After extensive review of the relevant facts in this dispute, it has come to my attention that the loss contingency is incorrectly booked for Solo Cup Company. To first understand the scope of the situation, below is a summary of key events for your reference. Timeline of Key Events 2/13/03 – Solo entered into a 15 year Equipment Lease Agreement and a 20 year Energy Services Agreement with Trigen Energy Services to construct a co-generation facility. 11/01/04 – Trigen issued a Letter of Substantial Completion to Solo and paid out $820,000, which represented the first year’s energy savings prepaid by Trigen. January 2005 – Solo notified Trigen of disputes after being dissatisfied that savings were not being realized.
Linkage of Case to Chapter Material This case focuses on the controversial $165 million in retention bonuses paid to employees of the Financial Products unit of the American International Group (AIG), a behemoth insurance and financial services company. In early 2008, employees in the Financial Products unit were asked to remain with the company through the unit’s shutdown and, essentially, to work themselves out of a job. To entice talented employees to stay and work through the shut-down, a contractual retention bonus plan was instituted. When the bonuses were paid in early 2009, controversy and outrage arose given that AIG was the recipient of a substantial amount of United States government bailout money under its Troubled Assets Relief Program (TARP). Amid this controversy, Edward Liddy, AIG’s CEO, requested the bonus recipients to return half of the bonus amount.
a) Prepare a cash budget for Sharpe covering the first seven months of 2004. b) Sharpe has $220,000 in notes payable due in July that must be repaid or renegotiated for an extension. Will the firm have ample cash to repay the notes? No, the firm will not have enough cash to pay the notes payable. Although there is enough ending cash if $200,000 is spent on the notes payable then there will be an insufficient amount to purchase raw materials or other expenditures. If the firm decides to use its cash for the notes payable it will then have to obtain financing to maintain the cash balance.
Restatement of Financial Results ACC/537 This paper reviews the restatement of financial results of Kodiak Energy, Inc. for the fiscal quarter ended September 30, 2007 and the year ended December 1, 2007. The company was forced to issue a restatement because of financial accounting errors in measurement and in the application of Generally Accepted Accounting Principles in the September 2007 acquisition of the Thunder River assets. On the original financial statement, Kodiak Energy reported issuing seven million common stocks of its company in order to acquire assets owned by Thunder River Energy. In their 10-k and 10-Q statements, Kodiak Energy reported a value of $2 per share at the time of the transaction. However, an investigation by the Securities and Exchange Commission (SEC) revealed
The central compliance issue that they are working to curtail is their many violations of the Servicemembers Civil Relief Act (SCRA). Since 2003, the company has undergone scrutiny about overcharging servicemembers and recently returned servicemembers from active duty, which caused many of the servicemembers to face the possibility of a bank foreclosure. When this issue was brought to the company’s attention, J.P Morgan Chase identified two problems. The first was the fact that four thousand-five hundred servicemembers were charged interest and fees that were way above the regulatory cap. Secondly, J.P Morgan Chase
He achieves this by clearly illustrating that 401(k) is vulnerable to many aspects. He gave readers factual data to explain how the 401(k) correlates with the stock market. Near the conclusion he give the reader possible solutions for solving this issue. He suggests that we should invest in a business that strictly caters to employee’s retirement funds. It would behave exactly like insurance agencies with the exception that when workers retire they would start receiving money on a monthly
During an investigation there were many questionable accounting transactions that were brought up, such as large executive bonuses as well as many loans for large amounts of money that were later forgiven without repayment. Kozlowski and Swartz were sentenced to 8 – 25 years in prison ("Investopedia", 2014). Then a lawsuit against Tyco cost the company $2.92 billion in repayment to its investors ("Investopedia", 2014). The biggest issue here was allowing for a CEO and CFO to have too much access to funds. A protocol should be in place that when a sale of stocks is made and no one authorized it then a full audit should take place from a third party or if a loan is going to be made then more then just the CEO and CFO’s approval needs to be given.
These institutions borrowed billions of dollars to purchase companies they weren’t experts in, allowed no money down mortgages, and used financial devices to calculate exactly how much they could lose if things went wrong so they needed little money on hand in reserve. However, in 2007 and 2008 when interest rates began to rise, asset prices fell, and borrowers couldn’t pay off debts the “Dumb Money era” crashed and burned and took the American economy down with it. The government and taxpayers are now responsible for paying off the $700 billion bank and financial institution bailout, along with many companies needing to shut down and lay off thousands of workers as well. Alan Greenspan appeared before congress in 2009 to discuss that after reevaluating his theories on which the “Dumb Money” era was based on (low interest rates, unregulated markets, and the ability to use debt instruments to manage risk) he found an error in his judgment. Gross believes that if we continue to listen to people like Alan Greenspan, another “Dumb Money” age may
One of the insurance that is required by law is Workers’ Compensation which is an insurance policy covering work-related injury and illness. Not a part of payroll or employment taxation, but required to be purchased by employers. There is high percentage of employer committing some kind of worker compensation insurance fraud. Insurance fraud is defined as an act that is committed to fraudulently receive payment from an insurer or deliberately lie to save money. A large number of insurance claims each year can be accredited to fraudulent claims, which cost insurers and other parties billions of dollars.
Senator McCain on the other hand says that he would order the secretary of the treasury to immediately buy up the bad home loan mortgages in America so that people are able to make their mortgage payments and retain their homes. He accuses Senator Obama and his friends in Washington of making risky loans and giving them to people who could never afford to pay back. He accuses Senator Obama to be the second highest recipient of Fannie Mae and Freddie Mac money in history. Senator McCain criticizes Senator Obama’s liberal big spending recording in the US Senate and his involvement in pork barrel projects. Senator McCain explains his record of bipartisanship and says that the situation today cries out for bipartisanship.