Topics

106

Psychological Disorder / Television Addiction

« on: November 27, 2014, 04:36:00 PM »

Television addiction is no mere metaphor
 The term "TV addiction" is imprecise, but it captures the essence of a very real phenomenon. Psychologists formally define addiction as a disorder characterized by criteria that include spending a great deal of time using the thing; using it more often than one intends; thinking about reducing use or making repeated unsuccessful efforts to reduce use; giving up important activities to use it; and reporting withdrawal symptoms when one stops using it.
 All these criteria can apply to people who watch a lot of television. That does not mean that watching television, in itself, is problematic. Television can teach and amuse; it can be highly artistic; it can provide much needed distraction and escape. The difficulty arises when people strongly sense that they ought not to watch as much as they do and yet find they are unable to reduce their viewing. Some knowledge of how television becomes so addictive may help heavy viewers gain better control over their lives.
 The amount of time people spend watching television is astonishing. On average, individuals in the industrialized world devote three hours a day to the activity – fully half of their leisure time, and more than on any single activity except work and sleep. At this rate, someone who lives to 75 would spend nine years in front of the television. Possibly, this devotion means simply that people enjoy TV and make a conscious decision to watch it. But if that is the whole story, why do so many people worry about how much they view? In surveys in 1992 and 1999, two out of five adults and seven out of ten teenagers said they spent too much time watching TV. Other surveys have consistently shown that roughly ten per cent of adults call themselves TV addicts.
To study people’s reactions to TV, researchers have undertaken laboratory experiments in which they have monitored the brain waves, skin resistance or heart rate of people watching television. To study behavior and emotion in the normal course of life, as opposed to the artificial conditions of the laboratory, we have used the Experience Sampling Method (ESM). Participants carried a beeper*, and we signaled them six to eight times a day, at random, over the period of a week; whenever they heard the beep, they wrote down what they were doing and how they were feeling.
 As one might expect, people who were watching TV when we beeped them reported feeling relaxed and passive. The EEG studies similarly show less mental stimulation, as measured by alpha brain-wave production, during viewing than during reading.
What is more surprising is that the sense of relaxation ends when the set is turned off, but the feelings of passivity and lowered alertness continue. Survey participants commonly reflect that television has somehow absorbed or sucked out their energy, leaving them depleted. They say they have more difficulty concentrating after viewing than before. In contrast, they rarely indicate such difficulty after reading. After playing sports or engaging in hobbies, people report improvements in mood. After watching TV, people's moods are about the same or worse than before.
Within moments of sitting or lying down and pushing the "power" button, viewers report feeling more relaxed. Because the relaxation occurs quickly, people are conditioned to associate viewing with rest and lack of tension. The association is positively reinforced because viewers remain relaxed throughout viewing.
 Thus, the irony of TV: people watch a great deal longer than they plan to, even though prolonged viewing is less rewarding. In our ESM studies the longer people sat in front of the set, the less satisfaction they said they derived from it. When signaled, heavy viewers (those who consistently watch more than four hours a day) tended to report on their ESM sheets that they enjoy TV less than light viewers did (less than two hours a day). For some, a twinge of unease or guilt that they aren't doing something more productive may also accompany and depreciate the enjoyment of prolonged viewing. Researchers in Japan, the U.K. and the U.S. have found that this guilt occurs much more among middle-class viewers than among less affluent ones.
 The orienting response is an instinctive reaction to any sudden or new, such as movement or possible attack by a predator. Typical orienting reactions include the following the arteries to the brain grow wider allowing more blood to reach it, the heart slows down and arteries to the large muscles become narrower so as to reduce blood supply to them. Brain waves are also interrupted for a few seconds. These changes allow the brain to focus its attention on gathering more information and becoming more alert while the rest of the body becomes quieter.
Collected

107

Business & Entrepreneurship / Which Depreciation Method is the Best?

« on: July 31, 2013, 06:02:39 PM »

Why do companies depreciate long-term assets?
It is important to remember that depreciation is an attempt to match expenses with revenues (matching concept).  Accountants try to spread the cost of the asset over the service life of the asset.  Do not make the mistake of thinking that depreciation is an attempt to value the asset.  Depreciation and market value have nothing in common.  There are other accounting techniques that are employed when an asset's market value and an asset's book value become very different.
 Why are there so many different methods of depreciation?
Not long ago (about 100 years) there were no accounting rules.  Accounting methods began to be developed during the industrial revolution.  Each company and industry made up their own way of doing accounting.  Sometimes an accounting method was developed because the accountants thought the method would best match revenues and expenses.  Other times accountants would make up a depreciation method because the method would help management reach an objective such as making the net income look better or worse than it otherwise would look.  Sometimes the government makes up depreciation methods in order to stimulate or dampen the economy and for other political reasons.  By tradition, many of these accounting methods are accepted and still in use today.
 Which method is the best?
Since the objective of depreciation is to match revenues and expenses, it is probably best to choose the method that meets that requirement.  Sometimes a machine will be more productive in the early years and less productive in the later years.  An accelerated method may be best in cases such as that.  Although matching revenues and expenses is important, accountants are expensive and the cost-benefit rule comes into play.  For that reason, many accountants will just use a straight-line method to keep things simple ("close enough").
 When doing the accounting for very small businesses, accountants will often use the exact same depreciation method that was reported on the business's tax return for the company's books.  Not an accepted accounting practice, but it does keep things easier for the accountant (saves time and money) and the business owners generally do not care.  Still, some accountants (sometimes directed by management) choose a depreciation method that will make net income and assets look better (e.g. to help stock prices or obtain a loan).  Research has shown that most investors and bankers recognize such ploys.  So..... which method is best?  The answer, as you may have guessed, depends on lots of factors.
 Can pick and choose different depreciation methods for for different assets within a company?
The answer is yes.  But here are a few things to think of first.  Tracking fixed assets in a large company ($100 million plus in revenue) can be frustrating for the accountants.  Even tracking assets in a small company can be a full-time job.  There are many reasons for this.  The biggest reason is that some people within a company are not very good about telling the accountants when a fixed asset is purchased, sold, or transferred to a different location.  This is true even when there are policies and procedures in place.  All of this makes accounting for fixed assets very confusing.  Just think of how confusing things would become if an accountant assigned a different depreciation method for each individual asset purchased. 
Usually, accountants will divide fixed assets into groups of similar assets based on function.  For example, all vehicles will be placed in a group and all computer-related equipment will be placed in another group, etc..  Any asset that is purchased is placed in the appropriate group and then depreciated in a similar fashion.  Each group can have its own depreciation method, but assets within that group are depreciated in a consistent manner.  This does not help when employees do not tell the accountant that an asset was purchased, sold or transferred, but at least it does keep things a little easier.
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108

Business Administration / Tax Evasion Vs Tax Avoidance

« on: July 30, 2013, 04:15:02 PM »

Tax evasion
Tax evasion consists of seeking to mislead Tax Authorities by either:
     - Suppressing information to which Tax Authorities is entitled, for example by:
-   Failing to notify Tax Authorities of a liability to tax
-   Understating income or gains
-   Omitting to disclose a relevant fact
or
   Providing Tax Authorities with deliberately false information, for example by:
-   Deducting expenses that have not been incurred
-   Claiming capital allowances on plant that has not been purchased

Minor cases of tax evasion are generally settled out of court via the payment of penalties. However, there is a statutory offence of evading income tax that can be dealt with in a magistrate’s court.
Serious cases of tax evasion, particularly those involving fraud, continue to be the subject of criminal prosecutions which may lead to fines and/or imprisonment on conviction.
Furthermore, tax evasion offences will fall within the definition of money laundering and in certain cases individuals may be prosecuted under one of the money laundering offences. This includes both the under declaring of income and the over claiming of expenses.
If the assets of any clients were derived from illegal activities or if the client has committed tax evasion that considered under money laundering, a threat to compliance with the fundamental principles would be created. In such situations, the professional accountant may consider seeking legal advice and he should report this to the authorities.
          Tax avoidance
Tax avoidance is not defined, but is broadly any legal method of reducing the tax burden.
In recent years there has been a requirement for promoters of certain tax avoidance schemes to
disclose their schemes to Tax Authorities, and for taxpayers to disclose details of which schemes
they have used. This may enable Tax Authorities to take action more rapidly to close the
ambiguity.

109

Business & Entrepreneurship / self confidence

« on: July 29, 2013, 04:24:17 PM »

Promise yourself, no matter how difficult the problem life throws at you, that you will try as hard as you can to help yourself. You acknowledge that sometimes your efforts to help yourself may not result in success, as often being properly rewarded is not in your control.

110

Business & Entrepreneurship / Relevance Information with example

« on: July 29, 2013, 04:13:55 PM »

Relevance:

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Information should be relevant to the decision making needs of the user. Information is relevant if it helps users of the financial statements in predicting future trends of the business (Predictive Value) or confirming or correcting any past predictions they have made (Confirmatory Value). Same piece of information which assists users in confirming their past predictions may also be helpful in forming future forecasts.
Example:
A company discloses an increase in Earnings Per Share (EPS) from $5 to $6 since the last reporting period. The information is relevant to investors as it may assist them in confirming their past predictions regarding the profitability of the company and will also help them in forecasting future trend in the earnings of the company.
Relevance is affected by the materiality of information contained in the financial statements because only material information influences the economic decisions of its users.
Example:
A default by a customer who owes $1000 to a company having net assets of worth $10 million is not relevant to the decision making needs of users of the financial statements.
However, if the amount of default is, say, $2 million, the information becomes relevant to the users as it may affect their view regarding the financial performance and position of the company.

111

Business & Entrepreneurship / Discretionary vs. Non-Discretionary Accounts

« on: July 29, 2013, 04:06:29 PM »

In many instances, the type of account arrangement you have with a broker or investment adviser will depend on how much control you want to maintain—or are willing to give up—over the investment choices that are made in your account.
Discretionary Accounts
If you establish a discretionary account, you give your investment professional a substantial amount of control. You set the overall direction and goals for the account. The investment professional then executes that strategy by picking individual securities they believe will help you meet your objectives with the appropriate amount of risk. With a discretionary account, managers will not typically seek your permission to buy or sell a particular security. Instead you will see the investment choices they have made, and how those investments are faring, on your monthly account statement and in periodic performance reports.
Discretionary accounts work best for investors who do not want to be actively involved in the day-to-day management of their investments and who want to have a professional manager design a portfolio to meet their financial objectives.
If you’re setting up a discretionary account, you’ll generally fill out an investment questionnaire and meet with your investment professional to identify your financial objectives. This process helps the manager find out whether you are seeking income, growth, or something in between, what your risk tolerance is, whether you are a short-term or long-term investor, and any other special considerations that might affect their choice of investments on your behalf. For example, some investors prefer to invest in socially responsible companies that care about the environment, have good employee relations, and show respect for human rights. These criteria then become one of the many screens a portfolio manager can use when selecting investments for you in a discretionary account.
A professional who works with you on a discretionary basis may develop a customized investment policy statement that outlines the objectives, investment style, expectations, and performance benchmarks for your portfolio. He or she uses this document, along with current information on economic and market conditions, to make and execute investment decisions for your account.
With many discretionary accounts you don’t pay commissions—or in some cases full commissions—on the individual trades the account manager makes for you. Instead, you pay a fee—usually assessed quarterly—that is a percentage of the assets under management. You agree to the amount of this fee upfront, and it is frequently assessed on a sliding scale—the percentage fee often declines the more money you have under management.
Non-Discretionary Accounts
With a non-discretionary account, your investment adviser or full-service broker might offer you professional advice in connection with the transactions you execute and may make some investment recommendations.  However, your investment professional is not authorized to buy or sell securities for your account without your prior approval. This type of arrangement is best for investors who want to maintain greater control over their investments, but still want the benefit of a broker’s professional guidance.
If you are working with a registered investment adviser and have an advisory account, you typically pay an asset-based charge—say 1-2% of assets in the account per year—in a non-discretionary account.  If you are working with a brokerage firm and have a brokerage account, you pay commissions on a per-transaction basis, according to the firm’s regular commission rates. Good customers and large trades may qualify for a reduced commission rate.  In addition, discount brokers generally charge less than full-service brokers.