Professor Elam

San Antonio Shark Theft Solved!

Tuesday July 31, 2018

Police returned Miss Helen, a stolen shark, to the SA Aquarium this week.

The theft  was apparently arranged for a marine animal collector here in SA.

Managerial Accounting Goes to the Movies

Weekend July 29 2018

Every few years someone discovers that popular movies can be made inexpensively.

In 1969 there was Easy Rider

 

Here is a list of movies that did.

The king of the low budget film makers is Roger Corman

who has been at it for decades.

Jason Blum is disrupting Hollywood

In fact while Eastwood is popular with his fans, he is really popular with his studio. Only  one film failed to make money.He always comes in on time and on budget. Every Which Way but Loose at the time was the second biggest grossing movie Universal had after Jaws. Themovie co starred an orangutang.

Revenue Recognition

WedJuly 26 2018

New Revenue Recognition Guidance

The new revenue recognition guidance has created new challenges for many companies with diversified service offerings. One of the most significant challenges has been determining how to group promised goods and services into performance obligations.  This determination can be highly subjective and complex and the conclusions reached can have a significant impact on how revenue is recognized. Because significant judgment is required, a thorough analysis should be performed and all considerations should be well documented.    The complexity around how to bundle or un-bundle promises into performance obligations includes determining at what point the customer can benefit from the services provided.  For example, certain pre-production services may be performed before goods or services can be transferred to the customer.  These pre-production services generally should not be considered a performance obligation as they don’t provide value to the customer on their own.   Additional complexity includes determining if a good or service is separate within the terms of the customer agreement.  This assessment can result in seemingly similar transactions being accounted for differently within the same company.  For example, product sales and labor services are typically two separate performance obligations; however if the customer agreement is for auto-repairs, the products and labor would likely be combined into a single performance obligation.   The identification of performance obligations is critical to properly applying the new revenue recognition guidance.  The assessment may be time-consuming and may require significant judgment; however, if the assessment is not done correctly, revenue could be recognized improperly.  Jared Benedict Managing Partner of Technical Accounting Aventine Hill Partners

Ferrari Valuations Dictated by Mood

Tuesday July 24, 2018

Bob Prechter  began formalizing about socionomics  in 1985  to explain human valuations on everything from music to movies to art to stocks. Today’s WSJ offers an interesting way to explain socionomics to the novice and I will do just that in class.

Pages B1 and B2 relate that Sergio Marchionne is suddenly out of the picture due to an undisclosed medical problem. He dismissed Luca Cordero di Montezemolo over whether to take Ferrari public and to ramp up annual production from  7,000 to 10,00. Production is now 8.400 which is a rounding error for any of the international firms. By the way,Sergio is a Chartered Public Accountant in Canada, the Equivalent of out CPA.

But here it gets interesting. FCAU Fiat Chrysler has a market cap of 29 billion. Ferrari RACE has a market cap of 25 billion, almost as high as Fiat but for selling a smidgeon of autos. Yes RACE has a profit margin of 25% while all other makers sink in the single digits. The reason is hat RACE has a fantastic marketing effort selling ball caps for sky high prices and the cars themselves are so rare, think expensive watches, that they are rolling art objects.  Vintage Ferraris have all set record prices the last few years with the 1963  GTO expected to go to $100 M.

Meanwhile on page A 9
Christie’sSales Soar in strong Art Market

A Matisse sells for $80 M and a Picasso for $115 million.  Soaring markets have raised expectations for real estate and art and rare autos around the world. And that is an expression of mood which as Bob says is really the only way to explain such valuations. With your interest in art I thought you might find this analogy interesting.

Click here to learn more about socionomics.

Tesla Asks for Cash Refund From Suppliers

Tuesday July 24, 2018

The WSJ reveals that Tesla asked for cash back from suppliers.

Tesla has been burning through cash at a rate of about $1bn a quarter, or more than $7,430 every minute, according to data compiled by Bloomberg, and finished the first quarter with $2.7bn in cash on hand.

My students tell me TESLA is a can't miss deal based on Elon Musk success in space. I contend the two are totally different exercises. TSLA has depended on debt, govt subsidies and wild valuations, TSLA is worth more than Ford!. The jury is still out on whether TSLA is the next KIA or hDeLorean DMC.  One would think Musk would sell more stock given the rich valuation. The company is losing $13.97 per share.

 

Professor Elam Earns a Second Top 50 Award

Tuesday July 17, 2018

This weblog has earned a second Top 50 Weblog Designation.

Professor Elam is listed along with many other well known Accounting Weblogs.We appreciate this National Recognition and are gratified to be in such good company.

Sears Closes Chicago

Weekend July  15, 2018

Sears closes its last Chicago Store

Chicago was the home of Sears, with the Sears Tower a vital part of the Chicago sky line. It is just a matter of time until Eddie Lampert sells the real estate and Sears is no more.

Lampert was no retailer that is for sure.

Here is a comparison of Sears, still failing, And Best Buy, now back on to.

Retail is all about detail, check out this comparison.

The capital investment at Best Buy and Kohl's is paying off. JCP is still struggling investing half what Kohl's has spent.

JCP is still reeling from its Ron Johnson disaster. Johnson from Apple tried to change all the JCP stores at once a classic recipe for failure. A test market of a few stores would have shown that would not work.

A Left Handed Compliment

Friday July  13. 2018

https://crushthecpaexam.com/top-50-accounting-blogs/

 

I received mention in this article that ProfessorElam is one of the Top 50 Acounting Blogs in the USA.

Sounds good so far, right?

But then I scrolled down to the actual write up.

Oh well as Cassius Clay put it back in the day

Just make sure people are talkin' bout ya

Don't matter what they say!

 

Gleim CMA Material on Sale

Friday July 13, 2018

Hi Dennis,

I hope all is well on your end!

Gleim CMA has partnered with the IMA to bring you and your members major discounts. You can use this special offer to encourage your current members to get started now and to help you recruit new members who are potential CMA candidates.

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Check out the attached flier to find out how to take advantage of this great offer. The 30% offer is only good until the end of July. In August the Gleim discount will drop back down to the normal chapter discount of 25% and the IMA Membership Fee and CMA Entrance Fee discounts will drop down to 15% for each.

Please let me know if you or any of your members have questions or concerns about this offer. I can be reached via email atalexandra.graham@gleim.com or by phone at 1-800-874-5346 ext 428.

Best,

Alexandra