Session 18 - Class Notes - Investments I (1)

Session 18 - Class Notes - Investments I (1) -...

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Session  Session  18 18 : CSR/Investments : CSR/Investments Hye Sun Chang ACCY 303  
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Outline 1. Corporate social responsibility 2. Describe the major reporting categories for investments and  how to distinguish them 3. Explain how to identify and account for investments classified  as held-to-maturity, trading and available for sale securities.  
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Corporate Social Responsibility CSR: voluntary corporate commitment to exceed the explicit  and implicit obligations imposed on a company by society’s  expectations of conventional corporate behavior. The market rewards enterprises’ social activities. Effective CSR is usually a long-term proposition.  
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Corporate Social Responsibility               Milton Friedman  - Shareholder approach   Rejected corporate social commitment - Stakeholder approach “shifts in traditional relationships with external groups  such as suppliers, customers, owners, and employees, as  well as the emergence and renewed importance of  government, foreign competition, environmentalists,  consumer advocates, special interest groups, media and  others, mean that a new conceptual approach is needed.”     
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Corporate Social Responsibility Doing well by doing good  The theory of stakeholders is, in the long run,  nothing but a shareholder value approach. 
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Balance Sheet  Balance Sheet  Current Assets Cash and cash equivalents Short-term investments: Trading or AFS  securities  Accounts receivable Inventory Non-current Assets  Current Liabilities Accounts payable Notes payable Interest payable   Non-current liabilities Bonds payable or Notes payable Lease payable Deferred tax liability Stockholders Equity   Long-term investments  Property, plant and equipment Intangible assets: goodwill, patents Other assets : bond issue cost, deferred tax  asset  Capital stock: preferred stock, common stock Additional paid-in capital Retained earnings Accumulated other comprehensive income Treasury stock 
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Reporting Categories for  Investments Investments I. The investor controls the investee (the investor owns more than 50% of the voting stock of the investee). → consolidation . II. The investor has significantly influence on the investee (the investor owns between 20% to 50% of the voting stock of the investee). → equity method . III.
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This note was uploaded on 11/08/2011 for the course ACCY 303 taught by Professor Staff during the Spring '08 term at University of Illinois, Urbana Champaign.

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Session 18 - Class Notes - Investments I (1) -...

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