Chapter 6 Blog

http://findarticles.com/p/articles/mi_m0EIN/is_20090504/ai_n31632426/





Summary:

In this article, UDR Inc., a leading multifamily real estate investment trust (REIT) has just announced some very good news for its own company. Some history of theirs is that as of December 31, 2008, they owned 44,388 apartment homes, 2,242 homes under development and 289 under contract for development. Now that is quite impressive let alone the fact that they have been giving shareholders, residents, and associates the best service possible. They were able to claim a $200 million note receivable on May 4, 2009 due to the sale of their portfolio. The contents of their 2008 March portfolio was 86 communities which came to a total of $1.7 billion including the note receivable. That is not all though, on top of the $200 million, there is a 7.5% interest rate per annum. UDR Inc. decided that they would like to put all this money to fund general corporate obligations.

Connections:

Although the length of this article is not very professional, it still links in with Chapter 6 in our text. The term "note receivable" is a section in this chapter and the entire article is discussing how UDR Inc.'s as a company is affected by the note receivable. The term is one we are not too familiar with but is actually quite simple as it is almost exactly the same as an account receivable except for the fact that it is more formal. There are types of note receivables as well but only two potential choices can match the type in this article. The promissary note or the discounted note. Again, another connection because the type of note is very important and has to be broken down further into one of these two in order to properly classify it. Honestly, there is not enough information to notify us of which of the two notes it is but the connection is still there. One last point is that note receivables are now going to be a more common thing to see now and we must be prepared for it. Therefore, this article gives us a broad understanding of the new term "note receivable" which will aid us later in the chapter.

Personal Reflection:

My feelings towards all this "action" in UDR Inc. are positive as I support this company in what they are doing and hope they are able to achieve even greater things in the future. A deal of $200 million plus interest on top of it, that is simply wonderful. This is proof of how they are performing as a whole. Their background is strong and I am sure they are going to make their future even stronger. Real estate is something that is not doing to well at the moment due to the economy and all but seeing that a company like UDR Inc. can look past it and succeed gives me a good feeling of things being able to get back on track. I enjoyed reading this article for a couple of reasons, the most obvious of course is its length but also the fact it presented a new term that we have only looked at briefly in the past. All in all, I feel good about UDR Inc., wish them the best and am ready to take on the challenge of learning and understanding new terms (note receivable).

- Jason K.

Chapter 5 Blog

http://www.vancouversun.com/Business/Economy+weighs+Canwest+specialty+stays+strong/1481934/story.html

Summary:

In this article, Canwest Global Communications Corp.’s second quarter results are being highly affected by global economic pressures. Within all of their aspects of revenues and generating income they have suffered losses to some degree. A couple substantial losses faced by Canwest include their operating profits which fell from $109 million to $75 million in the span of a single year. Also, their publishing operations had a net loss of $1.436 billion. After concluding all these amounts, Canwest’s president and CEO (Chief Executive Officer), Leonard Asper stated that although they are facing troubles due to the economy, their local television stations and underlying businesses were able to produce $295 million in operating profits. Along with this, Canwest has merged and have contracts with other companies which have increased operating profits and a higher percentage audience. In conclusion, the economy played a large factor in this company and because of all of its losses; investors in Canwest have brought the share price down 1.5 cents, and is now trading at about 30 cents.

Connections:

The connections I was able to make between this article and Chapter 5 are direct. Basically, Canwest’s cash flow has dropped a significant amount in almost every aspect of their business which can be blamed on the economic downturn that is currently present. The importance of cash flow is great and can be affected by numerous things, and in this case it is our economy that plays the biggest role. Although, their losses are quite large, they are still bringing in a reasonable amount of cash from smaller companies and businesses. Even through all the negatives of Canwest business, president and CEO, Asper is standing tall because he understands that these losses can be overcome and is already taking to proper procedures to do so. The main point I am trying to get across is that Canwest recognizes they have a problem with their cash flow and recognize that it is not too late to turn things around as is the case with any business.

Personal Reflection:

My insights on this article is that Canwest is not coming up to par with its usual standards but I also believe Asper is taking the leadership that will take them back to their spot. The worst thing a company can do in a situation like this is not take any action or continually put the blame on someone or something else so that they do not have to do anything. However, they do put some towards the economic state but so does everyone and they have the right to do so as it is affecting all of us. In my opinion, a great thing Canwest is doing is looking to their smaller companies to see what profits can be squeezed out of them for time being until they can recover on a larger scale. It is wise that they are not solely relying on one or two large profit organizations but instead have many scattered across our nation. Finally, I have no doubts that Canwest will succeed once again and reach great heights but it will only take time.

- Jason K.

Chapter 4 Blog

http://www.itnews.it/news/2009/0130125601808/suprema-revenues-jump-100-in-2008.html

Summary:

KRW = South Korean Currency

In this article, a company has made a large amount of money in revenue that was doubled from their last year’s results. Suprema Inc. (KOSDAQ: 094840), has recently announced that just last Friday, its revenue had made an incredibly significant increase in its 2008 year. They are a leading global provider in the industry of fingerprint recognition technology and systems. The increase is simply astonishing, a complete 100%. Compared to their previous year, they had made a substantially large growth in global sales. Also, they were exceptionally successful in their launching of several new businesses which involved live scanners and electronic passport solutions. At the end of their fiscal period, the 31^st of December 2008, they reported KRW 22.4 billion (US $16.22 million) in sales and KRW 10.0 billion (US $7.24 million) in operations. Due to this great success, its profits have even topped that of some government sectors. Suprema has recorded extraordinary results in the US Government’s NIST MINEX tests, simply obliterating all previous companies in November 2008. Their success can be traced for 3 consecutive years with double growth each time and has even launched Korea’s first biometric IPO. Finally, its current capital stands at an astonishing KRW 90 billion (US $65.10 million).

Connections:

The connections I was able to make between this article and Chapter 4 in our text is rather simple as it is revenue recognition. With the large increases and growth made by Suprema Inc. in the past 3 years, their revenue must be recognized at the proper time in order for everything to be true of the company’s performance. Many basic mistakes can occur if the particular revenues are not recognized in the times of which they are supposed to. The revenue recognition principle states that revenues are to be recognized when they are first realized or seen but are not actually earned until goods have been transferred or services have occurred. Now, in Suprema Inc.’s situation, their 2008 revenue in sales of 16.22 million in US dollars is to be recorded as revenue at first, but after the money has been earned, it will then move into a subsection called “Sales Revenue.” The same goes for the operations revenue which will also fall into an account called “Income from Operations.” Both of these accounts are shown on the income statements in an annual report. The importance of accomplishing this is so that the information of the company is true to all users of its financial statements. Finally, with the revenue having been designated to its appropriate accounts, the principle of revenue recognition has been met.

Personal Reflection:

In my opinion, I feel that this article can serve as a motivator for several companies who are in competition with Suprema Inc. It will push them to their ultimate heights to succeed in their area of expertise so that they can accomplish something like what this great company has done. As this is inevitable to occur, it will further the advancement in this industry which benefits everyone in the long run because they all have the same goal which is to bring something new or improved. Also, with the bar now set at almost an unthinkable bar, companies have no choice but to give it their all to succeed to their full potential. Along with this, I still cannot believe the fact that a company has gone so far and made an utterly jaw-dropping amount of money compared to last year. It shows how much dedication and hard work is being put into this company. In conclusion, I give my full respect to Suprema Inc. for doing what they have done for our security at every level and hope to see them have a long and prosperous future. One last note I wanted to make was that even though Suprema Inc. has done very well representing its company to the rest of the world, they need to keep in mind that no one stays on top forever.

-Jason K.

Chapter 3 Blog

http://www.cliffsnotes.com/WileyCDA/CliffsReviewTopic/Journal-Entries.topicArticleId-21081,articleId-21011.html

Summary:

This article talks about journal entries and their importance to a company’s future success by being neat with all of their financial records which need to be easily referred to at any time. It also goes through the basic steps of journalizing the transactions into a general journal which is a crucial part for every company to follow. All transactions are recorded in chronological order so that records are organized and easy to look for. The actual process of documenting a journal entry is explained in detail by showing exactly where the appropriate information needs to be placed. Along with this, are reference postings which are briefly mentioned to indicate the accounts number which is classified under a specific set of numbers. All of this data can and is used every single day in businesses around the world. Even if it is simple, it is one of the building blocks that accounting is based on.

Connections:

The connections I was able to make between this article and Chapter 3 in our textbook is that they both talk about journal entries attempting to get us familiar with them once again. Journalizing transactions is something that can be easily referenced back to the text as it is mention several times as well as how to do so within a general journal. Although the article gives the basic way of recording transactions that occur, it still covers what is needed to know for this topic. Also, the detailed explanations shown can relate to our text. The diagram helps greatly in understanding exactly what is trying to be accomplished and in Chapter 3, there are several charts, graphs, and pictures explaining what is happening and how it is done. Though my connections were simple and could be looked at as plain are direct and to the point of what is really going on which I feel is more important in this article.

Personal Reflection:

Reading an article such as this one can help newcomers to the accounting world as it describes an everyday process in accountants’ and business people’s lives. I feel that it should be looked at by anyone interested in business because it has information that all people need to understand. The article is simple, learning the entire concept however, that can take much longer but it is also much more interesting at the same time. Going over it, I realized that it also includes a handful of key terms used in the business world such as “source documents,” “journalizing,” “general journal,” “journalizing,” “general journal,” “journal entry,” and “posting.” General definitions nonetheless but are also considered very valuable when discussing business matters involving journal entries. Finally, I personally enjoyed this article because of its simplicity. All that really mattered was getting to the point, and I think that it was able to accomplish that quite well.

-Jason K.

Chapter 1 Blog

http://www.courierpostonline.com/article/20081017/OPINION/810170317/1046

Summary:

This article talks about how New Jersey and its people are attempting to deal with the great financial crisis that has recently taken over all of the United States. Apparently, America is in a much worse shape than most politicians had thought (Christine Gregoire). Taxing authorities have now come to the conclusion that they must lower taxes. Just last Thursday, Governor Jon Corzine released a $150 million economic plan to create a more efficient government. As most people believed that their property taxes would have to go up in order to pay for this new “plan.” However, they were wrong, Corzine’s plan heavily depends on distributing money again and speeding up future projects. The New Jersey Turnpike Authority and Schools Development Authority have now been asked to produce an astonishing $4.5 billion in capital projects to make more than 120,000 jobs. The state proposed also to redirect money in order to prevent the foreclosure of homes as well as minimize the property taxes for seniors. This plan seems great but needs to be handled with care.

Connections:

The connections that I was able to make between this article and the chapter are related to the taxing authorities. In this case, they needed to make a drastic change with what they enforced upon the people of New Jersey and they did. Even though they are taxing us on several things, mainly our income, they do not have all the power because as you can see they need to make necessary adjustments according to what is going on in the present. This is a prime example of how taxing authorities do their order of business with real life investors. Also, they aid us by using that money for future projects that will later benefit the entire area, city, or state. Within the chapter there are many references towards the taxing authorities but all that we really know is that they calculate the numbers and deductions off of our wages. The article shown gives us a glimpse of their reality because they must play a much larger role in the government then we know about right now.

Personal Reflection:

I feel that this is a good approach to solving the financial downfall in New Jersey but there have been plenty of others who have proposed ideas such as this and have failed miserably. It is quite interesting to see how Jon Corzine decided not to pile up the property taxes as that is what happens in most case but instead switches it up completely. Redirecting all of the money taken in by the government into new areas in order to seek a new and better outcome for the public is a quite brilliant idea. Even though it has probably been thought of, where Corzine chose to put the money was very smart because he seems to really care for the city of New Jersey. I would never have thought to invest the money in this way and by speeding up projects, more of the money can be handled properly in order to create newer and more advanced plans for the future. This plan has my full support because New Jersey, even American for that matter needs help and I believe that this is the way to go.

-Jason K.

Chapter 2 Blog

https://www.amazines.com/article_detail.cfm?articleid=555476

Summary:

This article explains negative amortization and how it works. It is a great way for new and upcoming house owners to pay the mortgage on their houses because it offers several flexible options of payment. Considerations made by many homebuyers are to get a fixed loan with a clause which has negative amortization for the earlier years of the loan. With these types of loans are usually called graduate payment mortgages (GPM’s). In the conventional plan, the borrowers’ payment is consisted of two parts, the amount paid on top of the interest of the loan and the amount applied to the principal. A negative amortization clause gives the borrowers’ the ability to pay a fixed amount, interest only, or an accrued interest. Also, you would pay more interest in the beginning than your actual principle of your loan in order to pay less interest in the future which can add up. Banks offer these buyers larger loans because they are taking a bigger risk investing in the market for a much longer period of time.

Connections:

My connections in regards of this topic to Chapter 2 of the textbook are quite simple. Well, we have learned about amortization and how it works when you are talking about supplies and equipment of a company but not in a situation that we could easily picture in our future. By the way, if you did not know already, amortization is the decrease in value of an item owned by a company due to time, technical problems, or simple wear-and-tear. With negative amortization, purchasing a house can become much easier when given the chance to make your interest payments sooner. Lenders’ usually offer a wide variety of payment options, allowing you to pay a certain minimum but can still pay a large sum if you have the money right there and then. These sort of deals really attract business owners and homebuyers because they have a choice with their spending instead of being pressured into a deal.

Personal Reflection:

My personal reflection involved understanding exactly how negative amortization works and where it is applied in peoples’ daily lives. I found that it is quite a good method of paying for your house, especially for new buyers who are all around us. They are given the opportunity to take a long period of time to pay off their debt. Along with this, being able to pay more of your interest sooner can really save you money in the future because your principal amount will not change but your interest can increase dramatically. New families and couples can find this wonderful because they are also allowed a long list of payment options which can work with most family situations. Another benefit is receiving larger loans from banks because when showing that you are committed to this kind of thing, it can sway their decisions in a heartbeat which can aid you in the future. One final note, this can also help with retirement as interest is not building up over all this time but instead is being paid off mostly at the start. I cannot find a major factor that would change my decision of signing my own negative amortization clause in the future.

-Jason K.