Accounting Theory Cga

Slide 1 ACCOUNTING THEORY & CONTEMORARY ISSUES (AT1) MODULE ONE Slide 2 ACCOUNTING UNDER IDEAL CONDITIONS Part 1 – Foundation items re the course Part 2 – Present value accounting under certainty Part 3 – Present value accounting under uncertainty Part 4 – Reserve recognition accounting Part 5 – Examination question examples Part 6 – Historical cost accounting Lecture by: Dr. A. L. Dartnell, FCGA Year 2009 – 2010 2 Slide 3 PART 1 Foundation Items re the Course Different Course Financial reporting is extremely important in our everyday life. You have heard of the many irregularities that have occurred in recent years which primarily involved financial reporting. Financial reporting is controlled by standards set so that the best disclosure will take place. To fully understand the importance and necessity for these standards, you need to appreciate that they are designed so as to trade off the conflicting interests of constituencies affected by them — usually investors and managers. Note carefully that Standard Setting bodies make these trade-offs through due process. That is, standards are set in consultation with major constituencies. Devices to achieve due process include representation of major constituencies on the standard setting boards, supermajority voting, exposure drafts, and public meetings. In other words, the issues and topics are well-vetted prior to their implementation. Thus the course deals with standard setting of accounting policies by which you are guided in your work as an accountant. Slide 4 Second, students often ask why they need an accounting theory course. We need to understand the thinking and action underlying the requirements for the standards we follow. All activities in life have a theoretical background. For example, how a chef prepares a meal in a restaurant. If the theory behind the meal is good, customers return. If not, they dine elsewhere. How you cut the lawn has a theory. You follow a theoretical plan for the actions you choose. So with accounting we have theories and to understand them is extremely important for the accountant. Why we do things the way we do. We do not want to follows principles which we do not understand. and Slide 5 Third, students ask why the course writer refers so much to shares, the stock market, financing and related matters. If you consider any undertaking it has finance involved. So the writer refers a great deal to shares and the market. 3 Financial institutions are throughout the world. For example, besides banks in all countries, there are many large stock exchanges, even in Socialist countries like China. Further, smaller businesses and organizations, such as, not-for- profit entities, obtain financing from banks and credit unions, as well as other sources of money, such as, donations from the public. Thus, stocks, bonds, financial institution loans, and other financing, are the life blood of our economic activity. Without these sources of funds our economy as we know it would not survive. Thus, it is important to you as an accountant to be fully aware of the financial activity we encounter day by day and we must provide good financial information for those who have invested or loaned their money for organizations to exist for our economic benefit. Slide 6 Objective To sum up: †¢ The Course revolves around setting of standards for release of information for investors and creditors. †¢ Standards can be set by various regulatory bodies – CICA, Securities Commissions, Stock Exchanges, and other groups. †¢ Our objective is to provide the best information possible for the readers of the reports. Slide 7 Standards in the Future As you know, financial reporting for publicly-traded firms in Canada will be in accordance with International Accounting Board (IASB) standards from 2011 on. This course includes coverage of IASB standards, in the textbook, the modules, the assignments, and review material. We do have a number which are in accord with IASB standards but the task is expected to be completed by 2011. While the current edition of the textbook has few references to Canadian standards, coverage of current Canadian standards is included in the modules, as well as, the review and assignment material. Coverage of certain United States standards is also included where these differ significantly from, or are in advance of, IASB standards. All of this material is examinable unless specifically marked to the contrary. 4 In this course, material relating to specific accounting standards is largely (but not completely) at a conceptual level. Fortunately, at this level, most standards in Canada, the United States, and internationally are broadly similar, thereby reducing the amount of detail you will have to learn. However, there are some important differences, particularly with respect to current value accounting, and these will be emphasized where appropriate. It would seem that from 2011, current Canadian standards will no longer be relevant or examinable. Future versions of this course will include only IASB and relevant United States standards. Slide 8 History and Research There is an interesting rundown on the history of accounting and research in the first 15 pages of the text. Go over them to get some background for the course. Topic 1. 2 of the module notes relates to recent developments in financial accounting. It gives an excellent account leading up to the current recession and also the effect on fair value accounting which we will be dealing with in the course. Read it carefully. It is level 2 and you should know it in a general manner. Slide 9 Information Asymmetry – an important topic The aim of the course is to deal with information economics. The theme relates to the fact that some parties have an information advantage over others in business transactions. If one party is better informed than the other(s), then it is referred to as information asymmetry. We will deal with these topics later but for the moment, information asymmetry comes in two forms: Adverse selection and Moral hazard. Slide 10 †¢ Adverse selection relates to the possession of greater information by one party over the other. †¢ Adverse selection in the securities market stems from insider trading and selective release of inside information, which is releasing only the information the manager decides to release. Bad news may be withheld from public consumption. †¢ Full disclosure is the antidote. 5 Slide 11 Moral hazard relates to shirking on the part of managers, or any situation where a person cannot be observed by the employing party. For example, a trustee for a bond issue could shirk if not carrying out his/her duties as they should be. †¢ For the manager (employee) participation in the fruits of the operations, for example, profit sharing is an antidote. Slide 12 Present Value Accounting †¢ An English economics professor named Hicks sai d the way to determine the real change in economics of the firm is to take the difference between net assets at the beginning of the period and at the end of the period and that would be your profit. That would be market value. †¢ If the net assets have increased, your wealth has increased and you have made a profit. If they have decreased, you have suffered a loss and your wealth had decreased. Your welloffness has changed Slide 13 †¢ How do we measure this well-offness of the firm? The present value system is probably the best way of measuring the change in the value of the assets and comes closer to the valuation of the market value than do other systems. In real terms – what is it worth today and what will it be worth in the future. We want to start with present value accounting. It is theoretical, no doubt not fully attainable, but a target at which we can shoot. While a full presentation of present value accounting would be difficult for a organization it can be considered from an ideal situation point of view. Slide 14 Current Value Accounting However, before moving ahead, on page 4 of the text the term current value accounting is used. This is a general term used to refer to departures from our currently used historical cost accounting. It is designed to increase relevance of financial information. Present value accounting (also called value-in-use) is a departure from historical cost. The other departure is fair value accounting (also called exit value or opportunity cost). Fair value is the amount the firm could sell an asset for or the cost to dispose of a liability, that is, market value. An implication of valuing assets and liabilities at opportunity cost is that management’s success is 6 then evaluated by its ability to generate more profits from retaining assets and liabilities and using them in the business rather than by selling them. Slide 15 It should be noted that under ideal conditions, present value and market value are equal. This module concentrates on present value accounting, since this is the fundamental basis on which market values are determined. However, when ideal conditions do not hold, the present value of an asset or liability may differ from its market value. It should also be noted that for many assets market value is not readily available. Think of steamships, what is their value? The fast ferries were a perfect example when the BC Government endeavoured to sell these vessels a few years ago. There was no market level for their sale price. Also, intangibles, and power plants, are other examples. Markets for these types of items are â€Å"incomplete†. Slide 16 Present Value Calculations and Limitations First, you have done present value calculations but to refresh your memory there are two examples in the appendix. However, if you have difficulty make sure you can under present value, future value, and annuities. The financial institutions and leasing firm use present value calculations extensively. Present Value Limitations It is difficult to precisely relate the present value system to the market value. Why? There must be ideal conditions: a definite and perfect knowledge held by all. Ideal conditions would include: †¢ a definite cash flow situation a definite discount rate – what we would term a riskless rate. †¢ a definite time period. In making our statements we want to give the best picture possible. Question is – is it a reality for us to give present value figures for all our assets and liabilities? Some – not all. To repeat – in many ways ideal conditions are a theoretical target at w hich to aim. Present value accounting is an example of the more general concept of fair value accounting, where the fair value of an asset or liability is its exit price, that is, the amount the firm could sell it for (asset) or the cost to dispose of it (liability). As noted above. ) Under ideal conditions, present value and market value are the same. However, when ideal conditions do not 7 hold, the present value of an asset or liability to a prospective purchaser may substitute for market value when, as is often the case, a market value does not exist. Slide 17 Relevance and Reliability We want to make our statements as relevant as possible and as reliable as possible. Relevance To be relevant statements must give users information on future cash flows, which show what the assets are worth in the future, that is, Predictive value. Reliability To be reliable financial statements and information should be precise and as free from bias as possible. If the present value is the same as the market value then they are relevant. If the data are correct and unbiased then they are reliable. This is our aim. Slide 18 Generally relevance and reliability work against each other. With present value you get more relevance but you lose some reliability because of unknowns such as future cash flows, the discount rate, etc. With historical cost you get reliability as transactions past are the basis of the statements, but you lose some relevance as the historical cost statements become dated. Relevant financial information gives investors information about the firm's future economic prospects. Reliable financial information faithfully represents without error and bias what it is intended to represent. Be sure you understand why, except under ideal conditions, relevance and reliability must be traded off. This is the main purpose of this topic. While the text concentrates on the relevance and reliability trade-off of historical cost accounting, there are different tradeoffs for other bases of accounting. For example, cash basis accounting represents the trading off of a lot of relevance in order to attain high reliability. Conversely, current value accounting represents the trading off of a lot of reliability in order to attain high relevance. Historical cost accounting can then be thought of as a compromise between these two extremes. Increasing both relevance and reliability is extremely difficult to do. (Can you think of a financial accounting product that does this? ) The text suggests that the reporting of supplementary information (such as RRA) enables increased relevance while retaining the reliability of historical cost in the financial statements proper. 8 Slide 19 Dividend Irrelevancy †¢ Theoretical concept – if conditions are certain, i. . , if cash flows, discount rates and time periods are certain then the present value will equate to market value. Income is not a determining factor. †¢ Dividend irrelevancy is the situation where it is presumed whether or not dividends are paid to the shareholders or profit retained where it earns the same return. There is one basic rate i n the economy. It is irrelevant whether dividends are paid or retained in the company for reinvestment. Slide 20 Arbitrage †¢ What is it? If the market gets out of equilibrium under ideal conditions â€Å"Arbitrage† will bring it back into equilibrium. Briefly arbitrage is buying in one market and selling in another for a higher price, thus, making a profit. Slide 21 Example: If I buy a share for $60. 00 in the Toronto market and can sell it for $61. 00 in the New York market, above commissions and foreign exchange, I can make a dollar per share. This possibility exists because there is imperfect information. If there is no arbitrage possibility then the market is working well. If, however, there is a rectifiable difference between the two markets and information asymmetry exists, then there is a problem. Arbitrage is a means to bring the two into equilibrium. Slide 22 †¢ How does arbitrage work in our ideal situation to bring the markets back into equilibrium? †¢ What happens from an economic theory point of view? If I buy in the Toronto market share price will rise and sell in the New York market share price will fall. The supply/demand relationship will erase differences which exist. This is an important economic principle. Demand will increase in the Toronto market increasing price and supply will increase in the New York market, decreasing price, bringing them into equilibrium. 9 Slide 23 Keep your Handout available PART 2 Present Value Under Certainty Major topics Comment on Present Value Example Description and Required What is the Answer Steps – year zero Balance sheet Steps – end of first year Slide 24 Present Value Under Certainty (con’t) Income statement – first year Balance sheet – first year Steps – end of second year Income statement – second year Balance sheet second year Summary of present value under certainty Slide 25 Comment on Present Value Present value accounting – you will find this different than historical cost accounting. For example, the point in the historical cost operating cycle at which we recognize revenue is the point of sale. Note carefully – in present value accounting under ideal conditions, the present value of all future revenues (net of costs) is recognized when productive capacity is acquired (for example, plant and equipment is valued at the present value of its future net cash receipts at date of acquisition – that is, when you commence to operate). Then, income for the year is simply the accretion of discount (profit) on the opening present value. That is, under ideal conditions, it is not necessary to wait until the realization of revenue is probable, since, by definition, all future revenues are reliably known. While the text addresses this in terms of asset valuation it is also revenue recognition. The opposite side of the same coin. Another interesting point is that even if the firm pays out all of its profits as dividends, there will be cash-on-hand equal to accumulated amortization. This illustrates the point you 10 learned in accounting courses that â€Å"amortization† retains â€Å"assets† in the business. The amount is not paid out. Slide 26 Example Description of Question Let’s look at a theoretical, ideal situation. Jane bought a fixed asset and operates under ideal conditions with certainty. She anticipates it will bring cash flows of $300 at the end of the first year and $400 at the end of the second year, with a salvage value of $100 at the end of the second year. The interest rate is 9%. Jane takes out a bank loan of $150 at 8%, and she issues a bond to I. Save for $120, with a coupon rate of 10%. Make provision for $100 in the cash account for working capital. The current yield in the market for a similar security is 9%. Interest is payable at the each year-end, at the rate of 9% At the end of the second year the loan will be paid and the bond will mature. Dividends of $20 will be paid at each year-end. Slide 27 After receiving the loan and the bond money, the balance of the assets are financed by common shares. There will be $100 additional subscription for common shares at the end of the second year. Required Prepare a balance sheet at year zero, and income and balance sheets for years one and two. It is generally wise to prepare a balance sheet at year zero. It prevents mistakes later. Slide 28 Answer: First of first year – steps 11 1. Obtain the present value of the asset by discounting cash flows and salvage. 2. Financing – present value of the principal and interest of the loan and the bond. 3. Make provision for the $100 in the cash account. . Deduct the p. v. of the loan and the bond from the capital asset to arrive at the shareholders' equity. Jane's Company Balance Sheet As at January 1st, x1 Assets: Cash $100. 00 Capital Asset – 300/1. 09 + 400/1. 188 + 100/1. 188 696. 11 Total assets $796. 11 Note: the interest rate is 9%. Liabilities and Shareholders' Equity Loan: 12/1. 09 + (12. 00 + 150. 00)/1. 188 $147. 37 Bond: 12/1. 09 + (12 +120)/1. 188 122. 12 Shareholders' Equity $796. 11 – (147. 37 + 122. 12)* 526. 62 Total liabilities and shareholders' equity $796. 11 *Proceeds from the loan and the bond are deducted from the total assets to obtain shareholders’ equity. Slide 29 First Year Results – End of First year: 5. Set up income statement. You need sales, interest on the cash balance, amortization for the year, (present value of second year deducted from original present value) and interest expense, which is, the discount rate times the original present value of the loan and the bond. 6. Set up your balance sheet for the first year. 7. Next is the cash and that which is actually paid out – interest and dividends 8. Determine the remaining balance of your capital asset – from the income statement. 9. Obtain your liabilities for the loan and the bond. This is the remaining amount for the second year, discounted. 0. Obtain retained earnings – net income for the year less dividends. 12 Jane's Company Income Statement For the Year Ending December 31, x1 Sales $300. 00 Interest $100. 00 x 0. 09 9. 00 309. 00 Less: Amortization $696. 11 – 458. 71 = $237. 40 400/1. 09 + 100/1. 09 = $458. 71 Interest expense:* Loan $147. 37 x 0. 09 = 13. 25 Bond 122. 12 x 0. 09 = 10. 98 261. 63 Net income $ 47. 37 *Note: interest is at the going rate in the economy. Jane's Company Balance Sheet As of December 31, x1 Assets Cash $100. 00 + 300. 00 + 9. 00 – ($12. 00 interest on bond, $365. 00 $12. 00 interest on the loan and $20 dividend) Capital asset $696. 1 Accumulated amortization 237. 40 458. 71 $823. 71 Liabilities and Shareholders' Equity Loan outstanding p. v. at end of year one – (12 + 150)/1. 09 $148. 62 Bonds outstanding p. v. at end of year one – (12 + 120)/1. 09 121. 10 Shareholders' equity – as shown above 526. 62 Retained earnings: Net income $47. 37 Less Dividends 20. 00 27. 37 Total liabilities and shareholders' equity $823. 71 13 Slide 30 Second Year Results – End of Year Two: 11. Set up your second year's income statement 12. In addition to your cash flow you should show your interest received on the bank balance of $32. 85 (made up of $365. 00 x 0. 09) 13. Less amortization – balance left in the capital account is salvage value of $100. 00 14. Obtain interest expense – the discount rate of 0. 09 times the carrying value of the loan and the bond in year 2 15. Set up the balance sheet 16. Cash account will be the carryover of $365. 00 from the previous year plus the sales of $400 and the interest on the cash account of $32. 85 plus the additional $100. 00 put into shareholders' equity. Deductions will be the actual paid out interest on the loan and the payoff of the loan ($162) and payment of the interest and the maturity of the bond ($132. 00) and the deduction of the dividend ($20. 0). Total in the cash account should be $583. 85 17. The capital asset will be $100. 00. You deduct the salvage from the carrying value of the capital asset in the second year ($458. 71 – 358. 71 = $100. 00) 18. Set up the liabilities and the shareholders' equity – show zero for the loan and the bond as they have been paid off Sli de 31 19. Shareholders' equity will be the original balance plus $100. 00, plus retained earnings from the previous year plus the addition of net income for year two and the deduction of the dividends in year two. Net Income will be $49. 86 and Total assets $683. 85. Jane's Company Income Statement For the Year Ending December 31, x2 Sales $400. 00 Interest on cash in bank ($365. 00 x 0. 09) 32. 85 $432. 85 Less: Amortization $458. 71 – $100. 00 = $358. 71 Interest expense: Loan $148. 62 X 0. 09 = 13. 38 Bond 121. 10 x 0. 09 = 10. 90 382. 99 Net Income $ 49. 86 14 Jane's Company Balance Sheet As at December 31, x2 Assets Cash $583. 85 Change: ($400 + 365 + 32. 85 + 100) – (12 + 150 + 12 + 120 + 20) Capital Asset: $458. 71 – 358. 71 100. 00 Total assets $683. 85 Liabilities and Shareholders' Equity Loan outstanding $ 0 Bonds outstanding 0 Shareholders' equity 526. 62 Additional subscription 100. 00 Retained earnings: Previous balance $ 27. 37 Net income 49. 86 $77. 23 Less: Dividends 20. 00 57. 23 Total liabilities and shareholders' equity $683. 85 That is a rundown on ideal conditions under certainty. Under ideal conditions everything, i. e. , cash flows, discounts, and other estimates, would happen as given. 15 Slide 32 PART 3 Follow the Handout – Page 15 Present Value Under Uncertainty Major Topics †¢ Present Value under Uncertainty – what is it? †¢ Example †¢ Description and Required †¢ Answer †¢ Steps – year zero †¢ Balance sheet Slide 33 Topics (con’t) †¢ Income statement – year 1 †¢ Balance sheet – end of year 1 Present value income statement – year 1 †¢ Income statement – year 2 †¢ Balance sheet – year 2 †¢ Summary of present value re Accounting Material †¢ A typical short answer exam question Slide 34 Present Value Under Uncertainty In this part we want to inject some uncertainty into the cash flows We are still under ideal circumstances and the theoretical aspect of things, thus, everything remains the same apart from revenues. Jane has a new company, that started operations on January 1, x1 Assume cash flows could be $250 for each of two years if the economy is good and $120 a year for each of two years if the economy is poor. There is a 50% chance there will be a good year each year and a 50% chance there will be a poor year. These are called states of nature. 16 To set the company up Jane makes a loan of $200 and finances the balance by common shares. The loan will be paid off at the end of two years. Loan rate 9%. We will make certain assumptions: – the discount rate is 8% – the states of nature and probabilities are publicly known and observable. – cash flows are given but uncertain as to which result will occur. Slide 35 Balance Sheet at Time 0: 1. Determine the capital asset – $329. 91 2. Determine the p. v. of the loan and shareholders' equity. P. V. = 0. 5(250)+ 0. 5 (120)+ 0. 5(250) + 0. 5(120) 1. 08 1. 08 1. 1664 1. 1664 = 0. 5(231. 48) + 0. 5(111. 11) + 0. 5(214. 33) + 0. 5(102. 88) = 115. 74 + 55. 56 + 107. 17 + 51. 44 = $329. 91 Jane's Company Balance Sheet As at January 1st, x1 Capital Asset $329. 91 Loan $203. 55 ______ Shareholders' equity 126. 36 $329. 91 $329. 91 Loan $18. 00/1. 08 + (18 + 200)/1. 1664 = $203. 55; common shares $329. 91 – 203. 55 = $126. 36 Time 1 Slide 36 First Year Results Assume there is a GOOD economy for time 1. 3. For the income statement determine sales $250. 00 4. Determine amortization – need the p. v. s of January 1st, x2 5. Charge interest on loan outstanding 6. Determine net income – $75. 10 17 Jane's Company Income Statement For the year ending December 31, x1 Sales $250. 00 Amortization $329. 91 – 171. 30* = $158. 61 Interest 203. 55 x 0. 08 = 16. 29 174. 90 Net Income $ 75. 10 * This figure can be taken from the first year above – $115. 74 + 55. 5 6 = $171. 30 Slide 37 7. For the balance sheet determine cash – sales revenue less interest paid 8. Deduct amortization to obtain p. v. of capital 9. Calculate p. v. of the loan 10. Include in statement the common shares and retained earnings. Jane's Company Balance Sheet As at December 31, x1 Assets Liabilities and Shareholders' Equity Cash $250. 00 – 18. 00 $232. 00 Loan $201. 84* Capital asset $329. 91 Amortization 158. 61 171. 30 Shareholders' equity 126. 36 ______ Retained earnings 75. 10 $403. 30 $403. 30 * Loan – $218. 00/1. 08 = $201. 84 Slide 38 Lets look at the present value statement: 11. Need accretion of discount – multiply the common shares by discount rate 12. Add revision of cash flows by deducting expected cash flows from actual cash flows. Present value Income Statement Jane’s Company Income Statement for the year ending December 31, x1 8 Accretion of discount $126. 36 x 0. 08 (rounded) $10. 10 Actual cash flows in year 1 $250. 00 Expected cash flows (0. 5 x 250 + 0. 5 x 120) 185. 00 65. 00 Net Income $75. 10 Abnormal earnings One thing you should be aware of is the abnormal earnings. The abnormal earnings in this instance are $65. 00. They indicate the difference between the expected value o f earnings and their actual realization. This is an important concept that will come up again when you study investor reaction to firms’ reported earnings in later Modules. For example, investors seem to respond strongly to unexpected earnings. You have probably seen the major effect on share price when a firm reports earnings higher or lower than the market had expected. The Present Value Income Statement above and also the illustration in Example 2. 2 (see pages 30 to 33) show how reported earnings can consist of an expected and an unexpected component. Slide 39 Now consider Year Two – Assume it is a poor year, that is, $120. 00 revenue Steps 1. Sales 2. Interest received on cash account 3. Interest paid on loan 4. Amortization – no salvage 5. Income for the year will be a loss of $(48. 90) Jane's Company Income Statement For the year ending December 31, x2 Sales $120. 00 Interest 18. 56 $138. 56 Amortization $171. 30* – 0 = $171. 30 Interest 201. 84 x 0. 08 = 16. 16 ** 187. 46 Net Income $(48. 90) * This figures can be taken from the first year above: $115. 74 + 55. 56 = $171. 30 ** rounded up 19 Slide 40 For the Balance Sheet: Steps 1. Determine Cash 2. Calculate Capital Assets to zero 3. Extinguish Loan 4. Show Shareholders’ Equity 5. Determine Retained Earnings Jane's Company Balance Sheet As at December 31, x2 Assets Liabilities and Shareholders' Equity Cash $152. 56* Loan $ 0** Capital asset $171. 30 Amortization 171. 0 0 Shareholders' equity 126. 36 ______ Retained earnings 26. 20*** $152. 56 $152. 56 * Cash $232 + 120 + 18. 56 – (18 + 200) = $152. 56 **Loan extinguished *** Retained Earnings $75. 10 + (-$48. 90) = $26. 20 Slide 41 Summary: Application of Present Value to Accounting Material These ideal, present value statements are relevant and reliable – dividends are irrelevant and expected cash flows have been assumed to include all possible events. – They are relevant because the values in the statements are based on all future cash flows. – They are reliable because the values reflect for sure future cash flows. Arbitrage assures the market value as time passes. How easy is it to apply present value material to accounting material? 20 In some cases it is easy and in some cases more difficult, for example, it is easy, with a bond, a mortgage, a loan, etc. P. V. can hold in the case of a bond which is purchased at face value and held to maturity. If it is purchased at other than its face value a premium or discount occurs. This will be covered in Module 5. P. V. can be partially successful in non-contractual cases such as the lower-of-cost or market or (fair value). On the lower side it is marked to market but not on the upside. In some cases it has been difficult. However, more is being added as time passes. A typical short examination question: Question: What is the change in the present value of an asset over time? Answer: It is the amortization of the asset. 21 Slide 42 PART 4 Follow the Handout – Page 21 Reserve Recognition Accounting What is Reserve Recognition Accounting? In this part we want to deal with an attempt by the Financial Accounting Standards Board in the United States to implement present value accounting material in the oil and gas company reports, for American companies, domestically, and their international subsidiaries. This was released under SFAS 69. It should be noted that this was supplemental material to the financial statements. Some Canadian companies have adhered to RRA because their parent companies in the U. S. have had to follow it in that country. Canada does not require it. However, Canada has implemented a standard of its own referred to below. Among the items was the requirement of an estimate of the present value of future receipts from a company's proved oil and gas reserves. What is its purpose? To give some idea of the discounted cash flows which an investor might expect the company to experience. As you know historical cost becomes obsolete very quickly and irrelevant in a short time. This attempt was to try to add to it so people would get some idea of the future expectations from the reserves and future cash flows. Oil and gas companies do not operate under conditions of certainty nor do any companies. This new consideration relates to present value under uncertainty. As noted earlier, recognizing revenue by the process of proved reserves indicates an early recognition of revenue in the operating cycle. Other companies, for example, recognize revenue at point of sale, or when they ship product to a distributor. Early recognition adds to the relevance aspect of revenue recognition but reduces the reliability because there are estimates being made which may not prove to be the outcome. It is suggested that you carefully read the comments on revenue recognition in the module notes under the heading of Reserve Recognition Accounting. Slide 43 Standardized Measure Theoretical and Practical RRA 22 Lets use the information of from a former year of Renaissance Energy: You have similar information in your text for Suncor Energy Inc. , page 36. What is the standardized measure? Standardized Measure is the expected discounted net cash flows from proved reserves in the ground to which the oil company has claim. Standardized Measure Millions Future cash inflows $8,822 Future production and development costs (3,603) Future Income Taxes (1,361) Future Net Cash Flows $3,858 10% annual discount for estimated timing of cash flows (1,148) Standardized measure of discounted net cash flows $2,710 Let’s assume $20 a barrel at the time – that would be approximately 441,000,000 bbls. Points: 1. Total proved reserves are the first line. 2. Development and production costs will be deducted 3. Deduct income taxes 4. Discount at 10% 5. Discounted net cash flows. Changes in the Measure during year Millions Standardized measure – beginning of year $3,704 Less: Sales less royalties and production costs (598) $3,106 Add: Accretion of discount (expected profit) 529 Abnormal earnings: Net present value of additional reserves added – Extensions, discoveries and improved recovery 577 Purchase of reserves in place 100 677 Development costs incurred 288 Unexpected items – changes in value of previous year Net change in prices, net of royalties and production costs (2,647) Change in future development costs (4) Revision of quantity estimates 249 23 Net change in income tax 1,157 Change in timing and other items (645) (1,890) Standard measure – future value of discounted net cash flows $2,710 Note: this could be considered similar to your book value. Another Note: Under the global aspect you deduct your costs from the cash inflows, leaving standardized measure of $2,710 Million. However, when you come to the reconciliation statement above you add in purchase costs, development costs and extension costs. At that stage you are adding to the value of your proved reserves because you have increased your proved reserves. You have acquired new reserves. It is a different aspect of the accounting operation. Accretion of Discount: this is the expected net income for the year. Under ideal conditions your anticipated net income at the first of the year and the actual would be the same. In real world conditions you do get differences. We want to look at the loss or gain for the year. Note with RRA additional reserves can result in anticipated revenue. Net Loss from Proved Oil and Gas Reserves Sales $598 Development costs incurred in the year (288) Amortization expense – (Decline from $3, 704 to $2,710)* (994) Net loss $ (684) See change statement above. Present Value Format: Expected net income – accretion of discount $529 Abnormal earnings: Additional reserves proved during the year $ 677 Unexpected items – changes in value (1,890)* (1,213) Net loss $(684) *This is the total of the unexpected items in the change statement above. Note carefully that amortization takes the difference between the two years and unexpected items takes only in the items shown. Amortization is used in the Income Statement and unexpected items are used in the present value income statement. Slide 44 An Examination question: 24 Students often find it difficult to connect the theoretical aspect to the practical output by gas and oil companies. Following is actual information taken from Exxon, an oil and gas company in the U. S. This will connect the practical to the theoretical aspect of the RRA process. Exxon Corporation – 1993 – supplemental information (millions) Shown in the annual report under change in net cash flows: 1993 Millions Value of reserves added during the year due to extensions, discoveries, improved recovery and net purchases less costs. $ 527 Changes in value of previous – year reserves due to: Sales and transfer of oil and gas produced (6,975) Development costs incurred during the year 2,947 Net change in prices , lifting and development costs (10,229) Revision of previous reserve estimates 1,137 Accretion of discount 2,817 Net change in income tax 4,499 Total change in standard measure during the year $(5,277) Comparison of Theoretical and Practical models Now to make a comparison with our theoretical model the various items below are numbered 1, 2 or 3 indicating the category within which they fall. . Accretion of discount 2. Development and other costs 3. Changes in estimates. Millions Value of reserves added during the year due to extensions, discoveries, improved recovery and net purchases less costs $ 527 (2) Changes in value of previous – year reserves due to: Sales and transfer of oil and gas produced (6,975) (sales) Development costs incurred during the year 2,947 (2) Net change in prices, lifting and development costs (10,229) (3) Revision of previous reserve estimates 1,137 (3) Accretion of discount 2,817 (1) Net change in income tax 4,499 (3) Total change in standard measure during the year $(5,277) Question: 25 Prepare the supplemental information of net income from proved oil and gas reserves in the â€Å"sales less amortization format† and the present value format: Exxon Corporation Income Statement for the year ending December 31st, 1993 Millions RRA Sales in year $6,975 Development costs incurred in year (2,947) Amortization expense (5,277) Net loss ($1,249) The present value statement would be the following: Accretion of discount $2,817 Abnormal earnings: Additional reserves proved 527 Changes in estimates – unexpected items – as shown below (4,593) Net loss ($1,249) Changes in estimates made up of: Net change in prices – $(10,229) Revision of estimates – 1,137 Net change – income tax – 4,499 $( 4,593) Slide 45 Summary The Exxon financial statements contained a comment that the corporation believed the standardized measure was not meaningful and may be misleading. It appeared management thought it lacked reliability and the reserve quantities would be as useful without the remainder of the calculations. The major problems with RRA: – Many estimates must be made how sound are they? Because conditions are not ideal, RRA estimates are compromised and revisions must be made. Example, future oil and gas prices fluctuate significantly. – Changing interest rates – Information on the states of nature is changing – very complex – probabilities are difficult to determine. – How does one determine complete cash flows? 26 Gulf oil was quite comfortable with the physical data but not the dollar amounts. They and other Canadian companies have dropped the process. RRA was an American requirement but CICA under Section 4580 did require physical data for Canadian companies. That Section has been suspended. While RRA was a good attempt to gain present value information – it gained some relevance but lost reliability. RRA is closer to market value than is historical cost but investors have not shown a particular interest in it. Canadian Requirement Similar to SFAS 69 As noted above, more recently the Canadian Securities Administrators have issued their own RRA standard. It is National Instrument 51-101. This is supported by all securities commissions in 13 provinces and territories. It goes beyond SFAS 69 in certain ways: Briefly: †¢ The definition of proved reserves is tightened. NI 52-101 states that proved reserves are those with at least 90% probability of recovery. SFAS 69 states only â€Å"reasonable recovery. † †¢ Probable reserves must be reported. These are additional reserves such that there is as greater than 50% probability that the sum of proved plus probable will be recovered.. †¢ Two present value estimates of future cash flows from reserves are required – based on yearend prices and costs (as in SFAS 69) based on forecasted prices and costs. †¢ Discounting is required at several different discount rates, ranging from 0% to 20%. SFAS requires only 10%. The Canadian requirements go beyond those of SFAS 69 but it will be noted that the same problems of reliability still exist. A further point which should be noted is that if a firm reports under SFAS 69, they can apply for exemption from NI 51-101 It should be noted that Canadian firms can apply for exemption from NI 51-101 if they report under SFAS 69. Most large Canadian oil and gas companies have secured this exemption. Consequently, despite the Canadian standard, RRA as per SFAS 69 remains as an important disclosure standard in Canada. For example, Canadian Natural Resources Limited, with shares traded on the Toronto and New York stock exchanges, has been granted an exemption from National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (â€Å"NI 51-101†), which prescribes the standards for the preparation and disclosure of reserves and related information for companies listed in Canada. This exemption allows the Company to substitute United States Securities and Exchange Commission (â€Å"SEC†) requirements for certain disclosures required under NI 51-101. 27 Slide 46 PART 5 Follow the Handout at page 27 Examination Question Examples Examination Question 1: On January 1, 2006, XYZ Ltd. , a hypothetical oil and gas firm, purchased a producing oil well with a life of 15 years. Operations were started immediately. The management calculated that future net cash flows from the well would be $1,500,000. The discount rate was 10% which was the company's expected return on investments. During 2006 cash sales were recorded (net of production costs) of $600,000. The company also paid dividends for the year of $50,000. a) Prepare the income statement for the year ending December 31, 2006 using RRA accounting. Prepare the balance sheet as at December 31, 2006, using RRA accounting. Answer: We first need our amortization so we take the beginning total of $1,500,000 and take a similar approach to our change statement under our first example – Renaissance Energy. We deduct sales and add accretion of discount, to arrive at amortization. PV beginning $1,500,000 Less: Sales 600,000 900,000 Accretion of discount 150,000 10% of $1,500,000 PV end 1,050,000 Amortization $ 450,000 XYZ Limited Income Statement for the year ended December 31st, 2006 Net sales $ 600,000 Amortization 450,000 Net Income $ 150,000 28 XYZ Limited Balance Sheet s at December 31st, 2006 Cash $600,000 – 50,000 $ 550,000 Shareholders' equity $1,500,000 Retained earnings: Reserves 1,050,000 $150,000 – 50,000 100,000 $1,600,000 $1,600,000 b) Question: summarize the perceived weaknesses of RRA accounting Answer: Three weaknesses are: 1. The discount rate of 10% might not reflect the expected return for the fir m. 2. RRA involves making a large number of assumptions and estimates and it may not bear any relationship to the net revenue to be received in the future. 3. Conditions in the oil and gas industry may change rapidly possibly making frequent changes in estimates. ) Question: Why does SFAS 69 require all firms to use 10% rather than letting firms select their own rate of return? Answer: The use of a single rate for all firms was to improve comparability. Slide 47 Continue to follow the Handout A Second Example: This one is particularly difficult. ABC Company (hypothetical) operates under ideal conditions. On January 1, 2001, it purchased a capital asset with a useful life of three years at which time it would be totally used and have no value. It will generate a cash flow of $3,993, on December 31st, 2003, at the end of its 3 year life. The purchase is financed partly by common shares and partly by a non-interest bearing note which matures on December 31, 2003, with a maturity value of $1,500. The interest rate in the economy is 10%. The shares and the note thus both have to receive a return. Required: a) Prepare an income statement and balance sheet for December 31, 2001. 29 b) Prepare an income statement and balance sheet for December 31, 2002. c) Prepare an income statement and balance sheet for December 31, 2003 d) Calculate the expected net income for the second year Answer Consider this as an investment of $3,000 and you are earning 10%, so income for the first year is $300, the second $330 and the third $363, totalling $993. 00. In other words if you left your earnings in the firm that is what you would have. However, you have borrowed money and it has to earn 10%, so it will reduce your income by the cost of the borrowed money at 10%. Capital Asset each year: PV (Jan. 1/2001) = $3,993/1. 103 = $3,000. 00 PV (Jan. 1/2002) = $3,993/(1. 21) = $3,300. 00 PV (Jan. 1/2003) = $3,993/(1. 10) = $3,630. 00 PV (Dec. 31/2003) = $3,993/1. 00 = $3,993. 00 Note: As the earnings remain the capital asset increases. Non-interest bearing note: Interest Expense Present Value and Discount Amortization Carrying Value of Note Jan. 1, 2001 – $1,126. 97 Dec. 31, 2001 $112. 70 1,239. 67 Dec. 31, 2002 123. 97 1,363. 64 Dec. 31, 2003 136. 36 1,500. 00 $373. 03 Book Value each year Accretion of Discount or Expected Income at 10% $3,000. 00 – $1,126. 97 = $1,873. 03 – $187. 30 $3,300. 00 – 1,239. 67 = $2,060. 33 – $206. 03 $3,630. 00 – 1,363. 64 = $2,272. 36 $227. 24 $3,993. 00 – 1,500. 00 = $2,493. 00 Total $620. 57 30 Some rounding may be needed. Slide48 To answer the parts: a) ABC Company Income Statement Year Ended December 31, 2001 Sales revenues $ 0 Amortization of capital assets 300. 00 Interest expense 112. 70 Net income $187. 30 This is unusual as there is shown income which has been earned but not received and the income statement is based on the amortization of capital assets and the loan. ABC Company Balance Sheet as at December 31, 2001 Capital asset $3,000. 00 Notes payable $1,239. 67 Add: amortization 300. 00 Shareholders’ Equity Common Shares $3,000 – 1,126. 97 1,873. 03 Retained earnings 187. 30 Total assets $3,300. 00 $3,300. 00 b) ABC Company Income Statement Year Ended December 31, 2002 Sales revenues $ 0 Amortization of capital assets 330. 0 Interest expense 123. 97 Net income $206. 03 31 ABC Company Balance Sheet as at December 31, 2002 Capital asset $3,000. 00 Notes payable $1,363. 64 Add: amortization 630. 00 Shareholders’ Equity: Common Shares 1,873. 03 Retained earnings * 393. 33 Total assets $3,630. 00 $3,630. 00 †¢ $187. 30 + $206. 03 Slide 49 c) ABC Company Inco me Statement Year Ended December 31, 2003 Sales revenues $3,993. 00 Less: Amortization $3,630. 00 Interest 136. 36 3,766. 36 Net income $ 226. 64 ABC Company Balance Sheet as at December 31, 2003 Cash $3,993 – 1,500 = $2,493. 00 Notes payable $ 0 Capital asset $3,630. 0 Shareholders’ Equity Less: Common Shares 1,873. 03 Amortization 3,630. 00 0 Retained earnings 619. 97 Total assets $2,493. 00 $2,493. 00 d) What you have to do to get the expected net income (the accretion of discount) it must be taken from the above balance sheet/and table that is the end of the first year: Net book value January 1, 2002 – $3,300. 00 – $1,239. 67 = $2,060. 33 Expected net income – 10% of $2,060. 33 = $206. 03 Note very carefully the book value and how it is obtained. 32 Slide 50 PART 6 Historical Cost Accounting Topics †¢ Why present value accounting †¢ Major problems with historical cost Examples Amortization Full cost versus successful efforts †¢ C onclusion Want to Consider Historical Cost Accounting but first make some comments about Present Value Accounting. Slide 51 Why Present Value Accounting? Why do we want present value accounting? What are some of the shortcomings of historical cost accounting? †¢ First, present value accounting is a balance sheet approach to accounting, also †¢ Referred to as the measurement approach. †¢ Increases and decreases in assets and liabilities are recognized, that is, measured, as they occur. †¢ Future cash flows are discounted and capitalized on the balance sheet. Income then is essentially the net change in present values for the period. †¢ Changes, whether realized or not, are recognized in the balance sheet. Slide 52 Historical Cost Accounting – Major Problems Comments Historical cost accounting is an income statement approach. It is referred to as an â€Å"information† approach to decision usefulness. In this situation unrealized increases or decr eases are not recognized in the balance sheet and net income lags behind real economic performance. 33 Thus, under this approach the accountant waits until there is actual validation of changes by increased sales or cash flows. This comes down to a matching of revenues and costs used to earn those revenues. First, it may make more sense than we give it credit for, and, second, it is firmly in place and may be difficult to replace. Then, how do we improve it? Slide 53 Major problems: 1. It does not equate in large measure with present value accounting – in some cases it does and many others it does not. 2. As it does not present complete relevant and reliable statements, there must be a tradeoff between the two. They tend to be opposites. Historical cost is more reliable than relevant. There as often different bases used for measurement and thus a problem arises. See page 42 of your text, 3. With historical cost there is a recognition lag of revenue. In other words, the revenue may be recognized over several periods. The revenue is recognized only when transactions take place. See page 42 of the text. This is the timing of revenue recognition lags behind changes in real economic value. On the other hand current value accounting has little recognition lag as changes in economic value are recognized as they occur, for example, recognizing revenue when proved reserves are recognized under oil and gas accounting. Do not overlook the fact, however, that RRA is supplemental accounting and appears separately in the financial statements. Note: carefully there is little matching of costs and revenues under current value accounting. Current value accounting really tells you how the value has changed of the assets and liabilities. Under historical cost the accountant waits until there is objective evidence before recognizing revenue. Thus, historical cost tends to be reliable while current value tends to be more relevant. See page 43 of the text. 4. We are faced with the fact that it is difficult to solve many problems within the historical cost system itself, thus, it is necessary to look for other ways to solve some issues, say to, present value accounting. There is accrual accounting is available to aid historical costing but matching of costs and revenues requires estimates, which can be difficult. Thus, historical cost does have it problems. See page 43 of the text. Some examples of problems Slide 54 Amortization: †¢ It is necessary to amortize the wearing out of assets to meet the matching principle. But historical cost rules do not direct how much should be amortized each year. †¢ It just states that the method to be used should be consistent with the time pattern 34 of expiration of the asset. †¢ A variety of methods are in use – straight-line, declining balance, double digit, etc. , which complicates matters between companies. †¢ If there were the requirement of present value for valuation pur poses, there would be only one method. Slide 55 Full Cost vs Successful Efforts in Oil and Gas Under full cost all drilled gas and oil well holes – both dry holes and successful efforts in drilling are capitalized. Thus some of the expenses for dry holes are deferred rather than written off. The concept is that they are all part of the development process. It is contended the costs match the revenue as it is earned. Under successful efforts dry drill hole costs are expensed immediately as it is thought they should not be part of the capitalization process. It is contended only successful efforts really match with the revenue of future years. Under historical cost CICA allows both methods; getting different income figures; under present value there would be one method. Slide 56 Conclusion: We conclude under historical cost that, â€Å"net income does not exist as a well-defined economic concept. † It is an artificial figure. See page 45 of the text. The matching principle under historical cost allows for different ways to be followed, as indicated above, as well as many other situations, e. g. , inventories Accounting challenge – Our quest for the balance of the course will be how can we improve historical cost statements if, as we concluded, we cannot have full present value statements. Slide 57 Appendix Present value annuities – one of the most used processes in the mathematics of finance. Its purpose is to discount a series of equal payments over a series of equal periods. Present value annuities with even payments Example: Assume you will receive $60 a year for four years for a dividend payment. The accepted discount rate (or the yield you would expect) is 10%. What is the present value (or value today) of these four cash flows, discounted at 10%? 35 P. V. = ? Formula P. V = R[1 – (1 + i)-n ] / i i = 10% P. V. 60[ 1 – (1 – 1. 10)-4/0. 10 n = 4 P. V = 60 (3. 16987) (can be obtained from the P. V. table. ) R = 60 P. V. = $190. 19 Second example: Present value annuity with uneven payments. Assume there are unequal payments over five years: Year 1, $60; Year 2, $40; Year 3, $50; Year 4, $35 and Year 5, $45. P. V. = ? i = 10% n = 5 R = as shown Formula: PV. = CF/(1. 10) + CF(1. 10)2 + CF/(1. 10)3, etc. P. V. = 60/ (1. 10) + 40/(1. 10)2 + 50/(1. 10)3 + 35/(1. 10)4 + 45/(1. 10)5 P. V. = $54. 55 + 33. 06 + 37. 57 + 23. 91 + 27. 93 P. V. = $177.

Merck Pharma Case Analysis

Jim Mesplie MBA 519 – Competitive Strategy Case Analysis #4 FACTS Beginning as a small scale manufacturer of chemical in the United States, Merck Research Labs (MRL) became the top notch research institution in the pharmaceutical industry by World War II. By attracting the top talent in chemistry, biology, and pharmacology, MRL emerged as the leader in human pharmaceuticals with the release of highly necessary drugs to treat infections, and tuberculosis. MRL focused their strengths on three key areas: vitamins, antibiotics, and hormones.With the best scientists in their industries, MRL developed a reputation of being the best and their profitability put them at the top of their own industry. By the 1970’s, pharmaceutical research had advanced dramatically and MRL expanded their leadership in the market by providing â€Å"breakthrough drugs to the market. † In doing so, MRL tripled their bottom line by the 1980’s and were continually one of the most valuabl e companies on an annual basis. MRL’s profitability was hard to match by their competitors along with their innovations in the human therapeutic drug market while maintaining a science-based business model.MRL biggest core strengths was not only maximizing their top-talent to produce profits and cutting-edge drugs to be sold on the open market, but being very disciplined in their drug development process. Every one of MRL’s competitors put their newly designed drugs thru the same development process as they do, but the difference is post-marketing clinical studies (Phase V) makes sure their products are positioned correctly and they are utmost effective to whoever consumes their products for medical reasons. ISSUESIn 1984, the pharmaceutical business world was shook up with the passing of the Hatch-Waxman Act which tore down a barrier that MRL had created with their innovations for other competitors to enter the market. This new law enacted allowed generic drugs to be manufactured which made a big hit to market share for MRL and other competitors in the pharmaceutical industry. Collaboration could be used with smaller companies to replicate drug patents that recently expired which meant smaller R&D was needed to make generic drugs and the timeline for MRL to have exclusivity was depleted.Another hit was a few years later when pricing restrictions were put in place hurting MRL and the industry even further. With the regulations and the FDA allowing businesses to advertise to potential consumers directly thru the mail, television, or print ads in the local newspaper, MRL had to re-think their own strategy and begin what the new CEO Ray Gilmartin called a â€Å"New Reality. † In his view, what made MRL the powerhouse in the past is not going to carry the company forward with the new business battlefield for market share.The belief that the product quality and effectiveness would be enough to justify a premium price in the open market would no t be a long-term solution for MRL since doctors and patients could get something very similar for a much cheaper price by using generic drugs. The biggest struggle for MRL currently is whether they could adapt to the new changes while maintaining their core values as being a â€Å"science-led† or based company. Mr.Gilmartin felt the biggest obstacle for the company was bringing drugs to the new market while still using their larger research department while other competitors are focusing more on a larger sales force to bring their drugs to market. CONCLUSION/ANALYSIS MRL and Mr. Gilmartin still struggle with adapting to the new market and it is obvious that Mr. Gilmartin isn’t quite sold on what the organization has done to be effective with selling their drugs in the market.While not adapting to the drug industry changes, MRL is not leveraging external opportunities with other organizations like their competitors have along with not capitalizing on direct to consumer marketing with a minimal sales force. Now MRL should not forget what made them great by maintaining a top-tiered research staff, but it would be ideal for them start putting more money into other critical stages of the drug development process. As you can see in Exhibit 2, MRL’s puts 60% of their R&D expenditures in the target & clinical phases of the drug development process.Now this helped them become a market leader in product differentiation and quality but today’s competitors are focusing more on phases III and IV to help drugs hit the market with a bigger impact. I feel MRL is on the path to change while adapting new strategies in response to the new market. However the bureaucracy that was created in doing so has inhibited this response to a minimal roar. All these extra teams that Mr. Gilmartin and MRL have created to figure out how to re-gain their market share have slowed down the progress that was intended. I suggest that Mr.Gilmartin keep with his somewhat flat leadership organization but invest more time in working with marketing department to create drugs that are needed in the market place. I feel utilizing the marketing department’s expertise and forecast of what the market will demand will help MRL develop drugs that can be sold in the market from the beginning will alleviate any wasted efforts for the company in those first few critical and expensive stages of drug development. In doing so, costs will be reduced and profits will be reflective of those efforts which would put them back down the same path that made MRL great in the first place.

German History & Politics Essay

The prosperous years between 1924 and 1929 are usually considered to have been the most affluent and stable in the history of the Weimar Republic. Certainly there were no major attempts at revolutionary change and the economy and culture seemed to recover steadily after the hyperinflation of 1921-23. Beginning from 1924 there were no further attempts to overthrow the Republic to compare with the Spartacist uprising (1919), the Kapp Putsch (1920) and the Munich Putsch (1923). The political life of the parties hostile to the Republic seemed to be in decline, both on the left and on the right. This can certainly be seen as statistical confirmation of political and cultural stability. The period between 1924 and 1929 in Weimar Republic is usually seen as an interlude of social change between the more repressive periods of the Second and Third Reichs. The Weimar Republic in this period had the most explicit statement of civil rights ever produced in a constitutional document. Germans were guaranteed ‘equality before the law’ (Article 109) and ‘liberty of travel and residence’ (Article 111). Their ‘personal liberty’ was ‘inviolable’ (Article 114), while ‘the house of every German’ was ‘his sanctuary’ (Article 115). In addition, each individual had ‘the right†¦ to express his opinion freely by word, in writing, in print, in picture form, or in any other way’ (Article 118): indeed, censorship was ‘forbidden’ (Article 142) (Eyck 10). The Weimar Republic produced probably the most advanced welfare state in the western world. In the following this paper will discuss the culture and politics in the prosperous years of the Weimar Republic. Weimar Germany’s Modernist Political Project: Theory and Practice The project of establishing a pluralist consensus in the Weimar Republic could confront its supporters and detractors alike with parliamentary deadlock and coalition politics, on the one hand, and with violent extra-parliamentary struggles, on the other (Kaufmann 90). The new democratic structures which made contestation possible were established in the constitution. The values and principles it enshrined show that the decision to convene in Weimar was not simply dictated by a need to get away from the upheavals in Berlin (Kaufmann 29). The choice of the former residence of German culture’s two greatest sons, Goethe and Schiller, reflected a desire amongst the designers of the constitution that the new Republic should turn its back on Germany’s nationalist and authoritarian past and promote instead the cosmopolitan universalist values of Humanitat and Bildung. With its emphasis on personal freedom, equality before the law, the right to assembly, freedom of thought, and the right to form political parties and independent trade unions, the Weimar constitution embodied a central concern of modernism, the desire for greater equality and emancipation. Above all it was intended to produce a society based on tolerance, mutual respect, openness, and democracy, where the social, political, and economic conditions that had given rise to the carnage of the First World War would be banished once and for all. In practice, however, various negative factors were to prevent a genuine democratization of German society. Foremost amongst these was the crippling task of reorganizing an economy not only devastated by four years of war, but also forced to meet the massive reparations payments that had been imposed by the Allies. Analysing the ‘Psychology of Nazism’, Fromm noted that Hitler was well aware of the Germans’ difficulties in embracing a more open society that required active participation in the body politic (Kaufmann 134). Faced with the disorientating complexity of pluralism and its apparent inability to guarantee economic security, many frustrated and resentful Germans ultimately opted for the certainty of totalitarianism (Lee 13). This ‘fear of freedom’ was not, however, typical of all sections of the population. Non-aligned leftists and liberals in the cultural sphere wholeheartedly embraced, and actively worked to extend, the new freedoms offered by the constitution. It was their commitment to democracy which provided one of the main motivating forces behind Weimar culture. But one of the tragedies of that culture was that it never gained acceptance by certain significant social classes. Weimar Culture: The Birth of Modernism In the course of the nineteenth century a consciousness emerged which reduced the Modern to a mere resistance to the past and its legacy. At this point the optimism of an eighteenth-century understanding of modernity was already in decline in the Weimar Republic. Enlightenment thinkers expected the arts and sciences to harness the forces of nature, to give meaning to the world, to promote moral progress and social justice, and ultimately to guarantee human happiness. Horkheimer and Adorno traced out the way in which this positive project for human and social development had been hijacked by the instrumental rationality of capitalism (Lee 59). What had been progressive had become, in the growth of the culture industry, exploitative. The transformation of cultural production occurred as a result of crucial social, technical, political, and artistic developments between the world wars. In the 1924-29 there are still remnants of the old project of a liberated humanity. It is precisely that active relation between the social and the aesthetic which characterized so many cultural projects in the Weimar years, from the Bauhaus to popular illustrated papers, and from the documentary theatre to Dadaist montages. What was progressive in Weimar culture was informed by aspirations derived from a basic tenet of modernism. That is the belief that technological change could effect a positive transformation of the environment and an improvement of the human condition. Introducing a new edition of his essays from the 1924-29s, Ernst Bloch recalled in 1962 that the famous Golden Twenties were a time of transition. Extremists on both left and right saw the first German democracy not as an end in itself, but the incidental means by which a new Germany was to be created. A look back to the Weimar years from the post-war period, across the gulf of the Third Reich, confirms their reputation for cultural vitality and innovation. The extent of this sea change in the nature of German culture is demonstrated by Thomas Mann 1928 essay ‘Kultur und Sozialismus’ (Hans 9). Here the erstwhile champion of the automony of art acknowledges that Kultur and politics were no longer mutually exclusive spheres. Mass audiences for mass circulation media could scarcely be encompassed by traditional patrician or elitist ways of understanding what a culture was. What Mann calls the ‘socialist class’ (for so long held in deep suspicion by the educated middle class) is entrusted by him with no less a task than preserving the traditional heart of German self-understanding in the new democratic future. Systematically blurring the lines between political discourse and cultural activity, Mann asserts the need for Geist (‘the inwardly realized state of knowledge achieved already and in fact by the summit of humanity’) to become manifest in the material world of legislation, constitutionality, and European coexistence (Lee 29). However, some of the most striking developments in the political appropriation and use of culture were promoted by political parties in the context of the working-class movement. The Social Democratic Party (SPD) had traditionally viewed culture with suspicion, as essentially middle-class in origin and intent, and therefore inappropriate to the purposes of the working-class struggle (Kolb 78). At most the Social Democratic promotion of a proletarian lay theatre had an educational aim which survived into Brecht’s conception of the didactic play ( Lehrstuck). Nevertheless, before the war a number of organizations connected with the SPD promoted sport and gymnastics, choral singing, and even tourism – as well as amateur dramatics. After the successes of the working class and the increasing confidence they brought, there was a growing sense among socialists. The middle years of the Republic saw a great blossoming of organizations, supported by the Communist Party and the Social Democratic Party, providing for workers’ leisure, education, and practical training in various cultural skills: Proletarian FreeThinkers, Nudists’ Clubs, Worker Speech Choirs and Dance Groups, Worker Photographers (whose pictures were used by John Heartfield), Radio Clubs, and Film-Makers (Lee 46). Enormous numbers were actively involved in these organizations. Almost half a million people sang in workers’ choral societies in the Weimar Republic. The performances of works for speech choir (involving a kind of collective dramatic speech) were often conceived on an epic scale as the climax of festivals and celebrations laid on by the parties of the left and the trade unions. Apart from a few texts by Ernst Toller and Bruno Schonlank, few of these organizations left behind accessible artefacts, but the movement associated with the Communist Party that promoted proletarian writing of various kinds exemplified the issues of aesthetic intention involved. The KPD, as part of its effort to establish a basis of mass membership, developed factory cells and with them factory newspapers. To these publications ‘worker correspondents’ were encouraged to contribute accounts of their day-to-day experience in the workplace. Their ranks eventually contributed important members to the BPRS ( League of Proletarian Revolutionary Writers, founded in 1928): Willi Bredel, Erich Grunberg, Hans Marchwitza, and Ernst Ottwalt. Developing a highly simplified form of naive realism, works such as Bredel Maschinenfabrik N & K (1930) reflect the increasing material impoverishment of the working class and its organization as a movement. The representation of class divisions was not the exclusive territory of the proletarian authors; similar trends were clear in writers as different as Fallada (in Kleiner Mann, was nun? , for instance) and Arnold Zweig, in his epic war novel Der Streit um den Sergeanten Grischa ( 1927). What was striking about the specifically proletarian novel was its tight focus on its own class interests. Here working-class experience was isolated in a functional and instructive narrative. Other authors developed the accounts of first-hand experience provided by the worker correspondents to create critical reportage addressing the class-based nature of Weimar institutions, such as Ernst Ottwalt’s ironically titled ‘factual novel’ on the legal system Denn sie wissen, was sie tun ( 1931) or Ludwig Turek’s autobiographical Ein Prolet erzahlt ( 1930). Yet both of these forms of proletarian writing eventually attracted the ferocious criticism of Georg Lukacs, the most influential cultural theorist of the Communist Party (Lee 78). Modernism and its Malcontents The simmering resentment in conservative circles against Weimar modernism and the cultural degeneracy it allegedly encouraged came to a head in a protracted and heated Reichstag debate in 1926 on a motion, proposed by the German National People’s Party, which sought to ban ‘trash’ and ‘filth’ from publication, performance, or screening (Haarmann 89). For members of the Catholic Centre Party and their allies further to the right economic prosperity had produced a dangerous development towards ‘economic individualism and Mammon’. It threatened to destroy the classical and religious foundations of German culture. Offering a fascinating mixture of conservative and progressive ideas the Catholic deputy Georg Schreiber called for a campaign against the profit motive in culture and a struggle for the ‘soul’ of the German worker. He proclaimed that the restoration of German national dignity could not be achieved by politics and economics alone. The conservatives’ mission was to reassert the best traditions of Germany’s cultural heritage by stemming the influx of alien cosmopolitanism which, they lamented, was engulfing Germany in a tide of commercialism. Their fears were underlined in more extreme fashion by the Nationalists, who railed against the ‘excesses of destructive sensual pleasure’ and the worship of ‘the body, nudity, and lasciviousness’. Germany, they proclaimed, was faced with nothing less than a moral decline of Roman proportions. At the other end of the political spectrum, the Communists lambasted the proposal as a thinly disguised attempt to increase state control over art, designed to impose bourgeois standards of morality on newly emerging proletarian culture. Citing the effective banning of Eisenstein Battleship Potemkin by local censorship boards in Wurttemberg, they pointed out that regional governments had already made use of legal powers that were designed to preserve moral decency in order to ban politically unacceptable works of art. Opposition to the proposal also came from the Social Democrats, who feared that the absolute freedom of art was being jeopardized by concessions to petty-bourgeois philistinism. Eduard David, in a speech on the day in December 1926 when the proposal was passed by a majority of 92 votes, expressed particular concern that the decision to devolve decisions on censorship to regional testing commissions (Landesprukfstellen) meant a return to the pre-unification spirit of petty provincialism ( Kleinstaaterei), and therefore a threat to the cultural integrity of the Republic. Thus he saw 3 December 1926 as a black day for German culture. Appealing in vain to the traditions of cultural liberalism in the Centre and Democratic Parties, he proclaimed that the freedom of art was a cornerstone of the constitution and that any form of censorship was an attack on the very foundations of the Republic (Haarmann 35). The parliamentary debate was merely a prelude to an even more lively public dispute. Groups of prominent members of the nonaligned left, proclaiming the sanctity of spiritual freedom, lined up against a rag-bag of ultra-conservative and nationalist organizations, such as the German Women’s League against Degeneracy in the Life of the German People, the Richard Wagner Society, and the German National Teachers’ League (Lee 78). All they zealously followed the call to organize against the alleged corruption of the German spirit that they saw as endemic in the new Weimar culture. The panoply of works banned by some of the new regional censorship committees was very broad indeed. That it included not only popular French magazines with fascinating titles such as Paris Flirt, Frivolites, Paris Plaisirs, and Eros, but also Soviet films and Brecht’s debut play Baal merely confirmed the worst fears of those opposed to the legislation (Haarmann 45). The debate on trash and filth, coming as it did in the mid- 1920s, when the distinctively new cosmopolitan, commercialist character of Weimar culture was becoming increasingly apparent, provided telling evidence of the extent to which culture remained a burning political issue. Many who supported the legislation did so out of a conviction that the Republic’s claim to be the legitimate home of Germany’s classical cultural heritage was a hollow one. In their estimation the reality was tasteless commercialization and a total loss of standards.

NUTRITION RELATED DISEASE Research Paper Example | Topics and Well Written Essays - 2500 words - 3

NUTRITION RELATED DISEASE - Research Paper Example Nutrition on other side can be defined as food that works in the body; components that are required in the body so as to grow, reproduce, and live a normal healthy life. Foodborne illness also known as foodborne disease is the term used to refer to symptoms associated with consumption of contaminated foods (Duggan, Walker and Watkins 179). Food poisoning entails eating contaminated foods as a result of poisons, or disease causing micro-organisms. On the other hand, nutrient related diseases are diseases that result from deficiency of some nutrients in the diet or over-consumption of some nutrients. According to Berdainer, Dwyer and Feldman, safe food is the major concern of all living things as well as food industry. Safe food contributes immensely towards protecting living things from foodborne illness. Additionally, observance of food safety contributes immensely towards reducing the rate of immortality as a result of consumption of contaminated foods. Safe food also entails taking in good diet. In tandem to this, consumption of safe food lowers the cases of nutrient related diseases. Food contamination is among the key elements that contribute to health problems. In most occasions, it is caused by the presence of unwanted micro-organisms, chemicals and physical elements in food. Food contamination is very crucial because it leads to occurrence of food borne illness. For instance, it is through consumption of bacteria as a result of food contamination that one develops gastrointestinal problems. Food contaminants have also the potential to cause death if not controlled in ti me. For instance, it is evident that typhoid leads to death if not treated effectively. Food additives are ingredients added to the produced food in order to increase its shelf life, enhance its flavor or change its physical appearance. Despite their contribution to successive maintenance of the quality of food, it is evident that they also cause some problems to people who are

Role of Unions and Human Relations Management Personnel Research Paper

Role of Unions and Human Relations Management Personnel - Research Paper Example This disadvantage results from the strikes which are undertaken by the labor unions for different reasons at different intervals. The decisions to go on a strike, for the acquiring of improved working environment or wages, involves many such social and professional factors which can be a big harm to the performance of the organization and employees. Moreover, the creativity, achievements and good performance of workers is not rewarded. Due to the strikes and labor union activities, the underachievers are also paid for their services same as the high performers. The union workers are normally hard to be fired, so they decrease the productivity as well as the profit potential of the organization. One of the other factors is that these unions make the individual employees lose their freedom of speech and the strength of voice in the organization (Baccaro, 2008). The human resources management personnel are the major people to be playing the contributing role in binding the people of the organization together. They organize various activities through which the people in the workforce of the company come together and work with each other. Through this process, they come to know about each other in a better manner. When the new employees are inducted into the organization, they are welcomed and are made to know the other people of the company by the human resource management officer. All the breaks, free time and leisure is managed by the HR relations officer and the productive relations, proper association and communication of colleagues with each other are assured by them in a better manner. The employee relation s manager plays the role of a link or a connection between the management and the employees within the organization. He is even responsible to collect the information of the labor unions to assist its activities and collective bargaining roles. He also makes the employees

Marketing the Bad Boys of the NFL Research Paper

Marketing the Bad Boys of the NFL - Research Paper Example The Super Bowl is the most-watched American television broadcast. Super Bowl XLIV, played in 2010 between the New Orleans Saints and the Indianapolis Colts, became the most-watched American television program in history, drawing an average audience of 106.5 million viewers and taking over the spot held for 27 years by the final episode of MASH. Sunday Night Football has become the most popular sow in prime-time television this season, dominating the overall Nielsen ratings, with the highest average viewership for a prime-time NFL package in 14 years. Sunday, December 6th's Pittsburgh-Baltimore classic, seen in nearly 23 million homes, was the most-watched show on television in the first week of December 2010, as Sunday Night Football has been since the start of the 2010 season. The NFL is so violent that the league, the US military, and neurologists recently held a conference to investigate head injuries and concussions and determine if equipment or rule changes could protect the players better. Remarkably, the military was involved because NFL players suffer the same type and frequency of injuries as soldiers in combat. That is an astonishing correlation – the NFL is as violent as combat in Afghanistan and Iraq. NFL is so violent that players regularly suffer 'career-ending' injuries that leave them crippled for life. It is so violent that Daryl Stingley was paralyzed for life in a game, and in pre-season games at that. In a meaningless preseason game New England Patriots quarterback Steve Grogan overthrew wide receiver Darryl Stingley, Jack Tatum of the Oakland Raiders, known for his vicious hits, nailed Stingley while he was in the air, snapping vertebrae in his neck. Stingley was a quadriplegic for the rest of his life. He died in April of 2007 at the age of 55 of heart disease and pneumonia complicated by his quadriplegia. NFL also has a propensity for criminality and criminal violence.

System Analysis and Design course Essay Example | Topics and Well Written Essays - 1250 words

System Analysis and Design course - Essay Example The scope of the project is to give a plan which illustrates to draw an amount of $800 from the monthly earning or we can say from disposable income by managing the routine expenses within the same income. The expected length of the saving plan would be 5 months i.e. starting from 1st of March 2014 to 1st of July 2014. I hope that during the period of 5 months I will be able to accumulate the amount of $800 in order to purchase the iPad. In order to be successful in my saving plan, there must be a saving of $160-180 per month. In case of any decrease in the saving amount per month I may not be able to purchase the desired model of iPad in the expected time period. One more important thing, I may reduce my frequent visits to nearby fast food restaurants along with my friends. This will definitely cut down my extra expenses. The basic purpose or the objective of this study or report is to devise an information system which helps to manage the time spent in different activities of daily routine life. Time management is very much necessary in the life because now the philosophers consider time value as an asset which should be properly utilized so that an individual can take full advantage of it. The scope of the essay is to devise a time management plan for best use of time. This will look at the past behavior of how time has been used how the time was saved during the college period. This time management will help to maintain the resources in later years. We have to give a proper time to our college activities because these cannot be compromised at all or we can say at any cost. Though the college schedule is set keeping in mind the personal activities also but the time plan should give ample time to the study duration. If I look back to my past activities then I might come to know that at certain times I failed to properly allocate time. This failure caused certain problems for me. Now I

Medicalization of Deviance Essay Example | Topics and Well Written Essays - 1000 words

Medicalization of Deviance - Essay Example One of the main reasons there has been a much stronger focus on medicalizing deviance is because the offenders who are in this category need a specific type of help to refrain them from continuing to break the law and behaving outside of what is considered to be the social norm. Without medical intervention their behavior is uncontrollable and will continue to escalate unless they are placed on medication to control their specific cognitive problems. So, based on this assumption, when the terminology of medicalization is placed with deviance or deviant behavior it is understood that what is actually being implied is that those of deviant character need specialized medical treatment such as certain neuro-chemical stabilizers to control their behaviors. Sociologists claim that by defining deviance in this way it will allow for an ability to be able to maintain order far better in societies than simply following a traditional pattern of law and placing all of those of a disorderly character in a certain legal framework without proper labeling of the adversity being given. Furthermore, when certain criminal activities are taken out of the main legal framework and analyzed it will be perceivable that for some there are medical reasons for their behavior while for others they simply are prone to violent actions and engage in crime because they want too and for no other reason. For other's it is quite the opposite, which is why there is a strong point for labeling some offenders under medical deviance. Conrad (1992, pg. 210) points out that it was in the mid 1970's when the concept of medicalization and activities of a deviant background were first were introduced, although there was not much headway in labeling offenders into this grou p at that time. However, now in present times the terminology has become quite common and even more pronounced, gaining precedence in claiming that many crimes have a medical reason and therefore claiming medicalizing many deviant behaviors is not only arbitrarily conceivable, but it is quite logical to do. In Conrad's article (1992) there is an emphasis on the fact that medicine can control deviant actions and many characteristics of it, which has been hinted at in this research. By applying the proper treatment regimen to those offenders who are engaging in deviant acts, the chemicals that are not reacting correctly in the brain can be adjusted by various pharmaceutical prescriptions. By counseling and regulating the medications, psychologists can monitor these previous offenders and almost guarantee that their actions won't be repeated as long as they stay on the treatment prescribed to them. The definition of medicalization in itself shows, "it is a process where more and more of everyday life has come under medical dominion, influence, and supervision" (Conrad 1992, pg.210). Of course, as this research is showing even legal problems in society are now beginning to be associated with medicine and it's treatments to maintain control. To extend this reasoning further, many psychiatrists, sociologists, and psychologists believe that a person who is committing deviant

Market Analysis- Opening a Tapas Restaurant in Pearland Texas Research Proposal - 1

Market Analysis- Opening a Tapas Restaurant in Pearland Texas - Research Proposal Example â€Å"Pearland is on its way to becoming the next major employment center in the Houston region† (Living in Pearland par. 1). Thus, it transpires that the city offers a highly conducive environment for launching a new restaurant, which can operate well in this region due to several factors. The population growth in this town shows a high market potential of Tapas Restaurant. Pearland is near to Hobby Airport and therefore the restaurant can cater to tourists and business people who travel to this area. Pearland Park and restaurant is one of the main attractions of Pearland city. Besides, Pearland Art League can be another potential source of market for the restaurant as it invites several people round the year for many functions. These are the market potential in Pearland. The restaurant has competitors there such as Pear Tree, Santa Barbara Italian Restaurant and Busy Bee Cafà © etc. The potential target customer groups for Tapas Restaurant include the employees and visitors of Texas Medical Center, Johnson Space Center’s workers, visitors to Pearland Park and Hobby Airport etc. Besides, there are several well established families living in the area. Since there are no outlets of Tapas Restaurant in this region, Pearland City is a potential market for opening such a restaurant. This restaurant’s target customers are youth and upper middle class people. Target market identification involves the process of determining the group of potential clients from the inhabitants of a community, which may comprise several sections. Once this is done, the firm concerned has to make sure that they are in position of gratifying the desires and requirements of each section. Marketing aims, which add to the achievement of the general industry objectives should be recognized for all target markets. The objectives must be in quantitative language, should indicate the target market and must also point out the period within which the goals must be

Magic number 1089 Research Paper Example | Topics and Well Written Essays - 1000 words

Magic number 1089 - Research Paper Example The procedure that yields the number 1089 through calculations bearing three digit numbers involves three basic steps. The first step involves a random selection of a three-digit number, which has the first and last digits having a difference of more than two. Secondly, the digits are reversed, this changes the order of the numbers such that the first one appears as the last and the last as the first. For example, 469 is reversed to become 964. After this, the smaller of the numbers is subtracted from the one that has a bigger value. From the example above it will be (964-469)= 495. Finally, the number obtained in step two is added to its reverse hence generating the number 1089. In our example, 495+593 yields 1089. This procedure yields this number (1089) only given that the three digit numbers used always have a difference of more than two between the first and the last numbers. To unravel the mystery behind the magic behind the mathematical logic we can systematically analyze the calculations. If the three digits in our number are a, b and c respectively; then, we establish the three digit number will be given by (100*a) + (10*b) + c. this means that when the number is reversed, it becomes; (100*c) + (10*b) + a. Engaging the next step in the calculation which involves a subtraction of the biggest number from the smallest (in this case we can use any of the numbers since we are not certain which letters represents the largest number). (100a+10b+c) – (100c + 10b + a) yields 99 (a-c). The logic here is that (a-c) must always be greater than two and definitely not greater than 9. The trick is usually in the predictable numbers that are obtained after the process gets to this level. It is a must that the values of 99 (a-c) should be either 198, 297, 396,495, 594, 693, 792, or 891. Looking carefully at these eight

Trends in Fashion Management Essay Example | Topics and Well Written Essays - 500 words

Trends in Fashion Management - Essay Example The essay "Trends in Fashion Management" concerns the fashion management and trends. Moreover, analysis of the case study clearly reflects a continuous process of evolution in the journey of Luxottica (2012) as it continued to materialize itself with innovation in its production, focusing on excellence in the manufacturing processes, and at the same time, acquisitions of successful companies that facilitated Luxottica in creating its brand image in the eye wear industry. Since few decades, technology has played an enormous role in influencing business processes all over the globe. Luxottica (2013) has responded to technology in an efficient manner, and its globally integrated distribution system is one of the major indications of its efficiency in terms of utilization of technology. It has been an observation that in the past, business organizations even with quality products were not able to survive in the global market due to their inefficiency in terms of technology; however, Luxo ttica (2013) has successfully transformed this challenge into one of its qualities that distinguish it from its competitors in the market. With implementation of SAP information system, the company has not only been monitoring its manufacturing and sales progress; however, it has also enabled Luxottica in reducing delivery time and improving its service; in other words, resulting in effective supply chain management that has become one of the most important aspects of successful business organizations.

Reasons Why Parents Should Read Aloud with Children Essay Example for Free

Reasons Why Parents Should Read Aloud with Children Essay One of the greatest gifts that a parent can bestow upon a child is the gift of literacy. Reading is a wonderful pastime, and the key to unlocking many academic puzzles. Parents should read aloud to children as part of a regular routine, one that can be thoroughly enjoyed by both parties. Firstly, reading aloud to children poses the benefit of being quality time spent together. Parents need to have special time with their children, and reading to them is a great method for achieving this goal. Instead of plunking the children down in front of the television, sit them down on your lap and open up a book. As you begin to read to your children, marvel at their attention to detail, and use every opportunity to test their memory and knowledge. While reading, stop frequently and relate the story to an aspect of their everyday life. This will help them to see the correlation between themselves and their environment. While you are enjoying the quality time with your children as you read aloud, you will also be fostering a love of reading that transcends boundaries. Learning to love books at a young age will enhance the children’s desire to be an avid reader as they mature. A love of literature can take a child to unfathomable heights, allowing them to soar to faraway lands of make believe. Children that are read aloud to may use their creativity and imagination more often, building their different levels of intelligence. Being read aloud too can help them see the world, giving them an idea of their place in the world. Another great reason why parents should read aloud to children is to enhance their vocabulary skills. The parent should ensure that they read every word in a story verbatim, never glossing over words that they deem difficult. Children need to hear new words, and need to be explained to their meaning. This will boost their communicative skills. A child with a mastery of vocabulary will be able to orate and have himself or herself heard with a greater degree of efficiency than a counterpart saddled with a limited grasp of the language. When a parent reads aloud to their children, they are also teaching their children to read. As the pages turn, the children are intently watching, following every word on the page, learning that the words go from left to right and flow in a certain fashion. They will, through spoken osmosis, learn how to read on their own. The longer this continues, and with a great deal of frequency, the more proficient of a reader they will become. Parents also should read aloud to their children so that are heard enjoying the books, and the children. This bond will unite them, and the stories will also help them to learn things of importance. Books should be selected together, during regular visits to the local library or book store. This will give the child a sense of autonomy and ownership over the story, which may hold their attention for a longer period. Parents can help steer the children towards books that have strong morals, ethics, focus on manners and friendships, and interesting characters. Once the children begin to learn how to read, the roles can be reversed, and the children can become the readers while the parents become the attentive audience. This may give the children a jolt of confidence and self-esteem that will serve them well as they continue through the educational system. The only thing better than a good book is sharing it with a loved one. Nine Benefits for Parents Who Read Aloud Reading Aloud: 1. Creates bonding experience 2. Allows you to observe and share in your child’s interests. 3. Demonstrates your commitments to your child. 4. Provides an opportunity to model and transmit values. 5. Develops good communication skills. 6. Provide bibliotherapy* opportunities. 7. Gives children a chance to ask you questions. 8. Combats a passive, couch-potato, TV-viewing lifestyle. 9. Helps you build a storehouse of pleasant memories with your children. *Using stories and books to help Children deal with traumatic events such as death, divorce, loss of a pet, and adjusting to life-changing situations such as moving and entering school. Sources: Paticia A. Habada, Ph. D. Senior Editor of the SDA Life Series Reading textbooks Health and Home, Volume 38 Pages 45-47 Bobby Coles http://www.helium.com

Study On The Importance Of Mahatma Gandhi

Study On The Importance Of Mahatma Gandhi Mahatma Gandhi also known as father of Nation- helped throw out white rule and gain independence to India. He followed the path of Ahimsa which was non violence concept and Sathyagrahas which strikes to gain freedom for the people of India. He did all this yet was a lawyer by profession. Gandhi was born into the Hindu Modh family in Porbandar, in 1869. He was the son of Karamchand Gandhi, the diwan (Prime Minister) of Porbandar, and Putlibai. While living with a devout mother and surrounded by the Jain influences of Gujarat, Gandhi learned from an early age the tenets of pacifist to living beings, vegetarianism, fasting for self-purification, and mutual tolerance between members of various creeds and sects. He was born into the vaishya, or business, caste. Yet wanted fight for fair rights amongst his fellow Indians. Gandhi was responsible for many influential attributes during his years. In his younger days he studied to become a lawyer and in South Africa around the early 1880s he become employed by a Muslim firm in Pretoria. Through this firm he became engrossed in several great efforts against the authorities. During this time it peaked his interest for the communitys struggle for civil rights and Indias desire to stand on its own. Around 1915 when he returned to India he instantly joined the Indian National Congress as a large movement. While doing so he began to wear a simple quite simple which consisted of a white loin cloth, white shawl and sandals. This style appeals too many Indians in the rural areas who then gave him the name Mahatma meaning great saint. Gandhi philosophy revolved around three central notions: sawaraj meaning home rule, sarvodaya meaning welfare of all, and satyagraha meaning non-violence. Whereas Satyagraha was the key component for accomplishing political goals while using non- violent tactics. And sarvodaya and sawararja were used to support ideas of individual and overall improvement and renewal. With this renewal Gandhi was adamant in the belief that this necessary for India to revive itself of its history and culture and get rid of the British hovering over them. One major accomplishment held by Gandhi led a 200 mile Salt March so that the people of India could make and gather their own salt. His goal was for the people of India not to buy salt from the British. This march is called the Salt Satyagraha which started with the Dandi March on March 12, 1930, which was a key part of the Indian Independence Movement. This crusade was entirely nonviolent against the British salt tax in India. This protest prompted a larger Civil Movement. This movement was the most momentous organized attempt to confront the British government since Non-cooperation movement of 1920-22, and was directly followed the Purna Swaraj declaration of independence by the Indian National Congress in January of 1930. Gandhi also led the Dandi march near Ahmedabad, to the sea coast near the village of Dandi. This imspiring man continued on his mile march to make salt without paying the tax the British wanted while still expanding the number of Indians joined him along his jour ney. Eventually Gandhi broke the salt laws in Dandi at the end of the march on April 6, 1930, thus sparking large scale acts of civil disobedience against the British Raj salt laws by millions of Indians. Gandhi 1906 the Transval government cultivated a new Act to force registration of the colonys population At a enormous protest in Johannesburg on September 11th that year, Gandhi went on views evolving the devotion of truth. At this time involving his followers for the first time to defy the new law and suffer the consequences for doing so. Through this act thousands of people were imprisoned include Gandhi himself. Also beaten or shot. This was all because they were refusing to register, striking , or setting their registration cards on fire. Although these were all non violent means the government was still very violent towards them. While the government was successful in suppressing the Indians protesters, the public outlook the technique of how the government handled the peaceful protester finally forced the South African general at the time to negotiate a deal with Gandhi. A second attribute by Gandhi was made when he went on a 21 day fast to protest against the war between the Muslims and the Hindus and also to protest against Great Britain for not allowing India to be free. In March 1922, Gandhi was jailed for treason and after his trial he was sentenced to six years in prison. After about two years, Gandhi was released due to his declining health following surgery to treat his appendicitis. After his release, Gandhi found his country involved in serious violent attacks between Hindus and Muslims. As compensation for the violence, Gandhi decided to begin a 21-day fast, known as the Great Fast of 1924. At the time he was still ill from his recent surgery, many thought he would die anytime after day twelve, but he pulled through and held on for this passionate cause. This fast created a temporary peace. Another impact created by him was when he was arrested by the police of the charge of creating a unrest and was told to leave the area. Due to this, thousands of people protested and gathered followers to stand outside the police station and courts insisting his release. Which eventually the courts unenthusiastic allowed. After his release he helped arrange strikes against the landlords, who with the help of the government signed an agreement granting the poor farmers of that area more money and control over farming and also cancel the inflation until the famine ended. It was then Gandhi was looked at by the people as Batu meaning father and Mahatma meaning great soul. And lastly the greatest accomplishment of Gandhi was his life-long fight for the independence of India. Which fulfill his dream for his countrys independence which finally became reality on August 15, 1947. His life goal was to free India of the Britishs tight hold. To even get to that point Gandhi and his devoted follow struggle to rise to the top. Gandhi played a big role in order for India to achieve independence. He encouraged Indians to do the ahimsa and the satyagraha or simply truth-force. In which they purposely shows civil insubordination against the authorities. Indians had also established parties to gain freedom and eventually independence from Britain. Instances of these parties are the Indian National Congress and the Muslim League. Even though thats true, there were many hardships on their way to top. During the great effort to self-government about 200,000 people were killed while fighting for their liberty in which they finally succeeded because they were able to gai n independence at August 15, 1947. Gandhi was the most outstanding political and spiritual leader of India especially during the Indian independence movement. He had many followers, and taught many how to protest peacefully, instead of using violence and war. Although many know who Gandhi is numerous people do not know the greatness he has achieved. I believe he is very influential with everything he did. Gandhi stood up against the British Empire and got civil right for India while protest peacefully even thought the British hurt and killed many innocent Indians. Although imprisoned for his heroic work he never gave up. He was responsible for popularizing the concept of non violence and truth through struggle. The usefulness of these two ideas can be showed how the India used this implement to single handedly brought down the British and attempt to colonize Gandhis nation. I think this is incredible seeing though the British ruled several colonies for centuries yet Gandhi helped India rise and force them to leave them alone in just about thirty years. This proved that the use of non violent protest is very powerful. Most importantly a government can rule peoples bodies yet have no control over their minds. Due to these events I believe G andhi is forever remembered in history to this day .For how he stood up for Indian civil rights, and has made a big difference for people in India today. Even after his death Gandhi is still remembered.