Posted by & filed under Taxation & Planning.

Film financing readily available– Lucrative tax incentives and other funding are available to help nurture film and television production in this country, according to KPMG’s global publication Film Financing and Television Programming – A Taxation Guide (Fifth Edition).

(Toronto – February 25, 2010)

These federal and provincial tax incentives, along with government support through loans, grants, equity investment, and corporate funding, provide for a fertile business environment, ensuring that Canada remains a great place for new and aspiring film and television producers.

“These incentives, including refundable tax credits, may not be widely known to newcomers to the film and television industry,” says Ryan Friedman, Tax Partner with KPMG in Canada’s Communications and Media practice. “This ‘hidden money’, along with incentives from film commissions in various provinces and territories, provide location and production assistance that truly help to make Canada ‘Hollywood North’.”

The Canadian Film or Video Production Tax Credit (CFVPTC) is a fully refundable tax credit for qualified Canadian production companies that own the copyright in the production. The Income Tax Act and Regulations outline the tests that a Canadian production must meet to earn this production credit.

The CFVPTC is available to taxable Canadian corporations whose primary business activity is the production of Canadian certified films that are carried on through a permanent establishment in Canada. In order to qualify for this credit, the producer of the production must be a Canadian resident individual or eligible corporation from beginning to end of production.

Non-Canadians who wish to produce films or television shows in Canada are eligible for funding through the Production Services Tax Credit, which is mirrored in certain provinces as well.

Additionally, Canadian provincial governments offer various tax credits to those under their respective jurisdictions. These include:

Ontario Film and Television Tax Credit (OFTTC)

Ontario Production Services Tax Credit (OPSTC)

Ontario Computer Animation and Special Effects (OCASE)

Film Incentive BC (FIBC)

British Columbia Production Services Tax Credit (PSTC)

The Alberta Film Development Program

Saskatchewan Film Employment Tax Credit

Manitoba Film and Video Tax Credit

Quebec Film and Television Production Tax credit

Quebec Production Services Tax Credit

Quebec Dubbing Tax Credit

Nova Scotia Film Industry Tax Credit

New Brunswick Film Tax Credit

Newfoundland and Labrador Film and Video Tax Credit

Film Location Incentive (Yukon).

“It is commendable that our government bodies, both at the federal and provincial levels, are committed to the film industry’s sustainability and, hopefully, its growth. Independent film producers should avail themselves of this non-repayable free financing,” says Kathy Cunningham, Industry Sector Leader, Communications and Media practice, KPMG in Canada. “However, in order to benefit from these incentives, one must first be aware of them. The Taxation Guide provides this essential information.”

KPMG’s Taxation Guide is a useful tool for those looking to learn about accessing these credits. However, it is still recommended that aspiring producers seek the advice of tax professionals.

Posted by & filed under Accounting Principles, All Articles, Cost Accounting, Financial Accounting, Managerial Accounting.

India has developed the world’s cheapest laptop – a touchscreen device which resembles Apple’s wildly popular iPad but will cost just £23.

The prototype was unveiled this week by Kapil Sibal, the country’s human resource development minister, who said 110 million Indian schoolchildren would be the first recipients.

Questions:

1.  Find the current exchange rates and calculate the price of the laptop in U.S. dollars?  Show your work and the site you found to get the exchange rate.

2. What types of costs do you speculate that the country has been able to cut to achieve the £1,450 Tata Nano car and a mobile phone costing less than £11. 3 and now the £23 laptop?

3. What do you see as the biggest advantages are of this new laptop?

 

Source:

Halliday, J. (2010). India unveils world’s cheapest laptop. Guardian.co.uk, July 23 (Retrievable online at http://www.guardian.co.uk/world/2010/jul/23/india-unveils-cheapest-laptop)

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Intermediate Accounting, Managerial Accounting.

Contractors should be educating themselves on the impact of the new proposed revenue recognition standards and the recently published (June 24, 2010) exposure draft pertaining to revenue from contracts with customers. Public comments are due October 22, 2010, and it is expected the standards will be finalized in 2011.

Questions:

1. What are some of the significant changes in this standard that will affect contractors?

2. How will the proposed standard define the economic unit of measure?

3. Explain what the new cost of capitalization rules will mean for contractors.

 

Source:

Henderson, J. (2010). Proposed Revenue Recognition Rules Would Significantly Affect Contractors, BKD Alerts, June (Retrievable online at http://www.bkd.com/industry/Construction-RealEstate/Insights/2010/2010-06alertsCRE-1.htm)

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Intermediate Accounting, Managerial Accounting, Video Updates.

Given the last year’s trend, is there an end in sight to new record-low interest rates? For example, on July 22, Freddie Mac’s Primary Mortgage Market Survey, which provides a snapshot of national average mortgage rates, reported a national average rate of 4.56% with 0.7 points on a 30-year fixed-rate mortgage. At the same time last year, the rate was 5.2% with 0.7 points. Given these changes and the housing crisis, many are turning to mortgage fair events for additional information.

Questions:

1. Assume that the women in this video has a fifteen-year $175,000 mortgage with a 7.5% interest rate and a monthly payment of $1,622.28. What is the interest portion of her first payment and how much is her principal reduced by with her first payment? If she refinanced this loan for 30 years at the same interest rate, what elements of her mortgage would change? 
2. The woman at the end of the video said that her mortgage was upside down. What does that mean? Why does she need an appraisal?
3. What do you see as the benefits for having mortgage fair events like these?
4. What is a point that is charged on mortgages and how do these affect the homebuyer?
Source:


Fontinelle, A. (2010). All-Time Low Mortgage Rates: Time To Refinance? San Francisco Chronicle, July 26. (Retrievable online at http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/07/26/investopedia45861.DTL)


CNN.com. Free Mortgage Fair Help Draws Crowd (Retrievable online at: http://www.cnn.com/video/#/video/us/2010/07/26/endo.mortgage.help.fair.cnn?hpt=C2)

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, Intermediate Accounting, Managerial Accounting, Video Updates.

Bank of America incorrectly classified as much as $10.7 billion in short-term lending and repurchase deals for mortgage securities as sales. This claim surfaced in a May 13 letter to the SEC where the banking corporation alleges that the transactions were immaterial and that it would be beefing up its internal accounting controls.  This letter was sent in response to an SEC request of finance chiefs at about two dozen firms in March, asking whether they employed accounting strategies like Repo 105 used at Lehman Brothers Holdings Inc.

Questions:

1. In the letter, the bank said its incorrect accounting for the six trades wasn’t intentional. “We do not deliberately structure transactions that are economically disadvantageous simply for the purpose of recording a sale or reducing recorded liabilities.” What must their incorrect journal entries have been?

2. Why did the bank include the phrase that “its incorrect accounting for the six trades wasn’t intentional?”

3. What does “end-of-quarter window dressing” mean in terms of this event? What is Repo 105?

4. Do you agree or disagree that this amount is not material enough to disclose? Explain your answer.

Source:

Rebel Traders (2010). Bank Of America (NYSE: BAC) Admits To Hiding Debt, iStock Analysts, July 12 (Retrievable online at http://www.istockanalyst.com/article/viewarticle/articleid/4299094)

Video: Lehman Brothers ‘Accounting Gimmick’: Repo 105 Lehman Hid Assets (Retrievable online at http://www.youtube.com/watch?v=Zb3DLWeHCks)

Staff reporter. (2010). Bank of America Wrongly Classified Transactions, China Daily, July 12 (Retrievable online at http://english.sina.com/business/2010/0711/328707.html)

Posted by & filed under Accounting Principles, All Articles, Cost Accounting, Managerial Accounting.

According to market research firm, Apple’s iPhone 4 wireless handset components cost about  $187.51. The iPhone 4 sells for $199 and $299. The most expensive component is the LG display that costs $28.50. According to the consultant, the iPhone has typically hovered around the $170-to-$180 cost range because Apple seems to be trying to hit some kind of budget.

Questions:

1.  According to the article the firm that put this information together used a teardown analysis.  What is this?

2. What are some of the reasons that Apple would put together this $170-to-$180 cost point budget?

3.  What is the markup on the gyroscope chip? What percent of the total part cost is the display?

4.  What percent profit is made on the iPhone 4 as compared to the iPhone 3GS?

Source:  Hesseldahl, A. (2010). Apple iPhone 4 Parts Cost About $188, Bloomberg Businessweek, June 28 (Retrievable online at http://www.businessweek.com/technology/content/jun2010/tc20100627_763714.htm?link_position=link1)

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting.

In a last-minute change to the financial reforms bill, Congress allowed Wall Street to continue to sell interest-rate swaps directly, rather than isolating these derivatives in separate units. The thinking behind this move is that the interest-rate securities are benign, or at least less dangerous than credit default swaps, which the legislation requires banks to detach from their main operations.

Questions:

1. What is an interest-rate swap?  Do you think that Congress’ action regarding interest-rate swaps was a good idea?  Why or why not?

2. What is an auction-rate security?

3.  How was the hospital industry harmed by these financial instruments?  What other entities took a hit from these financial instruments?

Source:

Sherter, A. (2010). Financial Reform: How Supposedly Safe Derivatives Make Hospitals Sick, BNET, July 8. (Retrievable online at http://industry.bnet.com/financial-services/100010474/financial-reform-how-supposedly-safe-derivatives-make-hospitals-sick/)

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting, Video Updates.

The U.S. Supreme Court on Tuesday ordered a new review of the convictions in the government corruption case against former Alabama Gov. Don Siegelman and ex-HealthSouth CEO Richard Scrushy.

Questions:

1. What is the “honest services” fraud law?

2. What is a “quid pro quo” agreement?

3. A judge issued a $2.9 billion civil judgment against Scrushy. According to the opinion, what did Mr. Scrushy do and why?

 

Sources:

Johnson, B. (2010). Court Orders New Review of Siegelman, Scrushy Case, Associated Press, June 29 (Retrievable online at http://www.google.com/hostednews/ap/article/ALeqM5gEFj4h2WLTpKm2g7jltY0N0opHMgD9GL1FQO1

Memorandum Opinion in the 2002 Derivative Litigation for Jefferson County Alabama Circuit Court Case of Wade Tucker, et.al. versus Richard M. Scrushy, et. Al., June 18, 2009. (Retrievable online at http://www.hwnn.com/images/stories/files/Scrushy%20Memorandum%20Opinion.pdf)

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting.

The U.S. Supreme Court ruled on June 28, 2010, that the Public Company Accounting Oversight Board (PCAOB) violates the U.S. Constitution’s separation of powers principle because board members are not appointed by the president.  In a 5-4 decision, the Court stated that the president must have more power to remove PCAOB members. The five-member board is appointed by the U.S. Securities and Exchange Commission after consultation with the Federal Reserve System’s chairman of the board of governors and the Secretary of the Treasury.

Question:

1.  How was the PCAOB originally established and why?

2.  Look at the ruling.  Which justices joined to support the ruling and which justices dissented?

3.  According to the sources listed, how do you think the ruling will affect the Board’s operations and why does Barry Melancon, president and CEO of the American Institute of Certified Public Accountants (AICPA), see this as a victory for investors and for the accounting profession?

Source:
Supreme Court Opinion No. 08–861 (2010). Free Enterprise Fund et.al. versus Public Company Accounting Oversight Board, June 28 (Retrievable online at http://www.supremecourt.gov/opinions/09pdf/08-861.pdf)
Accounting WEB staff. (2010). UPDATE: Supreme Court Rules PCAOB Violates Constitution’s Separation of Powers Principle, Accounting WEB, June 28  (Retrievable online at http://www.accountingweb.com/topic/accounting-auditing/supreme-court-rules-pcaob-unconstitutional)

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, Intermediate Accounting, International Accounting.

The SEC announced that it had reached a settlement with Technip for multiple violations of the Foreign Corrupt Practices Act (FCPA). The SEC allegations focus on  Technip’s role as  a global engineering, construction and services company based in Paris, France in bribing Nigerian government officials over a 10-year period in order to win construction contracts in Nigeria worth more than $6 billion. The SEC also charged that Technip engaged in books and records and internal controls violations related to the bribery.

Questions:

1. Go to the U.S. Department of Justice website (www.justice.gov) and briefly summarize the the Foreign Corrupt Practices Act?

2. Why would the SEC have any jurisdiction over a French firm doing business in Nigeria? Who is one of Technip’s joint venture partners?

3. What did the company do in February 2010 to prepare its shareholders for this potential settlement?

Sources:

Worthington, C. (2010) Technip’s €245 Million FCPA Charge, The FCPA Blog, Feb. 12 (Retrievable online at http://www.fcpablog.com/blog/2010/2/12/technips-245-million-fcpa-charge.html)

Black, B. (2010) Technip Settles FCPA Charges with SEC and DOJ, Securities Law Prof Blog, June 28 (Retrievable online at http://www.lawprofessors.typepad.com/securities/)