A Visual Interpretation of Lautrec’s “At the Moulin Rogue”

The painting â€Å"At the Moulin Rouge† by Lautrec gives me a feeling of gaudiness and activity as I look at it.   It shows the diverse kinds of activities done in the Moulin Rogue; however, it seems to lack the glamour and fanciness of a typical night club.Even the faces of the women, who I assume are hospitality girls, as is normal in a nightclub, lack luster, instead they are painted using pale colors; the blue hints on the face of the woman on the right even leads me to think that the woman is sickly.Noticeable also are the expressions in the faces of the people.   As opposed to the excitement that would be expected in the faces of people who go our partying in the evening, the faces in the painting seem to show a certain level of dissatisfaction, misery, or boredom.   Even the smile of the woman on the right side seems to be forced.The dominance of earth colors and faded hues in the painting give the viewer a feeling of tiredness and gloom.   The colors seem to ma ke the painting drab instead of what it is supposed to be as a painting of a club where people frequent in the evenings for drinks.   These are not the kinds of colors that one would normally see in a night club – even so, if it is set during an early period where people would most likely be more flamboyant as compared to party-goers of today.There is also a lack of light in the painting; despite the consideration that this is a night club and it opens in the evenings, it is strange that the light sources in the painting seem to be diffused or faded.   The colors and the lighting in the painting give me an overall feeling of monotony and blandness, like when you taste a piece of cake and it is not as sweet as expected despite the visual appearance of the cake.If I was to take notice of composition in the painting, the elements are quite scattered, perhaps to give the viewer a feeling of activity.   However, there are certain portions of the painting where sight is drawn towards, like the central portion which shows a group of people gathered around a table and looking down on the table, probably at cards (for gambling), and the lady at the right side of the painting.These elements of the composition that grab my sight were probably put there to emphasize what these elements denote.As mentioned earlier, the feeling that I get when I see the face of the lady is one of illness and a forced sense of joy, so the painter must have wanted the viewer to feel these emotions which is why he emphasized the element in the first place by putting it in a composition hotspot.   The central table also has the same effect of drawing the viewer towards that area of the painting, which shows, as well the pale faces of the people and the pensive moods that they are in.There is a dominance of curved lines in the picture as clearly shown by the backrest of the chair, the borders of the dresses of the ladies, and the outlines of the glasses and the bottles; this parti cular dominance of curved lines gives the painting a sluggish feel.As would normally be done, curved lines are usually used to invoke grace and softness, but in the painting these lines, in combination with the other elements somehow convey the feeling of lethargy to the viewer – that although there is activity in the Moulin Rogue, the people participating in the activity seem to be tired of what they are doing, or perhaps tired of something else which is why they waste their time in a pub.It also gives me the feeling that the people in the painting have been doing what they are supposedly doing in the painting for many, many times, repeatedly, and have grown exhausted of it.In terms of contrast, the painting is apparently, intentionally blurry and grainy, again making the viewer strain hard enough when looking into the painting.This gives me an added feeling of tiredness around the eyes, effectively conveying the physical equivalent of the abstract emotions that the painting would like to convey.   The different textures in the painting again, give me a feeling of activity, the movements, and the brushstrokes all show the repletion of activity in the painting.   So, although I feel that the painting   is about activity in the pub, it sends out a different message.A detail to note in the painting is the sporadic clean and sharp lines on the gentlemen’s top hats.   This sets the men apart from the women, giving the viewer a sense of aggressiveness when viewing the men in the painting in particular; however, even with this particular feature, notice again that the rims of these top hats are down turned, again giving the viewer the same feeling of tiredness from the painting.The piece, is also, in a way imbalanced, drawing the viewers sight to the right side and the center areas of the painting in particular; but perhaps the artist intended this to be to give the viewer a feeling of drowsiness or disorder; the feeling that one would get from intoxication, which also, by the way, is achieved by the bluntness in contrast, the graininess, and the noise in the painting.Overall, the elements of color, lines, balance, contrast, and texture in the painting contribute to its general feel.   Art is always intentional and the emotions that it convey to a viewer are quite likely, the same emotions that the artist wanted to convey in the first place.Strictly speaking though, a painting of a night club or a pub would contain a diversity of bright psychedelic colors if the norm was to be followed.   However, because perhaps the painter wanted to convey a sense of irony in the painting, the artist succeeded in using the elements of art to achieve this effect.

Pros and Cons of Kyoto Protocol Essay

Kyoto Protocol is an attempt of global community to encourage industrialized countries to lower on emissions of GHG (greenhouse gas) emissions was signed in 1997 and till date there are multiple debates going on whether or not it was a step to foster a global cooperation to address current environmental issues or just a governmental endeavor to take under control a free market spot. First, the protocol is seen as a starting point for effective collaboration aiming to achieve global good and face climate change (Hamish McRae). The journalist is sure that the deal has shown the commitment of countries to sacrifice their short-term needs at micro level in order to follow the â€Å"long-term global environmental aims†. In contrast, Kyoto Protocol is poorly designed and does not have any clear influences in perspective â€Å"unlike the Montreal Protocol, which had a clear objective and clear benefits†, notes the author. All things considered can help to draw a conclusion that the Protocol is rather controversial in its future perspectives but is a significant leap of â€Å"a wider global process of conservation† (Hamish McRae). Second, carbon is traded like any other commodity: the treaty expects the countries that do not exceed their carbon emissions limits to sell the surplus to the countries which due to their industrial needs are beyond the allocated quotas. On the other hand, â€Å"carbon market† has plenty of opponents ready to state that even though the carbon trading is being constantly advertized as a key solution to coping with climate change, it is just a small part of the dilemma. Tamra Gilbertson and Oscar Reyes are sure that â€Å"today’s climate challenges require a paradigm shift in our thinking and approaches† (3). The Carbon Trade Watch researchers state that the adoption of proposed schema was a way to â€Å"make climate problems fit market solutions† (9). In any case, despite its bright perspectives in reality Kyoto Protocol leaves very less room for adequate decisions in environment pollution control and gives a way to corporations and governments to speculate on their emissions targets. Third, it is worthy to take a look at nowadays situation and whether or not â€Å"Son of Kyoto† can be considered a success reaching its initial targets and objectives. The recent United Nations Climate Change Conference (COP18/CMP8) prolonged the lifeline of â€Å"of the Kyoto Protocol beyond 2012 keeps it alive as the sole legally binding plan for combating global warming† for eight more years (Alister Doyle and Barbara Lewis). This can be seen as a constant struggle of humanity to overcome or at least control the situation with growing GHG emissions in spite of all the imperfection and criticism of the Kyoto initiative. Some of Doha decisions were questioned by Russia as well as neighboring Ukraine and Belarus asking to â€Å"be allowed extra credit for the emissions cuts they made when their industries collapsed† (Roger Harrabin). However, the query was not given a credit which left Russia no room for objection. This fact claims that there is still no unity in common decisions and universal outlook on the problem of climate change preventive measures. On the whole, Kyoto Protocol is rather controversial instrument in global climate change arena. The deal should be taken as a serious step toward improving the future generations living conditions as well as preventing possible natural disasters. At the same time its coherence should be periodically reviewed and corrective actions taken based on the comprehensive scientific and environmental research not only on pure calculation and monetary estimates. Works Cited Doyle, Alyster and Barbara Lewis. UN climate conference throws Kyoto Protocol a lifeline. http://www.theglobeandmail.com. 08 Dec 2012. Web. 20 Jan 2013 Gilbertson, Tamra and Oscar Reyes. â€Å"Carbon Trading – How it works and why it fails†. Critical Currents no.7 (2009): 3-9. http://www.tni.org/. Web. Jan 20 2013 Harrabin, Roger. UN climate talks extend Kyoto Protocol, promise compensation. http://www.bbc.co.uk. 08 Dec 2012. Web. 20 Jan 2013 McRae, Hamish. Can Kyoto really save the world? http://www.independent.co.uk. 16 Feb 2005. Web. 20 Jan 2013

Discussion Essay Example | Topics and Well Written Essays - 250 words - 77

Discussion - Essay Example Another good impact of the association is that the rate of exchange in the various commercial transactions is relatively favorable among the three states as opposed to when a country that is not a member of the union involves herself in the commercial transactions by making a purchase of any kind (Tamara, 2011). This was through the removal of the tariffs or the taxes that were charged on various business people who took part in the importation and exportation of commodities from any of the three states. It consequently aimed at raising the wages and salaries f the employees slightly in the countries which was quite successful. This also led to the increment of job opportunities in the countries (Tamara, 2011). However despite all these moves that have been moved by the union, there are challenges that have been realized. One major failure that has hit the union is on the infrastructural development in Mexico through factories. The poor location is a big challenge as there is string and stiff completion that is posed by the workers from Asia (Tamara, 2011). The industries should be decentralized and delocalized in various parts of the Mexican country. This will be of much significance as it will not be a point of target during wars, regulating pollution in one area and also offering jobs to many (Tamara,

Globalisation of Business Activities Essay Example | Topics and Well Written Essays - 2500 words

Globalisation of Business Activities - Essay Example There are video phones, fax machines, video conferencing facilities which helps in connecting people with ease. Movement of People: There have been a number of people who travel for higher education and new job. There are number of people from the developing and under developed countries who migrate to different countries owing to the low standard of living, for higher education and better job opportunities. There have also been foreign investments in developing countries as there are ample opportunities for growth and development. Multinational Companies and NGO’s: There are a number of organizations who are making the general public aware of number of issues and health problems ,the role of non-governmental organization is to bring together the government, people affiliated. Some examples of NGO’s include the Amnesty International or Doctors without Borders. There are also many multinational corporations that are willing to diversify and open up markets in order to access new venues and markets. (Colin,2008) In 2003, approximately 300,000 jobs were outsourced to foreign countries mainly India and China. Research states that by 2015, 3.4 million jobs will be outsourced to other countries from US alone. The main reasons for the shift are due of the following reasons: Balancing risks and rewards are very important for the manufacturing company. There are some risk factors such as financial, business continuity, recovery, political and exchange rates that the manufacturing companies need to keep in mind before outsourcing. Many companies prefer to invest their profits back into the market but are limited as the market is not matured. Hence the overseas markets prove to be a good option for growth opportunities and expand their markets. The companies also try to maximize the efficiency and effectiveness of the process by using the resources in management, administration,

Spread of disease Essay Example | Topics and Well Written Essays - 500 words

Spread of disease - Essay Example The humoral theory was the hub of cause of disease in the European world till it was phased off by the germ theory that was first conceived in the sixteenth century. It took three centuries for the germ theory to be completely developed and it was accepted in the nineteenth century (Thargard, 1997). Robert Koch made the first discovery of the cause of disease where he postulated bacterium as the cause of tuberculosis in 1882. In 1932, Prontosil drug was discovered by Gerhard Domagk as the drug that could eradicate the microbe that Koch had stipulated. Moreover, in 1944, streptomycin was discovered and proved to be the most efficient treatment in killing the microbe. This served as the genesis of treatment regimes which are currently aimed at treating the symptom, eradicating the cause, and changing the course of the disease hence altering the spread of the disease (Thargard, 1997). Latest technology in the twentieth century has led to a more pragmatic approach to spread of disease since it has led to the discovery of nutritional, genetic and immunological causes of disease. The discovery of these aspects has made individuals learn the roles that nutrition plays in preventing spread of disease and also the immunological aspects that sanitation plays in preventing the spread of disease. Genetically, sanitation has progressed since it has aided in the discovery of how some aspect in an individual predisposes them more to acquire infection compared to other individuals. Consequently, knowledge of the immune system has led to the development of vaccines that aid in the protecting the spread of disease. Inventions have also been made in treatment modalities like laser, surgeries, chemotherapy, and radiotherapy all aimed in preventing the spread of disease (Thargard, 1997). Hippocrates a Greek philosopher existed between 430 and 330 B.C. He was a key player in the spread of disease theory since he coined the humoral theory that served as a

Dream catchers Essay Example | Topics and Well Written Essays - 1000 words

Dream catchers - Essay Example Dream Catcher, a first nation Canadian-based organization that mainly export to China, identifies, assess, analyzing (developing controls and making various decisions in respect to risks), implementing controls, as well as supervising and evaluating the risk or hazard. These processes are essential in identifying the best way to deal with the problem. Whereas identification of risk within Dream Catcher involves defining the various types of hazards that the company is facing, analysis of risk entails understanding the likelihood of such hazardous aspects occurring within the business. Understanding the likelihood of risk happening within Dream Catcher involves the analysis of risk in terms of probability, frequency, and severity of the risks. In risk identification, Dream Catcher engages in activities that identify various stakeholders that are involved and likely to be affected by the occurrence of the hazard. Once risks and affected stakeholders are identified, there is monitoring and reviewing of the process coupled with communicating and consulting different stakeholders and branches within the Dream Catcher Company. Dream Catcher on the other hand, attempts to define the likely impact on the firm as well as the stakeholders. Such impacts may be economic, political, or social. Identification of economic, social, or political impact, consequence, or cost of risk within Dream Catcher Company is done during the analysis stage. Risk assessment refers to identification and assessment of the hazards an organization is facing individually (Crouhy, Galai & Mark, 2006). In most cases, organizations assess hazards collectively in a bid to reducing costs associated with applications of resources that help in reducing, eliminating, or transferring the risk. Dream Catcher uses the risk assessment matrix in order to estimate the degree of severity as well as the probability of the involved hazards. Risk assessment within Dream

Islam in past and now days Essay Example | Topics and Well Written Essays - 1000 words

Islam in past and now days - Essay Example This paper discusses the past and now of Islam religion. In order to achieve this goal, the paper will explore the origin of Islam, Prophet Muhammad, the Quran, and Islam in the modern world. Islam is said to have originated in the 6th century in Christ Era or CE. The origin of this religion was in Arabia, which is believed to be the source of Islamic beliefs. In addition, Prophet Muhammad, the source of Islam religion, was born in Mecca found on Arabian Peninsula. Today, this place is known as Saudi Arabia. Prophet Muhammad was raised in a family of traders (Manji 12). At the age of 25 years, Prophet Muhammad was working as a trading agent for an older woman who later got married. Prophet Muhammad lived with his wife without any signs of religious calls. However, at the age of 40 years, Prophet Muhammad began experiencing auditory revelations and visions. In addition, Muhammad was provided with a book by angel Gabriel that he was required to read. At first, Muhammad shared the messa ge obtained from this book with his family and friends (Manji13). His wife Khadija was the first Islam follower and in his mission, she was always with him. After sometime, Muhammad began meeting with people and shared with them the same message. He delivered his message to public sermons denouncing impunity and evil while emphasizing on God’s unity. ... Hijrah period marked the establishment of Islamic era. The period was marked by lots of war and intense conflict in Medina forcing Muhammad and his followers to return to Mecca. Prophet Muhammad died in Medina in 632 (Riddell and Cotterell 3). After his death, the prophet left no other male heir. For this reason, Muslims believed he was the final prophet chosen by Allah and the last of His humanity messenger of peace. As a messenger and a prophet, this meant that prophet Muhammad was never to be worshipped but Allah was. In Arabic, Allah means God almighty and the one and only God. In addition, Allah is referred to in 99 other names and has multiple attributes. For instance, Allah is the merciful, mighty, forgiver, protector, provider and wise. In addition, Allah is loving, all-knowing, the first, last and eternal among others. The word Islam means peace, loyalty, submission, allegiance, obedient, and greeting. During the time of Muhammad, Muslims were made both a religious and polit ical community and the prophet was the head of state. Since Muhammad had authority from God, he managed the Muslim nation and territory. He also passed justice, made peace, collected taxes and led the army. Since there was no definite heir after the death of Mohammad, a suitable successor was chosen for the sake of Islamic unity preservation and the spread of Allah’s word (Bamyer 4). The formation of Islam was within the context of conflict against the Byzantine Empire in the west. Through the acknowledgement of this context, it is possible to understand the reason for the adherent interpretation of Islam today as war against greed, idolatry and immorality and the unification of the world.

Peer response Assignment Example | Topics and Well Written Essays - 250 words - 2

Peer response - Assignment Example Fracking indeed has various perspectives from which it can be viewed. Whereas some see fracking as a very important aspect considering its benefits to both economy and countries, others on the contrary, believe that indeed fracking is unethical, and therefore, should be stopped as it is the greatest contributor towards the frequent occurrences of earthquakes in regions that constantly experience fracking. In spite the truth associated with the argument that fracking is beneficial to the economy, it is argued that such is a one-sided argument and one that lacks any scientific proof. Ideally, fracking involves a number of processes that cause the land and surrounding environment to look ugly. Despite the little truth associated with such a perspective, it is evidently clear that such a point of view is self-centered and attributed to an individual’s opinion and one that lacks any scientific support. A similar perspective is observed on matters pertaining to autism. Evidently, on aspects pertaining to the vaccination of autism, opposing viewpoints have been realized. On the non-scientific approach to the issue, many people have been left scared on the aspects involved in the vaccination process of autism, which has contributed towards the deaths of many children. Provision of autism cure would ideally be the greatest achievement of both researchers and parents towards taking care of

Chitra Banerjee Divakaruni Essay Example for Free

Chitra Banerjee Divakaruni Essay One Amazing Thing by: Chitra Divakaruni. It was first published in the US in voice by Hyperion in 2009 and later published by Penguin books India February 2010. The book also has 240 pages. Chitra B. Divakaiumi is an award winning author poet. Her work is widely known, as she has been published in over 500 magazines. Including Atlantic Monthly and The New Yorker, and her writing has been included in over 50 anthologies. She was born in India and lived there until 1976. At which point she left Calcutta and came to the United States. A young woman Uma, sits in the waiting room of the India passport office. She starts to get very impatient, and she entertains herself by observing the other people in the waiting room with her. Everyone has a reason of why they want to enter into India. In the waiting area their waits an Africa American war veteran Cameron who takes charge, but some are unhappy about it. A Muslim names Tariq. An upper class Caucasian couple that really don’t get alone. A Chinese grandmother with a secret past, and her granddaughter, two visa office workers on the verge of and affair Malathi and Mr. Mangalam, and Uma. As they all set in the waiting area Uma starts to feel a little rumbling and that when the earthquake strikes. When everything settles down, there were some major injuries as well as some minor injuries. People started to go into survival mode, as there is little food to eat. The office starts to flood. So emotional stress seems to much for everyone to handle as they wait to be rescued or die. So that’s when Uma comes up with everyone telling â€Å"One Amazing Thing† , about themselves because she believes that no one can go through life without encountering at least one amazing thing. So everyone begin to tell one amazing thing that they have never told anyone before. With One Amazing Thing everyone discover so much from each other as well as their selves. Elderly Caucasian couple Mr. and Mrs. Pritchet going through a difficult time in their marriage, an Indian-Muslim man Tariq who is disillusioned and angry with the new US, as Chinese lady Jiang who loved and lost a man in her younger days, her granddaughter Lily, a middle age army officer haunted by his guilt Cameron, Malathi a visa officer who is engaging in a affair with her boss, Mr. Mangalam on the verge of an extra-martial affair, an Indian-American student Uma, who is confused by her parents decision to return to Kolkata after living in the US for over 20 years. The plot focuses on a group of strangers who are trapped in a visa office. Most customers even some staff have come and gone, but nine people remain in the office. When an earthquake rips through the afternoon, trapping these nine characters together, their focus first is to survive through the struggle. There is a little food from which came from what people had. The office begins to flood, and everyone starts to panic and get really scared and frustrated. So when the emotional stress seems to be to much for them to bear, the young lady Uma tells them to tell a personal tale about them that no one knows about â€Å"One Amazing Thing†, from what they have been through in life. So all of their stories from the romance, self-discovery, family, etc. This novel really proves the power of a lot of stories and the meaning of us as human’s expressions itself. In my opinion the book â€Å"One Amazing Thing†, is an engaging book because it reinforces the idea that all of us are different and unique in our own ways, and that we all have stories of our lives that may be interesting or not to tell. We all can connect to this book or see one another if we are willing to take the time out to listen to people. Because everyone has a something to tell, and amazing is not always positive words. But describes something that might have changed a life, or the course of someone life. Some of the stories are very heart breaking, but all of them paint a picture in some way of the characters and why they may be who they have become. Thing by: Chitra Divakaruni. It was first published in the US in voice by Hyperion in 2009 and later published by Penguin books India February 2010. The book also has 240 pages. Chitra B. Divakaiumi is an award winning author poet. Her work is widely known, as she has been published in over 500 magazines. Including Atlantic Monthly and The New Yorker, and her writing has been included in over 50 anthologies. She was born in India and lived there until 1976. At which point she left Calcutta and came to the United States. A young woman Uma, sits in the waiting room of the India passport office. She starts to get very impatient, and she entertains herself by observing the other people in the waiting room with her. Everyone has a reason of why they want to enter into India. In the waiting area their waits an Africa American war veteran Cameron who takes charge, but some are unhappy about it. A Muslim names Tariq. An upper class Caucasian couple that really don’t get alone. A Chinese grandmother with a secret past, and her granddaughter, two visa office workers on the verge of and affair Malathi and Mr. Mangalam, and Uma. As they all set in the waiting area Uma starts to feel a little rumbling and that when the earthquake strikes. When everything settles down, there were some major injuries as well as some minor injuries. People started to go into survival mode, as there is little food to eat. The office starts to flood. So emotional stress seems to much for everyone to handle as they wait to be rescued or die. So that’s when Uma comes up with everyone telling â€Å"One Amazing Thing† , about themselves because she believes that no one can go through life without encountering at least one amazing thing. So everyone begin to tell one amazing thing that they have never told anyone before. With One Amazing Thing everyone discover so much from each other as well as their selves. Elderly Caucasian couple Mr. and Mrs. Pritchet going through a difficult time in their marriage, an Indian-Muslim man Tariq who is disillusioned and angry with the new US, as Chinese lady Jiang who loved and lost a man in her younger days, her granddaughter Lily, a middle age army officer haunted by his guilt Cameron, Malathi a visa officer who is engaging in a affair with her boss, Mr. Mangalam on the verge of an extra-martial affair, an Indian-American student Uma, who is confused by her parents decision to return to Kolkata after living in the US for over 20 years. The plot focuses on a group of strangers who are trapped in a visa office. Most customers even some staff have come and gone, but nine people remain in the office. When an earthquake rips through the afternoon, trapping these nine characters together, their focus first is to survive through the struggle. There is a little food from which came from what people had. The office begins to flood, and everyone starts to panic and get really scared and frustrated. So when the emotional stress seems to be to much for them to bear, the young lady Uma tells them to tell a personal tale about them that no one knows about â€Å"One Amazing Thing†, from what they have been through in life. So all of their stories from the romance, self-discovery, family, etc. This novel really proves the power of a lot of stories and the meaning of us as human’s expressions itself. In my opinion the book â€Å"One Amazing Thing†, is an engaging book because it reinforces the idea that all of us are different and unique in our own ways, and that we all have stories of our lives that may be interesting or not to tell. We all can connect to this book or see one another if we are willing to take the time out to listen to people. Because everyone has a something to tell, and amazing is not always positive words. But describes something that might have changed a life, or the course of someone life. Some of the stories are very heart breaking, but all of them paint a picture in some way of the characters and why they may be who they have become.

Day Chocolate Essay Example for Free

Day Chocolate Essay Introduction This paper is dealing with the Day Chocolate Company, which has been first established in 1993 by a co-operative set of Ghanaian farmers. Thanks to liberalization of the cocoa market in Ghana (1990s) the first step of export was made. Because of the fact that farmers benefits were not thought of by the governmental cocoa agent, the need for a cocoa agent became obvious. This is why the Kuapa Koko was established in 1993 to appeal to the benefits for the farmers. With two farmer representatives the Ghanaian farmers agreed to start The Day Chocolate Company in 1995. The farmers aim was to establish a farmer owned organisation, where farmers were able to work together for their own benefit and trading their own cocoa (Divine 2007). On the following pages the consumer segment, at which day Chocolate is aiming at, and the assessment about what makes it a strong brand is given. Furthermore, the general market trends (opportunities and threats) are presented as well as the question of how Day Chocolate should cope with those opportunities and threats. Finally, it will be discussed where Day Chocolate should go when internationalizing to other parts of the world. Case analysis / Consumer segment The consumer segment that Day Chocolate is aiming at is the so-called concerned consumer. These types of consumers find it important where their products come from. They want to buy Fair trade products like Day Chocolate because they find it important that with buying that product, they really help those who have produced it. Fair trade products insure the integrity of these companies, and therefore the concerned consumer is willing to pay more for a certain product, knowing that the producers in third world countries benefit from this. Although the concept is becoming more and more popular, usually (not always) this type of consumer has a fairly good income. This is usually the case, not because people with a less good income are not interested in Fair trade, but because Fair trade products are mostly slightly more expensive than regular products, and people with a lower income need to keep a tight budget. This is probably the reason that Day Chocolate is selling their products in the top UK supermarkets instead of in a lower price range. According to Adams Raisborough (2008), there is a suggestion that customers who are interested in buying fair trade products are located in the so called middle-class. Besides, there seems to be a relation between higher education of buyer and fair trade, by which it can be proposed that middle-class segmented buyers have more money to spend. What makes the Day Chocolate a strong brand In order to say what makes the Day Chocolate a strong brand one has to have a closer look at the companys competitive advantage, their strengths and weaknesses, the customer equity and their marketing mix. Regarding the companys products, its structure and its mission it gets obvious that its competitive advantage is its fair trade mark. In 1970, the fair trade market has been established by Oxfam, a charity organization, and several other European aid organizations. Consumers who are buying fair trade products are seen as being ethical consumers. Ethical customers are concerned with topics like for instance fair labour conditions, environmental care and fair prices (Transfair USA, 2008). Thus, it can be stated that Day Chocolates competitive advantage is its fair trade mark because it addresses a special type of customer who are willing to pay more money for products and are loyal to companies who are selling fair trade products. Moreover, one the one hand, the companys product excellence is one of their main strengths. They pay very much attention to the quality of their products and their suppliers und this is why the customers are very satisfied and are willing to pay more. The customers can be sure that they will buy great quality und thus they are very loyal. However, as far as not loyal customers are concerned, with the fair trade mark comes -in their point of view- the weakness of Divine chocolate. Because of the fact that the company is doing business in a fair way with African cocoa farmers, the price of their products is higher than that of most of their competitors. In addition to that the portfolio of products is not very high and there is little diversity. So the customer has to go to competitors when they wish to buy more diverse fair trade products. Moreover, the company does not operate globally, which can be seen as another weakness of the Day Chocolate Company. It does not reach a wide range of markets, but is mainly operating in the United Kingdom, the United States, Norway, Canada, Sweden and the Netherlands. So one can deduce that they are operating on an international level and they are a potential global. In order to establish their company/ products more global they need to define their competences and find out how they can utilize this internationally As far as customer equity is concerned it can be stated that it consists of value equity, brand equity and relationship equity. Customers who are truly concerned with the issue of fair trade are very likely to stick with Day Chocolate if they are the only fair trade brand in the region or if they offer the best price/quality ratio. Taking a closer look at Day Chocolates marketing mix, following four Ps can be taken into consideration: The product, price, place and promotion. The first product was a classic milk chocolate bar, which is called Divine and was first launched in 1998. Made with 28% cocoa and real cocoa butter it melts in the mouth irresistibly and has been developed to appeal to the British publics palate preference for creamy chocolate (Bized 2010). Following in the footsteps of Divine The Day Chocolate Company has launched the following products: Darkly Divine (launched in 2001 as a response to the growth in the dark chocolate market and gourmet-cooking sector), Divine Mini Eggs (launched in 2002 as a seasonal product) and Dubble (launched in 2000 as a result of a partnership between the Day Chocolate Company and Comic Relief). The Divine range is continually expanding. Christmas products, such as chocolate coins and Christmas tree baubles, were first sold for Christmas 2002 and Divine white chocolate and Divine milk chocolate with hazlenut was on the shelves in time for Fair trade Fortnight during March 2003 (Bized 2010). Regarding the product prices it can be said that the products are not cheap but at the same time they are affordable. The customers are aware of the fact that they pay more for the product having in mind that they support fair trade. Promotion The Day Chocolate Company is a unique North-South partnership leading the way in producing good quality fairly traded chocolate to the British market. The company is working with organisations and individuals in the private, public and voluntary sectors in order to raise awareness of fair trade (Bized 2010). All in all it can be concluded that it is mainly their fair trade brand image that makes the brand a strong one. Further conclusions!! Market trends, threats and opportunities The chocolate industry is becoming more focused on very specific target markets. For instance the premium chocolate is very popular. This means that there are more adult flavours such as chocolate with spices, exotic tastes like mangos etc. Other trends include single origin (chocolate made with cacao exclusively from one region), organic, Fair Trade and sustainable (The Gourmet Retailer, 2008). Another trend in the chocolate industry of recent years is healthy chocolate. Chocolate is healthy when producers add functional healthy ingredients to their product. In this way they promote the benefits of cocoa because cocoa contains antioxidants[1]. This is why dark chocolate has been promoted the most as it contains the most cocoa. Besides, by adding fruits to the chocolate, the product contains more antioxidants (Confectionery News, 2007). Furthermore, a recent trend is that fair-trade products are called ethically sourced. This is the reason why sales of this type of chocolate have increased in the last years due to the fact that buyers and the industry are more concerned about where the ingredients come from. They do not favour the idea of having child labour connected with their chocolate. Regarding the market trends in the chocolate industry, one big opportunity for Day Chocolate could be to make their chocolate not only a fair trade product, but also a premium product. They could expand their market by developing many different original tastes. If there is more choice, it is likely that they will attract more consumers. Another opportunity lies in printing the cacao content on their products for consumers that pay attention on this. Finally, they could start a new, completely organic, product line. Seeing that it is fair trade and organic this would probably be attractive to their current consumer segment, namely the concerned consumer. In addition, another opportunity for the company is the fact that the fair-trade market is growing, which will give Day Chocolate the opportunity to expand not only their portfolio of products, but also to expand geographically. Nevertheless, the growth of the fair trade market also brings threats. More companies learn that some of their consumers are willing to pay more in order to buy fair trade chocolate and this may lead to more competition. Companies that are afraid of losing their customers to fair trade brands develop their own fair trade products. Another important threat is the recent financial crisis. The crisis may affect the sales of fair trade chocolate/ products, because buyers may tend to buy cheaper chocolate instead of expensive fair trade chocolate. Problems and possible future actions Regarding to the screening process of international market segmentation, firms competing internationally should segment markets on the basis of customers and not on basis of countries. Otherise it would ignore the differences between customers within countries. In the priliminary screening process, the following criteria are important to analyse: * Market size growth * Buying power of customers * Culturally similar markets When those critieria are applied to the day chocolat case it can be notified that their market size is an increasing market with the aim to a global market. Aditonally the buying of power of customers is medium/high. Customers who like the product excellence of the fairtrade products are willing to pay more for excellent chocolate. The culturally similarity of the markets are medium/high. Although there are some small differences, the chocolat market is rather similar in the US , UK, Netherlands and Scandinavia. Therefore, the day Chocolate company has potential to be successful in other markets as well. The Day Chocolate company has already a beverage assortment, which could be further extended to vendor machines, e. g. at airports or railway stations. The expansion of the market could be developed by the use of premium chocolate in different tastes. The market trends showed that fruit chocolates have increased popularity. It would be smart to focus on those kind of chocolates. Furthermore, their expansion could be improved by building relationships with retail companies. In addition to their contracts with Starbucks and co-op they should try to establish agreements with other retail channels. In this point of view, global retailers are probably the best alternative, because they would be able to reach more markets through one channel. Aditionally, a new market possibility could be the supply of other fair trade products. Such as the supply of fair traid coffee. Therefore, they have the ability to build a strong brand in fair trade coffee. (Hollensen S. , 2008) One difficulty is the fact that The Day Chocolate Company still is in its embryonic phase to global expansion. At the moment the UK and the USA are their main markets, however, they have potential to expand to other countries worldwide. Moreover, a possible problem is that the number of competitors is increasing because companies are now realizing the growing demand for fair trade chocolate and, as mentioned before, as consequence develop their own fair trade brands. Finally, the fact that due to the financial crisis the demand for the fair trade products is likely to decrease, may postpone the companys global expansion. Because of these occurring difficulties The Day Chocolate Company should try to expand globally. In order to expand the company makes use of an incremental, step-by-step entering strategy. Due to their products they should enter advanced/ developed countries with a high GNP per capita because in these countries the number of customers, who are willing to pay more for fair trade chocolate and can also afford it, is higher. The company should expand incrementally in combination with a resource concentration strategy. Firstly, day Chocolate will have to establish their company in similar markets as the United Kingdom and they have to be sure that those markets customers are keen on buying ethical products. To be able to deal with the increasing number of competitors the company should try to differentiate their products from competing ones. As far as their internationalization is concerned, Day Chocolate should expand to France and Germany because in these countries fair trade sales are very high compared to the rest of the world. While concentrating on these two countries the company should not pay much attention to Japan and the Mediterranean countries because these countries have very low fair trade sales (Datamonitor, 2008). However, the company should be aware of the fact that they probably need to adapt their products to the new markets. New market segments or new countries? Conclusion The Day Chocolate Company needs to create a global marketing plan in order to be able to internationalize. A strategy which combines the step-by-step manner and the resource concentration seems to be most aptly. Besides, they are able to attain the attention of a wider customer base by building relationships with global retailers. When expanding to other countries it would be a good choice to first establish channels in Germany and France as these countries are, according to a recent survey, interested in fair trade products (Datamonitor, 2008). When they keep on examining customer wishes and market information they are probably on a good way on becoming more global. More conclusions!!! Ideas References * Bized, 2010, Visit: The day Chocolate Company, http://www. bized. co. uk/compfact/daychocolate/chocindex. htm, retrieved on the 20th of February 2010. * Confectionery News, 2007, Chocolate Trends 2007, http://www. confectionerynews. com/The-Big-Picture/Chocolate-Trends-2007, retrieved on the 20th of February 2010. * Datamonitor, 2008, Global ethical revolution is driving growth in fair trade sales, http://www. datamonitor. com/store/news/? productid=284FC7F1-DE33-48B1-861A-63F2447B3DE6, retrieved on the 20th of February 2010. * Divine, 2007, http://www. divinechocolate. com/about/story. aspx, retrieved on the 20th of February 2010. * The Gourmet Retailer, 2008, 2008 Trend Report: Premium Chocolate, http://www. gourmetretailer. com/gourmetretailer/content_display/trends/e3ic1abd1883d2156371dc907ea114507eb, retrieved on the 20th of February 2010. * Hollensen Svend, 2008 , essentials of global marketing, Prentice Hall, 4th edition Read more: http://www. americanessays. com/study-aids/free-essays/business/the-day-chocolate-company. php#ixzz2NWHbC7XY.

Competitive Analysis of the Global Toy Industry

Competitive Analysis of the Global Toy Industry Welcome to the colorful world of teddy bears, singing dolls, miniature pianos that play nursery rhymes,  battery operated cars and stuffed dogs and rabbits that walk, talk and shake hands. In one word: Toys. Toy merchants of yester years gave shape to the creative fancies and dreams of young ones and growups  alike. The world market has seen various upheavals due to changing consumer preferences, new fads,  technological advances and trade liberalization. Countries like China have marveled the world with their  low cost manufacturing expertise while at the same time astonished them with their quick imitation,  leading all the gigantic players of the world to act on their feet and formulate strategies to counterattack  them and safeguard their shares. India too has seen a shift in focus from traditional board games like Chess (Shatranj) and Ludo (Paasa)  and sports like cricket to video games and consoles, puzzles, and Monopoly. The traditionally scattered  market has shown signs of consolidation with the entry of companies like Reliance ADAG and Mahindra   Mahindra who are both expanding the market and adding sheen to it. India as a developing economy  is a hotspot for MNCs like Mattel and Hasbro which have now become household names with Barbie  and Monopoly respectively. Big retailers of the world which exclusively cater to this segment include Toys R Us and Hamleys, which  house the best brands of the world and add a service dimension to toys. This document discusses the various classes of toys, the current global scenario for toys, how China has  affected the global toy industry, Indias market and its growth prospects. CATEGORIZATION Toys and games can fall in one of four general categories:- 1. Traditional toys: the category is essentially stagnant with 6296 manufacturers and the growth  being consistent over the years. In 2007 revenues were $21.2.billion (US Market) and $22.3  billion in 2006. It includes: Action Figures Accessories (G.I.Joes) Building Sets (Lego Sets) Dolls (Barbies) Games Puzzles (Monopoly) Plush (Soft Toys) Vehicles (HotWheels) 2. Video games: one of the fastest growing segments with revenues of $18.9 billion which is 51,2%  higher than its 2006 revenues. It includes:- Youth Electronics (PS2, X-Box) Gaming Parlours (Jammin, TimeZone) 3. Casino Games: Slot machines were introduced by casino games manufacturers which have  ultimately benefitted the video game industry. Mostly offered by hotels. Toy Industry : Present and the Future 2010 KJ Somaiya Institute of Management Studies Research 4. Accessories and Others: Includes traditional games including sports items and educational toysfor infants, which is also a fast growing industry GLOBAL SCENARIO The US, China and Japan rank among the top 3 countries in terms of toy sales worldwide; their sales  being US$21.5 billion, US$4.9 billion, and US$5.8 billion respectively. Other countries with a significant  toy sector include Germany, Brazil, France, India, Australia and Canada. Though the recession influenced  toy sales, the sector did witness growth of about 3.6% with sales reaching $80 billion. The worlds largest toy manufacturer and exporter China makes 2/3 of the worlds toys; the export  value of Chinese toys in 2009 was US$7.8 billion. Guangdong, Zhejiang, Shanghai, Jiangsu and Shandong  are the foremost production and export bases for toys in China, accounting for more than 90% of the annual sales of Chinese toys. Chinas plush toys enjoy a large share of the total sales in European American market. But the low  prices are also responsible for a low profit margin. However it entails high labor costs and therefore  manufacturing costs are pretty high. Wooden toys also have a significant share of 10% and plastic toys  are suffering due to the continuously rising price of raw materials, quality and safety issues, etc. Chinas  intellectual toys too have a broad prospect, but relevant standards need to be released so as to  guarantee the healthy development of the market. In 2009, in pace with the upgrading of technology, the toy export industry has witnessed several  changes: developed countries have diverted their demands of toys to toys such as adult toys, high-tech  electric toys, intellectual educational toys from traditional medium and low-grade products like plastic  toys and stuffed toys. Electric toys and online toys produced with high new technology have become  the new development orientation. MAJOR PLAYERS WORLDWIDE Mattel Inc.:- Mattel sells products under a host of well-known brand names such  as Barbie, Matchbox, Fischer Price, and Hot Wheels. Hasbro :- Produces popular board games such as Clue, Monopoly, and Scrabble. Its other  products include the Transformers, Mr. Potato Head, Play Doh as well as licensing agreements  with brands such asStar Wars and Marvel. JAKKS Pacific:- Produces traditional toys under licenses for brands such as Cabbage Patch  Kids, Care Bears, andHannah Montana, a particularly big earner for JAKKS in 2007. Other big names include Russ Berrie and Company, RC2, Action Products International and  Corgi International. Toy Industry : Present and the Future 2010 KJ Somaiya Institute of Management Studies Research Together, Mattel Inc. and Hasbro Inc. have less than 40% of the market, which analysts expect will  grow at a compound rate of roughly 2% annually. INDIAN SCENARIO Currently there are about 800 Indian games and toy manufacturers, exporters and suppliers in the small  sector of India, with a turnover nearly $2.5 billion. This includes manufacturers of electronic toys, soft  toys, educational games, toy cars, rattles, dolls, plush toys, computer games, brain teasers, children  puzzles etc. The total toys and games market in India stands at around Rs.2500 crore, of which Rs.250  crore is in Chennai. Total Market Size: Rs.2500 crore Market Structure: 35% Organized Sector, 65% Unorganised Sector Duties and Taxes: Excise Duty: 12.5% CST(Central Sales Tax): 4% Global Export Contribution: 0.4% Governing Body: Toys Association of India (TAI) Compared to European and American games and toy markets, Indian toy volumes are very low, mainly  because toy buying is a relatively urban phenomenon. Most toy manufacturers are from the  unorganised sector, who in turn sell their toys and games to big traders who market these toys. The total export market for toys and games is around Rs.18 crore. The export volumes are low because  of the quality norms abroad. Manufactured toys for export have to conform to EN 71 norms, the  European standards. The toys have to be non-toxic and safe to sell abroad. $0.00 $5,000.00 $10,000.00 $15,000.00 $20,000.00 $25,000.00 2009 (Million $) 2009 (Million $) Toy Industry : Present and the Future 2010 KJ Somaiya Institute of Management Studies Research Mattel, Lego and Funskool are three of the major players in the Indian toy industry. The toys and games  available in India are a mix of both fun toys and educational tools. They include dolls, puzzles, electronic  games, handmade toys, soft toys, board games, computer games etc. Indian wooden toys are of good  quality and comparable to international standards. The demand for fun toys is greater than that of  educational toys since parents usually prefer buying educational toys for their children. MAJOR INDIAN PLAYERS Zapak Games: It is a part of the Reliance Anil Dhirubhai Ambani Group. Zapak Games operates in two  categories Game CD Toys. It is the leader in Games CD in India. It holds licenses for leading kids  properties from Cartoon Network, Nick, Disney, Pogo etc as well as represents some of the leading  global toy companies in India. The product distribution is across all toy stores and retail chains in the country through the traditional  mom n pop outlets as well as large format key account stores. We had the opportunity of seeing  some of these toys with Landmark outlets across the city. It acts as the merchandizing and licensing arm of Zapak Digital Entertainment Ltd. They are also in an association with Spin Master Ltd. which according  to NPD is the third largest toy company in North America. Mahindra and Mahindra Mom Me outlets across the city are operated by Mahindra which hosts  educational toys for children. It also has the marketing rights for Lego brand of toys and soft toys from  Disney. Some small players are: Prasid Toys Pvt Ltd. Delhi based Little Genius Toys Ltd. (Wooden Educational Toys) Leo Plast EFFECT OF CHINA ON INDIAN TOY INDUSTRY From a 2,000 players a few years ago, barely 800 survive today, it is believed that nearly 40 per cent of  toy companies have shut shop since Chinese products started flooding into the Indian market. Even as  the unorganized sector has been most hit, some of the other players like Mattel, Funskool (joint venture  between MRF Tyres Hasbro Intl), Mahindra Intertrade (markets the Lego and Disney range of toys)  and a few others are forced to fight back with a string of innovative strategies. Compared with an average Rs 35 per kg a Chinese toy maker spends, an Indian manufacturer spends Rs  65 per kilogram for raw materials. High excise duties and taxes including local taxes that vary greatly add  to their woes. Indian companies have not made efforts to market their products in a planned manner and while some  Indian companies are trying to combat the threat from Chinese toys by slashing prices by 10 to 15%;  others are strengthening their distribution skills in smaller towns, where the reach of imported toys is  still limited. INDUSTRY GROWTH Finding the right niche marketing limited to premium segment  Indian consumers are gradually becoming less price sensitive, but are ready to pay for something they  believe has a value proposition. They are realizing that toys help in the all round development of a child. Take the $6-billion Mattel Inc. for instance, after a runaway success with Barbie, Hot Wheels and Fisher  Price, it has introduced the Harry Potter range of toys which caters to the premium segment. With its  Fisher Price range, Mattel is also launching developmental activities along with toys associations,  pediatricians and playschools to educate parents on how toys help the child in understanding the adult  world better. Glocalization Go Global Act Local Almost all major players, have launched an indigenous range of competitively priced soft toys range, to  cater to the growing market. Mahindra Intertrade, for instance, launched Soft Wonders, to cater to the  economically sensitive customers. Similarly, Mattel has launched Star Beanies for Indian market and  Funskool has launched soft toys. Act Faster than the Fastest These players have also spruced up legal activities against spurious products and taken actions to make  the vigilance stricter. They try to bring in designs faster than the Chinese can imitate. For instance, once  the market gets flooded with fake products with Mickey or Donald motives, be it on cups, bottle, plates,  tiffin boxes etc, Mahindra Intertrade would quickly launch Mickey in sportswear and shift the demand. Such marketing skills a range of strong brands have enabled them withstand the Chinese threat and  allowed them to play a crucial role in growing the market. TRENDS Online Buying In 2004 when Mattel registered on Indiatimes, Rediff and Baazee, they discovered that when kids did  not look for toys online, their parents (on the lookout of discounts) did. Also online shopping for toys  accounted for approximately 2% of total sales, that is Rs 21.24 crore in 2005-06. $74.00 $76.00 $78.00 $80.00 $82.00 $84.00 2007 2008 2009 2010 $78.30 $77.50 $80.28 $83.90 USD (Billion) Mall practice Malls are an undisguised blessing for the toy makers. In a mall one gets better shelf space to exhibit  products, and the entire range can be displayed with the add ons which then have a good chance of  being sold to the potential customers. Better sales tracking is another advantage one gets from the  malls. In 2005, Mattel opened two 1,200 sq ft Barbie stores in Mumbai. Approximately 35% of the sales  for Funskool and Mattel take place at the malls. Fusing Entertainment with toys Mattel has produced five movies to promote its existing range of toys, whereas Funskool, its rival has  been using existing movies like batman to create a new range of toys for itself. Toys for Men Mattel has also launched toys for men. It featured models of premium cars including BMW 645 Ci,  Ferrari Scaglietti; and Williams and Renault in its Hotwheels Collectibles; having a price ranging from Rs  999 to Rs 1,999. Changing Demographics Demographic variables like greater divorce rates, due to which kids get two sets of toys; increased  buying power per child due to 2 income families; and increasing involvement of grandparents are all  influencing the growth rate of the toys. THREATS/HINDRANCES/CHALLENGES Raw Material Costs There is a rise in the raw material costs, due to an increase in the manufacturing costs for  traditional toys Manufacturing Costs Most of the traditional toys are made from plastic resin. Petroleum, whose price is continuously increasing, is one  of the main components of plastic resin. This has a negatively impact on the manufacturing costs . Changing Consumer preferences Nowadays, customers prefer electronic games to traditional table games. This trend is not beneficial for  the traditional game equipment manufacturers. Revenue of the Video Games Industries and Traditional Toys ($ in billions) Industry 2004 2005 2006 2007 Video Games 9.9 10.5 12.5 18.9 Traditional Toys 22.4 22.2 22.3 21.2 Toy Industry : Present and the Future 2010 10 KJ Somaiya Institute of Management Studies Research In India, toys arent perceived as developmental. So toy manufacturers take advantage of impulse  purchasing trends and the pester power of kids works in advantage for the toy manufacturers.Indian  parents perceive expenditure on toys as a waste of money. Educational games like Scrabble and toys for  pre-school children and infants are an exception to this belief. Impact of Recession Only when the consumers have enough disposable income to afford luxury goods, they buy toys. A  struggling U.S. housing market, rising oil prices and other factors have limited their income. The toy  industry was also affected by this trend, as its overall revenue decreased. Declining profits due to emphasis on product safety Product safety is another major concern of the toy industry. This was discovered when there was a rising  number of product recalls in the second half of 2007. So while companies put more focus on their higher  margin core brands, the positive margin implications from this shift are offset by quality and safety  testing, as well as higher costs for raw materials.   Competing with large brands Small manufacturers which form the bulk of the unorganized sector are unable to brand and market  their products, which has been a critical disadvantage for them. With a large number of players in the  market, only the international brands have a strong brand recall. Here, manufacturing competency isnt  the real concern since most of the branded players outsource their requirements from Indian  manufacturers. However, lack of marketing acumen and an expertise to cultivate brands is found to be  lacking in most indigenous companies. NEW STRATEGIES Coupling toy launch with movies and vice versa Transformers, Shrek, etc Art Attack a Television series by Hit Entertainment has also entered the toy market. It showcases  Do-It-Yourself arts and crafts in their videos and has now made them available in DVD formats  across major stores. They also merchandise their creative works through books. Cradle catching: In 2005, Mattel entered into a partnership with diaper brand Huggies. By this  move, Mattel targeted its potential audience at their birth place, and even before they were  born at the maternity homes.When the mothers visit the doctor for the first time, they are given  a medical file, as well as well as the information on the different phases that a child is likely to  pass through as it grows which helps in selecting toys from the Fisher Price range that fits each  growth phase ie. crawling, sitting, standing, etc. Within a very short period of time, they claimed to have targeted 600,000 mothers by having tie  ups with 300 pediatricians and 50 gynecologists, across the top six Indian cities. Also, another  innovative technique used by Mattel is a toy directory which is placed in retail outlets that  informs parents about the best toy for each age group. CASE ANALYSIS: TOY INDUSTRY AND BUYING TRENDS CASE #1 HAMLEYS, PHOENIX MILLS MALL, LOWER PAREL, MUMBAI Hamleys, the worlds iconic toy maker from UK, has set up a 21000 sq ft outlet spread over three floors in  Mumbai, its first branch in India through franchise agreement with Reliance Retail. The tie-up is valid for  20 years. The company plans to invest Rs.150 crore in the next seven years to set up 20 more stores  across the country, including tier-II cities. Brands Other than Hamleys own-brand range of toys, imported brands such as Mattel,  Hasbro, Disney, Fisher-Price, Playmobil, Leapfrog, Mecchano ,, Scalextrics, Hornby, Maisto,  Burrago, and Lego are also present in the store. Segments The shop has been divided into segments catering to infants, young boys girls,  teenagers and adults. It has a Barbie Doll House and Barbie Salon and Spa for young girls. Grand Racing Track for RC Cars, London Double Decker Bus, Safari Jeep for young boys. Petals Pods-Play area and Bear Tree House are for infant and pre-school children. Science Molecules, Candy Shop, Disney Castle, Experiential gaming stations, Party rooms  area are for teenagers. A KodakExpress studio has a shop-in-shop strategically placed in the center of the shop to  capture moments at Hamleys. Prices The price varies from as low as Rs 200 to as high as Rs 30,000 depending upon the  requirements and preferences of the customer. Most products are priced on the higher end of  the spectrum keeping the affluent urban folk in mind. Age Group It caters to infants, young boys and girls and teenagers. Board Games are popular  with adults also. MANAGERS VIEWS The shop is one of its kinds in Mumbai, since it is an exclusive toys only outlet with all kinds of toys  under one roof. The trends noted by them are that parents are more interested in buying toys and  games that offer educational value to their children; and children too are more interested in games that  offer intellectual stimulation. Children have moved from the traditional sports of cricket and kabaddi to  gaming consoles and Scrabble. Also adults are a growing segment with them fraying towards traditional  games such as Mancala a French board game, Monopoly, and Poker for which they buy Poker chips.   Workshops are organized to engage the children and merchandise related to new films are sold every  now and then to offer something new to the customers. CUSTOMERS VIEWS Customers always find it a delight to visit Hamleys since it offers so much variety . A few of the  customers just come with their children to provide some entertainment and spend time in the shop.   They appreciate the display of the store and the hygiene maintained in the store. Also, though a few  products were manufactured in China, they didnt mind buying them if they were sold in Hamleys since  the name offered credibility to the product. The range and variety of toys offered by them is also  unmatched. ANALYSIS COMMENTS Layout: The layout of the store is very carefully planned with the store being divided into a girls section  and a boys section. Educational board games, interior decoration kits and games for adults are placed in  the center of the shop. The section which caters to toys for toddlers is separate, and the floor above  only houses gaming consoles, CDs and educational books. Staff: A large number of staff take care of the customers needs and are specially trained to provide entertainment to their most important consumers the kids! The manager himself caters to customers  and entertains all doubts and queries to help them purchase what best suits their requirements. Store Aesthetics and marketing: A lot of effort has been taken to enhance the visual appeal of the store  through visual merchandizing and display walls. Most toys are displayed and little remote controlled  cars and helicopters zoom in and around the store some of them hovering above ones head or new  cars that stick to the walls. The store has a facility for gift wrapping their products, and children and  adults alike are allowed to touch and operate various toys in the store. CASE #2 MOTHER AND ME, R CITY MALL, GHATKOPAR, MUMBAI Mother Me is a Retail store owned by Mahindra Group, which caters to the need of Pregnant women,  infants, toddlers, pre-schoolers learners. Its toys section is huge and is gaining popularity day by day. Following are the details of its toys section:- Brands:-Fischer price, Funskool, Mattel, Lego, Disney V-tech Segments:-Soft toys, Wooden toys, Metal toys Plastic toys Prices:- 350 5000 Age Group 0 9 Yrs MANAGERS VIEWS Following are the points which Store Managers told us. They prefer to keep toys of price range 350 to 5000. Mother and Me use SAP for inventory replenishment. They have kept the toys according to their type (wooden toys at one place soft toys at another  place) rather than age group wise (toys for 0-5 yrs at one place). According to them toys which are able to connect to Indian traditions are highly in demand, eg.   Indian Barbies. Maximum complaints they receive are against Chinese toys and toys manufactured in China. CUSTOMERS VIEWS We received the following feedbacks from customers. Most of them buy toys once a month. Fishcer price is preferred by most of them Most of them prefer plastic toys over metal Wooden toys Most of them are not in favour of Chinese toys despite of the low of cost. Most of them were in favour of interactive toys. Some Customers stressed the need of toys, which inculcate the values necessary in human  society were against the toys, which resembles the violent figures or creature. ANALYSIS COMMENTS From the information provided by store Managers feedbacks from customers we analyzed that the Toy Industry has a bright future ahead but only if it meets the challenge of providing better quality Interactive toys, which not only make learning easy but also help in cultivating the  values necessary in human society. Light weight Plastic toys as they are easy to handle more resistant to wear tear. Value for money, as most of the parents feel toys overly priced. CASE #3 LANDMARK, PHOENIX MILLS MALL, LOWER PAREL, MUMBAI Landmark is a one s top destination for s hopping for toda ys youth. It consists of books, s tationery, garments, merchandize, music, toys, movies, gaming, Technology products and other gift items. Brands -There were various brands present in the store and a few of them are as follows Mattel,  Disney, Fisher-Price, Zapak and Lego are also present in the store. Segments The shop has been divided into segments where toys for infants, young boys and  girls and teenagers can be found. It also has a sports section and board game section. Prices The price varies from as low as Rs 200 to as high as Rs 15,000 depending upon the  requirements and preferences of the customer. The pricing is not exorbitant in Landmark and  most of the toys are priced by keeping the Indian customer in mind. Age Group It caters to infants, young boys and girls and teenagers. Board Games are popular  with adults also. MANAGERS VIEWS Maximum profit is generated from the infants toy section of the store. Selling one item from the infant  section is equivalent to selling 3-4 items from the others sections. Boys prefer hotwheels,cricket kit and  board games and girls are still hooked onto Barbie dolls. Toys are imported from France and Germany  and most of them are made in India. CUSTOMERS VIEWS Toys are ideal gifts for young children and they dont even cost a fortune when it comes to buying them.  Customers dont mind paying for the latest and most popular toys for the kids. ANALYSIS COMMENTS Landmark has been doing a good job of catering to the growing toys market and plans to introduce  more imported toys in future. The Sports goods have a prominent place in Landmark and a lot of  importance has been given to the sports and board game section. FUTURE OF TOYS Predicting the future is never easy. The future of toys specially very difficult to predict . You never know  when an old favorite toy will make a sudden resurgence into the mainstream or a new technology will  bring about yet another revolution in toy technology. Generally speaking, video game consoles would predictably always rise to the top of wish  lists. However, classic toys often come back to take over the lists for top toys. In recent years, weve  seen old comic book characters and action heroes rise to the top again after being in the bottom of  comic bins for years. This years Iron Man 2 brought back an old action favorite, and action figures and  cars are available with an Iron Man twist. Other movies like Transformers have done the same. Old favorite cartoons are also being brought to the forefront. A few years ago, a new Teenage Mutant  Ninja Turtles movie in CGI was released, and this past year, Transformers were all the rage. It wouldnt  surprise me to see He-Man or the Thundercats rise up to become live action or CGI movies themselves. If they do, expect them to corner the toy market after the movie is released. It would also be prudent not to underestimate the power of toy fads that are still going strong even 12  years later. Pokemon first got big in 1998, and has been a huge hit with video games, playing cards, and  T.V. shows ever since. It has been hard for toy manufacturers to dethrone Pokemon, because its such a  huge hit among kids and even young adults who grew up playing the game. Its very possible that it  could last for another 12 years or more. (What do you think of Pokemon? Indeed, toy inventors are pushing the boundaries of artificial intelligence, speech synthesis, wireless  communications, and networked virtual reality. Whats more, they are figuring out how to cram huge  chunks of realistic graphics, dialogue, and sensory cues onto tiny, inexpensive computer chips. The toy  industry is really at the mercy of technology for the limits it can go to. There are only so many  interesting ways for them to reinvent dolls like Mr. Potato Head before kids are no longer  interested. Dolls like Furby were a step in the right direction, but the fad did not last for very  long. Technology working its way into the toys of the future will bring in a wider audience of interested  kids, but it has to be directed at toys that are more than just popular, but are fun too. The future of toys is bright and exciting. Any new innovation could shape the kinds of toys kids play  with. You can bet that the toys of the future are going to have something of the past, however. AUGMENTED REALITY: JET FUEL FOR THE IMAGINATION The future of toys almost undoubtedly belongs to augmented reality. Mattels i-Tags, will use Augmented Reality will be included with action figures the company will make  for Titanic director James Camerons blockbuster film, Avatar. Augmented reality is an overlay of digital information or imagery on top of real-world objects. WIKIPEDIA: Augmented Reality is a field of computer research that deals with the combination of realToy world and computer-generated data (virtual reality), where computer graphics objects are blended into real footage in real time. Think about it. The possibilities are just about endless, and could mean a whole new life for the kinds of  toys that kids at first play with a lot, and then quickly abandon. By embedding special software in imagery that can be placed just about anywhere on a toy, toy makers will now have an incredibly wide  range of virtual things to add to their physical toys. TOYS OF THE FUTURE ELECTRIC POP UP BOOKS Electronic Popables by Jie Qi is a pop-up book that lights up as you interact with it, producing the most  beautiful and dynamic pop-up pages ever. As you begin to go flip through the book open pages, pull  tabs, press pressure points and fold objects different LED lights will blink away on all over the page. They  can be a very efficient means of connecting holistically with the technology savvy kids. HORIZON HYDROCAR TOY The hydro car is a case in point. It does not depend on  batteries or electricity. Surprisingly this car produces  its own energy, running entirely on water. It is not only  Hydrocars functionality, but also its trendy, scientific  design that sets it apart. SCRIBBLE BOTS Scribble Bots is just a concept at the moment, but the idea is that children  can connect with their friends through the official website and share their  drawings, artwork and also the artistic process. The Scribble bots toy can  record and recreate movement so anyone with a scribble bot can download  your drawing and their scribble bot will draw it right for them, then and  there. TOUCH SENSITIVE VIDEO GAMES Usually, a lot of people do not see any fun in playing with  buttons and joysticks. This concept of touch sensitive games  employs touch sensitive silicon that simulates the terrain in a  game, empowering the users to feel their way through. No  major video game manufacturers are using technology quite  like this as of now, but we could see such technology being  used in the future. PARROT AR DRONE QUADRICOPTER Flying helicopter toys meets handheld video games with the Parrot  AR Drone Quadricopter. This isnt a simple chopper that flies around  the corner and crash because you cant see it. This device has a  built-in camera that lets you see everything from an iPhone or other  similar smart phones. Since joysticks are outdated, this toy uses  tilting gyroscopic controls, tilting the AR Drone as you tilt the  iPhone. MINDFLEX Remote controls are a thing of the past. Toys of the  future use mind control! Mindflex is a telekinetic  obstacle course that uses brainwave activity to move a  ball. Were not really sure how it works, but we like to  believe its because we have sci-fi like psychic powers. MILO The next biggest innovation in the toy world does not  belong to the genre of barbies or remote controlled cars or  thought controlled machines, but a virtual best friend. By  late 2010, Microsoft would release a new add-on for the  Xbox that will replace contr

English :: essays papers

English It's easy to tell the difference from right and wrong. It's just like telling the difference between dark and light. But what if you grew up in the dark not knowing there was a light, then you'd only think in one direction. "A long habit of not thinking a thing wrong, gives it a superficial appearance of being right." Society usually thinks in one way, only the intelligent and gifted few can think outside of the box, outside of how society views the world. They follow their hearts to decide what is right and wrong. They come from the dark but are able to see the light. One of the intelligent and gifted few is Jonathan Edwards who wrote Sinners In The Hands Of An Angry God. In this writing he talks about how men are sinners and how they need to start living their lives according to the bible. Sin was always a big issue for the puritans because they believed that men were born sinners. In his Sinners In The Hands Of An Angry God, he mentions "their foot shall slide in due time" meaning that men stand on slippery ground. He describes of the sinner as a loathsome spider suspended by a slender thread over a pit of seething brimstone. And that "there is no fortress that is any defense against the power of god." Meaning that you cannot escape God no matter what you do and that helped awaken the people of the evil things they do. The Colonial Era had views such as that. They lived their lives as well as they can, but they were doing something wrong. They were being hypocrites. They didn't exactly follow through what a good Christian should do. They showed discrimination against other backgrounds, they used suspicion as means of law (an example would be witch craft trials). This train of thought later changed as the Age of Reason came. In the Age of Reason, one of the primary goals was to abolish the ignorance in men. In Benjamin Franklin's the Temple of Learning, he mentions in a dream where people visited the Temple of Learning "that the whole tribe who entered into the temple with me, began to climb the throne; but the work proving troublesome and difficult most of them, they withdrew their hands from the plow, and concentrated themselves to sit at the foot, with madam idleness and her maid ignorance.

Auditor Independence Essay -- Auditing

1. Introduction 1.1 The objectives of audit Under the regulatory, directors are required to produce financial statements annually which give a true and faire view of the affairs of the company and its profit and loss for the period and accountable to shareholders. Auditors have a responsibility to plan and perform the audit to obtain reasonable assurance to the shareholders and other stakeholders of a company on the financial statements. The objective of an audit of financial statements is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, thereby enabling the auditor to express an opinion on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework; and to report on the financial statements, and communicate as required by the HKSAs, in accordance with the auditor’s findings. (HKSA 200.11) In order to maintain the auditor’s integrity, objectivity, and independence, auditing standards have been issued for measuring of the quality of the auditor’s performance. Auditing standards are general guidelines to aid auditors in fulfilling their professional responsibilities in the audit of financial statements. They include consideration of professional qualities such as competence and independence, reporting requirements and evidence. (Soltani, 2007) 1.2 Code of ethics for auditor independence Audit independence is a very critical component if a business wishes to have an audit function that can add value to the organization. The audit report and opinion must be free of any bias or influence if the integrity of the audit process is to be valued and... ...to aid auditors in fraud detection and increase emphasis on professional skepticism. 4. Recommendations Since professional independence and skepticism are more important for an auditors on audit engagement. It is recommended that auditors should enhance professional skepticism to the financial statement audit. It includes increase the ability of auditor to detect fraud by training, enhancing ability through experience and paying more effort in audit plan. In order to enhance auditor independence, directors should disclose the audit and non-audit services fee to investors and let investors to evaluate the independence of the auditor. By separating of auditor duties for audit and non-audit services, it can be help to maintain auditor independence. By enhancing the internal control system and corporate governance, it can be help to reduce fraud risk.

South-Western Federal Taxation: Comprehensive Volume

CHAPTER 21 PARTNERSHIPS SOLUTIONS TO PROBLEM MATERIALS | | | | |Status: | Q/P | |Question/ |Learning | | |Present |in Prior | |Problem |Objective |Topic | |Edition |Edition | | | | | | | | | | | | LO 1Partnership definitionNew 2LO 2General partnership versus LLCNew 3LO 1Check-the-box regulationsNew 4LO 2Partnership tax reportingModified1 5LO 2Analysis of Income scheduleModified1 6LO 2Partnership Schedule M-3New 7LO 3Special allocationsNew 8LO 3Capital accountsNew 9LO 3Inside versus outside basisNew 10LO 4Comparison of corporate and partnershipUnchanged2 treatment 11LO 4Application of  § 721New 12LO 4Exceptions to  § 721New 13LO 4Disguised sale issue recognitionUnchanged4 14LO 5Initial costs of a partnershipNew 15LO 6Cash accounting method for partnershipsNew 16LO 7Economic effect testUnchanged8 7LO 8Adjustments to partner’s basisUnchanged9 18LO 8Liability allocations to basisUnchanged10 19LO 10Guaranteed paymentsNew 20LO 8, 9, 14Partnership advantages and disadvantagesUn changed12 21LO 4, 6, 7,Partnership formation and operationsUnchanged13 8, 9, 10issues 22LO 11Basis in distributed propertyUnchanged14 23LO 11Distribution ordering rules; liquidatingNew versus nonliquidating distributions 24LO 11Conceptual: tax results of distributionsNew 25LO 12Ramifications of sale of a partnership interestNew Instructor: For difficulty, timing, and assessment information about each item, see p. 1-4. | | | | |Status: | Q/P | |Question/ |Learning | | |Present |in Prior | |Problem |Objective |Topic | |Edition |Edition | | | | | | | | | | | | 6LO 4Formation of partnership; inside and basisUnchanged15 27LO 4, 14Formation of partnership; inside and outsideUnchanged16 outside basis 28LO 4Contribution of various properties onUnchanged17 formation of a partnership; basis and depreciation 29LO 4Formation of a partnershipNew 30LO 4Formation of a partnershipNew 31LO 4, 8, 14Basis of property received as gift; receipt Modified19 of interest for services 32LO 8, 14Planning fo r service interestsNw 33LO 4, 10, 14Disguised sale versus distributionUnchanged20 *34LO 4, 7Treatment of contributed propertyNew 5LO 5Tax issues related to formation ofUnchanged5 partnership 36LO 4, 5, 6,Preparation of initial LLC tax returnUnchanged6 37LO 6Accounting methodsUnchanged7 *38LO 5Definition of organization costs;Unchanged21 amortization of organization costs *39LO 6Computation of partnership’s required taxUnchanged24 year under the least aggregate deferral method 40LO 4, 7Date basis of partner’s interest; gain on saleUnchanged25 of contributed land with precontribution built-in gain 41LO 7Date basis of partner’s interest; loss on saleUnchanged26 of contributed land *42LO 7, 8Computation of partner’s outside basis atModified27 beginning and end of year when several transactions took place *43LO 7, 8Partnership income; partner’s basis;Modified28 separately stated items; guaranteed payments 44LO 7, 8, Partnership income; partner’s basis; lossModified29 10,limitations; guaranteed payments 45LO 4, 7, 8Partnership’s income and separately statedUnchanged30 items; partner’s basis and amount at risk 6LO 4, 7, 8Same as Problem 45 for an LLCModified31 47LO 7, 8, 9,Basis and loss limitationsUnchanged32 *48LO 4, 7, 8,Allocations under  § 704(b)Modified33 9 49LO 7, 8, 9Allocation of gain under  § 704(b)Modified33 50LO 7, 8, 9Allocations to partner; basis in interest; Unchanged34 loss limitations 51LO 8Allocation of recourse debtUnchanged35 52LO 4, 8Sharing recourse debt for basis purposesUnchanged36 Instructor: For difficulty, timing, and assessment information about each item, see p. 21-4. | | | |Status: | Q/P | |Question/ |Learning | | |Present |in Prior | |Problem |Objective |Topic | |Edition |Edition | | | | | | | | | | | | 3LO 8, 9, 14Basis calculations and loss limitationsUnchanged11 54LO 8, 9Loss disallowance under  § 704(d),  § 465,Unchanged37 and  § 469 55LO 7, 10Timing of recognition of guaranteedModified38 payments 56LO 10Timing of recognition of guaranteed New payments, continued *57LO 7, 10Comparison of C corporation salary versus Unchanged39 partnership guaranteed payment 58LO 10Disallowed  § 267 loss from sale of propertyUnchanged40 to partnership by partner; conversion f capital gain to ordinary income from sale of investment property to partnership by partner 59LO 11Nonliquidating distribution; basis of New assets distributed (limited); partner’s outside basis 60LO 11Nonliquidating distribution; basis of New assets distributed (limited); partner’s outside basis *61LO 11Nonliquidating distributions; amount andModified43 nature of gain or loss; basis of assets distributed; partner’s outside basis *62LO 11Allocation of basis to multiple assetsUnchanged44 distributed 3LO 11Effect of change in partner’s share of New liabilities; nonliquidating versus liquidating distributions 64LO 11Results of various liquidating distributionsUnch anged45 65LO 12Sale of partnership interest; amount andModified46 nature of gain or loss; basis of new partner’s interest; election to adjust basis of partnership property *The solution to this problem is available on a transparency master. Instructor: For difficulty, timing, and assessment information about each item, see p. 21-4. | | | |Status: | |Q/P | | Research | | | |Present | |In Prior | |Problem | |Topic | |Edition | |Edition | | | | | | | | | 1Economic effect allocationsUnchanged1 2Allocation of liabilitiesNew Internet activityUnchanged3 | | |Est'd | |Assessment Information | | |Question/ | |completion |AICPA* | AACSB* | |Problem |Difficulty |time |Core Comp | Core Comp | | | | | | | | | | 2 |Easy | |10 |FN-Reporting |Analytic | | 3 | |Easy | |10 |FN-Reporting |Analytic | | 4 | |Easy | |10 |FN-Reporting |Analytic | | 5 | |Medium | |10 |FN-Reporting |Analytic | | 6 | |Medium | |10 |FN-Reporting |Analytic | | 7 | |Easy | |10 |FN-Reporting |Analytic | | 8 | |Medium | | 10 |FN-Reporting |Analytic | | 9 | |Easy | |10 |FN-Reporting |Analytic | | 10 | |Medium | |10 |FN-Reporting |Analytic | | 11 | |Easy | |10 |FN-Reporting |Analytic | | 12 | |Medium | |10 |FN-Reporting |Analytic | | 13 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | Reflective Thinking | | 14 | |Medium | |10 |FN-Reporting |Analytic | Reflective Thinking | | 15 | |Medium | |10 |FN-Reporting |Analytic | | 16 | |Easy | |10 |FN-Reporting |Analytic | | 17 | |Easy | |10 |FN-Measurement |Analytic | | 18 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | | 19 | |Easy | |10 |FN-Reporting Analytic | | 20 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | | 21 | |Medium | |15 |FN-Reporting |Analytic | | 22 | |Easy | |10 |FN-Measurement | FN-Reporting |Analytic | | 23 | |Easy | | 5 |FN-Measurement | FN-Reporting |Analytic | | 24 | |Easy | | 5 |FN-Measurement | FN-Reporting |Analytic | Reflective Thinking | | 25 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | Reflective Thinking | | 26 | |Easy | |10 |FN-Measurement | FN-Reporting |Analytic | | 27 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | Reflective Thinking | | 28 | |Easy | |10 |FN-Measurement | FN-Reporting |Analytic | | 29 | |Easy | |10 |FN-Measurement | FN-Reporting |Analytic | | 30 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | | 31 | |Hard | |15 |FN-Measurement | FN-Reporting |Analytic | Reflective Thinking | | | |*Instructor: See the Introduction to this supplement for a discussion of using AICPA and AACSB core competencies in assessment. | | 32 | |Medium | |10 |FN-Reporting |Analytic | Reflective Thinking | | 33 | |Medium | |15 |FN-Measurement | FN-Reporting |Analytic | Reflective Thinking | | 34 | |Medium | |15 |FN-Measurement | FN-Reporting |Analytic | | 35 | |Medium | |10 |FN-Measurement | FN-Reporting Analytic | Reflective Thinking | | 36 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | Reflective Thinking | | 37 | |Medium | |10 |FN-Repo rting |Analytic | | 38 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | | 39 | |Medium | |10 |FN-Reporting |Analytic | | 40 | |Medium | |15 |FN-Measurement | FN-Reporting |Analytic | | 41 | |Medium | |15 |FN-Measurement | FN-Reporting |Analytic | | 42 | |Medium | |20 |FN-Measurement | FN-Reporting |Analytic | | 43 | |Hard | |15 |FN-Measurement | FN-Reporting |Analytic | | 44 | |Hard | |15 |FN-Measurement | FN-Reporting |Analytic | | 45 | |Medium | |15 |FN-Measurement | FN-Reporting |Analytic | | 46 | |Medium | |15 |FN-Measurement | FN-Reporting |Analytic | | 47 | |Medium | |15 |FN-Measurement | FN-Reporting |Analytic | | 48 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | Reflective Thinking | | 49 | |Hard | |10 |FN-Measurement FN-Reporting |Analytic | | 50 | |Hard | |15 |FN-Measurement | FN-Reporting |Communication | Analytic | | 51 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | | 52 | |Hard | |15 |FN-Measurement | FN-Reporting |Communication | Analy tic | | 53 | |Medium | |15 |FN-Measurement | FN-Reporting |Analytic | Reflective Thinking | | 54 | |Hard | |15 |FN-Measurement | FN-Reporting |Communication | Analytic | | 55 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | | | |*Instructor: See the Introduction to this supplement for a discussion of using AICPA and AACSB core competencies in assessment. | 56 | |Medium | |10 |FN-Reporting |Analytic | | 57 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | | 58 | |Easy | |10 |FN-Measurement | FN-Reporting |Analytic | | 59 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | | 60 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | | 61 | |Medi m | |10 |FN-Measurement | FN-Reporting |Analytic | | 62 | |Medium | |10 |FN-Measurement | FN-Reporting |Analytic | | 63 | |Medium | | 5 |FN-Measurement | FN-Reporting |Analytic | | 64 | |Medium | |15 |FN-Measurement | FN-Reporting |Analytic | | 65 | |Medium | |15 |FN-Measurement | FN-Reporting |Analytic | | | |*I nstructor: See the Introduction to this supplement for a discussion of using AICPA and AACSB core competencies in assessment. | CHECK FIGURES 26. a. $0; $0. 26. b. $200,000. 26. c. $100,000. 26. d. $100,000 basis in property. 27. a. ($15,000) realized; $0 recognized. 27. b. $60,000. 27. c. $75,000. 27. d. $75,000. 27. e. Sell and contribute cash. 28. a. $20,000 on land; $60,000 on equipment. 28. b. No gain under  § 721. 28. c. Carol $70,000; Connie $30,000. 28. d. $40,000 basis in land; $30,000 basis in equipment. 28. e. Inside = Outside = $100,000. 28. f. Partnership continues Connie’s depreciation schedule. 29.No gain or loss to Justin, Tiffany, or partnership; Justin’s basis $85,000; Tiffany’s basis $125,000; partnership’s basis in land $65,000; partnership steps into Tiffany’s shoes for depreciation. 30. Tiffany recognizes $25,000 loss on sale; basis is $100,000. Partnership must spend additional $10,000 to acquire assets. 31. a. $0. 31. b. $ 50,000. 31. c. $25,000 ordinary income. 31. d. $75,000. 32. b. Contribute ‘‘property’’ of ‘‘permits’’ and ‘‘development plan’’ completed before contribution. 33. a. Distribution. 33. b. $0 gain or loss. 33. c. $50,000. 33. d. Disguised sale. 33. e. $16,667. 33. f. $66,667. 34. a. Rachel $360,000; Barry $600,000. 34. b. 170,000 ordinary income. 34. c. $100,000 capital loss and $20,000 ordinary loss. 35. Organization costs $10,000 (deducted); start-up costs $60,000 (amortized over 180 months); property acquisition costs $24,000 (added to property basis; depreciated as newly acquired asset); syndication costs $1 million (nondeductible). 36. Issues include partnership year end; partnership accounting method; treatment of initial costs; partners’ bases in LLC interests; LLC’s basis in property received on formation; interests issued in exchange for services; built-in gain on later sale of land. 37 . BR can use cash, accrual, or hybrid method in 2008, 2009, and 2010.In 2011 and later years, BR may no longer use cash method. 38. a. Organizational costs: $8,000; syndication costs $10,000. 38. b. $5,000 deduction plus $50 amortization of organization costs. 38. c. 180-month amortization. 39. January 31. 40. a. $75,000. 40. b. Five years. 40. c. $15,000 gain. 41. a. $36,000 loss; $30,000 to Reece and remaining $6,000 allocated equally among partners. 42. a. $160,000. 42. b. $230,000. 43. a. $42,000; qualified dividends $4,000. 43. b. $29,000 basis. 43. c. $22,000 basis. 44. a. ($18,000); qualified dividends $4,000. 44. b. $0 basis; $8,000 loss deductible currently, $1,000 suspended. 44. c. $0 basis; $1,000 loss allowed; $8,000 suspended. 45. a. 175,000 (Celeste); $125,000 (Ernestine). 45. b. Ordinary income $80,000; qualifying dividend $3,000; tax-exempt interest $1,000; charitable contribution $500; distribution to Celeste $20,000. 45. c. $283,500 basis and at-risk amount. 46. a. Accounts payable are nonrecourse for LLC. 46. b. $283,500 basis; $233,500 amount at risk. 47. a. $24,000. 47. b. $4,000. 47. c. $0. 47. d. $4,000. 47. e. Don can contribute capital or partnership can incur debt. 48. a. Year 1—Fred $49,600; Manuel $78,400. Year 2—Fred $960; Manuel $75,840. 48. b. Yes. 49. a. Gain $43,200 allocated equally. Basis—Fred $22,560, Manuel $97,440. 49. b. Fred’s cash $22,560; Manuel’s cash $97,440. 49. c.Tax savings now or cash later; not both. 50. Deduct $54,000 of loss unless basis increased before year-end. 51. Melinda $6,000; Gabe $6,000; Pat $18,000. 52. Paul $160,000; Anna $80,000. 53. a. Basis adjustment rules per Figure 21. 3; then loss limitation rules [ § 704(d),  §Ã‚  465, then  § 469]. 53. b. $5,000 gain, $0 basis. 53. c. No loss deduction. 53. d. Make distribution next year so Brad can deduct loss this year. Partnership can incur additional debt. 54. $48,000 deducted. $14,000 suspended— § 704(d ); $8,000 suspended— § 469. 55. a. $70,000 in 2010, incl. guaranteed payment. 55. b. $25,000 in 2010. 56. $70,000. 57. a. $55,000 salary in 2010. 57. b. 0 in 2010; $40,000 partnership income and $60,000 guaranteed payment in 2011. 58. a. $0. 58. b. $10,000. 58. c. $80,000 gain; may be ordinary. 59. a. $0. 59. b. $0. 59. c. Inventory $60,000; land $75,000; partnership interest $185,000. 60. a. $0. 60. b. $0. 60. c. Account receivable $0; land $20,000; partnership interest $0. 61. a. $15,000 gain and basis in partnership interest $0; partnership $0 gain. 61. b. Land $30,000 basis and basis in partnership $10,000; partnership $0 gain. 61. c. No gain or loss; land basis $12,000; basis in partnership interest $0. 61. d. $10,000 gain; $0 basis in inventory; $0 basis in partnership interest. 62. a. No gain or loss. 62. b. 6,000 in item 1 and $3,000 in item 2. 63. a. Inventory basis $10,000; basis in partnership interest $20,000. 63. b. Recognized loss $20,000; Inventory basis $10, 000. 64. a. $15,000 capital gain. 64. b. No gain or loss; $40,000 basis. 64. c. No gain or loss; inventory $10,000; capital asset $22,000. 64. d. $0 basis in accounts receivable; $60,000 capital loss. 65. a. $100,000 realized. 65. b. $30,000 ordinary income. 65. c. $20,000 capital gain. 65. d. $100,000 basis. DISCUSSION QUESTIONS 1. A partnership is an association of two or more persons (including individuals, trusts, estates, corporations, other partnerships, etc. ) formed to carry on a trade or business.Each partner contributes money, property, labor or skill, and each expects to share in profits and losses. The entity must not otherwise be classified as a corporation, trust, or estate. p. 21-3 2. In a general partnership, all partners are â€Å"general partners† who are jointly and severally liable for partnership debts, including liabilities arising from tort or malpractice judgments against the general partnership. A general partner bears liability for these debts even i f the partner was not personally involved in the malpractice. A limited liability company has the corporate attribute of limited liability for the owners (called â€Å"members† in an LLC), but an LLC is treated as a partnership for tax purposes.In a properly-structured LLC, none of the members are personally liable for entity debts. State law governs the types of entities that may be established as LLCs. Most states permit capital-intensive entities to use this form of business, but they do not permit personal-service entities to be treated as LLCs. pp. 21-3 and 21-4 3. By default, a newly-formed noncorporate entity with two more owners is treated as a partnership under the check-the-box Regulations. The entity may â€Å"check-the-box† on Form 8832 to elect, instead, to be taxed as a corporation. p. 21-4 4. A partnership is not a tax-paying entity; however, it must still file a tax return.The partnership reports its income and expenses on Form 1065. Partnership income is comprised of income from operations and separately stated income and expenses. The income and expenses from operating activities are reported on Page 1 of the Form 1065. A separately stated item is any item (income or expense) that could differently affect the tax liabilities of different partners. Separately stated items are reported in the partnership return on Schedule  K. The partners must pay the tax on the partnership income. The partnership’s income and separately stated items are reported to each partner on a Schedule K-1 prepared for that partner. pp. 21-4 to 21-7 5.Because it is not a tax-paying entity, a partnership does not report â€Å"taxable income. † However, it must still reconcile between the tax return and the books. The partnership prepares the Analysis of Net Income (Loss) (page 5 of Form 1065) to determine what might be called the partnership’s â€Å"taxable income equivalent. † Certain amounts shown on Schedule K are netted and entered on the Net Income (loss) line of this Analysis. This â€Å"taxable income equivalent† is reconciled to book income on Schedule M-1 or Schedule M-3 of the partnership’s return. This is similar to the corporate reconciliation (also on Schedule M-1 or M-3) in Form 1120; however, for a partnership, the â€Å"taxable† amount must be derived as described above. pp. 1-5 to 21-7 6. Schedule M-3 is filed (in lieu of Schedule M-1) by â€Å"larger† partnerships to report a detailed reconciliation between the partnership’s book and tax income. In addition, these partnerships must file Schedule C to answer various questions regarding the partnership’s changes of ownership, reporting, or other activities during the year. This reconciliation is designed to highlight differences between GAAP basis reporting (per an SEC filing or an audited financial statement) and tax basis income. A partnership is generally required to file Schedule M-3 if it has $10 million or more in assets or $35 million or more in total receipts.In addition, it must file Schedule M-3 if any partner owns a 50%-or-greater interest in partnership profits, losses, or capital, and if that partner meets either the $10 million (assets) or $35 million (receipts) threshold. pp. 21-6 and 21-7 7. A special allocation is an amount that is allocated differently from the general profit or loss sharing ratios specified in the partnership agreement. For pre-contribution gain or loss property, special allocations are required to be made to eventually bring the partners’ tax bases in line with their book-value capital accounts. Orange, LLC, can offer a preferential special allocation of profits and cash flows to Green to compensate the company for use of its capital.The LLC can offer a guaranteed payment (rather than a special allocation) to Rose for her managerial time and expertise. Upon sale of the appreciated property contributed by Rose,  §Ã‚  704(c) require s the precontribution gain to be allocated to her. pp. 21-8, 21-24, and 21-36 8. A partner’s capital account is a mechanical determination of the partner’s financial interest in the partnership, as determined using one of several possible accounting methods, including tax basis, GAAP,  §Ã‚  704(b) book basis, or some other method defined by the partnership. The capital account reflects contributions and distributions of cash or other property to or from the partner.In addition, it accumulates the partner’s share of increases and decreases from operations, including amounts that are otherwise tax-exempt or nondeductible. Even if capital accounts are determined on a tax basis, a partner’s capital account usually will differ from the partner’s basis in the partnership interest because (among other reasons) the capital account does not include the partner’s share of partnership liabilities. p. 21-8 9. The â€Å"inside basis† is the part nership’s tax basis for the assets it owns. The â€Å"outside basis† is a given partner’s tax basis in the partnership interest. On formation of a partnership, the total of all partners’ outside bases will equal the partnership’s inside bases of all of its assets. p. 21-8 10.As a general rule, both  §Ã‚ §Ã‚  721 and 351 provide that no gain or loss is recognized when property is transferred on the formation of a partnership or corporation. However,  §Ã‚  351 applies only if those persons transferring property to a corporation are in control of the corporation immediately after the exchange, whereas  §Ã‚  721 does not include a control requirement. Section 721 not only applies to initial transfers in forming the partnership but to all subsequent contributions from any partner. Similarities exist between  §Ã‚ §Ã‚  721 and 351 in that these nonrecognition provisions do not apply to all transfers made by the owners. Under  §Ã‚  721, the contr ibutor must receive an interest in the partnership, while under  §Ã‚  351, the transferor must receive stock in the corporation.Under both  §Ã‚ §Ã‚  721 and 351, if the transfer of property involves the receipt of money or other consideration, the transaction may be deemed a sale or exchange rather than a tax-free transfer. pp. 21-9 to 21-11, and Concept Summary 21. 1 11. In general, on formation of a partnership, no gain or loss will be recognized by either the partnership or the contributing partners [ §Ã‚  721]. Bobbi will not recognize the realized gain related to the land she is contributing. Similarly, BC will not recognize a gain or loss. Bobbi’s basis in the land will carry over to BC. Bobbi’s basis in BC will be a substituted basis equal to her basis in the contributed land. If the land Bobbi contributes is ever sold by BC, the precontribution gain must be allocated to Bobbi [ §Ã‚  704(c)]. pp. 21-9, 21-10, and Example 24 12.Under the general rule of à ‚ §Ã‚  721(a), no gain or loss is recognized on formation of a partnership. This rule does not apply in at least four situations. Realized gain or loss is recognized if: †¢ The entity is an investment partnership, †¢ The partner received the interest in the partnership in exchange for services, †¢ The transaction can be viewed as an exchange of properties (e. g. , properties are contributed to the partnership and soon thereafter are distributed to other partners with the intent of taking advantage of the basis rules of  §Ã‚  731 for distributed property), and †¢ The transaction can be viewed as a disguised sale of the property from the partner to the partnership or one of the other partners. pp. 21-10 to 21-11 13. a.If a contribution of property to a partnership is followed shortly thereafter by a distribution of cash to that partner, the IRS may recharacterize the transactions as a disguised sale of the property. In this case, Gerald would be treated as contri buting 75% of the property and selling the remaining 25% for cash [$60,000 sales price (distribution amount) ? $240,000 property value]. He would recognize $30,000 of gain on the deemed disguised sale [$60,000 deemed selling price less $30,000 basis ($120,000 ? 25%)]. b. The parties could use any of several techniques to minimize the possibility that the IRS will recharacterize the transaction as a sale. First, the distribution could be proportionate to all the partners. Second, the contribution should not be contingent on the later distribution of cash.Third, even if cash is required to ensure the contribution, the distribution should not be contingent on the partnership achieving a certain level of profits. Fourth, the distribution could be made in stages over a longer (say, three-year) time period. Here, it may be viewed as being a reasonable return of Gerald’s capital (e. g. , each $20,000 payment represents a 10% return on his capital). Finally, the distribution could be deferred until two years following the capital contribution. pp. 21-11, 21-12, and Example 12 14. In its initial year, a partnership will typically incur organizational and startup expenses. If property is contributed to the partnership, the entity may incur costs related to transferring the title of the property.If the partnership interests are sold to investors, the partnership might incur syndication costs. Once the partnership has started business, it will incur ordinary and necessary business expenses; these expenses are deductible under  §Ã‚  162. Organizational and startup costs are generally deductible to the extent of the first $5,000 of such costs. This deductible amount is reduced to the extent the total of such costs (in the respective category) exceeds $50,000. Any portion that is not deductible is amortized over 180 months, beginning with the month in which the partnership begins business. The cost of selling the partnership interests to investors is treated as a sy ndication cost under  §Ã‚  709. Such expenses are not deductible.The cost of transferring title to an asset is treated as an acquisition cost related to the asset; this amount will be treated as a new asset placed in service when incurred, and it will be depreciated using the same method and life as the underlying property. (If this underlying property was contributed by a partner, that property will be depreciated by continuing the depreciation schedule used by the contributing partner. The partnership â€Å"steps into the shoes† of the contributing partner in calculating depreciation deductions. ) pp. 21-15 and 21-16 15. A partnership may generally use the cash method of accounting unless it is a tax shelter or has one or more partners that are subchapter C corporations.The C corporation partner will not preclude use of the cash method of accounting if that corporation is a qualified personal service corporation or if it is engaged in the farming business. In addition, a subchapter C corporate partner will not preclude use of the cash method if the partnership has never had â€Å"average annual gross receipts† in excess of $5 million, for any year beginning in 1986 or later years. Average annual gross receipts is calculated by averaging the taxpayer’s gross receipts for the three years prior to the tax year in question or for the period of the taxpayer’s existence, if shorter. p. 21-17 16. The three rules of the economic effect test are designed to ensure that a partner bears the economic burden of a loss or deduction allocation and receives the economic benefit of an income or gain allocation.By increasing the partner’s capital account by the gain or income allocated to the partner, the rule ensures that a positive capital account partner will receive an allocation of assets equal to the balance in the partner’s capital account when the partner’s interest is eventually liquidated. If the partner has a negat ive capital account, an allocation of gain or income to the partner reduces the amount of the negative capital account and, therefore, the amount of the deficit capital contribution that is required from the partner upon liquidation. In short, a dollar of income or gain increases the partner’s capital account by a dollar and, everything being equal, the partner should receive a dollar more upon liquidation (or contribute a dollar less to restore a deficit in the capital account). Allocations of losses and deductions affect the partner in the opposite manner as income or gain.Therefore, the allocation of a dollar of loss or deduction reduces the partner’s capital account by a dollar and, everything being equal, reduces the amount the partner will receive upon liquidation (or increases by a dollar the partner’s deficit capital restoration requirement). p. 21-23 and Example 22 17. Under  § 722, a partner’s initial basis is determined by reference to the am ount of money and the basis of other property contributed to the partnership. This basis is increased by any gain recognized under  § 721(b) and the partner’s share of any partnership liabilities. Basis is decreased by any partner liabilities assumed by the partnership.Basis is also adjusted to reflect the effect of partnership operations: it is increased by the partner’s share of taxable and nontaxable income and is decreased by the partner’s share of loss and nondeductible/noncapitalizable expenses. Certain adjustments for depletion are also made. Finally, a partner’s basis is increased by additional contributions to the partnership and by increases in the partner’s share of partnership debt. Basis is decreased by distributions from the partnership and decreases in the partner’s share of partnership debt. A partner’s basis is adjusted any time it may be necessary to determine the basis for the partnership interest, for example, wh en a distribution was made during the taxable year, or at the end of a year in which a loss arises. A partner’s basis may never be reduced below zero (i. e. , no negative basis). Figure 21. 3 18.The partnership’s debts are allocated to the partners in determining the partners’ bases in their partnership interests. Any increase in partnership liabilities is treated as a cash contribution to the partnership, thereby increasing the partners’ bases. Any decrease in partnership liabilities is treated as a distribution from the partnership to the partners and decreases their bases. Partnership debt is allocated differently depending on whether it is recourse to the partners or nonrecourse. Recourse debt is allocated in accordance with the constructive liquidation scenario. Under this test, all partnership assets are deemed to be worthless.The losses that would arise are allocated to the partners according to the partnership agreement. The losses would create ne gative capital accounts for at least some of the partners; those partners are deemed to contribute that amount of cash (equal to the negative capital balance) to the partnership in settlement of the obligation to repay partnership’s recourse liabilities. The amount of that deemed capital contribution is the amount of the partner’s share of the recourse liabilities. Nonrecourse debt is allocated in a three-tier system. First, allocate any gain related to assets where the debt exceeds the partnership’s â€Å"book† basis in the assets. This is called minimum gain and is allocated according to the partnership agreement.Next, any debt related to any remaining precontribution gain is allocated to the partner who contributed the encumbered property to the partnership. Finally, any remaining debt is allocated in accordance with the method specified in the partnership agreement. pp. 21-28 and 21-29 19. A guaranteed payment is an amount paid to a partner for the pe rformance of services or for the use of the partner’s capital. These payments are in the nature of salary or interest payments that are made by other entities, but the tax treatment of guaranteed payments is somewhat different. Like payments made by other entities, guaranteed payments are generally deductible by the partnership, and can result in a loss to the entity. Guaranteed payments are taxed as ordinary income to the recipient partner.Unlike salary and interest payments made by other entities, guaranteed payments are treated as if they were received by the partner on the last day of the partnership’s tax year. If the partner and partnership have different tax years, there will be a deferral between the time the partnership claims the deduction and the time the partner reports the income. Guaranteed payments are treated as self-employment income by the recipient partner. pp. 21-36 and 21-37 20. A partnership is advantageous under any of the following conditions: à ¢â‚¬ ¢ Special allocations of income, expenses, cash flows, etc. can be made by the entity owners. †¢ The entity has taxable losses which the owners can utilize on their individual tax returns. †¢ The partnership generates net passive income which offsets passive losses of the owners. The entity operated as a Subchapter C corporation and would be required to report taxable income since other means of reducing such income (e. g. , interest, rents, salaries to owners) have been maximized and are not available. †¢ The entity cannot qualify under the requirements for a Subchapter S election (e. g. , too many shareholders, nonqualifying shareholders, more than one outstanding class of stock, etc. ) †¢ The entity will exist for only a short period of time and, if a corporation, its liquidation will result in a large tax due to the appreciation in its assets. †¢ Several other advantages may exist. The disadvantages of the partnership entity form arise when: The ent ity income is significant and will be taxed at higher individual rates than if accumulated in the corporation. †¢ The entity is in a high risk business and the owners require protection from personal liability. An LLC or LLP may be useful in such situations. pp. 21-51, 21-52, and Concept Summary 21. 5 21. a. False. The entity is required to file an information return, generally by the fifteenth day of the fourth month after the end of the partnership’s tax year. The return includes data concerning the partners’ allocable shares of the financial activities of the partnership. In addition, property, sales, and employment tax returns are likely to be required of the entity. p. 21-6 b. False.Generally no gain or loss is recognized, but there are exceptions to  § 721, including those pertaining to the receipt of boot, the contribution of property with liabilities in excess of basis, and the receipt of a partnership interest in exchange for services provided to the pa rtnership. pp. 21-10 and 21-11 c. False. The partner recognizes ordinary income, to the extent of the fair market value of the partnership interest that is received in this manner. p. 21-11 d. False. If property which was inventory in the hands of the transferor partner is sold by the partnership within five years of the date it was contributed, any gain will be treated as ordinary income, regardless of the manner in which the property was held by the partnership. p. 21-13 e. False. The partnership chooses tax accounting periods and methods that are applied to all of the partners. p. 21-15 f. False.An alternative tax year will never be required by the IRS; instead, the partnership must request permission from the IRS and may have to illustrate to the IRS that it has a business purpose for using an alternative tax year. p. 21-19 g. True. Built-in losses, as well as gains, must be allocated to the contributing partner when recognized by the partnership. pp. 21-24 and 21-25 h. True. pp . 21-27 to 21-29 i. True. p. 21-33 j. False. Such losses can be deducted by partners who hold a 50% or less ownership interest in the entity. p. 21-38 22. Generally, a taxable gain arises on a proportionate distribution only when cash is received in excess of the distributee partner’s basis in the partnership interest. As a relief of liabilities is treated as a distribution of cash, a decrease in a partner’s share of liabilities may also trigger a taxable gain.Similarly, certain distributions of marketable securities are treated as distributions of cash and can result in gain recognition. Other transactions, such as disguised sales and distributions related to precontribution gain property, might also result in gain recognition by the distributee partner. pp. 21-41 and Examples 51, 52 and 57 23. In either a current or liquidating distribution, assets are distributed in the following order: 1)  cash, 2) ordinary-income producing (hot) assets, and 3) other assets. Cash . In either a current or liquidating distribution, a cash distribution in excess of the partner’s basis triggers a gain (typically a capital gain). Cash (and certain items treated as cash) is the only asset for which a distribution might trigger a gain. Hot assets.In either a current or liquidating distribution, the partner’s basis in distributed hot assets equals the lesser of the partner’s basis in the partnership interest (after any cash distributions) or the partnership’s basis in the hot asset. In a liquidating distribution, the partner can claim a loss equal to any basis remaining after these hot assets are distributed, if no â€Å"other assets† will be distributed. In a current distribution, no loss can be deducted. Other assets. In a current distribution, â€Å"other assets† are treated similarly to hot assets: the basis equals the lesser of the partner’s basis in the partnership interest (after any cash and hot asset distribu tions) or the partnership’s basis in the asset. In a liquidating distribution, â€Å"other assets† absorb any remaining basis in the partnership interest after cash and hot assets are accounted for.For either a current or liquidating distribution, if â€Å"other assets† are distributed, the partner cannot recognize a loss. Examples 54, 57, 59, and 60 24. The partnership distribution rules reflect the aggregate theory of taxation. With respect to property ownership, the partner can be seen as an extension of the partnership. Ownership of property by the partner generally produces the same result as ownership by the partnership (and vice versa). The result is a carryover basis in distributed property with a preservation of the character of distributed property. The distribution rules operate with the goal of deferring tax on the distribution, while preserving the ordinary income potential.No gain or loss is recognized if an adjustment can be made to the basis of t he distributed property, without reducing the amount of ordinary income the partner will eventually recognize. So, gain is recognized if cash distributions exceed basis, because there is no asset for which the basis can be reduced. The basis of hot assets can be decreased, but not increased, in a distribution because the inherent ordinary income cannot be decreased. Similarly, loss can be recognized if only cash and â€Å"hot† assets are received in a liquidating distribution, because the basis in these types of assets cannot be increased to absorb the partner’s remaining basis. pp. 21-40 and 21-41 25.Jody must determine her gain or loss on the sale of the partnership interest. If the partnership owns â€Å"hot assets,† she must recognize ordinary income or loss to the extent of her proportionate share of the built-in appreciation or depreciation on these assets. Her remaining gain or loss is adjusted by the ordinary income or loss recognized. If the partnership ’s assets are substantially appreciated, Bill may wish to ask the partnership to make a  § 754 election so he can be allocated a step-up in basis. If the partnership has a substantial built-in loss (assets are depreciated by more than $250,000), the partnership may be required to make a step-down adjustment with respect to Bill’s acquired interest.If Jody sells more than a 50% interest in the partnership, or Bill is the sole remaining member of a two-owner partnership, the entity will terminate on the date the purchase is finalized. This may result in a loss of a favorable tax year or accounting method by the partnership. pp. 21-47 to 21-49 PROBLEMS 26. a. Under  § 721, neither the partnership nor the partners recognizes any gain on formation of the entity. b. Chip will take a cash basis of $200,000 in his partnership interest. c. Marty will take a substituted basis of $100,000 in his partnership interest ($100,000 basis in the property contributed to the entity). d. The partnership will take a carryover basis in the assets it receives ($200,000 basis in cash, and $100,000 basis in property). Example 14 27. a. Liz has a realized loss of $15,000.However,  § 721 contains the general rule that no gain or loss is recognized to a partnership or any of its partners upon the contribution of money or other property in exchange for a capital interest. Since Liz is subject to this rule, she does not recognize the loss. p. 21-10 b. $60,000. Section 722 provides that the basis of a partner’s interest acquired by a contribution of property, including money, is the amount of such money and the adjusted basis of such property to the contributing partner at the time of the contribution. p. 21-12 c. $75,000, the adjusted basis of the contributed property ( § 722). p. 21-12 d. $75,000. Under  § 723, the basis of property to the entity is the adjusted basis of such property to the contributing partner at the time of the contribution, increased by a ny  §Ã‚  721(b) gain recognized by such partner.Since no such gain (and no loss) was recognized by Liz on the contribution, the partnership takes a carryover basis in the property. Example 14 e. A more efficient tax result may arise if Liz sells the property to an unrelated party for $60,000, recognizes the $15,000 loss on the property, and contributes $60,000 cash to the partnership. The partnership could then use the $60,000 to acquire similar property, in which it would take a $60,000 basis. Example 9 28. a. Carol realizes a gain of $20,000 on contribution of the land. Connie realizes a gain of $60,000 on contribution of the equipment. The partnership realizes a gain equal to the value of the property it receives (it has a $0 basis in the partnership interests it issues). b.Under  § 721, neither the partnership nor either of the partners recognizes any gain on formation of the entity. Example 8 c. Carol will take a substituted basis of $70,000 in her partnership interest ($30 ,000 cash plus $40,000 basis in land). Connie will take a substituted basis of $30,000 in her partnership interest ($30,000 basis in the equipment). Example 14 d. The partnership will take a carryover basis in all the assets it receives ($30,000 basis in cash, $40,000 basis in land, and $30,000 basis in equipment). p. 21-12 e. The partners’ outside bases in their partnership interests total $100,000: Carol’s basis of $70,000 plus Connie’s basis of $30,000.This is the same as the partnership’s basis in assets of $100,000 ($30,000 cash plus $40,000 land plus $30,000 equipment). p. 21-12 f. The partnership will ‘‘step into Connie’s shoes† in determining its depreciation expense. It will use the remaining depreciable life and the same depreciation rates Connie would have used. p. 21-12 29. Both partners are contributing assets valued at $100,000. One property has a built-in gain; the other has a built-in loss. Justin and Tiffany recog nize no gain or loss on contribution of their respective properties to the partnership. Justin takes a substituted basis of $85,000 in his partnership interest ($20,000 cash plus $65,000 basis in land). The partnership takes a $65,000 carryover basis in the contributed land.The â€Å"built-in gain† on the land must be tracked and allocated to Justin if the property is ever sold at a gain [ §Ã‚  704(c)]. Section 721 applies to losses as well as gains and prevents Tiffany from recognizing the $25,000 loss on her contribution to the partnership. She will have a $125,000 basis in a partnership interest worth $100,000. Similarly, the partnership will have a $125,000 basis in assets valued at $100,000. The partnership will â€Å"step into Tiffany’s shoes† in determining depreciation deductions. As this is â€Å"built-in loss† property,  §Ã‚  704(c) applies, and amounts related to the built-in loss must be allocated to Tiffany. Depreciation must be allocated in accordance with Reg.  §Ã‚  1. 704-3 (not discussed in detail in this chapter). Basically, a large portion of the depreciation deductions would be allocated to Tiffany to reduce the difference between her basis and the fair market value of her partnership interest as quickly as possible. (If the property basis was less than its fair market value, depreciation would first be allocated to the other partner. )] pp. 21-10, 21-12, 21-13, 21-24, and Example 9 30. Tiffany has a taxable transaction when she sells the assets to a third party. She receives cash of $100,000 in exchange for assets with a basis of $125,000 and recognizes a $25,000 loss. (Based on the facts presented, the loss will likely be a  §Ã‚  1231 loss. ) When Tiffany contributes the $100,000 cash to the partnership, she recognizes no gain or loss and has a basis of $100,000 in her partnership interest.The partnership, of course, has a basis of $100,000 in the cash it receives. The partnership will need to use Tiffa ny’s $100,000 cash contribution, plus $10,000 of the cash Justin contributed to acquire new equivalent assets for $110,000. In this situation, the tax result to Tiffany is improved (she can recognize her $25,000 realized loss), but there is a $10,000 economic cost to the partnership when it acquires equivalent assets for $110,000 instead of $100,000. pp. 21-10, 21-12, 21-13, 21-24, and Example 8 31. a. None. Under  § 721, neither the partnership nor any of the partners recognize gain on contribution of property to a partnership in exchange for a partnership interest. b. $50,000.Ben’s basis in his partnership interest will equal the basis he held in the property he inherited from his father. The basis a beneficiary takes in property received from an estate generally equals the fair market value of the asset at the date of death or at the alternate valuation date (6 months later) if available and elected. p. 21-26 c. Beth will recognize $25,000 of ordinary income. The fair market value of Beth’s 50% partnership interest is $75,000. Since Beth will contribute only $50,000 of property, the difference between the amount contributed and the value of the interest will be treated as being for services rendered to the partnership. Services do not constitute ‘‘property’’ for purposes of  § 721 nonrecognition treatment. p. 21-11 d.Beth’s basis in her partnership interest will be $75,000 [$50,000 (cash contributed) + $25,000 (the amount of ordinary income recognized for services rendered to the partnership)]. Example 13 32. a. Assets Basis    FMV Cash $ 50,000 $ 50,000 Land50,00075,000 Land improvements 25,000 25,000 Total assets$125,000$150,000 Ben’s capital $ 50,000 $ 75,000 Beth’s capital 75,000 75,000 Total capital$125,000$150,000 Note that the partnership will capitalize the $25,000 deemed payment for Beth’s services, since the services relate to a capitalizable expenditure. The partners hip will reflect this $25,000 in ‘‘cost of lots sold† as the development lots are sold. b.Beth could prepare a development plan and secure zoning permits before the partnership is formed. She could then contribute these plans and permits to the partnership in addition to the $50,000 cash. Since a completed plan would be considered â€Å"property,† no portion of her partnership interest would be received in exchange for services if this were done. The entire transaction would be considered under  § 721. p. 21-12 33. a. Under general guidelines, the $50,000 would be treated as a distribution, which, since it does not exceed Ben’s basis in his interest, would not be taxable. The distribution would reduce Ben’s basis in his partnership interest by $50,000. b. None. c.The partnership would take a basis of $50,000 in the land, Ben’s basis in the property at the time of the contribution. d. The IRS might assert that the contribution and distr ibution transactions were in effect a disguised sale of two-thirds ($50,000 distribution ? $75,000 fair market value) of the property contributed by Ben to the partnership. e. $16,667. Under disguised sale treatment, Ben will recognize gain on a sale of two-thirds of his interest in the land. He will be deemed to have received $50,000 in exchange for two-thirds of the land, with a basis of $33,333 ($50,000 basis ? 2/3). Total gain recognized, then, is $16,667. f. $66,667. The partnership will be deemed to have paid $50,000 for two-thirds of the land.The remaining one-third is deemed to be contributed to the partnership, and the partnership will take a carryover basis of $16,667 in this parcel. The partnership’s total basis is $66,667 ($50,000 + $16,667). Figure 21. 3 and Example 12 34. a. The partners’ initial bases in their partnership interests are the same amounts as their bases in the contributed property ( § 722). Rachel’s basis $360,000 Barry’s ba sis 600,000 b. The 2011 sale results in ordinary income of $170,000 to the partnership. 2011 sale: Selling price$530,000 Basis (360,000) Gain$170,000 The gain is ordinary income, since the land is held as inventory by the partnership. The land was a capital asset to Rachel, but no code provision allows treatment of the gain based on Rachel’s use rather than the partnership’s use. c.The 2012 sale results in a $100,000 capital loss and a $20,000 ordinary ( § 1231) loss. 2012 sale: Selling price$480,000 Basis (600,000) Loss ($120,000) As a sale of inventory (determined at the partnership level), the sale in 2012 of the land contributed by Barry would normally result in an ordinary ( §Ã‚  1231) loss. However,  §Ã‚  724 overrides the usual treatment. The character of the precontribution loss, instead, is determined based on the character of the property in Barry’s hands. This sale was within five years of the capital contribution date, so the loss is capital in nature to the extent of the built-in loss at the contribution date, which is: FMV at contribution$500,000 Basis (600,000) Capital loss ($100,000)The remaining $20,000 loss in 2012 is an ordinary ( § 1231) loss because the character of the post-contribution loss is based on the partnership’s ownership and use of the property as inventory. d. If the property Barry contributed was sold by the partnership in 2017, the entire $120,000 loss would be treated as an ordinary ( §Ã‚  1231) loss. A sale in 2017 would not be within five years of the contribution date, so the character of the loss would be determined solely by reference to the character of the asset to the partnership. Since the land is inventory to the partnership, the loss in 2017 would be ordinary. pp. 21-12, 21-13, and Examples 16 and 17 35. P5 Partnership, Ltd. has incurred costs for organizing ($10,000), starting the business ($60,000), transferring of property ($24,000), and securing investors ($1  million) f or the partnership. The organizational costs are treated under  § 709. Under this section, the first $5,000 of such expenses are deducted (provided the total is less than $50,000); the remainder is amortized over 180 months. The startup costs are treated under  § 195. Under this section, also, the first $5,000 of such expenses are deducted, provided the total is less than $50,000. If costs exceed $50,000, the $5,000 deduction is phased out, dollar for dollar, by the amount of costs in excess of $50,000. When total costs equal or exceed $55,000 (as in this situation), no portion of the expense is currently deductible.Instead, the full amount is amortized over 180 months. The $24,000 transfer tax is treated as a cost of acquiring the land and is added to the partnership’s basis in the land. The $1 million of brokerage commissions is treated as a syndication cost of the partnership. Under  §709, these costs cannot be deducted. pp. 21-15 to 21-17 36. The SB Limited Liabilit y Company must address the following issues in preparing its initial tax return: †¢ What year-end must the LLC use? Unless an election is made under  § 444, the LLC must use the year-end determined under the least aggregate deferral method. There is no majority member, and the principal members do not have the same year-end.Under the least aggregate deferral method, the LLC would use a July year-end since this would result in only a 5-month deferral of income to Block. Example 19 †¢ What method of accounting will the LLC use? Even though both members are Subchapter C corporations, the LLC may elect the cash method of accounting if average annual gross receipts are less than $5 million for the year. The LLC, then, could select either the cash, accrual, or a hybrid method of accounting. p. 21-17 †¢ How are the initial legal fees treated? Can the first $5,000 of organizational expenditures be immediately expensed and the balance amortized over a period of 180 months or more? Would any amounts be treated as startup expenditures under  § 195? p. 21-15 The members’ initial bases in their LLC interests must be determined. The bases will be the substituted basis of the assets contributed to the LLC ($650,000 for Block, and $550,000 for Strauss). Example 14 †¢ The LLC’s basis in the property received from the members must be determined, and any cost recovery related to contributed property calculated. The LLC takes a basis of $650,000 in the equipment and steps into Block’s shoes in determining cost recovery allowances. Since the licenses and drawings are contributed rather than sold, the LLC takes a $0 basis in these assets, with no cost recovery possible. The LLC takes a $50,000 carryover basis in the land and a $500,000 basis in the cash. p. 21-12 The LLC must determine whether any portion of either of the LLC interests is issued in exchange for services. The equipment, cash, and land are considered â€Å"property† for purposes of  § 721. The building permits and architectural designs also are considered property under  § 721, even though they are intangible assets. Therefore, none of the LLC interests is issued in exchange for services. Example 13 †¢ Treatment of expenses incurred during the initial period of operations must be considered. The legal fees are organization costs and their tax treatment was previously noted. The construction costs must be capitalized until such time as the building is placed in service. The office expense may have to be capitalized under either (1)  § 195, if it is etermined that the business is still in the startup stage, or (2)  § 263A if it is determined the costs relate to â€Å"production† of the rental property. If neither of these provisions applies, the office expense is currently deductible. pp. 21-15 and 21-16 †¢ If the land is later sold, a portion of the gain must be allocated to Strauss, since the gain was â€Å"built-inâ €  at the time the property was contributed. Note that if the equipment had been appreciated, depreciation allocations would have to take the precontribution gain into account. Allocation of precontribution deductions related to depreciable property are not covered in this text. p. 21-24 37. In 2008, 2009, and 2010, BR can use either the cash, accrual, or a hybrid method of accounting.BR has at least one Subchapter C corporation as a partner, but BR’s average annual gross receipts did not exceed $5,000,000 in either 2008 or 2009. (BR’s average annual gross receipts were $4,600,000 for 2008 and $4,800,000 for 2009. ) In 2011, BR must change to the accrual method of accounting. BR has at least one Subchapter C corporation as a partner during that year, and BR’s average annual gross receipts for the preceding y