This case focuses on the Income Statement in the context of a brewing company, entitled Molson Coors Brewing Company. This is where Molson Coors reports income and expenses arising from secondary activities of the company.
ACCOUNTS RECEIVABLE
There are two offset accounts associated with Pearson's trade receivables: Allowance for Sales Proceeds and Allowances and Allowance for Doubtfulness. Complete a T-account showing the activity on the sales returns provision account during the year.
BAD DEBT REPORTING
Accounts receivable, net of allowance for doubtful accounts $950,000 Customer accounts written off as uncollectible during. What must be the balance in accounts receivable on December 31, 2017 before the allowance for doubtful accounts is deducted.
PROPERTY, PLANT, AND EQUIPMENT
Based on the description of Palfinger above, what kind of property and equipment do you think the company has. When they are completed, they are removed and debited to the property's current facilities and equipment. Use the information in the notes to the financial statements to analyze the activity in “Property, plant and equipment” and “Accumulated depreciation and.
Explain what these allowances are and why they are deducted from the property, plant and equipment account. The net book value of property, plant and equipment that Palfinger disposed of in fiscal 2007. The statement of cash flows (not presented) states that Palfinger received proceeds on the sale of property, plant and equipment amounting to €1,655 in fiscal 2007.
Calculate any gains or losses on this transaction, assuming the company used straight-line depreciation. Consider the gain or loss on the disposal as well as the total depreciation on the equipment (ie the amount from part i.i). Consider the gain or loss on the disposal as well as the total depreciation recorded on the equipment (ie the amount from part i.ii).
RESEARCH & DEVELOPMENT COSTS
Furthermore, looking at the ratio of research and development costs to net sales allows for even greater comparison. Volvo Group follows IAS 38—Intangible assets, to account for its research and development expenditure (see IAS 38 extracts at the end of this case). Refer to footnote 14 where Volvo reports an intangible asset for "Product and software development". Assume that the product and software development costs reported in footnote 14 are the only R&D costs that Volvo capitalizes.
What is the amount of capitalized product and software development costs, net of accumulated depreciation, at the end of fiscal year 2009. This is shown on the last row under the Product and Software Development column. Assume that the product and software development costs reported in Note 14 are the only R&D costs that Volvo capitalizes.
What share of the total R&D costs incurred has Volvo Group capitalized in each of the three years (as an intangible asset for product and software development). GAAP which requires that all research and development costs be recorded in the year in which they are incurred. Calculate the share of total research and development costs in net sales from operations (for Navistar, called net sales from manufactured products) for both companies.
DATA ANALYTICS
Example no. 7 gave me the much needed knowledge of data analytics by exploring a specific software tool called Hadoop. The establishment of the World Wide Web was a major factor in the need and creation of automated search engines for efficient search of relevant information. One remained a web search called Nutch, while the other evolved into a computing and processing engine called "Hadoop".
Hadoop's purpose is to better inform decision makers through data analytics so that their solutions are better and faster. Most other data analysis tools use SQL, so finding programmers who know Java is the key to success with MapReduce. Hadoop can help recommend optimal locations in the United States and around the world to expand operations to best address these two conflicting goals.
Write a few paragraphs to your future public accounting partner explaining why your team should invest in purchasing and training in this tool. It is in the best interest of our team to invest in the necessary talent and training to implement Hadoop. What is Hadoop?” SAS Institute Inc., www.sas.com/en_us/insights/big- data/hadoop.html.
LONG TERM DEBT
According to Note 11, who has guaranteed some of Rite Aid's unsecured debt. Consider why Rite Aid has many different types of debt with a variety of interest rates. Reconcile the total debt reported in Note 11 with what Rite Aid reports on its balance sheet.
Prepare the journal entry Rite Aid should have made when these notes were issued. Determine the total amount of interest expense recorded by Rite Aid on these notes for the year ended February 27, 2010. 49,143 in total for the amount of interest expense recorded by Rite Aid on these notes for the year ended February 27, 2010.
Assume that Rite Aid issued these notes on June 30, 2009, and that the company pays interest on June 30 of each year. Assume that Rite Aid uses the effective interest rate method to account for this debt. Based on the above information, prepare the journal entry that Rite Aid would have recorded on February 27, 2010, to calculate interest expense on these notes.
SHAREHOLDER’S EQUITY
It is the highest number with shares issued as the second largest (unless they are equal to shares outstanding). The outstanding shares can never be greater than the issued shares, but can be equal to the issued shares. Reconcile the number of shares outstanding at December 31, 2007, with the dollar value of the common shares reported on the balance sheet.
Market capitalization is the number of shares outstanding multiplied by the market price per share. Finally, it returns money to the shareholder, who indirectly contributes to the company's profits. When dividends are paid, the company's share price is reduced by the amount of the dividend paid.
The name "purchase method" comes from the fact that it keeps an account of its own shares at the cost price of the purchased shares. You can find this number on the statement of cash flows in the line titled purchases of treasury stock. For Merck to disclose their own shares as an asset would unfairly imply that they own part of it.
MARKETABLE SECURITIES
Available-for-sale securities are those debt or equity securities that are neither held to maturity nor traded. If the market value of available-for-sale securities increased by $1 during the reporting period, what journal entry would the company record. What is the amount of net unrealized gains or losses on the available-for-sale securities held by State Street at December 31, 2012.
Net unrealized gains or losses in 2012 for available-for-sale securities are gains in the amount. What was the amount of net realized gains (losses) on the sale of available-for-sale securities for 2012. The 2012 net realized gains or losses on available-for-sale securities are gains of $55 million.
At the top of page 119 in note 4 are two lines entitled "gross realized gains from the sale of available-for-sale securities" and "gross realized losses from the sale of available-for-sale securities". Show the journal entry State Street made to record the purchase of available-for-sale securities for 2012. Show the journal entry State Street made to record the sale of available-for-sale securities for 2012.
DEFERRED INCOME TAXES
This was the most difficult part of the case because it asked the "why" question: why a company reports deferred income taxes as part of their total income tax expenses and why companies don't simply report their current tax bill as their income tax expenses. A permanent tax differential is a difference between income tax expense and income taxes payable that will never be reversed. It is the total income tax expense for the period divided by the financial income before taxes.
Explain in general terms why a company reports deferred income taxes as part of total income tax expense. Measuring income tax expense in this way allows the company to match income tax expense with the amount of pretax book income. A deferred tax valuation allowance is the portion of a deferred tax asset for which it is more likely than not that a tax benefit will not be realized.
Using the information from the first table in Note 8, show the journal entry that ZAGG has recorded for the income tax provision in the 2012 financial year. The net deferred taxes recorded in the income tax journal entry are split into two components: 8,002 of deferred tax assets and 291 in deferred tax liabilities. The effective tax rate is calculated by dividing the total income tax expense by the pre-tax financial income.
REVENUE RECOGNITION
It is the result of unsatisfactory guidance from the FASB and the IASB in several areas of revenue recognition. Comparing Apple's disclosure and revenue recognition requirements to the required criteria in ASC 606 helped solidify my understanding of the concepts. There are so many factors that go into revenue recognition and this case has helped break down these factors and make them more manageable.
Situations like this make revenue recognition complex and interesting, which is why I enjoyed this case. The new standard, Revenue from Contracts with Customers, describes a five-step process for revenue recognition. Do they appear to meet the revenue recognition criteria you described in part b, above?
What are multi-element contracts and why they present revenue recognition problems for companies. Mac-branded accessories such as headphones, power adapters and backpacks are sold in Apple stores. Apple immediately recognizes revenue from Mac-branded accessories such as headphones, power adapters and backpacks sold in Apple stores.
