Contemporary issue in financial reporting Case Study

Contemporary issue in financial reporting - Case Study Example Due to the afore-mentioned factor, Microsoft can find the combination of balance sheets more useful in acquiring Yahoo, as it is an online Company. One more aspect that is useful for Microsoft in Pooling of interest method, it does not result in creation of goodwill. This leads to report higher earnings. (Answers.com, 2008) Thanks for giving us a chance to advise you on adoption of 'pooling interest' method. So that we can let you know, why it is beneficial for a company trying to acquire another, while you are contemplating to acquire Yahoo Corporation. While acquiring a company a firm follows one of the two methods. The first one is pooling of interest and the other is purchase method. The later involves the goodwill, which is a premium for buying a business. The goodwill is a result of subtracting purchase price from its book value. However, this is not advisable as Microsoft is trying to acquire Yahoo for more than the book value and this may result in negative goodwill according to purchase method. Hence, pooling of interest method is advisable for acquisition of Yahoo, for reporting higher earnings and a probable resultant higher share price. (About.com , 2008) When we consider the situation of Microsoft taking over Yahoo.com, let us take into consideration the earnings of both the companies at the end of 2007. The earnings of Microsoft at the end of 2007 is $11,030 and that of Yahoo is $1,403. Let us suppose that the book value of Yahoo's share is $10. Microsoft is contemplating to pay $32.5 per share. If it happens, the company has to pay $ 227987.5 million. However, the book value of Yahoo shares is $ 70150 million only. The difference is $ 157837.5 million. This will be termed as good will if Microsoft follows the purchase method and needs to be amortised in 40 years by amortising 1/40th part of the earnings every year. (Microsoft, 2008) If the company follows pooling interest method, there is no need of showing good will and the resultant company's balance sheet is the combination of balance sheets of two companies before acquisition. If the Book value of Yahoo share is $10 then the total book value of 7015 million Yahoo shares equal to $7.0150 billion. However, Microsoft has to pay $ 22. 8billion. The difference is $ 15.785 billion. (Ad vision, 2008) This has to be amortised in the resultant entity within 40 years according to purchase method. In Pooling of Interest method, there is no way to consider the goodwill as the company pays the amount to the investors and the balance sheets are combined from word to word and value to value. This reports the higher earnings and in the future years and allows higher earnings per share resulting in a higher share price in the market, which is not possible with purchase method as every year 1/40th part of the earnings cannot be included in reporting the earnings. A company like Microsoft, which have enough reserves of cash do not need the amortisation and can concentrate on For example, when we consider, the earnings of Microsoft and Yahoo in the year of 2007, the number of shares in Microsoft is 9848 million and the number of sha

Fish Depletion Paper Research Example | Topics and Well Written Essays - 1250 words

Fish Depletion - Research Paper Example In addition, advancement in technology enabled more areas of the oceans to be exploited. According to a report by the Food Agricultural Organization, an estimated 25 percent of the global fish species have been depleted or fully exploited (Srinivasan 183). It is however unimaginable to have a world without marine life. More than 2.6 billion people in developing countries depend on fish to provide them with animal protein and depletion of fish stock would affect food security and nutritional status of this people. Moreover, fish depletion would have significant impacts to the world economy given that fishing industry employs more than 150 million people and is a source livelihood for the poor (Srinivasan 183). The causes of fish depletion include overfishing, pollution, habitat destruction, climate change and invasive species. However, human causes are the cause of fish depletion. The paper will analyze the causes of fish depletion and recommend ways that will help reverse this trend. Causes of Fish Depletion The first main cause of fish depletion is overfishing where fish species are trapped at a rate that is faster than they reproduce (Scrimgeour, et al. 957).Overfishing is the biggest threat to fish population more than even the contribution of pollution. Overfishing results from better fishing methods and high demand for fish products are blamed for overfishing. Overfishing is a serious environmental issue given that depletes adult fish leaving fish that are not able to breed. The period between 1950 and 1994 saw the ocean fish catch grow by more than 400 percent and by 1998 the total global fish catch was approximated to be 93 million tons which and subsequent years were followed by a decline in the fish capture (Clare 73). The reduction is an indication that overfishing has led to fish declines. The main reason behind overfishing is due to global fishing vessels that are currently five times larger than the equipments that are required to sustainably catch fish produced in the oceans (Clare 73). In fact the worldwide active fishing vessels have a capacity to fill four planets equal to earth’s surface (Clare 75). Overcapacity is therefore removing fish at a rate faster than their rate of breeding. In addition to overcapacity of the fishing vessels, most fishing methods being used currently lead to negative impacts to the ecosystem. Bottom trawling for instance is a poor fishing given that it uses a non-selective fishing method and heavy gear leading to destruction of marine life. The method destroys fish breeding grounds and kills some fish species. Some fishing gears used currently also lead to trapping of fingerlings which are then killed thereby reducing the fish stock. In some developing countries, there have been cases of fishermen using mosquito nets whose pores are too small thereby catching the young fish. This has led to high rates of fish depletion with current data indicating that over 50 % of the fish stock are full y exploited, 20 percent have been moderately exploited while a further 17 percent is overexploited (Tsitsika et al. 731). 7 percent have been completely depleted although only 1 percent is recovering from depletion. In 1992, the formerly thriving cod industry came to a halt after there was no fish as the fishing season began (Tsitsika et al. 731). The other main cause of fish depletion is increased rates of pollution. Ocean pollution is negatively affecting the