1. Which of the following actions are likely to reduce agency conflicts between stockholders
a. Paying managers a large fixed salary.
b. Increasing the threat of corporate takeover.
c. Placing restrictive covenants in debt agreements.
outline the five phases of a companys operations in the extractive industries
It has been suggested that there are five identifiable phases in the discovery and recovery of
minerals, oil and natural gas. Four of these phases are pre-production phases, whi
Market Risk premium
Which of the following statements is most correct?
free rate remains constant.)
(Assume that the risk-
a. If the market risk premium increases by 1 percentage point, then
the required return on all stocks will rise by 1 percentage poin
Nature of superannuation plans
Defined benefit plan:
Specifies the benefit to be received by plan members
Trustees ensure that the contributions to the fund and its earnings are sufficient to meet the defined
Defined contribution plan:
Joint arrangement An arrangement of which two or more parties have joint control
Joint Operation A joint arrangement whereby the parties that have joint control of the
arrangement have rights to the assets, and obligations for the liabilities, relating to
Identify corporate stakeholders and explain how they can affect a businesss operation.
Stakeholders are people or groups that are affected by your company's operations. Shareholders or owners
are a commonly recognized stakeholder group. However, you also
An asset can become impaired for a number of reasons, which include becoming obsolete, failing to
meet regulatory standards, damages to the asset, changing market conditions, etc. Other company
accounts such as goodwill and accounts receivable can also be
As the investor recognises its share of the profits/losses of the associate as income, and this
profit/loss is prior to the appropriation of dividends, then to recognise dividend revenue would
double count the income recognised by the investor. The divide
In recent years, both expected inflation and the market risk premium (k M - kRF) have declined. Assume that
all stocks have positive betas. Which of the following is likely to have occurred as a result of these
a. The average required return on t
Joint control is the contractually agreed sharing of control of an arrangement, which exists only
when decisions about the relevant activities require the unanimous consent of the parties sharing
The key element of joint control is the sharing of
In the early 21st century, companies tend to place greater value on the contributions employees make to
business operations. If you operate a service-based business, your employees provide the consistent service
that helps you attract and retain
Amortisation and goodwill
The main argument for the systematic amortisation of goodwill is that, given the cost or
other value of long-lived tangible assets is required to be systematically depreciated, why
should goodwill be any different? The allocation
The key element in the classification of a joint arrangement is the rights and obligations of the
parties to the arrangement.
For a joint operation the rights pertain to the rights and obligations associated with individual
assets and liabilities
For a jo
How should EPS be calculated?
divide amount available for distribution to ordinary shareholders by the number of issued ordinary shares
Difficulty arises from actual or potential changes in the number of ordinary shares outstanding
Recognition Criteria- A liability is recognised in the statement of financial position when it is probable that an
outflow of resources embodying economic benefits will result from the settlement of a present obligation and
the amount at which the settlem