Glenwood's current ratio and acid test are 4.8 and 2.98, respectively, meaning it can pay its bills more easily than Eads at 1.3 and 0.87. By investing equal capital, Glenwood's earnings per share of 28.9 to Ead's 22.0 that Glenwood generates higher earnings per every dollar invested.
RETURN ON NET OPERATING ASSETS Molson Coors Brewing Company
The net operating profit can be found in different ways according to the basis of net income. All other assets come down to the basis of These are all the items on the assets that do not contribute to day-to-day operations.
STATEMENT OF CASH FLOWS Golden Enterprises, Inc
The Statement of Cash Flows provides relevant information about the cash receipts and payments of an enterprise over a period. The two different methods of preparing the statement of cash flows are the indirect and direct methods.
ACCOUNTS RECEIVABLE Pearson
This is the activity of anticipating how much of the company's sales account will be returned and credited from the sales account. In 2009, the company estimated sales revenue by calculating that 25 percent of trade receivables would be returned. According to my calculations, for 2009, with their estimated % uncollectible trade receivables, the company would not collect 74.19 million pounds of their gross trade receivables.
An accountant must report the error that the company reported £76m not being received. In 2008, there were much less credit sales than in 2009, and of those sales, a higher percentage of them were trade receivables; therefore it was a little more difficult for the company to collect their receivables in 2008 than in 2009. This means for the company to tighten the credit policy on receivables so that the company does not receive them after they have to pay their bills.
U.S. GAAP Graphic Apparel Corporation
Instead of using the direct write-off method for uncollectible accounts, as GAC currently uses, the company may switch to the allowance method for uncollectible accounts. The direct write-off method is not considered appropriate when there are significant amounts of uncollectibles because it fails to record expenses in the same period as income (in accordance with the matching principles we live by in accounting) and does not state receivables on a net basis . realizable values in the balance sheet. This method would affect the balance sheet because under the direct write-off method there is no account against assets as there is in the provision method that deducts the amount of receivables that will probably not be collected.
This method is acceptable when the amount returned each year is insignificant or very small in the grand scheme of business; therefore, GAC is only acceptable to use this method of recording returns when they are returned. It is still important to implement this policy now so that the financial statements are consistent in the future. The cost of inventory can be averaged in the case of this clothing company because it does not age or become obsolete in the market.
DEPRECIATION Planes and Garbage
From at least 1992 through part of 1997, the directors of Waste Management increased their profits by improperly deferring or eliminating current period expenses. Management deferred or eliminated current period expenses by inexplicably increasing the salvage value of their trucks and extending the useful lives of these trucks to amortize the depreciation. Waste Management managers wanted to manage profits in order to manipulate publicly released financial statements.
Arthur Andersen was Waste Management, Inc. 's external auditor during WMI's fraudulent financial reporting habits and, among other things, failed to publicly report WMI's fraud. AA did assign proposed adjusting journal entries to WMI several times to correct their past financial errors, but WMI was unable to make these corrective adjustments to maintain their false earnings level. After that, AA secretly entered into an agreement with WMI to allow them to write off their accumulated expenses, especially the deferred depreciation expenses, to correct old mistakes over the future.
CONTINGENCY FORMATTING Construct and BigMix, Inc
For the following responses, sourcing has been located via the website https://asc.fasb.org/home for the U.S.
In 2007, at the time of the purchase, should Construct record a liability for environmental liabilities? If so, how much?
LONG-TERM DEBTS Rite Aid Corporation
Rite Aid noticed a difference between the total amount of interest charges for the year and the amount actually paid and charged the coupon rate of 0.09375 multiplied by the face value of the bond. Rite Aid would have paid for these 9.375% notes because that would have been the beginning of the period with the carrying amount of the notes multiplied by the market interest rate as used to calculate periodic interest expense under the effective interest method. Rite Aid reports the same interest rate on these notes every year because this is the method used in the straight-line method.
This represents an amount of long-term debt on Rite Aid's balance sheet relative to its total assets, showing that it is unsustainable and dangerous for the firm. I used reference to Rite Aid's ratios that I calculated with numbers from the end of fiscal 2009 to compare Rite Aid's financial situation to others in the industry. Yet Rite Aid has an alarming amount of long-term debt relative to its total assets, as demonstrated by the debt-to-asset ratio.
COMMON STOCK
In this cost method that Merck used, they debited the government account for the repurchase cost and deducted this amount from the paid-in capital and retained earnings on the balance sheet. This is a financing activity that is reported in the cash flow statement as the line 'Purchase of own shares'. Merck does not present its government bonds as an asset for the reason that no one does: government bonds are not assets.
Of these purchased treasury shares, 269 million were held in the treasury share account and 16 million were permanently discontinued or canceled. In US GAAP in which the GSK repurchase is journalized, an accountant would debit the government account, increase the contra assets, and credit the cash for the purchase. In practice, they kept their dividend-to-total assets ratio and their dividends per share roughly the same between the two years.
INVESTMENTS State Street Corporation
If the market value of trading securities were to increase by $1.00 during the reporting period, the company's journal entry would credit the adjustment to fair value (available for sale) and the unrealized holding gain because fair value exceeds book value ( amortized cost) of the debt at the end of the reporting period. If the market value of available-for-sale securities increased by $1.00, the company would recognize the gain and report it as other comprehensive income. If the market value of held-to-maturity securities increased by $1.00 during the reporting period, the company would not record a journal entry because it is not adjusted to fair value, as the sales price is irrelevant given the owner's intent.
The balance in the "Trading Account Assets" account on State Street's balance sheet at December 31, 2012 is $637 million, recorded at market value. The difference shows that the market value is $289 million higher than the amortized cost of the debt. This shows that the interest rate on the market has fallen because the fair value of the debt has risen.
REVENUE RECOGNITION Groupon
Gross margin is a percentage of the profit that the company keeps after the direct costs associated with the production of goods. These figures resulted from the company's assets growing at a massive rate; higher than that of sales growth. It is a result of the fact that the company has generated almost $360 million in assets in one year, not becoming more inefficient in generating sales from its assets.
Groupon's argument regarding its use of the gross method is weak because if the business was the primary debtor, it would not have been appropriate for the business to recognize revenue until the business delivered the underlying product to the customer, which it did. The Company recognizes either sales revenue and sales expense when the return privilege has substantially expired or when the six conditions are met, whichever comes first. This is possible because operating cash flows are affected by cash inflows, that the business records the cash inflows immediately, but income is low because the business cannot record sales until after the return period ends.
DEFERRED INCOME TAXES ZAGG Inc
Deferred tax liability represents increases in tax payable in future years as a result of taxable temporary differences that exist at the end of the current year. A deferred tax asset represents the increases in deviating taxes that are refundable in future years as a result of the deductible temporary differences at the end of a current year. A situation that would give rise to a deferred tax liability on a balance sheet would be an installment sale.
The deferred tax assets, on the other hand, are debited because they have been held on the balance sheet until now to be payable in this current period. The net deferred tax asset appears on the balance sheet under the non-current assets. With this journal entry, the deferred tax asset is written off the books as a tax expense and the allowance valuation account is effectively changed.
RETIRMENT OBLIGATIONS Johnson & Johnson
Actuarial gains or losses are the actual return on plan assets and increases in pension funds due to interest, dividends, and realized and unrealized changes in the fair value of plan assets. Generally, company pension costs and pension plan assets have a component of return on plan assets; however, they differ in that the return on pension costs is the expected return and the return on plan assets is the actual return. Earnings paid are a deduction from the plan's assets and reduce the plan's liabilities.
The 2006 return better reflects the economics of Johnson & Johnson's pension expenses because they not only met their expected return, but exceeded it, favorably increasing the company's plan assets. Johnson & Johnson's retirement plan assets consist of investments including equity securities, debt securities and even a small portion of real estate. We know that a company is in overfunded or underfunded status by measuring the difference between the fair value of the plan assets and the projected benefit obligation.
