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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.

Supplements the case.

Explains the assumptions behind and the insights from a simple queueing model.

Logan Airport is facing mounting delays for flights landings and takeoffs, especially in inclement weather. An additional runway and peak-period pricing are two alternatives being considered.

Spreadsheet Supplement for case 102011.

Spreadsheet Supplement for case 102023.

Supplements the (A) case.

When Borealis, a European producer of plastics, used a traditional, time-consuming budgeting process, the budget was quickly out of date in a competitive environment characterized by continually changing input and output prices and dynamic market conditions. This case describes the process that led Borealis to replace its budgets with four targeted management tools: rolling financial forecasts, Balanced Scorecard, activity based costing, and investment management. It also discusses the process of implementing the new measurement and control systems.

Spreadsheet Supplement for case 102048.

In March 1996, the ASIC division of Sub-Micron Devices received an inquiry from Western Digital: would ASIC be willing to supply 3 million chips annually for a period of 3 years at a price of $40/chip? ASIC's controller, Gary Ravenport, convened a meeting with Peter Parks, his assistant, to review the profitability of the Western Digital proposal.

Sailing Voyages, Inc. is a tour boat company offering day cruises on a sailing schooner. In this exercise, the owner of the company needs to determine the amount and nature of costs and revenues with varying number of sailing voyages and a limited season of operation.

Komandor SA is a subsidiary of a Polish holding company that manufactures sliding doors and closet organizer systems. The company president and his Canadian counterpart must decide on a transfer pricing policy for consulting services and associated components shipped between the two countries. Polish tax regulations seem unclear and arbitrary and the tax auditor has disallowed the consulting fees. The two presidents must decide whether allocating the consulting fee to product overhead will solve the problem.

The entrepreneurs of the Regical Electronics Company Limited, a financial software and integrated system developer in Guangzhou, have perceived a new e-business opportunity in the sale of an electronic payment system. To implement the Hotye business project, a new company is established, and the immediate task for the chief financial officer is to seek financing sources for the huge investment and to determine the appropriate accounting policies that will help the new company decide on its business and financial strategies. Two significant financial reporting issues are the depreciation of the Hotye electronic payment terminals and the method of revenue recognition, as various approaches of depreciation and revenue recognition can produce different impacts on taxation and on the bottom line.

A U.K. and a U.S. firm are entering into a merger agreement. Management must decide whether the merged companies should be domiciled in the United Kingdom and account for the merger as a pooling of interests or the United States and account for the merger as a purchase. A rewritten version of an earlier case.

Shanghai Eurotel Center Co. Ltd. is a joint venture formed by four parties from China, France (2) and Singapore to construct and operate a group of buildings including one five-star hotel, a luxury shopping center, some apartments and office space. After the first seven months of operation, actual profit of the hotel was under budget. The chief accountant, in preparing for a report for the board of directors, must decide how to resolve the problems with ambiguous accountability for operations, lack of appropriate performance measures and must analyze performance using flexible budgets.

The footnote disclosure for eBay, Inc. in 2000 indicates that if the company had accounted for employee stock options under the fair value method, its reported profit of $48 million would have been a loss of $91 million. The protagonist is a prospective member of the compensation committee of the board of directors, which provides a corporate governance perspective on the role of compensation in attracting, motivating, and retaining talented employees.

Employees who have been granted stock options have the right to purchase shares of their company's stock at a specified price within a specified time period. The accounting for such employee stock options has been a controversial and complex topic for decades. The debate has continued to the present time because of the high visibility of company executives who have made fortunes under their stock option programs. This note chronicles the history and debate surrounding the rules for stock options accounting and provides a simple, instructive example of accounting entries for fixed stock option grants.

Spreadsheet Supplement for case 102039.

An entrepreneurial, publicly traded biotech company has begun production and sales of its core product--cartridges that permit DNA samples to be analyzed on a microchip. In the early quarters, sales are difficult to forecast and the company has experienced fluctuating production volumes and unpredictable gross margins, which has upset the board of directors. The finance staff investigates whether to adopt a new costing approach based on capacity. With large amounts of unused capacity, the decision of how to apply capacity costs is critical to the company's management and its reporting strategy with analysts.