....................
330
Cash* .............................................................
27,060
Paid ¼ of total amount due
*3,000,000 yen x $0.00902/yen
Dec. 31
Accounts Payable .............................................
26,730
Loss from Currency Translation .....................
180
Cash* .............................................................
26,910
Paid ¼ of total amount due
*3,000,000 yen x $0.00897/yen
3. Since all of the company’s payments are to be in yen, the company can
Hitting the Road— BTN C-8A
Exchange rates can be found at businesses that specialize in foreign currency
exchange. Also, American Express offices abroad exchange currencies for
cardholders and post foreign exchange rates. Typically, railroad stations and
airports also post foreign exchange rates and offer currency exchange services.
Global Decision— BTN C-9
1. Samsung (₩ in millions)
Return on total assets = Net Income / Average Total Assets
Return on total assets = Profit margin x Total asset turnover
Current Year
2. (a) Current Year Analysis: Samsung vs Apple vs Google
Return on total assets = Profit margin x Total asset turnover
Company
Return on total assets*
Profit margin
Total asset turnover
Apple
19.3%
21.7%
0.89
Google
12.6
21.6
0.58
Samsung
15.4
13.3
1.16
Global Decision (Concluded)
2. (b) Prior Year Analysis: Samsung vs Apple vs Google
Return on total assets = Profit margin x Total asset turnover
Company
Return on total assets*
Profit margin
Total asset turnover
Apple
28.6%
26.7%
1.07
Google
12.9
21.4
0.60
Samsung
14.2
11.9
1.19
In the prior year, Apple has the highest return on total assets followed
