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forum week 7 AMU ACCT100 Accounting I American Military University

#1

Corporate Shenanigans

Week 7 Graded Forum Question.

Note: This case is based on an actual situation.

Stan Sewell paid $50,000 for a franchise that entitled him to market software programs in the countries o the European Union. Sewell intended to sell individual franchises for the major language groups of Western Europe - German, French, English, Spanish, and Italian. Naturally, investors considering buying a franchise from Sewell asked to see the financial statements of his business.

Believing the value of the franchise to be $500,000, Sewell sought to capitalize his own franchise at $500,000. The law firm of St. Charles & LaDue helped Sewell form a corporation chartered to issue 500,000 shares of common stock with par value of $1 per share. Attorneys suggested the following chain of transactions:

Sewell's cousin, Bob, borrows $500,000 from a bank and purchases the franchise from Sewell.
Sewell pays the corporation $500,000 to acquire all its stock.
The corporation buys the franchise from Cousin Bob.
Cousin Bob repays the $500,000 loan to the bank.
If the final analysis, Cousin Bob is debt-free and out of the picture. Sewell owns all of the corporation's stock, and the corporation owns the franchise. The corporation's balance sheet lists a franchise acquired at a cost of $500,000. This balance sheet is Sewell's most valuable marketing tool.

Requirements

What is unethical about this situation?
Who can be harmed? How can they be harmed? What role does accounting play?
Instructions: Your initial response should be no less than 250 words with at least one scholarly journal reference (dictionary-type websites are excluded). Reply to at least two of your classmates. Replies to classmates should be a minimum of 100 words and include direct questions. In-text citations and references must be in APA format. Refer to the Forum Grading Rubric below for additional guidelines.

Initial Post Due: Wednesday by 11:55 pm ET
Replies to Classmates Due: Sunday by 11:55 pm ET

Make sure you are using credible sources in your discussions and assignments. Scholarly journals are the preferred source of credible/quality references. These consist of peer-reviewed articles published in academic journals related to the field, which are found via our Library. Websites such as Investopedia, ask.com, answers.com, or dictionary-type of websites limit the insight to the topics. Wikipedia is not acceptable as it is not a reliable, credible source of reference. The purpose is to bring in new information and how does it apply to our topic from a real-world perspective, instead of extending on definitions that are found in the book.

More information what a credible source consists of can be found here: http://writingcommons.org/evidence/suppo...ble-source.
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#2

(11-15-2015, 12:57 PM)accountshelp Wrote:  Corporate Shenanigans

Week 7 Graded Forum Question.

Note: This case is based on an actual situation.

Stan Sewell paid $50,000 for a franchise that entitled him to market software programs in the countries o the European Union. Sewell intended to sell individual franchises for the major language groups of Western Europe - German, French, English, Spanish, and Italian. Naturally, investors considering buying a franchise from Sewell asked to see the financial statements of his business.

Believing the value of the franchise to be $500,000, Sewell sought to capitalize his own franchise at $500,000. The law firm of St. Charles & LaDue helped Sewell form a corporation chartered to issue 500,000 shares of common stock with par value of $1 per share. Attorneys suggested the following chain of transactions:

Sewell's cousin, Bob, borrows $500,000 from a bank and purchases the franchise from Sewell.
Sewell pays the corporation $500,000 to acquire all its stock.
The corporation buys the franchise from Cousin Bob.
Cousin Bob repays the $500,000 loan to the bank.
If the final analysis, Cousin Bob is debt-free and out of the picture. Sewell owns all of the corporation's stock, and the corporation owns the franchise. The corporation's balance sheet lists a franchise acquired at a cost of $500,000. This balance sheet is Sewell's most valuable marketing tool.

Requirements

What is unethical about this situation?
Who can be harmed? How can they be harmed? What role does accounting play?
Instructions: Your initial response should be no less than 250 words with at least one scholarly journal reference (dictionary-type websites are excluded). Reply to at least two of your classmates. Replies to classmates should be a minimum of 100 words and include direct questions. In-text citations and references must be in APA format. Refer to the Forum Grading Rubric below for additional guidelines.

Initial Post Due: Wednesday by 11:55 pm ET
Replies to Classmates Due: Sunday by 11:55 pm ET

Make sure you are using credible sources in your discussions and assignments. Scholarly journals are the preferred source of credible/quality references. These consist of peer-reviewed articles published in academic journals related to the field, which are found via our Library. Websites such as Investopedia, ask.com, answers.com, or dictionary-type of websites limit the insight to the topics. Wikipedia is not acceptable as it is not a reliable, credible source of reference. The purpose is to bring in new information and how does it apply to our topic from a real-world perspective, instead of extending on definitions that are found in the book.

More information what a credible source consists of can be found here: http://writingcommons.org/evidence/suppo...ble-source.

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