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This is a supplement to the "Accounting for Leases at American Airlines (A)" case. The (B) case describes American Airlines' financial results for the first quarter of 2020, as well as the continuing effects of coronavirus on the airline industry.

This technical note explains how to account for leases under Accounting Standards Codification 842. This new addition to US generally accepted accounting principles became effective for fiscal years beginning after December 15, 2019. The note provides broad treatment for how a lessee will account for a short-term, operating, and financing lease, and how a lessor will account for short-term and sales-type leases with and without manufacturing profit. The intent is to provide a brief overview of lease accounting. As such, it is most appropriate for MBA or finance students who need to understand the broad effects of leases on the balance sheet, income statement, and statement of cash flows.

An impact assessment enables organizations to assess the wider impact of their activities on stakeholders, beyond the financial impacts. By assessing all impacts, managers can make better decisions, leading to a more positive impact; reduce their organizations' negative impacts; and identify creative ways to capture the social and environmental value their organizations create. Organizations can undertake an impact assessment on themselves or on organizations in which they invest or plan to invest. This note explains the fundamentals of impact assessment, including what an impact assessment is, how to assess impact, and the main frameworks used to assess impact.

An impact assessment enables organizations to assess the wider impact of their activities on stakeholders, beyond the financial impacts. By assessing all impacts, managers can make better decisions, leading to a more positive impact; reduce their organizations’ negative impacts; and identify creative ways to capture the social and environmental value their organizations create. Organizations can undertake an impact assessment on themselves or on organizations in which they invest or plan to invest. This note explains the fundamentals of impact assessment, including what an impact assessment is, how to assess impact, and the main frameworks used to assess impact.

This short case challenges students to review an array of corporate financial metrics and to match them to one of 13 listed industries. As such, students must use their intuition and common sense pertaining to the distinctive characteristics of, and the key differences between, the 13 named industries, and then identify the financial metrics that are most indicative of those traits.

In its annual report for the financial year (FY) 2018/19, Reliance Industries Limited reported an unprecedented ₹596.74 billion as other comprehensive income (OCI). The OCI affected the statement of profit and loss (P&L), the balance sheet, and the statement of changes in equity. India converged its accounting standards with the International Financial Reporting Standards, effective FY 2017 onward. The converged accounting standards required an entity to present the statement of P&L and OCI in two sections, with the sum of the two reported as the total comprehensive income. The requirement to present a separate statement of changes in equity was also introduced in India. Though the concept of OCI was new to India, it had been used globally since 1997. The classification of income and expenses to either P&L or OCI as well as the subsequent reclassification of OCI to P&L have remained subjects of debate. The exercise discusses the nature, reporting, and reclassification of OCI, as well as its impact on key financial ratios.

In its annual report for the financial year (FY) 2018/19, Reliance Industries Limited reported an unprecedented ₹596.74 billion as other comprehensive income (OCI). The OCI affected the statement of profit and loss (P&L), the balance sheet, and the statement of changes in equity. India converged its accounting standards with the International Financial Reporting Standards, effective FY 2017 onward. The converged accounting standards required an entity to present the statement of P&L and OCI in two sections, with the sum of the two reported as the total comprehensive income. The requirement to present a separate statement of changes in equity was also introduced in India. Though the concept of OCI was new to India, it had been used globally since 1997. The classification of income and expenses to either P&L or OCI as well as the subsequent reclassification of OCI to P&L have remained subjects of debate. The exercise discusses the nature, reporting, and reclassification of OCI, as well as its impact on key financial ratios.

Evelynn by Nicole Snobelen was an e-commerce clothing company based in London, Ontario, and was owned and operated by Nicole Snobelen. Snobelen had just been informed that a retail unit had become available for immediate occupancy at The Market at the Western Fair District in London (The Market). The Market housed a farmer's market on the main floor and an artisan's market on the second floor that featured distinctive locally handcrafted products. Snobelen had been waiting for a space to become available at The Market for some time, but now that the opportunity was becoming a reality, she wanted to thoroughly assess the quantitative and qualitative aspects of the decision before deciding to jump in.

In 2019, the director of strategy at US-based First Financial Group (FFG) needed to decide which alternative incentive program the mid-sized bank should use to replace its current short-term incentive plan (STIP) for branch employees. The scorecard-driven STIP was found to have motivated branch sales staff to set up unauthorized accounts in order to obtain bonuses. These actions could potentially bring negative publicity and regulatory penalties to the bank in an industry fraught with such problems. Further, the current STIP had led to conflicts between the branch managers, who were compensated based on dollar sales, and the employees, who were compensated based on units of accounts sold. However, the path forward was not clear. The strategy director could revise the current scorecard or introduce a team-based incentive based on a new scorecard. Regardless of which option was chosen, the bank would have to implement additional management controls to motivate its employees while reducing the risk of fraud.

This short, fictional case chronicles the story of Susan Hughes, the CFO for 4 Sisters Construction Co. (4SCC), who introduces the economic profit (EP) construct to her fellow executives (and sisters) as a viable means for signaling to owners the value the company created for them that year. As such, she has also created a one-step reference table that converts their more familiar earnings before interest and taxes (EBIT) financial measure to an EP measure. The case explains the use of the reference table, and poses several scenarios for students to use it, explain it, and anticipate the effects of rising or falling income tax rates.

In June 2018, the co-founder and chief brand officer of HEXO Corp. (HEXO), a medical cannabis company in Gatineau, Quebec, Canada, needed to prepare his company for the legalization of Canada's recreational marijuana market. HEXO already provided a range of innovative, smoke-free, and traditional marijuana products to customers across Canada. The chief brand officer planned to analyze the inflows and outflows associated with two options for entering the recreational cannabis market: constructing a new greenhouse and acquiring one of the company's competitors in eastern Canada. Because HEXO could pursue only one option, he would need to assess each option carefully, both qualitatively and quantitatively; develop short-term and long-term action plans; and project an income statement and balance sheet for the next fiscal year. The chief brand officer wanted to ensure that HEXO was in the best position to achieve economies of scale by increasing production capabilities, establishing a widespread distribution network, and developing a strong brand through high-quality customer experiences.

In June 2018, the co-founder and chief brand officer of HEXO Corp. (HEXO), a medical cannabis company in Gatineau, Quebec, Canada, needed to prepare his company for the legalization of Canada’s recreational marijuana market. HEXO already provided a range of innovative, smoke-free, and traditional marijuana products to customers across Canada. The chief brand officer planned to analyze the inflows and outflows associated with two options for entering the recreational cannabis market: constructing a new greenhouse and acquiring one of the company's competitors in eastern Canada. Because HEXO could pursue only one option, he would need to assess each option carefully, both qualitatively and quantitatively; develop short-term and long-term action plans; and project an income statement and balance sheet for the next fiscal year. The chief brand officer wanted to ensure that HEXO was in the best position to achieve economies of scale by increasing production capabilities, establishing a widespread distribution network, and developing a strong brand through high-quality customer experiences.

Sara Hughes, the CFO at Sports Equipment, Inc. (SEI), is striving to make financial analysis more easily and uniformly done by the company's investment center managers. As such, she has presented her boss COO George Noland with a pair of tabular tools for deconstructing profit variances into three component parts. Those three parts pertain to the variance amounts due to: (1) utilizing more net assets (NA), (2) achieving higher margins on those NAs, and (3) the interaction effect of these first two factors. Hughes has walked Noland through an example of using the tools, and he is now taking some time to verify his own understanding of the tools by working through four additional examples. Hughes is hopeful that Noland will find the tools conveniently useful, and thus will give Hughes permission to distribute and explain the tools to the operations investment center managers. In addition, Noland has envisioned some additional, typical two-factor variance analysis situations where the tools might also be applicable-he wants to think a bit more about those possibilities.

In 2019, the co-founders of Praxis-a toothpaste that aimed to improve the health and wellness of its users by incorporating vitamins, minerals, and supplements into the toothpaste-were contemplating whether to launch their business. The mission of Praxis was to facilitate a health-conscious lifestyle and empower individuals to improve their productivity and well-being. The duo wanted to assess the business environment, evaluate their product and marketing strategy, project the venture's financial performance for the first three years of operations, and ultimately determine whether they should pursue the idea. They had specific goals in mind since they had won a case competition at their university, been approached by many investors, and been shortlisted to star on Dragons' Den. Could they successfully launch Praxis, differentiate Praxis from other industry players, and continue managing their existing workload in their studies at Western University?

In 2019, the co-founders of Praxis—a toothpaste that aimed to improve the health and wellness of its users by incorporating vitamins, minerals, and supplements into the toothpaste—were contemplating whether to launch their business. The mission of Praxis was to facilitate a health-conscious lifestyle and empower individuals to improve their productivity and well-being. The duo wanted to assess the business environment, evaluate their product and marketing strategy, project the venture’s financial performance for the first three years of operations, and ultimately determine whether they should pursue the idea. They had specific goals in mind since they had won a case competition at their university, been approached by many investors, and been shortlisted to star on Dragons’ Den. Could they successfully launch Praxis, differentiate Praxis from other industry players, and continue managing their existing workload in their studies at Western University?

Tiffany Pham taught herself to code and created a technology platform, Mogul, with the goal of providing girls and women around the world with information and opportunities. After several years Mogul had reached more than 146 million women around the world and had measurable outcomes in increasing the diversity of talent pipelines for major Fortune 500 companies that served as its clients. The case explores Pham's journey in building Mogul and the idea of moving into other business lines, such as media or venture capital, making Mogul not just a place for people to connect but also a global brand.

In March 2016, Bahrain Development Bank's existing board term came to an end and Khalid Al Rumaihi was appointed the new chairman. Determining a need for change, he immediately overhauled the board and replaced the Bank's long-standing CEO. The new board quickly concluded that the Bank needed to refocus on its core business of lending to small and medium-sized enterprises (SMEs) and selected an experienced Bahraini corporate banker to implement this strategy. However, within six months, the new CEO resigned and the board had to once again look for a replacement. Expanding their search globally, they found Sanjeev Paul, a Singaporean with immense experience in SME lending, who was appointed CEO of BDB in May 2018. Over the next 20 months, with the board's support, Paul headed an organization-wide revamp aimed at enabling the bank to refocus and achieve its mandate of supporting SMEs. By December 2019, the changes started to pay off; after three years of losses, BDB turned its first profit. However, Paul and the board recognized their work was far from over. The Bank's cost structure was higher than that of competition, they paid below-market salaries, and had an outdated core banking system. As Al Rumaihi looked ahead to his second term as chair, he wondered how the board could help Paul and his management team in addressing these challenges.

In mid-2019, the owner of Ireland Renovations was contemplating the future of his renovation and construction company that operated in London and Middlesex County in Ontario, Canada. The owner's youngest son was interested in working for the business, but the owner wondered whether the company could afford to hire him. His son had previously worked for the company part-time and had shown an interest in helping his father grow the business. The owner decided to project and analyze cash budgets for fiscal years 2020 and 2021 to determine whether hiring his son would be a feasible option.

In early October 2018, the executive director of Daya Counselling Centre had just learned that the Ontario Works program, one of the centre's major funded-referral programs, was planning a significant change. The executive director was concerned about the impact of this change on the centre's financial performance. The timing could not be worse. She and the board of directors had been discussing the feasibility of moving the centre from its downtown location in London, Ontario, Canada. Any negative impact on the counselling centre's financial performance could derail these plans. In addition, she had been planning to approach the board with a proposal to fund a new clinical administrative support position to help her manage the centre's growth. How could she ask the board to add a new position to the budget if the counselling centre continued to post a deficit?

In early October 2018, the executive director of Daya Counselling Centre had just learned that the Ontario Works program, one of the centre’s major funded-referral programs, was planning a significant change. The executive director was concerned about the impact of this change on the centre’s financial performance. The timing could not be worse. She and the board of directors had been discussing the feasibility of moving the centre from its downtown location in London, Ontario, Canada. Any negative impact on the counselling centre’s financial performance could derail these plans. In addition, she had been planning to approach the board with a proposal to fund a new clinical administrative support position to help her manage the centre’s growth. How could she ask the board to add a new position to the budget if the counselling centre continued to post a deficit?