BUL 6810Final ExaminationINSTRUCTIONSThe final examination consists of 4 essay questions; each question is worth 25 points. Eachquestion and any subparts of the question must be answered. The final should be 6-8 pages double spaced and only 1 inch margins please. The answer may exceed the page limitations.This is not a group project. Each student should work alone. READ THE QUESTIONSCAREFULLY BEFORE ANSWERING.In order to do well on this test you must refer to materials in the chapters including cases and you may also refer to the handouts and in-class case studies and discussions. Make sureto use the legal and business terms that you have learned in the course and apply them to thefacts of the questions. When you use a legal term provide an explanation of its meaningand/or any legal test that explains how it is applied to any factual situation. If there is acase that supports your argument make sure to explain the reasons.Please bring a hard copy of your exam to class. LATE SUBMISSIONS WILL NOT BEACCEPTED. NO EXCEPTIONS!1. Using the course readings and materials explain how legitimate accounting methodsfacilitate fraud. Give examples.2. Explain what Arthur Leavitt meant by the “erosion” of the quality of financial reporting.Give examples.3. The South Miami Engineering Company of Florida (SMEC) recently began marketing a uniquetest that can predict what the stability of soil will be during a flood. This test benefits propertyowners because it allows them to determine whether a building will be structurally stable in floodconditions. No one else performs this test in Florida. SMEC did not invent the test but insteadpurchased the rights to a license for the entire geographical area of south Florida from a vendor.SMEC hired and trained Xavier an experienced engineer to perform this test. SMECprovided Xavier an employment contract for Xavier to sign. The contract contained thefollowing non-competition clause:“In the event Xavier leaves the employ of SMEC he agrees not to perform or providesimilar testing services within the State of Florida for six years. Xavier read and signedthe agreement. After one year Xavier quit work at SMEC and opened up his ownengineering company. His company provided engineering services including a test verysimilar to the one performed by SMEC. The test was not developed from any informationgained during Xavier’s employment at SMEC. Instead one of SMEC’s competitorsdeveloped a different prototype of the test and licensed its use to Zavier’s company.SMEC’s sales declined after Xavier’s company began performing the similar test. When SMEC learned that Xavier had opened his own engineering firm and wasperforming a similar test it sued Xavier for breach of the noncompetition clause.a. Is the non-competition provision between SMEC and Xavier enforceable? Explain. (p.351-2)(Florida courts will rarely refuse to enforce a non-compete agreement due to its lengthor geographic scope. Instead courts often employ the “blue pencil” to reignimpermissibly broad terms within the limits of Fla. Stat. § 542.335) See final examattachment.b. Assuming the non-competition provision is enforceable and was breached by Xavier what types of damages might SMEC be entitled to?4. A development company has decided to raise capital from private investors to build stripshopping malls in three separate towns in south Florida. Your consulting firm has beenretained to advise the company on the form of business organization to be used tofacilitate the transaction. The development company wants to keep the three investmentsseparate. It is not intended that profits be shared between investor groups. Theinvestment transactions should be wound up and terminated within 90 days after thecompletion of the construction. Investors will receive the return of their investment withan additional 6% return on investment. What form of business organization would yourecommend and why? (p.624)
