Chapter 6 Blog

http://www.financialpost.com/news-sectors/story.html?id=1631822

Summary

This article reports on Chryslers recent drop in sales in the month of May compared to last year. Sales dropped a whopping 55% compared to the same month as last year. Chrysler filed for creditor protection in the United States on April 30. As a result of filing for creditor protection, its North American assembly lines are shut down as the court process continues. Cash is at a shortage for Chrysler and they are desperately finding ways to increase sales. On May 7, Chrysler introduced a new “pay break” program which offers to cover up to $500 of a buyer’s monthly loan payments for three months. This new “pay break” program has not made a significant difference in sales yet.

Connections

I connected this article to the internal control part of the chapter. With assets definitely declining for Chrysler, Management needs to make some key decisions on how to handle this problem, as Management is responsible for safeguarding the organizations assets. Properly handling Chrysler’s assets is very important if Chrysler wants to continue operating. Cash is a major problem for Chrysler as they are in a shortage of it. New policies and procedures are already being implemented by the Chrysler Management to protect their assets. The Chrysler Management needs to efficiently utilize the major assets of Chrysler to succeed these rough times.

Personal Reflection

I think that the next couple of months are very important for Chrysler. If sales do not increase for Chrysler, they could possible lose their assets depending on how much debt they are in. Managing is going to be critical if Chrysler wants to continue operating. Keeping expenses at a minimum and saving cash is what Chrysler will need to do. I feel that in the near future Chrysler financial position will improve slightly. I feel that their financial position will improve because they will have an increase in sales. I think that the consumer confidence in the automobile industry will rise somewhat, which will gain some much needed customers for Chrysler.

Chapter 5 Blog- Canada's airlines struggle to fill their planes

http://www.canada.com/business/fp/Canada+airlines+
struggle+fill+their+planes/1469384/story.html

Summary

The article reports that Canada’s largest airlines are struggling to fill their planes with passengers. Air Canada and WestJet Airlines are seeing a decrease in passengers compared to last year. The declines in demand for air travel have caused the load percentage of Air Canada to drop by a whooping 13.5 percent, and WestJet Airlines to drop by 8.6 percent. The weak economy and the low consumer confidence are definitely the major causes for the decline in passengers. In order to cope with the decline in passengers, Air Canada is reducing capacity in 65 percent of their airplanes. However, WestJet Airlines has not taken any measures to deal with their slump in passengers.

Connection

Chapter five stresses that the cash flow of a company must be healthy in order for the company to continue operating. The decline in passengers has definitely caused the cash flow in Air Canada and WestJet Airlines to decrease. If things continue to run downhill, Air Canada and WestJet Airlines will have trouble covering their everyday expenses. This will ultimately lead to major problems in the future for both companies if they do not find a solution. Air Canada is trying to solve their problem by reducing the capacity in their airplanes to fill them up, but only time will tell if it will work.

Personal Reflection

I feel that Air Canada and WestJet Airlines need to desperately find a way to increase their cash flow. With the weak economy, they cannot depend solely on their ticket sales to keep them operating. They must keep their expense levels at a minimum in order to survive. The future is critical for these companies and every decision they make is very important. Air Canada is reducing capacity in their airplanes, but WestJet Airlines has not decided to do anything yet. In order for WestJet Airlines to continue operating, I feel that they must make a quick and intelligent move.

Chapter 4 Blog- Vehicle warranty scam picks up speed

http://autos.canada.com/news/story.html?id=17fbd1fe-af08-4e73-8c74-f22d8e40ee69

Summary

My blog is about a recent vehicle warranty scam that is rapidly picking up momentum in Canada. A number of Canadian citizens are receiving phone calls from a U.S. firm representing itself as “Warranty Center” which is offering vehicle warranty. An automated message has been dialling up cell phone numbers and land lines, telling people that their warranty will expire in two days and they have to make an immediate credit card payment over the phone. The scam claims that the customer’s vehicle information was provided by the vehicle manufacturer, so the customer believes that the information provided by the scam is official.

Connections

I connected this article to the warranty service part of the chapter. Almost all automotive companies such as Ford, GM, and Honda offer warranty services to their customers to gain revenue. However, with this recent warranty scam customers are going to be hesitant to buy vehicle warranty. With the downturn in the economy as of late, automotive companies cannot afford their customers to pass on buying vehicle warranty from them. At the end of the accounting cycle, automotive companies are going to see less revenue coming in due to this scam. With big automotive companies like GM and Chrysler already going bankrupt in the States, what can we expect to happen to the automotive companies in Canada with all these scams surfacing and hurting our economy?

Personal Reflection

I think that this warranty scam occurred at the worst time possible. Automotive companies currently are seeing a decrease in revenue from previous years, and this certainly does not help to increase revenue. If things do not get better for automotive companies, it seems that Canada’s automotive companies may end up like the States. I think that the government may need to bailout some major automotive companies in the future with all these troubles surfacing for them. Automotive companies may begin to cut employees, reduce salaries, and even decrease research to continue operating. I think that the government needs to crack down on these scams because they are affecting our economy as well as our citizens.

Harman Basra

Financial Accounting

Block B

Chapter 3 Blog- Ownership group for Major League Soccer in Vancouver reconsiders franchise fee

http://www.vancouversun.com/Sports/Ownership+group+Major+League+Soccer+Vancouver+reconsiders+franchise/1023715/story.html


Summary
This article is on the Vancouver Whitecaps attempting to enter Major League Soccer by 2011. Major League Soccer is demanding a huge 40 million dollar transaction fee to allow the Vancouver Whitecaps to join the organization. Six other cities are also negotiating to bring a Major League Soccer team to their city, so the price is expected to rise. The Vancouver Whitecaps have already agreed to pay BC place 350 million dollars to renovate their stadium to build a soccer field. With 350 million dollars secured to the renovations, the Vancouver Whitecaps are not sure they have the money to enter the Major League Soccer Organization.


Connections
I connected this article to the transaction part of the chapter. The 40 million dollar transaction fee which the Vancouver Whitecaps are planning to pay is going to take plenty of thought. The Vancouver Whitecaps need to make sure they have enough money left over from the renovations at BC place. Chapter three stresses that when making a major transaction, the business should take their time to decide whether or not the transaction is going to benefit them. In this case, the Vancouver Whitecaps should decide if they are going to be making more revenue by entering Major League Soccer. The Vancouver Whitecaps should also make sure they will have enough money to make the 40 million dollar transaction. Chapter three also states that a major transaction requires the services of a professional accountant, to check if the GAAPS and the appropriate accounting methods have been followed. A professional accountant will definitely be needed for this particular transaction to make sure everything stays legal.


Personal Reflection
I think that the Vancouver Whitecaps should make the transaction fee to enter the Major League Soccer Organization. I think they should because soccer is a growing sport in Vancouver, and by the Vancouver Whitecaps entering the Major League Soccer they will attract more spectators. People will get to watch superstars like David Beckham, Freddie Edu, and Dwyane De Rosario as they all play for Major League Soccer. These superstars are bound to attract spectators and will definitely boost revenue through ticket sales. I think that the Vancouver Whitecaps will gain more revenue by entering the Major League Soccer, rather than just staying in their low profile league.

Chapter 2 Blog

http://www.canada.com/vancouversun/news/business/story.html?id=1c317af2-9537-4de6-8721-875c1c0c7d49

Summary
This article reports that the declining prices in British Columbia’s high priced Vancouver, Kelowna, and Fraser Valley housing markets has helped to decrease the average cost of Canadian homes by 6.2 percent, compared to September of last year. British Columbia’s housing market is expected to decline even more due to the low consumer confidence. The Canadian Real Estate Association suggests that the low consumer confidence could be related to the elimination of mortgage-insurance availability for buyers with less than a five-percent down payment and 40-year amortizations. The Canada Mortgage and Housing Contractors estimates that 15,663 new units of residential units have been built since the beginning of the year, a five percent increase from the amount built at this point last year.

Connections
I connected this article to the balance sheet part of the chapter. With the housing market declining, assets in a balance sheet will be declining as a result. The decrease in the assets will lead to the equity section of a balance sheet to decline. Residential properties that were listed at high prices in the balance sheet are going to have to be cut down to lower prices. Cutting down these prices will result in the property account in the assets to decrease. The equity section of the balance sheet will decrease based on how much money the property account declined by. Real estate businesses will be affected the most because they own a large number of residential units. Owners of these real estate businesses will have a hard time observing comparative balance sheets as their equity and assets have decreased quite a bit.



Personal Reflection
With the housing market dropping in Canada, residential units are dropping in price also. I predict that in two to three months, consumer confidence is going to be high again when potential buyers see these low prices and want to take advantage of these deals. The high consumer confidence will cause the housing market to increase once again. At this point in time, I would recommend buying a house if you have the money saved up. Waiting for lower prices could actually backfire and cause you to lose money, as prices will eventually rise again. I predict real estate businesses are going to wait for the consumer confidence to get high again, and then start selling their residential units.


Harman Basra
Financial Accounting 12
Block A

Harman Basra's Blog

Chapter 1 Article Response

http://www.canada.com/vancouversun/news/business/story.html?id=59f73d28-2e36-46de-a39d-15e5fc40c8f9

Summary

The article I read is about the recent slump in the stock market and how it is affecting those who invest in and sell stocks. The article describes how the stock market is unpredictable and how stocks are “going up, down, and flipping around.” The article explains that the foreign market companies’ stocks are rising, such as Coca-Cola and Colgate Palmolive. Many inexperienced investors are going to want to jump into the stock market with buying shares, which could definitely hurt them financially but could also result in positive outcomes. The article reports that buying stocks at low prices and holding them is the smartest thing to do at this particular moment. In the near future, the stocks will increase in value and this will result in profit.

Connection

I connected this news article to the topic about shareholders and investors in the financial accounting textbook. Investors and shareholders are always looking to buy, sell, or trade shares to enhance their financial position. Especially with the recent stock market slump, investors are eagerly searching for the right stocks to invest in. Currently, buying, selling, and trading shares are crucial moves for investors and shareholders due to the unpredictable stock market. Investors need to make responsible decisions whether or not the business they decide to invest in is going to succeed or fail. The recent stock market slump is going to benefit some investors and shareholders who invest in the right corporations. With that being said, some shareholders and investors will be negatively affected by investing in the wrong corporations.

Personal Reflection

I feel that investors should carefully research the corporations that they are thinking about investing in. With the recent stock market slump, many inexperienced investors are going to jump into the market and make key investments that could make them or break them financially. These inexperienced investors should cautiously decide to invest in corporations rather than just playing the role of a kid in a candy store. I feel that investors should make investments with a reasonable amount of money depending on their financial position. Inexperienced investors should not take any chances and make risky investments that could kill them financially. I feel as though this stock market slump is going to help many investors by giving them valuable experience and more knowledge in the world of stock exchange.

-H.Basra