Question 1
The board of directors is considering updating the fleet of vehicles of the company which are used to ship goods to markets all around the United States. They will be leasing the vehicles as opposed to purchasing them outright. Please explain the advantages of leasing and which lease type would be more preferable?
Question 2
In some cases, one of the purposes of initiating a business combination is to control your value chain through vertical integration.
Consider the following two independent scenarios:
1. General Motors relies on an unrelated company for a key component
2. General Motors relies on a vertically integrated subsidiary for a key component
Discuss the pros and cons of both scenarios. Specifically address how a subsidiary that provides products only to the parent can be fairly evaluated on performance. What do you believe is the best option for General Motors? Explain.
Question 3
The growth of information technology has caused the accounting industry to further examine control and security issues. Do you feel it is possible to provide absolute security for a company's information system? Why or why not? What are some controls that can be put into place to enhance the security of the information system? Explain.