Bank Management Chapter 7

Suggested end-of-Chapter Practice Questions: Chapter Seven Chapter 71, 2, 3, 7, 11, 13, 19, 22, 29, 32, 33, problem similar to HW 1. What is the process of asset transformation performed by a financial institution? Why does this process often lead to the creation of interest rate risk? What is interest rate risk? Asset transformation by an FI involves purchasing primary assets and issuing secondary assets as a source of funds. The primary securities purchased by the FI often have maturity and liquidity characteristics that are different from the secondary securities issued by the FI.For example, a bank buys medium- to long-term bonds and makes medium-term loans with funds raised by issuing short-term deposits. Interest rate risk occurs because the prices and reinvestment income characteristics of long-term assets react differently to changes in market interest rates than the prices and interest expense characteristics of short-term deposits. Interest rate risk is the effect on prices (value) and interim cash flows (interest coupon payment) caused by changes in the level of interest rates during the life of the financial asset. . What is refinancing risk? How is refinancing risk part of interest rate risk? If an FI funds long-term fixed-rate assets with short-term liabilities, what will be the impact on earnings of an increase in the rate of interest? A decrease in the rate of interest? Refinancing risk is the uncertainty of the cost of a new source of funds that are being used to finance a long-term fixed-rate asset. This risk occurs when an FI is holding assets with maturities greater than the maturities of its liabilities.For example, if a bank has a ten-year fixed-rate loan funded by a 2-year time deposit, the bank faces a risk of borrowing new deposits, or refinancing, at a higher rate in two years. Thus, interest rate increases would reduce net interest income. The bank would benefit if the rates fall as the cost of renewing the deposits would decrease, wh ile the earning rate on the assets would not change. In this case, net interest income would increase. 3. What is reinvestment risk? How is reinvestment risk part of interest rate risk?If an FI funds short-term assets with long-term liabilities, what will be the impact on earnings of a decrease in the rate of interest? An increase in the rate of interest? Reinvestment risk is the uncertainty of the earning rate on the redeployment of assets that have matured. This risk occurs when an FI holds assets with maturities that are less than the maturities of its liabilities. For example, if a bank has a two-year loan funded by a ten-year fixed-rate time deposit, the bank faces the risk that it might be forced to lend or reinvest the money at lower rates after two years, perhaps even below the deposit rates.Also, if the bank receives periodic cash flows, such as coupon payments from a bond or monthly payments on a loan, these periodic cash flows will also be reinvested at the new lower (or higher) interest rates. Besides the effect on the income statement, this reinvestment risk may cause the realized yields on the assets to differ from the a priori expected yields. 7. How does the policy of matching the maturities of assets and liabilities work (a) to minimize interest rate risk and (b) against the asset-transformation function for FIs?A policy of maturity matching will allow changes in market interest rates to have approximately the same effect on both interest income and interest expense. An increase in rates will tend to increase both income and expense, and a decrease in rates will tend to decrease both income and expense. The changes in income and expense may not be equal because of different cash flow characteristics of the assets and liabilities. The asset-transformation function of an FI involves investing short-term liabilities into long-term assets.Maturity matching clearly works against successful implementation of this process. 11. A money market mutual f und bought $1,000,000 of two-year Treasury notes six months ago. During this time, the value of the securities has increased, but for tax reasons the mutual fund wants to postpone any sale for two more months. What type of risk does the mutual fund face for the next two months? The mutual fund faces the risk of interest rates rising and the value of the securities falling. 13. What is market risk? How do the results of this risk surface in the operating performance of financial institutions?What actions can be taken by FI management to minimize the effects of this risk? Market risk is the risk of price changes that affects any firm that trades assets and liabilities. The risk can surface because of changes in interest rates, exchange rates, or any other prices of financial assets that are traded rather than held on the balance sheet. Market risk can be minimized by using appropriate hedging techniques such as futures, options, and swaps, and by implementing controls that limit the a mount of exposure taken by market makers. 14.What is credit risk? Which types of FIs are more susceptible to this type of risk? Why? Credit risk is the possibility that promised cash flows may not occur or may only partially occur. FIs that lend money for long periods of time, whether as loans or by buying bonds, are more susceptible to this risk than those FIs that have short investment horizons. For example, life insurance companies and depository institutions generally must wait a longer time for returns to be realized than money market mutual funds and property-casualty insurance companies. 19.What is the difference between technology risk and operational risk? How does internationalizing the payments system among banks increase operational risk? Technology risk refers to the uncertainty surrounding the implementation of new technology in the operations of an FI. For example, if an FI spends millions on upgrading its computer systems but is not able to recapture its costs becaus e its productivity has not increased commensurately or because the technology has already become obsolete, it has invested in a negative NPV investment in technology.Operational risk refers to the failure of the back-room support operations necessary to maintain the smooth functioning of the operation of FIs, including settlement, clearing, and other transaction-related activities. For example, computerized payment systems such as Fedwire, CHIPS, and SWIFT allow modern financial intermediaries to transfer funds, securities, and messages across the world in seconds of real time. This creates the opportunity to engage in global financial transactions over a short term in an extremely cost-efficient manner.However, the interdependence of such transactions also creates settlement risk. Typically, any given transaction leads to other transactions as funds and securities cross the globe. If there is either a transmittal failure or high-tech fraud affecting any one of the intermediate tran sactions, this could cause an unraveling of all subsequent transactions. 22. If you expect the French franc to depreciate in the near future, would a U. S. -based FI in Paris prefer to be net long or net short in its asset positions? Discuss. The U. S.FI would prefer to be net short (liabilities greater than assets) in its asset position. The depreciation of the franc relative to the dollar means that the U. S. FI would pay back the net liability position with fewer dollars. In other words, the decrease in the foreign assets in dollar value after conversion will be less than the decrease in the value of the foreign liabilities in dollar value after conversion. 29. What is country or sovereign risk? What remedy does an FI realistically have in the event of a collapsing country or currency?Country risk involves the interference of a foreign government in the transmission of funds transfer to repay a debt by a foreign borrower. A lender FI has very little recourse in this situation unl ess the FI is able to restructure the debt or demonstrate influence over the future supply of funds to the country in question. This influence likely would involve significant working relationships with the IMF and the World Bank. 32. What is liquidity risk? What routine operating factors allow FIs to deal with this risk in times of normal economic activity?What market reality can create severe financial difficulty for an FI in times of extreme liquidity crises? Liquidity risk is the uncertainty that an FI may need to obtain large amounts of cash to meet the withdrawals of depositors or other liability claimants. In times of normal economic activity, depository FIs meet cash withdrawals by accepting new deposits and borrowing funds in the short-term money markets. However, in times of harsh liquidity crises, the FI may need to sell assets at significant losses in order to generate cash quickly. 33.Why can insolvency risk be classified as a consequence or outcome of any or all of the other types of risks? Insolvency risk is the risk that an FI may not have enough capital to offset a sudden decline in the value of its assets. This risk involves the shortfall of capital in times when the operating performance of the institution generates accounting losses. These losses may be the result of one or more of interest rate, market, credit, liquidity, sovereign, foreign exchange, technological, and off-balance-sheet risks. 34. Discuss the interrelationships among the different sources of FI risk exposure.Why would the construction of an FI’s risk management model to measure and manage only one type of risk be incomplete? Measuring each source of FI risk exposure individually creates the false impression that they are independent of each other. For example, the interest rate risk exposure of an FI could be reduced by requiring customers to take on more interest rate risk exposure through the use of floating rate products. However, this reduction in FI risk may be obtained only at the possible expense of increased credit risk. That is, customers experiencing osses resulting from unanticipated interest rate changes may be forced into insolvency, thereby increasing the FI’s default risk. Similarly, off-balance sheet risk encompasses several risks since off-balance sheet contingent contracts typically have credit risk and interest rate risk as well as currency risk. Moreover, the failure of collection and payment systems may lead corporate customers into bankruptcy. Thus, technology risk may influence the credit risk of FIs. As a result of these interdependencies, FIs have focused on developing sophisticated models that attempt to measure all of the risks faced by the FI at any point in time.Practice 1. A bank has the following balance sheet structure: AssetsLiabilities and Equity Cash$10,000Certificate of Deposit$90,000 Bond$90,000Equity $10,000 Total Assets$100,000Total Liabilities and Equity$100,000 The bond is a Eurobond; it has a te n-year maturity and a fixed-rate coupon of 6 percent. The certificate of deposit has a one-year maturity and a 4 percent fixed rate of interest. The FI expects no additional asset growth. a. What will be the net interest income (NII) at the end of the first year? Note: Net interest income equals interest income minus interest expense. b.If at the end of year 1, market interest rates have increased 100 basis points (1 percent), what will be the net interest income for the second year? Is the change in NII caused by reinvestment risk or refinancing risk? c. Assuming that market interest rates increase 1 percent. (i) What will be the market value of the bond? (ii) What will be the market value of equity? (Assume that all of the NII in part (a) is used to cover operating expenses or is distributed as dividends, so that there is no addition to retained earnings. ) a. What will be the net interest income (NII) at the end of the first year?Note: Net interest income equals interest income m inus interest expense. Interest income$5,400$90,000 x 0. 06 Interest expense 3,600$90,000 x 0. 04 Net interest income (NII)$1,800 b. If at the end of year 1, market interest rates have increased 100 basis points (1 percent), what will be the net interest income for the second year? Interest income$5,400$90,000 x 0. 06 Interest expense 4,500$90,000 x 0. 05 Net interest income (NII)$900 The decrease in net interest income is caused by the increase in financing cost without a corresponding increase in the earnings rate.The increase in market interest rates does not affect the interest income because the bond has a fixed-rate coupon for ten years. Note: this answer makes no assumption about reinvesting the first year’s interest income at the new higher rate. c. Assuming that market interest rates increase 1 percent. (i) What will be the market value of the bond? (ii) What will be the market value of equity? (Assume that all of the NII in part (a) is used to cover operating expens es or is distributed as dividends, so that there is no addition to retained earnings. Note: market value of equity falls due to lower market value of the bond If the coupon rate is 6%, yield to maturity = 7%, then using our financial calculator, N = 9 (only 9 years left), PMT = 540, I = 7%, FV = 90,000. Compute PV; find PV = -84,136. 29. Hence the market value of the bond fell from $90,000 to $84,136. 29 (a decrease of $5,863. 71). Since the interest rate on the CD has risen (it had only a one year maturity; so it gets a new interest rate when it is re-issued), the market value of the CD is $90,000 (interest rate = coupon rate on the CD).Consequently, it is the market value of equity that will decline. If the bank must sell the bond, it will sell it at the lower market value and realize the loss. The book value of equity has remained at #10,000, but the market value of equity has fallen by the amount of the decrease in the value of the bonds. This was a problem faced by banks in 200 8, when the market value of the mortgage debt and mortgage backed securities and CDOs (collateralized debt obligations) fell; some of them had negative equity in market value terms.

Trends in Cad Industry

INTRODUCTION ABOUT THE INDUSTRY CAD SOFTWARE HISTORY CAD software, also referred to as Computer Aided Design software and in the past as computer aided drafting software, refers to software programs that assist engineers and designers in a wide variety of industries to design and manufacture physical products ranging from buildings, bridges, roads, aircraft and automobiles, large aerospace and automotive companies, ships and cars to digital CAD CAM software (‘CAM' is the acronym for Computer Aided Machining). Sketchpad was the world's first CAD software but the first commercial CAM software system, a Dr. Patrick J. Hanratty. For that reason it is Dr. Hanratty who is most often referred to as â€Å"the father First-generation CAD software systems were typically 2D drafting applications developed by a manufacturer's internal IT group (often collaborating with university researchers) and prim arily intended to automate repetitive drafting chores. The first CAD/CAM software tools emerged in the late 1950s and early 60s for use by automobile and airplane manufacturers with highly detailed McDonnell-Douglas (CADD released in 1966), Ford (PDGS released in 1967), Lockheed (CADAM AN INTRODUCTION TO THE CAD SOFTWARE INDUSTRY CAD software, or computer-aided design software, is used to expedite the process of 2-D and 3-D design and drafting. CAD software can be used on projects as small as a single room in a house, such as a kitchen or bathroom, or as large as a municipal master plan. CAD software also lets engineers and manufacturers design components such as car parts or circuit boards; this process is referred to as CAM, or computer-aided manufacturing. Computer-aided design (CAD) is the use of computer technology for the design of objects, real or virtual. CAD often involves more than just shapes. As in the manual drafting of technical and engineering drawings, the output of CAD often must convey also symbolic information such as materials, processes, dimensions, and tolerances, according to application-specific conventions. and technical manuals. The modern ubiquity and power of computers means that even perfume bottles and shampoo dispensers are designed using techniques unheard of by engineers of the 1960s. Because of its enormous economic importance, CAD has been a major driving force for research in computational geometry, computer graphics (both hardware and software), and discrete differential CAD enables designers to lay out and develop work on screen, print it out and save it for future modeling, in which case it may be marketed as CADD — computer-aided design and drafting Current Computer-Aided Design software packages range from 2D vector-based drafting systems to The CAD software industry can be used solely for creating 2-D and 3-D designs, other products can be linked to construction cost databases, thus giving users the option to click on a window and see data such as a model number and its cost. Finally, today's CAD systems also provide functionality for Web-based collaboration, for turning 3-D models into animations or videos for prospective clients, and for publishing designs onto surveying applications such as Google Earth. Computer-Aided Design is one part of the whole Digital Product Development (DPD) activity within the Product Lifecycle Management (PLM) process, and as such is used together with other tools, which are either integrated modules or stand-alone products, such as: Computer-aided engineering (CAE) and Finite element analysis (FEA) Computer-aided manufacturing (CAM) including instructions to Computer Numerical Control (CNC) machines Photo realistic rendering Document management and revision control using Product Data Management (PDM). CAD standards Comparison of CAD editors for AEC (architecture, engineering and construction) Comparison of CAD editors for CAM (computer-aided manufacturing) Comparison of CAD editors for CAE (Computer Aided Engineering) Comparison of Free EDA software (Electronic Design Automation) 3D computer graphics software Comparison of 3D computer graphics software Digital architecture Electronic design automation ISO 128 List of CAD companies Molecular design software INTRODUCTION ABOUT THE COMPANY EGS Computers India Private Limited, since inception in 1993, has been providing solutions in the areas of product design, Validation and Engineering Simulation for customers in India. EGS India is an authorized reseller of SolidWorks CAD/CAE/PDM Software Since 1999. EGS is a World-Wide consulting company in Product Design, Finite Element Analysis, Simulation and Development for Machinery, Automobile OEM's and their suppliers, Agriculture, Automotive, Process, Machine Tool, Material Handling Applications and Special Purpose Machines (SPM) SolidWorks Technical support team at EGS India has been delivering Engineering Design Solutions to demanding customers requirements in applications ranging from automotive, material handling, machinery development to power, process and allied industries world-wide for Services, Software and Training Requirements. EGS India has invested in latest engineering tools in the areas of CAD and FEA to augment the Design Capabilities and Complement Engineering Experience built over years of delivering successful customer-driven solutions. Activities at EGS India Array of Product Design activities ranging from concept design to engineering drawing release while focussing on Fit, Form and Function using SolidWorks for Customers in Chennai, Coimbatore, Bangalore, Pune, Mumbai and Rest of India Simulation and Validation using Finite Element Analysis techniques from Linear to Highly Non-Linear Domains Reseller SolidWorks CAD, SolidWorks Simulation ( Cosmos FEA ), PDMWorks Software Solutions, Chennai, Coimbatore, Trichy, Tamil Nadu, India in the areas of Computer Aided Engineering Customization using SolidWorks for Automation of Design functions including Modelling, Drawing Generation and Knowledge Based Engineering Functions ACADEMIX Training on Advanced Engineering functions to augment Design expertise and refine design procedures for accelerated product development using SolidWorks, Cosmos FEA, Nastran, Patran, LMS, Abaqus software. GD & T Training is conducted by EGS India for customers in Chennai, Coimbatore, Bangalore, Pune, Mumbai, New Delhi and other parts of India to help Indian Manufacturers deliver on High Quality Products ACADEMIX, technical training Division of EGS India has contributed to devolution of knowledge in the areas of Design, Validation, Drawing Development using GD&T concepts for numerous companies in India. Software Sales and Support EGS India has been associated with SolidWorks Corporation – USA, as a Value Added Reseller since 1999, delivering Design Solutions to customers in India. Commitment and Passion to help customers in their Design Functions has helped EGS India earn the trust of Companies, Large and Small, India-wide.

Fifth Amendment

The Fifth Amendment dates back to the 17th century, in England. They used it to protect their citizens. It was designed to protect us just like it protected the people in England. It protects us against government authority in a legal procedure.Amendment 5 states, â€Å"No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of war or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be completed in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.Question #1 What specific constituencies supported the provisions of this amendment at the time of the Constitutional Convention? Who wer e they and why did they support it? The Federalists (James Madison) introduced and supported the provisions of the 5th amendment. Madison included a constitutional provision that an individual shall not â€Å"be compelled to be a witness against himself. † Congress added the words â€Å"in any criminal case†, meaning that the provision, which will become one of the Fifth Amendment’s clauses providing safeguards against abuse of criminal laws.Because the idea that double jeopardy was wrong was so widely upheld by the colonists, James Madison also presented the Double Jeopardy Clause to Congress. Question #2 Were there any groups or persons that were against the inclusion of this amendment (or any part of it)? Who were they and why did they not support it? There were not any groups or persons that were against the inclusion of the 5th Amendment at the time of the Constitutional Convention. Question #3 Were there any changes or modifications proposed that were not included in the amendment? Who or what constituencies supported or opposed the proposed changes?Why? Many representatives rose to argue that Madison’s wording of the Double Jeopardy Clause was not strong enough. Madison had worded his Double Jeopardy Clause like this, â€Å"No subject shall be subject, except in cases of impeachment, to more than one punishment, or trial for the same offense. † Some representatives argued that the phrase â€Å"or trial† would prevent people from receiving a retrial if they had convicted improperly in their first trial. Eventually the phrase was left out, and the Congress and the States voted to make the Fifth Amendment Double Jeopardy Clause, as we know it, law.Question #4 What (if any) were the historical causes for this amendment to be important enough to be included in the original Bill of Rights? The Fifth Amendment states that â€Å"No person shall be compelled in any criminal case to be a witness against himself. † This right was created in reaction to the British courts of equity in 1487. These courts were truth-seekers. The prosecutors did not have to prove the case instead they got proof from confessions out of the accused. The accused were required to answer any questions from the prosecutors at any time.The common law courts of England adopted the principle of nemo tenetur – that no man should be bound to accuse himself. The right to be free from self-incrimination was established in common law throughout most of the colonies before it appeared in the US constitution. Question #5 Have there been any attempts to change or repeal this amendment through the years? When and by whom? Who or what constituencies supported or opposed the changes or attempts at repeal? Why? SOURCE 1 (http:/www. enotes. com/american-court-case) The 1887 Act of Congress allowed the government to compel an individual to testify against himself.Counselman vs. Hitchcock 1882. In 1891 Charles Counselman, a grain businessman was brought before the court for violation. The Chicago court requested it mandatory that Charles answer certain questions; Counselman refused on the grounds of self-incrimination. The Supreme Court, with Justice Blatchford giving the opinion, declared the 1887 law as related to the Fifth Amendment is not of the Bill of Rights. Source 2 (www. blackwellreference. com/public/tocnode The California State law granted power to prosecute any criminal defendants who exercise his or ‘her right to silence’, by interpreting the silence as an inference of guilt.In 1965 in the Griffin vs. California, Dean Griffin was accused of murder. In the court Griffin refused to speak. His silence was ruled as an acknowledgement of guilt and Griffin was sentenced on those grounds. The Supreme Court, with Justice Douglas giving the ruling, declared that inferring that a person’s right to remain silent is to be deemed guilty is changing the Fifth to suit the court. Source3 (ht tp;/ www. lectlaw. com/files) California State instituted the law of â€Å"Immunity† which compels an individual to testify against himself, with the guarantee that it will not be used to prosecute him.In 1972, Kastigar vs. United States, Charled Kastigar refused to reply even though he was given the guarantee. The California law was qualifying the Fifth Amendment’s right to be silent. The Supreme Court Judge Powell delivered the opinion, which granted â€Å"Use Immunity† which was compatible with the Fifth Amendment. Use Immunity would not allow anything that was given in testimony to be used as evidence for prosecution, nor in any other succeeding case against the defendant. Question #6 Are there currently any constituencies that want this amendment changed, abbreviated, expanded or repealed?Who would support such changes and why? Who would oppose such changes and why? In 2007 George W. Bush issued an executive order that effectively destroyed the Fifth Amendm ent. This executive order that he signed claimed that he has the power to seize the property of any person who undermines efforts to promote economic reconstruction and political reform in Iraq. Bush declared that he can take people’s property without due process if the government determines in some way that a person is undermining efforts to promote economic reconstruction and political reform in Iraq.

A Study Of Teachers Perceptions Of Online Teaching And Satisfaction Dissertation

A Study Of Teachers Perceptions Of Online Teaching And Satisfaction Within A Private Organizational Setting - A Mixed Methods Study - Dissertation Example It stands to reason then that, according to statistics maintained by the National Center for Education Statistics (NCES), nearly 4,200 U.S. institutions or approximately 66% of ‘degree-granting postsecondary institutions, offered distance education courses to over 12 million students during the academic year 2006-07. Of these, 77% were enrolled in online courses, 12% in hybrid courses, and 10% in other types of courses (Institute of Education Sciences, 2007). Online education and teaching is also growing in K-12 schools. This trend was shown by a national survey comparing online and blended learning conducted in the 2005-06 academic year (Picciano & Seaman, 2007). Another follow- up survey during 2007-08 showed a 47% rise from the previous survey, with over 1 million students enrolled in online learning nationwide (Ibid.). Drawing on national data compiled over a span of six years, it has been predicted that no less than half of all high school courses will be online by 2019; b efore then, it is expected that about five to six million K-12 students (10% of the national total) will be taking classes online (Picciano, Seaman, & Allen, 2010). Industry organizations such as the â€Å"International Association for K- 12 Online Learning† (iNACOL) believe online learning is more than a trend. It is revolutionizing global education, and those academic institutions with strong e-learning strategies will advance to help prepare students to reach their full potential in a digital age (Arora, 2009, p. 17). Education through online learning is presenting fresh opportunities for all students, despite learning abilities, background, income level or location (Curran & Allen, 2006). Statement of the Problem The dynamic state of online... Online education and teaching is also growing in K-12 schools. This trend was shown by a national survey comparing online and blended learning conducted in the 2005-06 academic year (Picciano & Seaman, 2007). Another follow- up survey during 2007-08 showed a 47% rise from the previous survey, with over 1 million students enrolled in online learning nationwide (Ibid.). Drawing on national data compiled over a span of six years, it has been predicted that no less than half of all high school courses will be online by 2019; before then, it is expected that about five to six million K-12 students (10% of the national total) will be taking classes online. Industry organizations such as the â€Å"International Association for K- 12 Online Learning† (iNACOL) believe online learning is more than a trend. It is revolutionizing global education, and those academic institutions with strong e-learning strategies will advance to help prepare students to reach their full potential in a digital age (Arora, 2009, p. 17). Education through online learning is presenting fresh opportunities for all students, despite learning abilities, background, income level or location (Curran & Allen, 2006). The dynamic state of online education has outpaced empirical research into the theory that applies to the area of teacher satisfaction. Even a moderately intensive search of the literature shows that more than half are devoted to student satisfaction, suggesting an overwhelming concern with market forces and revenue streams.

Family history Essay Example | Topics and Well Written Essays - 500 words

Family history - Essay Example Through agriculture, my parents have managed to educate us to the highest levels of education despite the struggles that come with such a business. However, my parents are hopeful that we will get good jobs so as we do not end up like them though my youngest sister has shown great interest in agriculture especially on cash crops. My granddad has played a crucial role in our family. He always says that regardless of all the odds in life, one must endeavor to succeed. Even at his age, he has sought to open his own business that has all sorts of merchandise. The returns are indeed appealing and any person would envy his work. As the siblings in the family, we are more challenged by the day to strive to do more especially when we see our grandfather wake up so early to start his days at his business. This business has also boosted the little income that we get from agriculture. Life is looking up for us and we expect brighter days ahead. Religion also plays a role in the success of our family. My parents are always keen to ensure that we follow the expected norms of the society through inculcating the good deeds in our religion. This has played a major role in ensuring that we are admirable by all in the society and are also the envy of many. For my case, the virtues taught by my parents especially of honesty and hard work have enabled me survive in the tough times of today’s society. I have succeeded in my education, and though I do not have a job yet, I am sure I will get one and give it full effort and dedication. My family is also fond of giving especially to the poor and the homeless. After every three months, it is compulsory that we visit the unfortunate in the society. One would question why we do such activities yet we do not have enough, but my parents do not take any excuse for not helping others. I find this reasonable as if our situation is not very comfortable with farming as our chief source of livelihood, then for the ones without a job is

Assessment Task2 an individual report on international marketing Research Paper

Assessment Task2 an individual report on international marketing environment assessment - Research Paper Example Facilitating international business and marketing has been the underlying strategy of Australia that is directed towards strengthening the country’s economy and the country has been able to achieve that this far. The study of these factors has also enabled the researcher to determine the major challenges for international marketers as well as major prospects for international marketers in the country. The study concludes that although the Australian marketing environment is associated with certain drawbacks, the benefits and opportunities that it provides to the global marketers outweighs all drawbacks and constraints and makes marketing in Australia a prospective decision. Table of Contents 1. Introduction 4 2.International marketing environment in Australia 5 2.1.Political forces 5 2.2.Economic forces 6 2.3.Financial forces 7 2.4.Social forces 8 2.5.Cultural forces 8 2.6.Technological forces 9 2.7. Legal forces 9 3. Current challenges for international marketers 10 4. Opport unities for international marketers 10 5. Conclusion 11 Reference List 12 1. ... International marketing is the process of marketing on a global scale by integrating or taking commercial advantage of operational differences that can be identified globally as well as the similarities and opportunities present all over the world in order to fulfil objectives as far as expanding internationally is concerned (Baack, Harris and Baack, 2013). The authors have explained that international marketing involves the activity of franchising, exporting and merging or a complete direct entry of a marketing organization into a foreign country. Following this, a company needs to develop a marketing mix specific to the country of expansion as a part of its international marketing strategy (Buckley, 2002). It can be as straightforward as implementing an existing marketing strategy, product mix and tools for export and alongside that, the company can formulate highly complex relationship strategy that includes localization, pricing, regional product offerings, production and distrib ution. Globalization and international marketing caters to meet the needs and requirements of the targeted foreign country whereby a company can export its value, thereby achieving optimization and efficiency in economies of scale and scope as well as facilitating inter-firm and firm learning (Felzensztein et al., 2013). The abovementioned theories explain the importance of international marketing as far as a company’s growth and success strategy is concerned. For a company planning to expand internationally, a detailed judgement of the market prospects along with a thorough evaluation of the PESTEL environment of the target country is pivotal. This is primarily

Interview an agency administrator Essay Example | Topics and Well Written Essays - 500 words

Interview an agency administrator - Essay Example The case record in an agency has several purposes. One of the purposes is to provide information for quality improvement and evaluation of activities. It is also used for purposes of research as it provides a baseline for the research. The case record ensures transparency and accountability of the financial bodies of the agency. The content elements in the case record structure include the problem or diagnose including its cause. Another content element is the interventions which provide the way in which the problem is treated or solved. The outcome is the last content element in the case recording structure. It presents the progress of the case that is, whether it is fairing well or it is worse. Thus the structure is designed in that, the problem appears first followed by the intervention and lastly is the outcomes of the case. There are different purposes of content and structure in case recording. One of the purposes is to provide clear information about the client situation which is the problem. According to Kiser (2007), content and structure provide a clear flow of the assessment that was done on the client. They show the information about the services that are offered to the client hence accountability. They also provide details of case was implemented and also information about the end of the case.

Gasoline Prices Essay Example | Topics and Well Written Essays - 1500 words

Gasoline Prices - Essay Example Increased fuel prices forces American society to find alternative energy sources and motivates the government to invest more into research and development of the cars with less fuel consumption and improving efficiency of the refinery sector. Crude oil prices have the major impact on gasoline prices. Other factors include refinery capacity in the country, gasoline inventories maintained by refiners which is going downward, regulatory environment (national air quality standards), and the structure of the gasoline market. It is important to note that mergers lead to anticompetitive effects because more power is given to merged companies who are able to increase prices above competitive level. The first wave of mergers has started in 1990s in US when several competing with each other companies have merged. More than 2,500 mergers have occurred at that time - since 2000 only 8 mergers have occurred involving different market segments (exploration, production, and transportation) (Energy Markets: Factors Contributing to Higher Gasoline Prices, 1). Refining capacity in the United States is not expanding at the same rate as demand for the gasoline. The American average refinery capacity is 92 percent - as the result, there is no room to expand production (Energy Markets: Factors Contributing to Higher Gasoline Prices, 1). ... Experts attribute higher prices to the expending demand (particularly for the electricity production) while supply is not expanding at the same rate. The balance of demand and supply is especially affected if demand or supply changes unexpectedly. For example, the prices went up at the end of year 2005 when two hurricanes hit the Gulf Coast region (Natural Gas: Factors Affecting Prices and Potential Impacts on Consumers, 1). As it was noted above, the domestic refineries are already working at their full capacity and the fact that the gasoline is imported leads to the shortage of supply. According to market structure principles, the shortage of supply results in increased cost - people will buy gasoline despite of the price they pay. In 2004 the United States citizens have consumed approximately 20.5 million barrels per day of crude oil accounting for as much as 25 percent of global production. Half of this crude oil was used for the production of gasoline. Data from the Energy Information Administration indicate that the capacity of American refineries is approximately 16.5 million barrels per day. Even though the refineries are upgraded, the majority of them have been built over 25 years ago. By year 2020 the demand for gasoline is projected to increase by 20 percent and the country will not be able to satisfy the domestic demand. As Karen Matusic has noted, since May 2005 the demand for gasoline has increased by 3.3 percent while the price increased by 35 percent. From supply side, she continues, those refineries that has been destroyed by hurricanes are operating now and the capacity utilization rate rose to 91.7 percent (Matusic, 1). Despite of the increased capacity, the price for gasoline is not

POLITICS Essay Example | Topics and Well Written Essays - 1250 words

POLITICS - Essay Example (2003) political ideas and ideologies can act as a kind of social cement, which in turn could provide social groups with a set of unifying beliefs and values. In this regard one could consider that governments are set up to help provide a relatively unified set of codes by witch to govern a society. In the American context one could present the argument that the ‘First Continental Congress’ which was a meeting of twelve of the thirteen original colonies which banded together to present grievances to the British Monarchy was the original congress. However it was the second continental congress which met again in 1776 which declared the colonies free, effectively beginning the American Revolution and in turn was the entirety of the United States government. According to English (2003) it is the case that the original congress held such responsibilities as directing the war, commerce, the enforcement of laws, however they were not free to collect taxes and held the key distinction of allowing the independent colonies (States) the ability to remain sovereign and as such they would effectively be free to ignore any legislation passed by congress. As one would naturally assume, this system was rife with flaws. In this regard a kind of compromise was made in which a house of representatives was established in which officials would be elected directly by the people based on the population of the states and the senate would provide a type of equal representation by the state regardless of population. Now it is the case according to Davidson et al. (2006) that the United States congress has a number of direct powers identified in the United States Constitution however there are a number of implied powers which owe their nature to the Necessary and Proper clause. In general the congress handles affairs pertaining to the setting and collection of taxes, defense, the paying of debts, regulation of commerce, the establishment of courts (lower than the Supreme Court). It

Developing business skills ta Essay Example | Topics and Well Written Essays - 5000 words

Developing business skills ta - Essay Example Thus, I need to become proficient in verbal and written including non-verbal communication (Refer appendix 1 and 3) Resources from the library and the EBSCO database for reading academic journals and books related to communication. ‘Improve Communication Skills’ by Marcela Enos and other such books would be used to improve communication skills. I will also network with diverse populace for improving non-verbal communication 10th December 2014 would be my target date to review my proficiency in the verbal, non-verbal and written English as I would have finished my two terms and I would be confident in my communication which will reflect in assignments, presentations and group discussions. Moreover, it will help my internship which requires excellent communication skills for career success. Effective time management is necessary for planning and organization of the activities in personal and professional life. Self-motivation helps to develop focused approach and promote timely completion of targets as assigned within the activities. I will use ‘Priority Grid’ to arrange tasks on the basis of importance/ urgencies. The grid is an essential ingredient as it would help complete task according to its priority. The grid would be applied in studies and at work to achieve targets. (Refer appendix 5) Reflective practice would be used regularly and feedback from the tutor and the peer group would help to assess the effectiveness of the planning and organization of the activities within the two terms and later used for work-life balance. It would improve my time management skills and inspire me to finish work within the deadline. It would help me to complete the assignments and presentations on time and reduce stress especially as they are time sensitive and could adversely impact academic scores. ‘Getting Things Done’ by David Allen gives important tips in managing time and therefore, I would be using it to improve my

Threats and Vulnerabilities Essay Example for Free

Threats and Vulnerabilities Essay Threat: An unauthorized employee tries to access data that is hosted on the server. Vulnerability: The organization does not use authentication and access controls. Likelihood: The likelihood is very low, depending on the organization and its budget. For the most part, most organizations have IT specialists that are tasked to keep everything on the network secure. In the government most all data is protected by multiple forms of security. LAN DOMAIN: Weak passwords could be broken with a brute force attacks. Ensure all access permissions are set up correctly. If there is not attention to detail with configurations unauthorized access may be easy to obtain on the network and information could be compromised or stolen. Threat: Any type of malicious software that enters the network. Vulnerability: Antivirus software doesn’t detect the virus. Likelihood: The likelihood is frequent. Anti-viruses have a hard time keeping up to date before new viruses pop up. The best way to deal with this is keeping the automatic update enabled for one’s virus protection program, and if you suspect a virus either shutdown or at least disconnect from the network to prevent further contamination of the network. REMOTE ACCESS DOMAIN: Remote users could be infected with a virus, and when they connect to the internal network, they can propagate the virus without any knowledge. Threat: An attacker modifies or defaces a company Web site. Vulnerability: The Web site isn’t protected. Likelihood: The likelihood of this is minimal, unless an inexperienced webmaster was hired. One way to avoid this is have a backup IT specialist to do checks and balances to ensure the website is secure. Another way to prevent this is by ensuring permissions and authentication is programmed properly. LAN-TO-WAN DOMAIN: A malicious web sites may be allowed access, malicious software may be downloaded, or firewalls are not configured properly; all of these can compromise a network or its’ website. Threat: A social engineer tricks an employee into revealing a password. Vulnerability: Users are not trained or briefed properly about the company’s policies. Likelihood: This is highly likely. Employees should have refresher courses given by the company on a regular basis. USER DOMAIN: Social engineering represents different ways for users to mingle and try to find a way to get a password out of another user it is done by phishing or even direct contact with a user. Threats and vulnerabilities are very important issues to tackle; it is up to company supervisors and IT leaders to ensure that everyone is up to date on computer viruses and how to keep hackers at bay. There are ways of doing this, by ensuring that employees are properly trained and briefed on any pertinent network issues that they have a direct affect on. One way is to ensure personnel are checking their company e-mail. Proper authentication needs to be setup for each user dependent on skills, their current position, and their need to have access; to avoid future issues. If giving remote access to an employee ensure the computer they use is updated before allowing them to log onto the VPN tunnel for work. The IT department or configuration team should ensure that they’ve configured web site filtering and access. To ensure limited access; Mac Address filtering brings another level of security and helps keep a log of hardware and when it accesses the company network. There are many ways to secure and protect a network, and there is also many way to attack one. No one plan is fool proof. A company must find the sweet spot for what system costs are more to maintain than it the costs to repair them if compromised.

Edible Cutlery Essay Example for Free

Edible Cutlery Essay In the eco-friendly world, it will no longer be enough to eat your meal before getting dessert; you will have to eat your plate before you get dessert. In fact, your plate may even be dessert. In a brilliant moment of inspiration, Universite de Montreal industrial design professor Diane Bisson saw a vision of a world in which food product waste was drastically reduced and even recycling, as we know it, would carry a lesser burden. Edible plates and containers. The perfect and thorough recycling method. Ms. Bisson stewed her ideas for 10 years until she finally applied and won a research grant allowing her to work with dieticians and chefs to create recipes for plates made without without preservatives, artificial colours or sugar. Their creations are beautiful, spanning all the colours of the spectrum with carved designs of varying thicknesses. Recipes are primarily vegetable-based, so the plates and containers are nutritious. Two hundred of her 400 edible prototypes were prepared for Ms. Bissons new book launch at commissaries design gallery in Montreal. They were very tasty, according to gallery owner Pierre Laramee. The book, Edible: The Food as Material will be available in late January. Ill let you know in the comment section below where its being sold. It will have many recipes for edible containers that you can prepare at home. Many of the edible plates made for the book launch were made to blend with the foods they hold, both visually and taste-wise, like a carob plate made to serve sweets. Others included beets or poppy seeds as a base. Her ambition is really to try out as many shapes and as many gastronomic food combinations as possible so that we can get into many different markets. She could see a lot of different venues. Just a few of those venues would be shopping mall food stands, hospitals, and catered food services. Next project for Ms. Bisson is to work with a caterer to come up with a five course meal with accompanying edible plates and cutlery. Also, she will have to figure out how to preserve her edible plates without common preservatives, as her current container prototypes are drying up after awhile. Edible plates, containers, cutlery. Think of how they could tastefully change our world. However, the problem with edible plates, and indeed any edible containers, is that in order to be hygienic, they need to be protected by some other packaging that is NOT meant to be eated. Hence, what we need is re-usable packaging. A sealed container protecting the sterile contents inside, from the contaminating world outside, which can be reused many times. An Indian entrepreneur manufactures delicious edible cutlery forks, knives and spoons that can all be eaten up post-meal Even as global warming turns up the heat on the world stage, entrepreneur Narayana Peesapaty, 44, may have found the perfect answer to the mountains of disposable plastic cutlery choking the world: he makes them edible. In other words, after people have eaten their curry and rice, they can now chew and swallow the spoon. The Hyderabad-based entrepreneurs company B. K.  Environmental Innovations Private Limited manufactures eco-friendly forks, knives, spoons and chopsticks in delicious flavours of vanilla, strawberry and pineapple. And all can be gobbled up after the meal. The outfit is part of the New Ventures Global initiative to encourage environment-friendly business ideas in developing countries. Peesapaty, a former scientist at the Institute for International Crop Research Institute for Semi-Arid Tropics (ICRISAT), is already supplying his product to a raft of hotels, sweet shops and organised retailers in the city. Samples have also been sent to corporate caterers, schools and housewives. It took the scientist another two years to give commercial shape to his idea. I began by checking out the suitability of various cereal flours wheat, rice and sorghum (jowar) as base for edible cutlery, he says. Finally, he zeroed in on sorghum. Jowar has traditionally been an important source of nutrients such as folic acid and fiber, yet the domestic consumption of this crop has recently decreased and been replaced by starch-laden rice. B. K. Innovations is thus helping to revitalize the popularity of jowar with consumers, especially since those with diabetes have shown an interest in consuming edible cutlery as a nutritious snack. Vegetable pulp spinach, beetroot and carrot were used to add colour and nutritive value to the cutlery. Spinach gave it a green shade, beetroot red and carrots brought out a yellow hue. In 2006, the entrepreneur applied for a process patent for producing edible cutlery. The entrepreneurs entire production line comprising blenders, slicers, dyes and an oven had to be designed and calibrated to ensure that the spoons retained their hardness while not losing out on their taste and nutritive value. BK offers spoons in three flavours and has also expanded its production to edible sandwich wrappers and edible chopsticks. Large-scale domestic buyers have already shown initial interest, and BK Environmental Innovations hopes to eventually enter the international market. Requests from international sellers have come from various countries including Singapore, New Zealand, and Canada. With Japan and China’s growing demand for chopsticks and the decreasing availability of resources, an environmental movement has grown to search for better options. Narayana expects edible chopstick to be a popular alternative to disposable chopsticks. Peesapaty feels there’s a great future ahead for his edible chopsticks which will give stiff competition to the disposable ones. In fact, he aims to corner a portion of the global disposable chopsticks market, which sees sales of around 24 billion units per annum in Japan and 35 billion units in China. However, the innovators path has not been without challenges. When he wasn’t getting investors for his dream project, Peesapaty says he had to sell his flat for Rs 35 lakh (about US$ 100,000) three years ago. He then moved to a rented house with his wife and young daughter. In other words, of the Rs 50 lakh Peesapaty has invested in the venture so far, 70% of the funds have come from his own pocket.

The Reflection Of Reading And Writing Experiences English Literature Essay

The Reflection Of Reading And Writing Experiences English Literature Essay On the first day of my Freshman high school English, I entered the classroom with an extremely self-assured, even intermediate, sort of feeling. I signed in late and tiptoed to the last seat in the classroom, comfortably supporting my feet on the seat in front of me. Every year, English has been my worst subject and I failed at it. I had to work hard for every grade I earned in that class and thus far proved to be a real challenge in my mind. Every time I complete an assignment, I procrastinated and eventually end up writing ten page essays the night before or the day of and still would average an A- on all of them. This was definitely the worst thing I could do to improve my Reading and Writing, since I felt no confidence or remorse towards my actions. I would stay up late or wake up 2 hours in the morning, just to finish a paper that I loathed writing. This bad nature of staying up to finish a paper led me to believe that I was untouchable, when it came to writing that is. This asp ersion led me to ask the question, what is there that I dont already know? I thought I was an english god. Too bad I was in for a major eye-opener. One big problems that I found constant throughout all my writing pieces and projects was the difficulty answering the why is it important? question. When I wrote something, I knew exactly what my thoughts and ideas meant, but the problem was, I assumed that my audience did too. I also never clarified the common knowledge that I would find by researching. I would increasingly display vague information and would assume that my audience felt the same kind of sympathy towards say, my memoir, as I did. This problem still progresses in all of writings to this day, but its not in the worst phase it could possibly be in. As I had started my freshmen year in high school, my writing was unreadable because it had no intentions, no moral. I would finish the paper just to get the A I need, and nothing more. But all that has changed as I progressed through my junior and senior years. Besides my slight writing deformities, I have accomplished many pieces that has made me content of my writing. Such as my excellent introductions, that not only catch the readers attention, but also to get them hooked into reading my entire pieces. In all my pieces, the introduction, for me, is the most important part, so I make it very descriptive and inspiring. They force the audience into a phase of wonder, and make them research about a certain topic even after theyve reviewed my paper. I love to put big words and complex looking sentences, just to make my audience happy, excited, and even in disbelief right from the start. If it wasnt for the constant peer reviews and teacher conferences during my junior and senior year, I would have had never been made aware of my strengths and weaknesses. At first, I hated peer reviews. I felt like it was a waste of my time and effort. But soon after I got the gist of the whole thing, my essays always came back with a Good job! or a smiley face, demonstrating my writing accomplishments. Peer reviews helped me see what I can improve on and where exactly I make my paper sound awkward or just plain weird. After all the experience, I like to say, peer reviews, thanks for everything. When it comes to Reading, my journey just takes a new route every single year. Even when I entered high school, I wasnt much of a readerà ¢Ã¢â€š ¬Ã‚ ¦nope, not even one book that I would actually want to read during my pastime. I felt so jaded from any kinds of reading materials, whether it was a book, a magazines, or even the Sunday comics. I felt very detached because most of my years I spent watching TV was when I shouldve picked up a book and plowed through it, if not even the first page. Even summer reading! I was never motivated to read those lame pieces of writing because they were a waste of my time (as I thought). Peer pressure on books, like Harry Potter, never seemed to induce me into reading either. At this point I had no idea what my future would be like without reading. But just as I had lost hope, just as I was about to stop, I gained moral reason through a system I like to called read and reward. For every book I read, I was awarded with a little extra credit or a pi ece of a snicker bar (sophomore year). I felt as if I was in a contest, and the rewards were sweet! As a result, I started reading more and more books, especially during my junior year. Such as, Of mice and men, The Great Gatsby, and little excerpts from Moby Dick. I may not have loved all of them, but at least I felt like I earned the grade I received through hard work (through actual reading). From that point on, I started to read and most importantly, began to feel more confident. With every page I read, I would clinch my dictionary in one hand and would sit there, reading and searching for an elongated word that I could add to knowledge. That for me was like playing a video game; turn the page (press the buttons) and search (look for a win). Now I felt like I was spending my time in the best way possible. Not just improving my reading skills, but also fitting into the society today. As I progress throughout my senior year in high school, I will always remember the strategies I have learned and taken from previous years. Reading and Writing may not be my best subjects, but so far they have been my best improvements. Im proud to say that now I have truly accelerated in my Reading and Writing career and will further due so.

Media and Society Essay -- Papers Media TV Television Impact Essays

Media and Society Works Cited Not Included Media is all around us. We as a society absorb media from television, radio, magazines, billboards, and newspapers. Media has such a strong effect on our lives that we do not even notice its presence sometimes. Media is the central force in shaping our culture and democracy. Media reflects and sustains the values and traditions of our striving, but necessary democracy. We as a society can use mass media to our advantage if we watch over the impact it has over us (Media and Culture 35) Let me first give some insight on how media bombards our life everyday. In our society, television is the main source of news and information, and the main source of entertainment as well. More than 99 percent of U.S. households have at least one television set, and about two-thirds of them have two, three, or more sets (Nielsen 1993). As the number of TV sets in a household has increased, family viewing has declined, and individual program selection and so...

American Colonies :: American America History

American Colonies When settlers from England came to America, they envisioned a Utopia, where they would have a say in what the government can and cannot do. Before they could live in such a society they would have to take many small steps to break the hold England had on them. The settlers of America had to end a monarchy and start their own, unique, form of government. They also had to find a way that they would have some kind of decision making power. The most important change that the colonies in America had to make was to become a society quite different from that in England. By 1763 although some colonies still maintained established churches, other colonies had accomplished a virtual revolution for religious toleration and separation of church and state. During the mid-1600's England was a Christian dominated nation; the colonies, however, were mainly Puritans. When Sir Edmond Andros took over a Puritan church in Boston for Anglican worship, the Puritans believed this was done to break their power and authority. The Puritan church in New England was almost entirely separated from the state, except that they taxed the residents for the church's support. The churches in New England had no temporal power, unlike the church of England. Many seaport towns like Marble head and Gloucester, became more religious as time pasted. This show of religious freedom was a way in which the colonies had religious toleration and differed from the Christian church in England. Unlike the well-defined social classes of England, the colonies had a streamline class structure, which gave individuals the chance to rise on the social latter. New settlers living on the coast could become rich by fishing and selling what they caught. If fishing was not a settler's strong point, then they could try their hand at farming. Getting the land to farm on was the easy part. The 'head right' system gave each male 50 acres, and 50 acres to each indentured servant he might bring over. England could not do this because England so defined the social classes and they did not have enough land that they could give to every male and his indentured servant. In a similar economic revolution, the colonies out grew their mercantile relationship with England and developed their own expanding capitalist system. The idea of a set amount of wealth in the world and that if one were to become wealthy, he or she had to take from someone who is already wealthy, is basically what mercantilism means.

Original Definition of Art Essay -- Art, Definition

My definition of art is imagination and passion expressed by creating a visual feature. I consider art to be a figurative of the imagination because everything starts with thought. People create life by thinking of ways to develop; this then creates art. It is as simple as watching a child draw a picture. I can recall imagining a picture in my head and expressing my thoughts on paper. The drawing did not come out as I imagined but it took me to a place and every time I saw the picture I thought about the vision I had created in my head. Although art involves imagination, not everyone has passion to create art. Art can be created through anger and frustration. I think that is the best way to create art. It can show passion to the person that will see this visual aspect. Art can be viewed through many perspectives. An example can be of a chandler that hangs in my grandmother’s house. My grandmother loves the chandler and brags about it every chance she gets. Living with her and imagining the image of the chandler falling on my head has created a negative view towards it. She looks as it as art on a good perspective while I take it in as art that I have a passion for destroying; in the end its always considered to be art. I consider art a visual feature because it is look at and critiqued by people. I feel that art can be expressed through many things such as dance, painting, riding a bike, etc. It is considered art when the image and passion is seen through the audience. Many may criticize my thoughts with the visual meaning towards art. This can be summed up by stating, art is something seen that shows passion and imagination. ï‚ § Chicago Foundations of Modern Architecture Definition The Chicago Foundations of Modern... .... 03 Dec. 2009. . Hunter, Marnie, ed. "Chicago: Tracing Modern Architecture." CNN. Cable News Network. Web. 12 Oct. 2009. . "Paleolithic and Neolithic Art." The Alamo Colleges. Web. 03 Dec. 2009. . Teacher resource science biology chemistry at cartage.org. Web. 03 Dec. 2009. .

Population of China and Gender Imbalance Essay

China’s one child policy was established by Chinese leader Deng Xiaoping in 1979 to limit China’s population growth. It was designated as a â€Å"temporary measure,† to limit couples to just one child. Those who fail to follow the law are subjected to fines, pressures to do abortion, and forced sterilization. In 1979, the Chinese government embarked on an ambitious program of market reform following the stagnation of the economy after the Cultural Revolution. At the time, China was home to a quarter of the world’s people, who were occupying just 7 percent of world’s arable land. Two thirds of the population was under the age of 30 years, and the baby boomers of the 1950s and 1960s were entering their reproductive years. The government saw strict population containment as essential to economic reform and to an improvement in living standards. So the one-child family policy was introduced. The policy consists of a set of regulations governing the approved size of Chinese families. These regulations include restrictions on family size, late marriage and childbearing, and the spacing of children (in cases in which second children are permitted). The State Family Planning Bureau sets the overall targets and policy direction. Family-planning committees at provincial and county levels devise local strategies for implementation. Despite its name, the one-child rule applies to a minority of the population; for urban residents and government employees, the policy is strictly enforced, with few exceptions. The exceptions include families in which the first child has a disability or both parents work in high-risk occupations (such as mining) or are themselves from one-child families (in some areas). The policy has been estimated to have reduced population growth in the country of 1. 3 billion by as much as 300 million people over its first twenty years of existence. However, this rule has caused a bias against female infants; abortion, neglect, abandonment, and even infanticide have been known to occur to female infants. The use of IUDs, sterilization, and abortion are China’s most popular forms of birth control. However, over the past few years, China has provided more education and support for alternative birth control methods. This shift in focus on implementing this family planning policy was partly in reaction to what happened in 2007 when there were reports that in the southwestern Guangxi Autonomous Region of China, officials were forcing pregnant women without permission to give birth to have abortions and levying steep fines on families violating the law. As a result, riots broke out and some population control officials may have been killed. The result of such family planning policy has resulted in the disparate ratio of 114 males for every 100 females among babies from birth through children four years of age. Normally, 105 males are naturally born for every 100 females. When the Chinese government introduced the policy in 1979 to alleviate social, economic, and environmental problems in China, authorities claim that the policy has prevented 250 million births from its implementation to 2000. However, the policy is controversial both within and outside China because of the manner in which the policy has been implemented, and because of concerns about negative economic and social consequences. The policy has been implicated in an increase in of forced abortions and female infanticide, and has been suggested as a possible cause behind China’s significant gender imbalance. Despite these negative reports, favorable feedback from this policy is heard from the families themselves. Since the introduction of the one-child policy, the total fertility rate in China has fallen from over two births per woman to approximately 1. 7 births today. In total, China estimates that it has three to four hundred million fewer people today, with the one-child policy, than it would have had otherwise. The reduction in the fertility rate and thus population growth has reduced the severity of problems that come with overpopulation, like epidemics, slums, overwhelmed social services (such as health, education, law enforcement), and strain on the ecosystem from abuse of fertile land and production of high volumes of waste. Another favorable feedback as a result of this policy is that it is reported that the focus of China on population control helps provide a better health service for women and a reduction in the risks of death and injury associated with pregnancy. Increased involvement of women in the labor force is also another positive feedback. Women have traditionally been the primary caregivers for children; however, with fewer children, they have more time to invest in their careers, increasing both their personal earnings and the national GDP. Another feedback that appeals to environmentalists is that, with the policy, there is decreased environmental impact. China’s one child policy has the indirect consequence of reducing China’s total ecological footprint and thus reducing strain on ecological resources. Despite these successes, however, the one-child only policy draws criticisms from many quarters. First, the one-child policy has been criticized by human rights advocacy groups and Western religious groups, including some evangelical Christians, as well as by pro-life advocates. Within China, criticism tends to be focused on potential social problems caused by the policy. A second type of criticism has come from those who acknowledge the challenges stemming from China’s high population growth but believe that less intrusive options could have achieved the same results over an extended period of time. One very important concern was the human rights factor. The one-child policy is challenged in principle and in practice over violating basic human rights. Reported abuses in its enforcement include bribery, coercion, forced sterilization, forced abortion, and possibly infanticide. Even though in 2002, China outlawed the use of physical force to make a woman submit to an abortion or sterilization, it is not entirely enforced. In the execution of the policy many local governments still demand abortions if the pregnancy violates local regulations. Some critics also point to the possible economic and emotional costs the policy may bring to the people. As the one-child policy begins to near its next generation, one adult child is left with having to provide support for his or her two parents and four grandparents. This leaves the older generation with more of a dependency on retirement funds or charity, rather than their children in order to have support. If a child cannot care for their parents and grandparents, or if that child cannot survive, the oldest generation could find itself destitute. Another social problem seen is when some parents may over-indulge their only-child. The media referred to the indulged children in one-child families as â€Å"little emperors†. Since the 1990s, some people worry this will result in a higher tendency toward poor social communication and cooperation skills among the new generation, as they have no siblings at home. One important focus among sociologists is the issue of gender imbalance. China, like many other Asian countries, has a long tradition of son preference. Many argue that the one-child policy induces many families to use selective abortion, abandon female infants, and even kill female infants under the influence of the son preference. Some families even kill or starve the female infant and then try again for a male child. The commonly accepted explanation for son preference is that sons in rural families may be thought to be more helpful in farm work. Sons are preferred as they provide the primary financial support for the parents in their retirement, and a son’s parents typically are better cared for than his wife’s. In addition, Chinese traditionally view that daughters, on their marriage, become primarily part of the groom’s family. Becaue of this gender bias the sex ratio at birth (between male and female births) in mainland China reached 117:100 in the year 2000, substantially higher than the natural baseline, which ranges between 103:100 and 107:100. It had risen from 108:100 in 1981 — at the boundary of the natural baseline — to 111:100 in 1990. According to a report by the State Population and Family Planning Commission, there will be 30 million more men than women in 2020, potentially leading to social instability. The correlation between the increase of sex ratio disparity on birth and the deployment of one child policy would appear to have been caused by the one-child policy.

Difference Entre Ifrs Us Gaap Swiss Gaap Fer

IFRS US GAAP Swiss GAAP FER Summary of similarities and differences 2007/2008 Edition 1 IFRS – US GAAP – Swiss GAAP FER Summary of similarities and differences 2007/2008 Edition This PricewaterhouseCoopers publication is for those who wish to gain a broad understanding of the key similarities and differences between IFRS, US GAAP and Swiss GAAP FER. No summary publication can do justice to the many differences of detail that exist between IFRS, US GAAP and Swiss GAAP FER. Even if the guidance is similar, there can be differences in the detailed application, which could have a material impact on the financial statements. It needs to be stressed that this brochure deals with the main differences only. Many more pages would be needed to be more comprehensive, but that was not our objective with this publication. This publication focuses on the measurement similarities and differences most commonly found in practice. When applying the individual accounting frameworks, readers should consult all the relevant accounting standards and, where applicable, their national law. Listed companies should also follow relevant securities regulations. IFRS and US GAAP are globally acknowledged accounting standards for which a broad range of theoretical background, interpretations and literature is available. Swiss GAAP FER focuses on accounting for small and medium sized organisations and groups based in Switzerland; if there are questions that are not answered by a respective standard, the general principle of a true and fair view should be applied. This summary is based on IFRS and US GAAP developments up to August 2007 and on Swiss GAAP FER as applicable from January 1, 2007. It does not cover Swiss GAAP FER 14 Consolidated financial statements of insurance companies, Swiss GAAP FER 21 Accounting for charitable, social non-profit organisations and Swiss GAAP FER 26 Accounting of pension plans. We trust you will find this publication useful in helping you identify the key differences between IFRS, US GAAP and Swiss GAAP FER. SUBJECT Accounting framework Historical cost or valuation IFRS US GAAP Swiss GAAP FER Generally uses historical cost, but intangible assets, property, plant and equipment (PPE) and investment property may be revalued to fair value. Derivatives, certain other financial instruments and biological assets are revalued to fair value. Full retrospective application of all IFRS effective at the reporting date for an entity’s first IFRS financial statements, with some optional exemptions and limited mandatory exceptions. Reconciliations of profit or loss in respect of the last period reported under previous GAAP, of equity at the end of that period and of equity at the start of the earliest period presented in comparatives must be included in an entity's first IFRS financial statements. No revaluations except for certain types of financial instrument. Basically, historical cost convention applies. However, for several balance sheet positions Swiss GAAP FER defines deviations from that convention (fair value) or allows choices between two options. First-time adoption requires a presentation of the prior year balance sheet in compliance with Swiss GAAP FER only. First-time adoption of accounting framework First-time adoption of US GAAP requires retrospective application. There is no requirement to present reconciliations of equity or profit or loss on first-time adoption of US GAAP. Financial statements Components of financial statements Two years’ balance sheets, income statements, cash flow statements, changes in equity and accounting policies and notes. Similar to IFRS, except three years required for SEC registrants for all statements except balance sheet. Specific accommodations in certain circumstances for foreign private issuers that may offer relief from the three-year requirement. Entities may present either a classified or non-classified balance sheet. Items on the face of the balance sheet are generally presented in decreasing order of liquidity. SEC registrants should follow SEC regulations. Similar to IFRS. Balance sheet Does not prescribe a particular format. A liquidity presentation of assets and liabilities is used, instead of a current/ non-current presentation, only when a liquidity presentation provides more relevant and reliable information. Certain minimum items are presented on the face of the balance sheet. Does not prescribe a particular format. A current/noncurrent presentation of assets and liabilities is used unless a liquidity presentation provides more relevant and reliable information. Certain minimum items are presented on the face of the balance sheet. A minimum structure is required. Several items have to be disclosed separately on the face of the balance sheet or within the notes. Income statement Present as either a single-step or multiple-step format. Expenditures are presented by function. SEC registrants should follow SEC regulations. A minimum structure is required, either by nature or by function. Several items have to be disclosed separately on the face of the income statement or within the notes. 3 SUBJECT Exceptional (significant) items IFRS Does not use the term but requires separate disclosure of items that are of such size, incidence or nature that separate disclosure is necessary to explain the performance of the entity. Prohibited. US GAAP Similar to IFRS, but individually significant items are presented on the face of the income statement and disclosed in the notes. Swiss GAAP FER Does not use the term exceptional, but significant items are to be disclosed separately. Extraordinary items Defined as being both infrequent and unusual, and are rare. Negative goodwill is presented as an extraordinary item. Total comprehensive income and accumulated other comprehensive income are disclosed, presented either as a separate primary statement or combined with the income statement or with the statement of changes in stockholders’ equity. Similar to IFRS except that US GAAP does not have a SoRIE, and SEC rules permit the statement to be presented either as a primary statement or in the notes. Defined as being extremely rare in the context of the ordinary operations and as being not predictable. Not addressed. Statement of recognised income and expense (SoRIE)/ Other comprehensive income and statement of accumulated other comprehensive income A SoRIE can be presented as a primary statement, in which case a statement of changes in shareholders’ equity is not presented. Alternatively, it may be disclosed separately within the primary statement of changes in shareholders’ equity. Statement shows capital transactions with owners, the movement in accumulated profit and a reconciliation of all other components of equity. The statement is presented as a primary statement except when a SoRIE is presented. In this case, only disclosure in the notes applies. Standard headings but limited guidance on contents. Use direct or indirect method. Statement of changes in shareholders’ (stockholders’) equity Similar to IFRS except SoRIE alternative. Certain minimum disclosures of components of equity and changes in equity. Cash flow statements – format and method Similar headings to IFRS, but more specific guidance for items included in each category. Direct or indirect method used. Similar to IFRS, except that bank overdrafts are excluded. Similar to IFRS, but with more guidance regarding contents and with examples of noncash transactions. Cash includes cash equivalents with maturities of three months or less from the balance sheet date and may include bank overdrafts. Similar to IFRS. Cash flow statements – definition of cash and cash equivalents Cash includes cash equivalents with maturities of three months or less from the date of acquisition and may include bank overdrafts. No exemptions. Cash flow statements – exemptions Changes in accounting policy Limited exemptions for certain investment entities and defined benefit plans. Similar to IFRS. Comparatives and prior year are restated against opening retained earnings, unless specifically exempted. Prior year financial statements have to be restated. The notes need to disclose why the accounting principle has changed, the nature of the change and its financial impact. Prior year financial statements have to be restated. Explanation and quantitative disclosure of the effects of errors within the notes. Correction of errors Comparatives are restated and, if the error occurred before the earliest prior period presented, the opening balances of assets, liabilities and equity for the earliest prior period presented are restated. Similar to IFRS. 4 SUBJECT Changes in accounting estimates IFRS Reported in income statement in the current period and future, if applicable. US GAAP Similar to IFRS. Swiss GAAP FER Changes in accounting estimates are to be reported in the income statement in the current period and future, if applicable, and to be disclosed within the notes. Consolidated financial statements Consolidation model Based on control, which is the power to govern the financial and operating policies. Control is presumed to exist when parent owns, directly or indirectly through subsidiaries, more than one half of an entity’s voting power. Control also exists when the parent owns half or less of the voting power but has legal or contractual rights to control, or de facto control (rare circumstances). The existence of currently exercisable potential voting rights is also taken into consideration. Consolidated where the substance of the relationship indicates control. A bipolar consolidation model is used, which distinguishes between a variable interest model and a voting interest model. The variable interest model is discussed below. Under the voting interest model, control can be direct or indirect and may exist with less than 50% ownership. ‘Effective control’, which is a similar notion to de facto control under IFRS, is very rarely if ever employed in practice. Control rinciple applies. Control is presumed to exist when parent owns, directly or indirectly through subsidiaries, more than one half of an entity’s voting power. Control also exists when the parent owns half or less of the voting power but has legal or contractual rights to control (e. g. shareholder commitment contract, majority in the supervisory body/management body). Special purposes entity (S PE) Variable interest entities (VIEs) are consolidated when the entity has a variable interest that will absorb the majority of the expected losses, receive a majority of the expected returns, or both. A voting interest entity, in which the entity holds a controlling financial interest, is consolidated. If a SPE meets the definition of a qualified SPE (QSPE), the transferor does not consolidate the QSPE. Organisations with a differing business activity are to be considered in the scope of consolidation. This also applies, as a matter of principle, for SPEs. Definition of associate Based on significant influence, which is the power to participate in the financial and operating policy decisions; presumed if 20% or greater interest. Equity method is used. Share of post-tax results is shown. Detailed information on associates’ assets, liabilities, revenue and profit/loss is required. Similar to IFRS, although the term â€Å"equity investment† is used instead of â€Å"associate†. Comparable to IFRS. Voting rights ;= 20% and ; 50% and control cannot be exercised. Presentation of associate results Disclosures about associates Similar to IFRS. Similar to IFRS. Comparable to IFRS. Not addressed. However, significant balance sheet information of non-consolidated organisations has to be disclosed if the value of those investments exceeds 20% of the group’s equity. If associated organisations report goodwill such goodwill will need to be disclosed within the notes. 5 SUBJECT Associate’s accounting policies IFRS Adjustments are made for consolidation purposes to the associate’s policies to conform to those of the investor. Both proportional consolidation and equity method permitted. Consolidated where substance of relationship indicates control (SIC-12 model). Entity’s own shares held by an employee share trust are accounted for as treasury shares. US GAAP No adjustment to accounting policies is required if the associate follows an acceptable alternative US GAAP treatment. Equity method required except in specific circumstances. Similar to IFRS except where specific guidance applies for Employee Stock Ownership Plans (ESOPs) in SOP 93-6. Swiss GAAP FER Similar to IFRS. Presentation of jointly controlled entities (joint ventures) Employee share (stock) trusts Similar to IFRS. Not addressed. Business combinations Types: acquisitions or mergers All business combinations are acquisitions, thus the purchase method is the only method of accounting that is allowed. Assets, liabilities and contingent liabilities of acquired entity are fair valued. If control is obtained in a partial acquisition of a subsidiary, the full fair value of assets, liabilities and contingent liabilities, including portion attributable to the minority (non-controlling) interest, is recorded on the consolidated balance sheet. Goodwill is recognised as the residual between the consideration paid and the percentage of the fair value of the business acquired. Liabilities for restructuring activities are recognised only when acquiree has an existing liability at acquisition date. Liabilities for future losses or other costs expected to be incurred as a result of the business combination cannot be recognised. Purchase method – contingent consideration Included in cost of combination at acquisition date if adjustment is probable and can be measured reliably. Stated at minority’s share of the fair value of acquired identifiable assets, liabilities and contingent liabilities. Similar to IFRS. Not addressed. Purchase method – fair values on acquisition There are specific differences to IFRS. Contingent liabilities of the acquiree are recognised if, by the end of the allocation period: †¢ theirfairvaluecanbe determined, or †¢ theyareprobableandcan be reasonably estimated. Specific rules exist for acquired in-process research and development (generally expensed). Some restructuring liabilities relating solely to the acquired entity may be recognised if specific criteria about restructuring plans are met. Comparable to IFRS. Net assets taken over in an acquisition are to be valued at fair values. Goodwill is recognised as the surplus of acquisition cost over the newly valued net assets and to be capitalised as an intangible asset. Contingent liabilities and restructuring liabilities not specifically addressed. Generally, not recognised until contingency is resolved and the amount is determinable. Stated at minority’s share of pre-acquisition carrying value of net assets. Not addressed. Purchase method – minority interests at acquisition Not addressed, but treatment would need to be disclosed as part of the consolidation principles. 6 SUBJECT Purchase method – intangible assets with indefinite useful lives and goodwill IFRS Capitalised but not amortised. Goodwill and indefinite-lived intangible assets are tested for impairment at least annually at either the cash-generating unit (CGU) level or groups of CGUs, as applicable. US GAAP Similar to IFRS, although the level of impairment testing and the impairment test itself are different. Swiss GAAP FER Goodwill: Either capitalise and amortise over useful life (normally five years; disclose the goodwill separate in the balance sheet or within the notes) or allocate directly to retained earnings at acquisition date only (in this case separate disclosure within the statement of changes in equity necessary and the effects of a theoretical capitalisation as well as of any impairment and ordinary amortisation have to be presented within the notes). For intangible assets with a useful life that cannot be clearly determined an amortisation period of five years is applied, in justified cases a period of twenty years at the most. Purchase method – negative goodwill The identification and measurement of acquiree’s identifiable assets, liabilities and contingent liabilities are reassessed. Any excess remaining after reassessment is recognised in income statement immediately. Not specifically addressed. Entities elect and consistently apply either purchase or pooling-of-interest accounting for all such transactions. Any remaining excess after reassessment is used to reduce proportionately the fair values assigned to noncurrent assets (with certain exceptions). Any excess is recognised in the income statement immediately as an extraordinary gain. Generally recorded at predecessor cost; the use of predecessor cost or fair value depends on a number of criteria. Not addressed, but treatment would need to be disclosed as part of the consolidation principles. Business combinations involving entities under common control Not addressed. Revenue recognition Revenue recognition Based on several criteria, which require the recognition of revenue when risks and rewards and control have been transferred and the revenue can be measured reliably. Similar to IFRS in principle, although there is extensive detailed guidance for specific types of transactions that may lead to differences in practice. Comparable to IFRS. Income is the inflow of benefits in the reporting period through increase of assets and/or decrease of liabilities that increase shareholders’ equity without receiving an investment from the shareholders. Income is only recognised if the related changes of assets and/or liabilities may be reliably determined. Not addressed. Multiple-element arrangements Revenue recognition criteria are applied to each separately identifiable component of a transaction to reflect the substance of the transaction – e. g. to divide one transaction into the sale of goods and to the subsequent servicing of those goods. No further detailed guidance exists. Arrangements with multiple deliverables are divided into separate units of accounting if deliverables in arrangement meet specified criteria outlined in EITF 00-21. Specific guidance exists for software vendors with multiple-element revenue arrangements. 7 SUBJECT Construction contracts IFRS Accounted for using percentage-of-completion (PoC) method. Completed contract method is prohibited. US GAAP Similar to IFRS; however, completed contract method is permitted in rare circumstances. Swiss GAAP FER Accounted for using the PoC method. Completed contract method required if preconditions for PoC method are not met. Expense recognition Interest expense Recognised on an accruals basis using the effective interest method. Interest incurred on borrowings to construct an asset over a substantial period of time is capitalised as part of the cost of the asset. Employee benefits: pension costs – defined benefit plans Projected unit credit method is used to determine benefit obligation and plan assets are recorded at fair value. Actuarial gains and losses can be deferred. If actuarial gains and losses are recognised immediately, they can be recognised outside the income statement. Similar to IFRS. Not addressed, in practice similar to IFRS. Interest incurred on borrowings to construct tangible fixed assets and inventories including long-term contracts may be capitalised. Swiss GAAP FER make use of the financial statements of the respective pension fund, if any. An organisation has to assess annually whether an economical benefit or economical obligations from a pension plan (and from a patronage fund) exists. Swiss GAAP FER alternatively allow the application of an international accounting standard (e. g. IFRS, US GAAP) in presenting the economical impact of pension obligations; however, entities applying this option only use respective prescriptions for pension obligations. Not addressed. Similar to IFRS with some differences in the detailed application. Similar to IFRS but with several areas of difference in detailed application. Actuarial gains and losses cannot be deferred and are recognised in accumulated other comprehensive income with subsequent amortisation to the income statement. Employee share-based payment transactions Expense for services purchased is recognised based on the fair value of the equity awarded or the liability incurred. Termination benefits arising from redundancies are accounted for similarly to restructuring provisions. Termination indemnity schemes are accounted for based on actuarial present value of benefits. Similar model to IFRS, although many areas of difference exist in application. Termination benefits Four types of termination benefits with three different timing methods for recognition. Termination indemnity schemes are accounted for as pension plans; related liability is calculated as either a vested benefit obligation or according to the actuarial present value of benefits. Termination benefits are accounted for as provisions and do not fall within the scope of Swiss GAAP FER 16 Pension benefit obligations. 8 SUBJECT Assets Acquired intangible assets IFRS US GAAP Swiss GAAP FER Capitalised if recognition criteria are met; amortised over useful life. Intangibles assigned an indefinite useful life are not amortised but reviewed at least annually for impairment. Revaluations are permitted in rare circumstances. Similar to IFRS, except revaluations are not permitted. Capitalised if they yield measurable economic benefits over several years. Amortisation over useful life. If the useful life cannot be clearly determined an amortisation period of five years is applied, in justified cases one of twenty years at the most. For intangible assets related to individuals the useful life may not exceed five years. Capitalisation allowed if recognition criteria are met. Swiss GAAP FER also mention expenses which cannot be capitalised (e. g. asic and applied research, internally generated goodwill). Comparable to IFRS. Internally generated intangible assets Research costs are expensed as incurred. Development costs are capitalised and amortised only when specific criteria are met. Unlike IFRS, both research and development costs are expensed as incurred, with the exception of some software and website development costs that are capitalised. Historical cos t is used; revaluations are not permitted. Property, plant and equipment Historical cost or revalued amounts are used. Regular valuations of entire classes of assets are required when revaluation option is chosen. Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. A non-current asset classified as held for sale is measured at the lower of its carrying amount and fair value less costs to sell. Comparative balance sheet is not restated. A lease is a finance lease if substantially all risks and rewards of ownership are transferred. Substance rather than form is important. Amounts due under finance leases are recorded as a receivable. Gross earnings allocated to give constant rate of return based on (pre-tax) net investment method. Impairment is a one-step approach under IFRS and is assessed on the basis of discounted cash flows. If impairment is indicated, assets are written down to higher of fair value less costs to sell and value in use. Reversal of impairment losses is required in certain circumstances, except for goodwill. Non-current assets held for sale or disposal group Similar to IFRS. Not addressed. Practical interpretations comparable to IFRS. Leases – classification Similar to IFRS, but with more extensive form-driven requirements. Comparable to IFRS. Leases – lessor accounting Similar to IFRS, but with specific rules for leveraged leases. Not addressed. Impairment of long-lived assets held for use Impairment is a two-step approach under US GAAP. Firstly, impairment is assessed on the basis of undiscounted cash flows. If less than carrying amount, the impairment loss is measured as the amount by which the carrying amount exceeds fair value. Reversal of losses is prohibited. Similar to IFRS. 9 SUBJECT Investment property IFRS Measured at depreciated cost or fair value, with changes in fair value recognised in the income statement. US GAAP Treated the same as for other properties (depreciated cost). Industry-specific guidance applies to investor entities (for example, investment entities). Swiss GAAP FER Measured at historical cost or market value. Revaluation adjustments on fixed assets kept for investment purposes and recognised at market value must be recognised in the income statement. Comparable to IFRS, except that besides FIFO and weighted average method also LIFO and other methods are allowed to determine cost. Inventories Carried at lower of cost and net realisable value. FIFO or weighted average method is used to determine cost. LIFO prohibited. Reversal is required for subsequent increase in value of previous write-downs. Similar to IFRS; however, use of LIFO is permitted. Reversal of write-down is prohibited. Not specified. Generally historical cost used. Comparable to US GAAP. Biological assets Measured at fair value less estimated point-of-sale costs, with changes in valuation recognised in the income statement. Depends on classification of investment – if held to maturity or loans and receivables, they are carried at amortised cost; otherwise at fair value. Gains/ losses on fair value through profit or loss classification (including trading instruments) are recognised in income statement. Gains and losses on available-for-sale investments, whilst the investments are still held, are recognised in equity. Financial assets are derecognised based on risks and rewards first; control is secondary test. Financial assets – measurement Similar accounting model to IFRS, with some detailed differences in application. Financial assets (â€Å"Finanzanlagen†) are to be recognised at acquisition value. Securities as part of current assets are to be valued at fair value. Receivables are valued at par value. Liabilities are normally recorded at par value. Derivatives have to be valued depending on their classification (trading, hedging or other than trading or hedging). Derecognition of financial assets Significantly different model to IFRS and derecognition is based on control. Requires legal isolation of assets even in bankruptcy. Only derecognition of derivatives addressed. Liabilities Provisions – general Liabilities relating to present obligations from past events recorded if outflow of resources is probable (defined as more likely than not) and can be reliably estimated. Restructuring provisions recognised if detailed formal plan (identifying specified information) announced or implementation effectively begun. Similar to IFRS. However, ‘probable’ is a higher threshold than ‘more likely than not’. Similar to IFRS. Provisions – restructuring Recognition of liability based solely on commitment to plan is prohibited. In order to recognise, restructuring plan has to meet the definition of a liability, including certain criteria regarding likelihood that no changes will be made to plan or that plan will be withdrawn. General recognition criteria apply also for restructuring provisions. Decisions taken may allow recognising provision, also before detailed formal plan is announced. 10 SUBJECT Contingencies IFRS Disclose unrecognised possible losses and probable gains. Full provision method is used (some exceptions) driven by balance sheet temporary differences. Deferred tax assets are recognised if recovery is probable (more likely than not). Recognised as deferred income and amortised when there is reasonable assurance that the entity will comply with the conditions attached to them and the grants will be received. Entities may offset capital grants against asset values. Finance leases are recorded as assets and obligations for future rentals. Depreciated over useful life of asset. Rental payments are apportioned to give constant interest rate on outstanding obligation. Operating lease rentals are charged on straight-line basis. Profit arising on sale and finance leaseback is deferred and amortised. If an operating lease arises, profit recognition depends on whether the transaction is at fair value. Substance/linkage of transactions is considered. US GAAP Similar to IFRS. Swiss GAAP FER Contingent liabilities need to be disclosed within the notes. Comparable to IFRS. Deferred tax assets on temporary differences and on tax losses carried forward may only be capitalised if it is probable that they an be realised in the future through sufficient taxable profits. Not addressed. Deferred income taxes – general approach Similar to IFRS but with specific differences in application. Government grants Similar to IFRS, except when conditions are attached to grant. In this case, revenue recognition is delayed until such conditions are met. Long-lived asset contribu tions are recorded as revenue in the period received. Similar to IFRS. Specific rules should be met to record operating or capital lease. Leases – lessee accounting Comparable to IFRS. Leases – lessee accounting: sale and leaseback transactions Timing of profit and loss recognition depends on whether seller relinquishes substantially all or a minor part of the use of the asset. Losses are immediately recognised. Specific strict criteria should be considered if the transaction involves real estate. Application of the US GAAP guidance may result in significant differences to IFRS, for example, certain redeemable instruments are permitted to be classified as â€Å"mezzanine equity† (i. e. outside of permanent equity but also separate from debt). Conventional convertible debt is usually recognised entirely as a liability, unless there is a beneficial conversion feature. For finance leases, profit arising on sale and finance leaseback is deferred and amortised. Losses have to be recognised immediately. Financial liabilities versus equity classification Capital instruments are classified, depending on substance of issuer’s contractual obligations, as either a liability or equity. Mandatorily redeemable preference shares are classified as liabilities. Not addressed. Convertible debt Convertible debt (fixed number of shares for a fixed amount of cash) is accounted for on split basis, with proceeds allocated between equity and debt. Liabilities are derecognised when extinguished. Difference between carrying amount and amount paid is recognised in income statement. Not addressed. Derecognition of financial liabilities Similar to IFRS. Not addressed. 11 SUBJECT Equity instruments Capital instruments – purchase of own shares Derivatives and hedging Derivatives IFRS US GAAP Swiss GAAP FER Show as deduction from equity. Similar to IFRS. Similar to IFRS. Derivatives not qualifying for hedge accounting are measured at fair value with changes in fair value recognised in the income statement. Hedge accounting is permitted provided that certain stringent qualifying criteria are met. Similar to IFRS. However, differences can arise in the detailed application. Derivatives for trading purposes are to be recognised at fair value. For derivatives for hedging purposes, the same valuation principles as for the underlying hedged position can be applied instead of the valuation at fair values. Derivatives held for other motives than hedging or trading are to be valued at fair values or according to the lower of cost or market principle (in all cases consistent criteria for valuation have to be applied). Other accounting and reporting topics Functional currency definition Currency of primary economic environment in which entity operates. If indicators are mixed and functional currency is not obvious, judgement is used to determine functional currency that most faithfully represents economic results of entity’s operations by giving priority to currency that mainly influences sales prices and currency that mainly influences direct costs of providing the goods and services before considering the other factors. When financial statements are presented in a currency other than the functional currency, assets and liabilities are translated at exchange rate at balance sheet date. Income statement items are translated at exchange rate at dates of transactions, or average rates if rates do not fluctuate significantly. Similar to IFRS. Not addressed. Functional currency – determination Similar to IFRS; however, no specific hierarchy of factors to consider. In practice, currency in which cash flows are settled is often key consideration. Not addressed. Presentation currency Similar to IFRS. Financial statements in a foreign currency that are consolidated must be converted to the currency of the consolidated financial statements. Balance sheet items are to be converted at the exchange rates at the balance sheet date (alternatively use of average exchange rate for the last week or for the last month of the business period). Income statement and cash flow statement items may be converted at the exchange rates at the balance sheet date or at an average exchange rate for the period. 12 SUBJECT Earnings per share – diluted IFRS IAS 33 is prescriptive about the procedure and methods used to determine whether potential shares are dilutive. ‘Treasury share’ method is used for share options/ warrants. US GAAP Similar in principle to IFRS, although there are differences in application. Swiss GAAP FER Not addressed. Related-party transactions – definition Determined by level of direct or indirect control, joint control and significant influence of one party over another or common control by another entity. Name of the parent entity is disclosed and, if different, the ultimate controlling party, regardless of whether transactions occur. For related-party transactions, nature of relationship (seven categories), amount of transactions, outstanding balances, terms and types of transactions are disclosed. Disclosure of compensation of key management personnel is required within the financial statements. Applies to public entities and entities that file, or are in the process of filing, financial statements with a regulator for the purposes of issuing any instrument in a public market. Reporting of operating segments is based on those segments reported internally to entity’s chief operating decision-maker for purposes of allocating resources and assessing performance. Disclosures for operating segments are profit or loss, total assets and, if regularly reported internally, liabilities. Other items, such as external revenues, intra-segment revenues, depreciation and amortisation, tax, interest income, interest expense and various material items, are disclosed by segment where such items are included in the segment profit/loss or are reported internally. For geographical areas in which the entity operates, revenues and noncurrent assets are reported. Disclosure of factors used to identify segments and about major customers is required. Similar to IFRS. Comparable to IFRS. Related-party transactions – disclosures Similar to IFRS except that disclosure of compensation of key management personnel is not required within the financial statements. Disclose a description, the volume and other significant conditions of the transaction. The identity of the related party has to be disclosed only if this is necessary for the understanding of the transaction. Related parties with whom no transactions have been carried out during the reporting period do not need to be disclosed. Segment reporting – scope and basis of disclosures Applies to SEC registrants. Basis of reporting is similar to IFRS. Geographic market and business segment information necessary if business sectors differ significantly. Geographical markets may comprise more than one country. Segment reporting – disclosures Similar disclosures to IFRS. Breakdown of net sales from goods and services by geographic and business segments only. 13 SUBJECT Discontinued operations – definition IFRS Operations and cash flows that can be clearly distinguished for financial reporting and represent a separate major line of business or geographical area of operations, or a subsidiary acquired exclusively with a view to resale. At a minimum, a single amount is disclosed on face of income statement, and further analysis disclosed in notes, for current and prior periods. Financial statements are adjusted for subsequent events providing evidence of conditions that existed at the balance sheet date and materially affecting amounts in financial statements (adjusting events). Non-adjusting events are disclosed. Contents are prescribed and basis should be consistent with full-year statements. Frequency of reporting (e. g. quarterly, half-year) is imposed by local regulator or is at discretion of entity. US GAAP Wider definition than IFRS. Component that is clearly distinguishable operationally and for financial reporting can be a reportable segment, operating segment, reporting unit, subsidiary or asset group. Similar to IFRS. Discontinued operations are reported as separate line items on face of income statement before extraordinary items. Similar to IFRS. Swiss GAAP FER Not addressed. Discontinued operations – presentation and main disclosures Not addressed. Post-balance-sheet events Similar to IFRS. Interim financial reporting Similar to IFRS. Additional quarterly reporting requirements apply for SEC registrants (domestic US entities only). Interim reporting requirements for foreign private issuers are based on local law and stock exchange requirements. Preparation of an interim report optional, it might be required by local regulators. Condensed income statement and condensed balance sheet as a minimum. Those must include at least the major captions and subtotals that were reflected in the most recent annual financial statements. Financial information contained in the interim report must be prepared on the basis of the same principles as the annual financial statements. 14 Contact Daniel Suter, Partner, Basel Tel. 058 792 51 00 E-Mail: daniel. [email  protected] pwc. com PricewaterhouseCoopers (www. pwc. com) provides industry-focused assurance, tax & legal and advisory services to build public trust and enhance value for its clients and their stakeholders. 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