Maccloud Winery

In: Business and Management

Submitted By littlehux27
Words 684
Pages 3
MacCloud Winery

1). (A) Ok so the first question is asking about whether the building being leased on the 5 acres piece of piece of property. And doing some further research I found that it can be treated one of two ways.

Capital Lease: which is a lease treated as an acquisition of the assets financed by a loan OR Operating Lease: which is a lease treated as a rental agreement so there for would not be an asset. BUT a capital lease has to meet one of three criteria and in this case it does. The criteria it meets States: The present value of the minimum lease payments is equal to or greater than 90% of the fair market value of leased property. And if you were to calculate the lease payments out (10,000*5= 50,000) it would equal $50,000 which far exceeds the value of the building being at only $32,000. (B) yes all the payments made towards the lease should be recorded as an expense 2). BANK LOAN: $180,000 3 years $10,000 annual payment (until 3rd when you pay lump sum) 10% Interest rate Journal entry on the day of the loan: Cash 180,000 Notes payable 180,000 Journal entries for the next three annual payments. Note Payable 10,000 Interest Expense 1,000 Cash 11,000 Journal entry on the lump sum pays out at the end of the loan contract Note Payable 150,000 Interest Expense 15,000 Cash 165,000 3). Land: Mike should treat the land as acquiring an asset transaction would be like the following (see below) also he cannot depreciate it over time because you cannot do that with land Land 250,000 Notes payable 180,000 Cash 70,000 Vines: the vines themselves are a little tricky to figure out but once you acquire them for $10,000 an acre (10,000*4=40,000) you them have to find out what there useful life is in this case it is 75 years and…...

Similar Documents

Abbey Winery

...Arkansas State University | Freemark Abbey Winery | Team 1 | | Assignment | 11/28/2012 | | Case Summary Freemark Abbey Winery should make a decision whether to harvest or not, taking into consideration the possibility of rain. Rain may damage the crop but delaying the harvest would be risky too. Keeping in mind rain could be beneficial and will increase the value of the resulting wine. This decision is complicated by the fact that ripe Riesling grapes can be converted to wine in two ways, resulting in two different types of wine. Factors that should be taken into consideration Probability of rain, mold formation, acidity, sugar level, wine price, and reputation. Mr. Jaeger’s possible choices: Harvest now or later. Solution: The payoffs are calculated based on 1000 cases of wine. 1. There are two alternatives: * Waiting (W) for the storm to come. * Harvest (H) now. * If he waited, the storm may or may not hit. * If the storm hits, the mold may or may not form, which greatly affect the revenue. * If the storm hits and no mold form, the sugar level which determines the quality of the wine is uncertain. The quality of wine produced affects the company’s reputation. * If storm hits and mold do not form: Sell the grapes in bulk (B), or make the thin (light) wine and sell it (T). * The best decision: Where the expected value (EV) maximizes current returns. * The blue values represent selling the harvest in bulk......

Words: 530 - Pages: 3

Winery

...is expected to also add wine as a choice.Indian Constitution discourages consumption of alcohol and authorizes States to formulate their own policies of production, distribution, procedures and pricing, making it complicated for the users, marketers and producers.State of Maharashtra (Mumbai is the Capital) announced in 2001 a progressive policy for wine production with special incentives and single-window clearances to help farmers as they were already growing eating grapes,. This resulted in a spate of new wineries; today Maharashtra boasts 90% of the national total of 90. With the policy extended to 2021, the thrust continues for new wineries.The balances are situated mostly in Karnataka which announced a similar policy in 2008 encouraging new wineries to be set up in the State. Singed with recession, the response was initially lukewarm with overall reduction of consumption by over one- third but a dozen wineries are now coming up. Recently an MOU was signed by 10 wineries and the Karnataka Wine Board which administers the State Policy. Included in these is Alpine which has Stéphane Derenoncourt as their consultant and has recently unveiled the maiden vintage of red wines that show promise.Wine Grapes of IndiaIndia has had an ancient wine-making tradition. After the Portuguese conquest of Goa in 1510, they planted vines to make wine. The British followed later and greatly contributed towards the growth of Indian wine consumption. Winemaking went off the radar with the......

Words: 2353 - Pages: 10

Accounting at Maccloud Winery

...GSM 5301 Accounting for Decision Making ACCOUNTING AT MACCLOUD WINERY Syed Mohd Muhsin Sy Mohamad Mohd Khalis Mohd Asrar Norhelena Mansor Mohd Hezreey Onn Keywords to be used: A=Asset L=Liability OE=Owners’ Equity R=Revenue E=Expenses SOCI=Statement of Comprehensive Income SOFP=Statement of Financial Position PPE= Property, Plant & Equipment NBV = Net Book Value Should the leased building be accounted for as an asset? No, leased building should be accounted for as an expenses (cost of sales) Why? Because: i) The lease contract signed was not mention on purchase bargain ii) Mike might not assume ownership of the building iii) The lease would be considered an operating lease (business expense) – expenses would be accrued by monthly as the asset is used. Should the agreement to pay lease rental be recorded as liability? Yes, it should be recorded as liability Again, why? Because: i) The contract has been signed and commitment already confirmed ii) It can be treated as Trade Creditor in liability ii) A=L+OE A : $0 L : $5k per year OE: R ($0)-E ($5k) = -$5k $0 =$5k+(-$5k) Applying accrual basis principal, how to treat the expenditures-land,vines,vine planting,fertilizing,water 1 - Land  Resource - to record as an asset upon purchase of land  Source - to record partially as a liability (term loan) and partial as owner’s equity (share capital) A=L+OE Land = Term loan + Share capital $250k = $180k + $70k 2 - Grapevines  To treat......

Words: 838 - Pages: 4

Maccloud Winery Case Study

...MacCloud Winery Case Study Due 11/17/13 1. Should the leased building be accounted for as an asset? No, the lease should be considered an operating lease. The building is the asset. The expense should be accrued on the building. The length of the lease should be less than 75% of the life of the asset leased. The lease is a ten year lease and the building has a 30-year economic life. Therefore this is an operating lease. The rental payments should be expensed as they are paid and offset by the cash used to make them. Should the agreement to pay lease rentals be recorded as a liability? No liabilities should be recorded because the future payments on the lease should be noted in the footnotes of the company’s financial statements. 2. Record the journal entries to account for the bank loan for all 3 years. Assume the loan was made at the beginning of the year and repaid at the end of year. Assume all interest payments are made on an annual basis. The $10,000 per year payment is to reduce the loan’s principal. Loan Issuance: DR Cash $180,000 CR Notes Payable $180,000 Year One Loan Repayment: DR Notes Payable $10,000 CR Cash $10,000 Year Two Loan Repayment: DR Notes Payable $10,000 CR Cash $10,000 Year Three Loan Repayment: DR Notes Payable $160,000 CR Cash $160,000 To record the interest payments annually (10% interest rate on $180,000 principal): DR Interest Payable $18,000 CR Cash $18,000 3. Applying the principals of accrual accounting,......

Words: 840 - Pages: 4

Freemark Abey Winery

...William Jaeger From: Consulting Group Date: January 19, 2013 Subject: Options and Best Practices for Winery From my research, word of mouth and your product itself, I am aware that Freemark Abbey Winery’s reputation is one of its greatest strengths. However, I understand that the weather plays as both a threat and opportunity for the wine industry as a whole. There are reports of a rainstorm in route to Napa Valley with a 50% chance of striking your winery; this is why you have reached out to my firm, Consulting Group. We have carefully analyzed all options and are ready to offer our recommendation. Problem Freemark Abbey Winery is known for producing premium wines; nevertheless, not choosing the best action to take in anticipation of this rainstorm may hinder your ability to even produce a premium wine for sale this quarter. A decision tree was constructed to weigh out Freemark Abbey Winery’s options. The winery has two alternatives: 1. do nothing and wait for the storm to greet the winery or 2. harvest the grapes immediately to avoid the rainstorm’s effects. Both options yield vastly different alternatives that we deem critical to your winery’s profit, revenue and reputation. Evaluation If Freemark Abbey immediately harvests its grapes, it incurs little risk and no further worry at first glance. Conversely, this option allows the winery to harvest “not quite-ripe grapes” resulting in weak revenues. This option contributes $2.85 of profit......

Words: 943 - Pages: 4

The Valley Winery

...Case Analysis – The Valley Winery The Valley Winery is the largest domestic producer of wine in the United States and one this nation’s largest privately held companies. Their recently hired sales manager of the San Francisco region, Pat Waller, has determined that the number one problem in the region, despite favorable sales results, was turnover which is nearly 100% a year with the average sales rep being with the San Francisco region winery for only 7 months before leaving or being terminated. Pat begun to analyze the effects of the turnover the company is experiencing, which consisted of first considering the costs of training and recruiting which was close to $33,000 per representative. Secondly, he believed that decreasing turnover would increase sales due to better customer rapport. Pat then decided to travel with sales representatives to better understand the day to day of the job to get a better sense of what may be happening while out in the field that may be adding to the high turnover. There seems to be many problems with the culture of this company, but not a single one with sales and profits. They’re consistently making high numbers, but the number one problem they seem to have at The Valley Winery is the high turnover problem. As mentioned above, the high turnover rate nears 100% on the year with the average sales rep staying a nearly 7 months. The sales manager of the company oversees two area managers, who collectively oversee 11 district managers, who......

Words: 1434 - Pages: 6

Delamere Winery

...Delamere Winery Problem Statement Richard Richardson wants to improve the quality of his wine by preventing oxidation, deepen the red color, and determining the best mix to include in the crush. However, he uncertain which initiative will be the most impactful, will be most accepted by his customers, and be the most cost effective. Due to harvest, Richard Richardson only has a few days to decide. Objectives Richard Richardson’s goals are to: • Continue to grow his business and increase profit. • Prevent oxidation of the wine. • Deepen the color of his red wine. • Determine the best mix of whole bunches, stalks, and destemmed grapes in the wine’s crush. Analysis Richard Richardson owns a 21.3 acre winery in Tasmania. 8 acres of the winery are used to produce wine. He has a PhD in agricultural chemistry and has used to his education and passion for winemaking to attempt to continually improve his wine through experiment and express the personality of the winery as well as his own. However there are many risks and conflicts involved with his current business practices. The Tasmania wine region is growing rapidly and experiencing many changes. The region is becoming very competitive and focused on quality, price, and consistency. Advertising is currently limited but will likely change as a more competitive environment emerges. There are many steps to manufacturing wine such as harvesting, crushing, fermentation, and maturing. Currently......

Words: 1497 - Pages: 6

Winery Report

...灌溉、水源及用水成本。 4. 收购后的管理 无论是部分还是全盘收购,使用当地管理团队都非常重要。购买酒庄后必须要有当地专家参与, 尤其是在酒庄管理上,才能保持酒的品质和品牌。因此需要建立一个有效的沟通系统,保证与当地 管理团队或其他股东的良好合作,实现企业的长期发展。 六、中国企业对澳洲葡萄酒业的现有投资以及潜在机会 近两年澳大利亚葡萄酒业吸引了不少海外投资者的注意,尤其是来自中国的投资者。中国市场 对葡萄酒的需求增长是主要推动力。 近期的一些投资案例包括: 锐勤资本集团 8 中国投资澳大利亚葡萄酒业分析 中国投资澳大利亚葡萄酒业分析 (澳洲)飞马公司(Pegasus Corp)属中国某食品酒类多元化加工制造私营公司,飞马投资 一千万澳元购买西澳 Great Southern 及 Margaret River 两地区的葡萄酒制造商 Ferngrove 共 计 60%的股份。Ferngrove 基地位于 Frankland River,生产能力 7000 吨,压榨能力 3500 吨, 其大部分产出主要供应散装酒市场。该公司即将在 Margaret River 的 Caves Road 新开一间品 酒厅。目前 Ferngrove 旗下有三个品牌的葡萄酒产品:Ferngrove、Leaping Lizard、以及最近 购得的 Killerby。飞马则将于 8 月在中国大陆为 Ferngrove 产品开设 10 间商店,据报道飞马 还计划开设更多商店。 威士顿葡萄酒公司(Winston Wines)总部设在中国厦门,自 2007 年起开始进口澳大利亚葡 萄酒,其在大陆拥有共计 60 间商店,曾以 280 万澳元价格从猎人谷的金葡萄酒厂(Golden Grape winery)购入 15 英亩葡萄园、一间品酒厅、一个葡萄酒博物馆(含澳洲最老的葡萄 酒出版社),以及一间餐馆。威士顿还正在协商以 150 万澳元外加股份的条件购买 Capercaillie , 威 士 顿 将 获 得 5 公 顷 ( 12 英 亩 ) 葡 萄 园 , 内 种 植 有 霞 多 丽 、 琼 瑶 浆 (Traminer)、山姆山(Chambourcin)及味而多(Petit Verdot)等品种的葡萄。据报道, 威士顿还购买了另一家澳洲酒厂。 Bird in Hand 是一家总部位于 Adelaide Hills 的酒厂,日前与中国进口商、大连澳豪贸易有限 公司旗下的 Auspride 葡萄酒会员俱乐部展开合作,将在大陆开设两间门店。 来自维州 Mornington Peninsular 的 Yabby Lake 与广州沃河酒业有限公司展开合作,计划在广 东省开设 7 间商店,据悉双方还计划再多开 3 间。 锐勤集团目前正在帮助投资者审查 3 个葡萄酒庄的收购机会,包括: 一家私营酒厂,在西澳、维州及南澳拥有葡萄园,生产高质量、大品牌葡萄酒,旗下拥有 4 间酒庄,一间在维州,其余在西澳,年销量约 25 万箱并且有大量剩余生产力; 一家南澳的酒厂,位于著名的巴诺莎谷(Barossa Valley),主要生产红酒葡萄; 一家维多利亚州的酒厂,旗下拥有四个葡萄园和一个酒庄,生产品牌及贴牌葡萄酒并供应 酿酒葡萄,年销售额约 500 万澳元。 锐勤资本集团 9 ...

Words: 1230 - Pages: 5

Benziger Winery

...Executing Strategy: Concepts and Cases, 14th Edition Benziger Family Winery Case © The McGraw−Hill Companies, 2004 1 case Benziger Family Winery Murray Silverman San Francisco State University 36 Tom Lanphar California Department of Toxic Substances Control had been the primary participants developing the system, the rest of the organization would have to become involved and staff training would be required. In light of the financial investments and time that would be required from management and employees, Matt and Chris had to decide whether to aggressively pursue ISO 14001 certification. The alternative was to continue to develop an EMS as time and resources permitted, leaving open the possibility of eventually pursuing ISO 14001 certification. M att Atkinson, ranch manager at Benziger Family Winery (BFW), was overseeing the development of the winery’s environmental management system (EMS). Matt was working with Chris Benziger, partner and national sales manager, to ensure that development of the EMS was consistent with BFW’s operational and strategic direction. It was February 2003 and Matt and Chris had already invested countless hours in the EMS, which was being developed with assistance from the California Environmental Protection Agency (Cal/EPA). Through its EMS winery pilot project, Cal/EPA hoped to design an EMS template that eventually could be made available to other wineries. Furthermore, Cal/EPA was attempting to develop a......

Words: 8320 - Pages: 34

Mondavi Winery

...1. What are the main benefits and drawbacks to the Mondavi Winery of becoming a public company? 300 words maximum Once the Mondavi Winery becomes a public company, there will be an immense increase in its equity and it can be used to fund Mondavi’s rapid growth. Despite the fact that family control can be retained by designing the rules of IPO, the uncertainty degree would still be higher than the company used to be. The fluctuation of share price would also affect the company image. Moreover, Mondavi’s historical financial performance, which had previously been a guarded secret, was made available to the public. 2. What types of investors are most likely to be interested in the company? How could you target those investors? 300 words maximum Wine stocks appeal to ‘the hobby stock holder’ who wants to be part of this industry. Investors can be targeted through the following process: 1. Look for wine lovers who know how to appreciate US-made premium wines. Some useful sources may be obtained from wine-related clubs, associations and institutes. 2. Hold social fairs or other events and share stories and visions with these potential investors instead of simply analysing financial data to have them involved in picturing a better future with strong evidences. 3. Emphasize on the expected big leap of Mondavi, which may serve as a growth booster of the whole US wine industry to arouse the need of purchasing Mondavi stock. 3. How would you recommend Robert......

Words: 377 - Pages: 2

Freemark Abbey Winery Case

...Freemark Abbey Winery Case The Freemark Abbey Winery must decide whether to harvest their grape crop before or after an incoming storm. If the storm is light there is a chance of the grapes developing a mold, which is beneficial to the flavor and increases the wine’s value. There is also a possibility that the grapes will not become botrytised and will simply absorb water which will reduce the wine value. There are a number of options available to the winery in this situation. The grapes may be harvested immediately, resulting in a reduced revenue. This option is low risk, but also has low return as the grapes will reach a market value of $2.85 per case. If harvested and sold in bulk the grapes will be values at only $1.00 per case. If 12,000 cases are produced the total revenue will be $34,200 maximum and $12,000 minimum. The advantages of this are that the entire grape crop is not going to be lost (low risk), that there will be a guarantee of some profit, and that production can begin earlier. On the other hand there is a higher likelihood of a low return, particularly on the grapes sold in bulk. If the grapes are left on the vine and a storm does not come they will only ripen more. This option could lead to equal or greater profits than those found by harvesting immediately. The grapes left on the vine will have the potential to develop to bring in anywhere from $30000 to $46000. The disadvantages of this option would be the potential that the grapes’ sugar will not......

Words: 635 - Pages: 3

Mondavi's Winery Case Analysis

...obvious. Wine industry never slowed down exhibiting constant growth of 1-2% over the years. According to Roberto, there are over 1 million wine producers worldwide with various representation in different parts of the world that share yearly profits of $130 to $180 billion in retail sales (p.1). Robert Mondavi’s winery, described in the case, proved to be a profitable business that showed a substantial growth rate of 28% since fiscal year 1994 and market value of $600 million (p.1). Wine industry is a very profitable business that is an excellent target for investment. I would invest into a reputable and growing winemaking company with no reservations. Robert Mondavi has a significant advantage over the smaller independent wineries due to the name recognition after the efforts to advertise the company and its products. Robert Monbdavi’s business has established a loytal customer base and is taking efforts to further expand the number of people who are familiar with the name. Most of the success comes from the advertising and promotion efforts that are aimed to educate people about fine wine. According to Roberto, Mondavi’s company invested $11 million in the Golden Vine Winery at Disney new California Adventure Theme Park and spends $20 million annually on advertising efforts (p. 10). However, Mondavi’s company faces a serious competition from large and small winemaking companies that are moving aggressively into the premium wine business to complement their alcoholic......

Words: 986 - Pages: 4

Freemark Winery

...correct (more on this later), R and C are irrelevant to the problem. Given the information you provided, it seems safe to assume that C < $15, 000.∗ Even assuming the worst, R ≥ $12, 000 and C = $0, the option of waiting has a greater expected value than the decision to harvest now: $35,640 versus $34,200.† If the worst is not true (i.e., R < $12, 000 or C > $0), the the option of waiting is even more valuable. Consequently, unless you strongly dislike risk, you should wait to harvest. Your expected gain from waiting is at least 4% (worst-case scenario). If the very best-case scenario in which the node (labeled as ①) is worth $28,200 (see Technical Appendix for underlying calculations), your expected gain would be at least 18%. Because your winery is a partnership rather than a stock firm, I assume that risk is an issue for you. On the other hand, Riesling represents only 4% of your ∗ Otherwise, you not find it profitable to produce a $2.50 bottle of wine should the storm not occur and the acidity drops below 0.7%. † I provide details in the attached technical appendix. Copyright c 2004 Benjamin E. Hermalin. All rights reserved. mba 201a Lecture 2 — Fall 2004 business, which suggests that this particular risk would not be very significant to you. Only a full evaluation of your attitudes toward risk—which I could conduct for an additional fee—would reveal whether this risk would be acceptable. Finally, there is the accuracy of the numbers you gave me. I assume I can......

Words: 1529 - Pages: 7

Valley Winery

...Valley Winery Case Study Introduction The San Francisco division of Valley Wine has recently hired a new sales manager named Paul Waller. The company has had consistently good sales despite a turnover of 100% of the sales force in the San Francisco area. Waller is tasked with better planning and organization of the sales force activities of Valley Winery and the operations in the region. Philosophy and Strategy The Valley Winery was founded in 1933 and has grown to the largest domestic producer of wine in the United States. They produce multiple product lines that include both low-price, consistent-quality wines as well as lower quality wines and wine coolers. The Valley Winery has had a difficult time retaining its sales force. Even though they have had short-term growth in sales, they are not able to sustain the growth. The Valley Winery has been recognized as the best managed and most innovative in the market. This is related to two factors: * Producing low-priced wine with consistent quality * Push strategy that is used by the sales force Distribution System Valley Wine has a wide, nationwide distribution system which is primarily located in metropolitan areas. The company owns approximately 50% of these distributors that are mainly larger and more profitable accounts. The company typically does not target smaller accounts, but one of their products do cater to this segment of the market also. Sales representatives’ call on......

Words: 1098 - Pages: 5

Quint Winery

...Quint winery | Exploring possibilities to enter the Japanese market | | This study aims to give Quint winery a solid advice wether to enter the Japanese market or to look for other ways to expand their market. | | Roderick d’Hont 48632 | 1-1-2011 | | 1 Contents 1 Case discription 3 2 Analysis 3 Uncovering the potential of the Japanese market 3 How to locate potential Japanese purchasers 4 Should Quint winery visit japan or should japan visit quint winery 4 Entering Japan solo or together with other companies 5 Marketing research 5 3 Conclusion 5 1 Case discription Quint winery is a wine producer located at the Mosel River Valley in Germany. As the home market is becoming increasingly saturated and the competition is increasing, Quint Winery is looking for other markets to expand their sales and distribution. The wines produced at Quint Winery are high quality, and honor the traditions in wine making. Once at a ‘wine tasting party’, one of Quint Winery’s German customers brought a Japanese visitor along. She believed that the wines would prove salable in Japan, if marketed properly. 2 Analysis Uncovering the potential of the Japanese market Wine made out of grapes hasn’t been one of the favorite alcoholic beverages in Japan. Rice wine and plum wine were always the way to go. As these wines are made in Japan, they contribute to the Japanese sense of culture and traditions. Only since 1969 when Pieroth, which is an established wine brand......

Words: 1499 - Pages: 6