Leslie Castle, a Certified Public Accountant (CPA) and accounting firm partner, finds herself in a reflective mode, recollecting several previous conversations with several nonaccountants that had questioned some core contemporary financial reporting practices pertaining to balance sheets. In particular, she had been challenged to consider that balance sheets and their related disclosures should: •move from acquired-only to acquired and internally created intangible assets; •move from financial-only to financial and nonfinancial measures; •move from many acceptable accounting method choices to fewer acceptable accounting method choices; •move from single-measure numbers to ranges, probabilities, and sensitivity analyses; and •move from articulated to nonarticulated balance sheets and income statements. The case provides an opportunity for reimagining some of accounting's traditional balance sheet conventions and related disclosures. The two questions posed in the case title undergird the case tasks for student pursuit and are in part the foundational questions posed in the general process of design thinking, an appropriate mindset for discussing this case.
In discussing the key cost management principles every executive must know, this technical note organizes the information under six principles. For example, the many meanings of the word "cost" are defined in an abbreviated costs glossary under the first principle while the remaining principles cover relevant costs, allocating indirect costs, good cost data, and second-effect costs.
One year after going into the chip-manufacturing business and hiring a new CEO to reorganize the company, Diversified Electronics Corporation realized that under the new organizational structure, it was clear that last year's results were mixed, and expectations for the year to come would be hard to meet. Discontent focused on the costs that were assessed against each of the company's product lines. Product-line managers also questioned the cost of the chips produced by the chip-manufacturing operation-the largest part of the product-cost structure. The situation called for the implementation of new procedures.
Martin Field, the new controller for the automobile replacement-parts company Run, Inc., is not comfortable with a large write-off that the family-owned company plans to make in 2004. Fairly new to the position, Field had not prepared the financial information for the annual report and he hesitated to alert anyone about the balance between the receivables and inventory items. Although external auditors give Run, Inc.'s financials a clean bill of health, Field was still not comfortable and must decide what steps to take.
Recently, accountants were instructed by President Bush to get their acts together. Indeed, the Enron, WorldCom, Tyco, and other recent corporate financial reporting failures have prompted a loss of faith in accountants and accounting. To a large extent, this loss of faith involves corporate balance sheets and it is warranted. Corporate managers and shareholders have a vested interest in addressing balance sheet shortcomings. Highlights the pervasive shortcomings of contemporary corporate balance sheets, identifies the underlying foundational tensions creating those shortcomings, offers proposals to address those tensions, and discusses the potential implications of the proposals.
This case exposes students to the process of creating an operating plan. In addition, it introduces the concept of flexible expense budgeting. It may be used as a stand-alone case on budgeting, or it may be paired with the B case (UV1704) in a module on budgeting and strategic-profitability analysis or flexible expense budgeting.
This case details the rise of hard-disk storage manufacturer MiniScribe in the mid-1980s and the company's demise after executives manipulated the financial information.
Ben Cohen and Jerry Greenfield were best friends and socially conscious entrepreneurs when they founded Ben & Jerry's Homemade in the 1970s in Burlington, Vermont. The company was well-known for being offbeat, quirky, and committed to socially responsible ventures and using organic ingredients in its products. When the company went public in 1984, most people bought the stock because they believed in the company's values and mission. In late 1999, the financial and economic world was quite different, and two suitors-Unilever and Dreyer's Ice Cream-appeared, both very interested in acquiring Ben & Jerry's. This case describes not only the background and history of Ben & Jerry's, but the factors involved in the founders' having to decide what course of action to take.
Case B describes the aftermath of Ben & Jerry's being acquired by Unilever. While there was public sadness and dismay over the socially responsible company appearing to "sell out," Ben Cohen and Jerry Greenfield tried to put it in the best possible light: "Under this new arrangement, Ben and Jerry's will be independently operated, our values will continue and we hope our efforts to make positive change will even expand. Unilever has contractually agreed to increasing socially beneficial activities as a percentage of sales every year. Ben and Jerry's will be doing more good than it does today."
Dunlap Corporation has just adopted FAS No. 87, "Employers' Accounting for Pensions." Students are asked to perform a variety of calculations in order to determine the amounts of the pension-related items to be included in the company's income statement and balance sheet. This case requires an understanding of present value concepts. It is intended to be used as part of an initial class on pension accounting and reporting or as the basis for a second class on pensions.