Although three of the main financial statements are listed in the report, this report does not present a Statement of Cash Flows for the company. I would recommend investors buy the company, but watch carefully how the company's management moves forward with Eads Home Heaters, Inc.
Comparison of Both Companies
Operating Section: This section is a report of income and expenses in the day-to-day operations of the company. Income is able to allow the user to see the general trend of the company's net income from previous and current years.
What is the difference between these two income statement items? Why does Molson Coors Brewing
Special item?”
Executive Summary
What is accounts receivable? What other names does this go by instead?
How do accounts receivable differ from notes receivable?
What is a contra account? What two contra accounts are associated with Pearson’s trade receivables (see Note 22)? What types of
Two commonly used approaches for estimating uncollectible accounts receivable are the percentage of-sales procedure and the
What information do managers need to determine the activity and final account balance under each approach? Which of the two
If Pearson anticipates that some accounts will be uncollectible, why did the company extend credit to those customers in the first place?
Discuss the risks that managers must consider with respect to accounts receivable
Note 22 reports the balance in Pearson’s provision for bad and doubtful debts (for trade receivables) and reports the account
Note that Pearson refers to the trade receivables contra account as a
- Use the information in Note 22 to complete a T-account that shows the activity in the provision for bad and doubtful debts account
- Prepare the journal entries that Pearson recorded during 2009 to capture 1) bad and doubtful debts expense for 2009 (that is, the
- Where in the income statement is the provision for bad and doubtful debts expense included?
- Note 22 reports that the balance in Pearson’s provision for sales returns was £372 at December 31, 2008 and £354 at December 31,
- Create a T-account for total or gross trade receivables (that is, trade receivables before deducting the provision for bad and doubtful
- Based on the description of Palfinger above, what sort of property and equipment do you think the company has?
- The 2007 balance sheet shows property, plant, and equipment of
- What types of equipment does Palfinger report in notes to the financial statements?
- In the notes, Palfinger reports “Prepayments and assets under
The number shown in the 2007 balance sheet for Palfinger is the total tangible assets owned by the company. Plant refers to a company's production capacity, while machinery is the assets that a company uses in production.
- How does Palfinger depreciate its property and equipment? Does this policy seem reasonable? Explain the trade-offs management
- Palfinger routinely opts to perform major renovations and value- enhancing modifications to equipment and buildings rather than
- Use the information in the financial statement notes to analyze the activity in the “Property, plant and equipment” and “Accumulated
- The statement of cash flows (not presented) reports that Palfinger received proceeds on the sale of
This difference gives you purchases of new real estate, plant and equipment for Palfinger. Net book value of real estate, plant and equipment disposed of by Palfinger in the 2007 financial year.
The statement of cash flows (not shown) reports that Palfinger received proceeds from the sale of proceeds received from the sale of.
Calculate the gain or loss that Palfinger incurred on this transaction
Prepare a table showing the depreciation expense and net book value of this equipment over its expected life assuming that
- The 2009 income statement shows research and development expenses of SEK 13,193 (millions of Swedish Krona). What types of
- Volvo Group follows IAS 38—Intangible Assets, to account for its research and development expenditures (see IAS 38 excerpts at the
- The R&D costs that Volvo Group capitalizes each period (labeled Product and software development costs) are amortized in
- Refer to footnote 14 where Volvo reports an intangible asset for
This will increase the company's overall profits, which in turn will keep the company's investors happy. To be classified as an intangible asset, it must be established that it will provide future economic benefit to the company. Any research conducted by the company cannot be recognized as an intangible asset but must be recognized as an expense of the company.
While working on the case, I learned how to report various situations of intangible assets in accordance with IAS 38 on the financial statements of the company. The Volvo Group follows IAS 38 – Intangible assets to account for its research and development expenditure (see IAS 38 extract at the research and development expenditure (see IAS 38 extract at the end of this case). If the company considered certain things to be listed as research, an intangible asset arising from research or from the research phase of an internal project must not be recognised.
But if the company designates it as development, Volvo will be able to capitalize on it. To be capitalized, it must meet the following criteria listed by IAS 38 section 57. When a company decides to amortize and capitalize its products, the company must consider the future benefits of that product.
Product and software development.” Assume that the product and software development costs reported in footnote 14 are the only R&D
- Refer to Volvo’s balance sheet, footnotes, and the eleven-year
- Assume that you work as a financial analyst for Volvo Group and would like to compare Volvo’s research and development
- History of IDEA by Caseware
- Skills Needed to Use IDEA by Caseware
- How to use this tool in the business world?
- Audit
- Tax Planning
- Financial Statement Analysis/ Valuation/ Advisory
- Present Why We Should Invest in IDEA by Caseware
- Consider the various types of debt described in note 11, Indebtedness and Credit Agreement
During 2007-09, the average percentage of research and development costs for the company Navistar was approx. 3.21%. This provides a timely audit to fix some of the gaps in the business before they are exposed and a more cost effective way for a business to conduct an internal audit. ii. IDEA is able to sort through sales transactions that occurred during the year and identify the correct amount of VAT owed by the business.
This is useful when filing tax returns at the end of the year for the business. IDEA is able to work with the finances of a company to easily interact with the company's various financial functions to provide a single view of the company's financial controls. To use IDEA, several members of an audit team must be thoroughly trained in the various uses of the tool.
This is the reason that creditors are sometimes more concerned with the value of the company's assets than looking strictly at the company's profits. Rite Aid separates two types of debt on the balance sheet in order to show shareholders and creditors how much of each type of debt the company carries. But if the interest rate falls during the term of the bond, then the company still has to make the higher interest payments.
To calculate the book value of a note, take the face value of the note, subtract the unamortized discount to get the book value of the note. To calculate the cash paid for that year, the company will take the face value of the note and multiply it by the note's stated interest rate to get the money to be paid. To calculate interest expense, we need to take the book value of the note and multiply it by the effective interest rate to get the interest expense for the year.
The second way is the effective interest method, where the book value of the bond is multiplied by the. If the bonds were sold at a premium, the stated interest rate of the bonds would be higher than the market rate. Then enter the depreciation periods, the cash payments on the note, the current value of the note, and finally the future value of the note.
Note that when the payments and the face value of the note are entered, they enter as negative since they are cash outflows. Based on your answer to part iv, what would be the net book value of the notes on February 27, 2010. To find the carrying value on February 27, 2010, take the original carrying value of the note and since it was issued at a discount, add the discount back onto the note for the accrual period to get a new net carrying value of $403,136.
Executive summary
- Consider Merck’s common shares
- Why do companies pay dividends on their common or ordinary shares? What normally happens to a company’s share price when
- In general, why do companies repurchase their own shares?
- During 2007, Merck repurchased a number of its own common shares on the open market
- Determine the missing amounts and calculate the ratios in the tables below
- Consider trading securities. Note that financial institutions such as State Street typically call these as “Trading
Listed in the charter are the main objectives of the company and the various strategic operations the company has in place to accomplish its goals. Merck has listed in its charter that it is only allowed to authorize company shares. To calculate market capitalization, a company will take the market value of the shares traded multiplied by the number of shares outstanding.
If management is unhappy with some of the shareholders' decisions, then they can buy back their stock. To find the cash paid for the treasury stock at the time the company must receive the repurchase of the stock times the market value of the stock. I learned how a tax shelter is created and how the structure of tax shelters is kind of genius.
Some of the main countries using corporations are the Netherlands, Cayman Islands, Panama and Bahamas. As a hired service of the particular corporation, it is therefore the duty of the accounting firm to legally save the corporation the most money. This is due to the fact that investment activities are part of the daily operations of the company.
- Consider the “Trading account assets” on State Street’s balance sheet
- Consider the balance sheet account “Investment securities held to maturity” and the related disclosures in Note 4
- Consider the balance sheet account “Investment securities available for sale” and the related disclosures in Note 4
- State Street’s statement of cash flow for 2012 (not
When the fair value of the securities changes from period to period, they are adjusted against the operating income in the equity section of the balance sheet. If the market value of the available-for-sale increased by $1 during the reporting period, what journal entry would the company require. This type of security is listed on the company's balance sheet at the stated price of the bond.
If this is the case, the discount or premium is amortized over the term of the bond. Unlike available-for-sale or trading securities, when the fair value of the security changes during the accounting period, there is no One possible reason for an increase in the fair value of the bonds is a fall in interest rates.
To calculate the book value of the bond at the current date, the company will either take the original cost price and add amortization costs (discount), or take original cost and subtract amortization costs (premium). The difference between the security's market value and the book value to date is either the gain or the loss on the sale of the security. The current interest rates at the time, the credit of the company taking out the loan, or the financial position of the company at the time of the loan are several factors in the calculation of the market value of the bond.
Describe what is meant by the term book income? Which number in ZAGG’s statement of operation captures this
Accounting income is defined as income from special items that are listed in the company's income statement and are not part of the company's taxable income. Some examples of non-taxable items a business might have are municipal bonds, workers' compensation, and tax refunds.
In your own words, define the following terms
Explain in general terms why a company reports deferred income taxes as part of their total income tax expense
Why don’t companies simply report their current tax bill as their income tax expense?
Explain what deferred income tax assets and deferred income tax liabilities represent. Give an example of a
Explain what a deferred income tax valuation allowance is and when it should be recorded
Consider the information disclosed in Note 8 – Income Taxes to answer the following questions
In your own words, define “revenues.” Explain how revenues are different from “gains.”
Revenue for a business is defined as the sale of goods or services provided by the business that are associated with the main activities of the business. When presented in the income statement, revenue is usually listed as the first line of the income statement. To arrive at net income, the most basic calculation is income minus any expenses equal to net income.
Revenue occurs in the normal operations of the business, while a profit is the result of a transaction unrelated to the company's primary operations of business. For example, a company like apple whose main business is manufacturing technology products, they sell a truck for $10,000 that had an adjusted basis of $5,000, and Apple Inc.
Describe what it means for a business to “recognize” revenues
What specific accounts and financial statements are affected by the process of revenue recognition? Describe the revenue recognition
What are multiple-element contracts and why do they pose revenue recognition problems for companies?
A multi-element contract is one where a company sells multiple products to a single customer under a single contractual agreement. The problem with multi-element contracts under the accrual method of accounting is how to report and measure revenue for each component or product involved in the sale. Since the company provides goods and services over time, it is difficult to properly allocate the right amount to each good for the same period of time.
In general, what incentives do managers have to make self-serving revenue recognition choices?
In scenario two of the problem we get a future value as well as the past given in the problem. We use the future value because we are given the future value of the problem. We also use the future value of a single sum because it is the lump sum method.
We then divide the future value by the sum of the current value, which gives a value of 3.16667.
Appendix
Equipment Accounts Payable Interest Payable Rent Payable Note Payable Common Stock Dividends Cost of Goods Sold Depreciation Building Expenses.
Pearson Plc
