Assignment

Question 1

You are a new cost accountant for EAON Corp. Your first project is a capital investment proposal to purchase state of the art hardware and software for engineering's new product. The VP of engineering is excited to begin R & D on this new product. He has made it clear to you that he believes in this product and wants your proposal to be approved "with no questions asked".

You prepare your analysis using the company's cost of capital and timeline developed by the VP of engineering. When you dig deeper into the cash flow estimates you can see much latitude has been used in predicting the cash inflows. The VP of engineering has estimated the return on investment and believes a lower discount rate should be used in the PV calculations. You are following company protocol by using the cost of capital as the discount rate.

1. According to the IMA's Standards of Ethical Conduct, what are your responsibilities in this case?
2. Since this is a R&D project, could you justify using a lower discount rate?
3. What will you say to the VP of engineering?
4. Will you stick by your original estimates or make the changes so the VP of engineering can get started on his project?

Question 2

Accounting for goodwill changed in June 2001 for financial reporting purposes in the United States. Differences in reporting still exist throughout the world. Conduct research to determine how goodwill is reported in the financial statement of the country that you chose for your final project. For your main post, summarize the source and add a short paragraph stating how this method of financial reporting impacts the financial statements. What are the similarities and differences in reporting for goodwill between the United States and your chosen country? How does this affect the bottom line of your company?

Question 3

Theory without an effective and efficient implementation remains just a theory. The same holds true for strategy. In order for the strategy to materialize and be successful, it has to be implemented.

Please discuss the importance of "alignment" in strategy implementation. What are the people factors that need to be aligned? How can the "management style" of senior executives be a barrier to implementation? What can be done to overcome this barrier?