Throughout the year, I was able to apply the technical knowledge I learned in my accounting classes to real-world problems presented by examples, allowing me to understand concepts outside of the classroom. By comparing two home heater companies, I was able to see how it was used.
Eads Heater, Inc. Financial Statements
Investment Recommendation
A company with a higher times interest earned ratio is less risky for an investor because it is more likely that it is able to repay its loans. An investor lends money to a person, organization or business with the hope that they will be paid back and earn interest on their investment.
Appendices: Part A (Glenwood and Eads)
Part B: Glenwood
Part B: Eads
Cost of Goods Sold 188,800 Other Operating Expenses 34,200 Debtor Expenses 4,970 Depreciation Expenses- Building 10,000 Depreciation Expenses- Furniture 20,000 Depreciation Expenses- Rent.
CASE STUDY 2: MOLSEN COORS BREWING COMPANY
Summary
Explain why the company reports these in a separate line item, rather than including them with another expense item. This expense does not directly coincide with the company's core operations, which is brewing.
CASE STUDY 3: PEARSON
The two contrasting accounts related to Pearson's trade receivables are the allowance for bad and doubtful debts and the allowance for sales returns. The United States equivalents for these accounts are Allowance for Doubtful Accounts (ADA) and Allowance for Sales Return and Allowances. In the Allowance for Sales Return and Allowances account, Pearson will estimate the amount of sales returns and allowances it will have for the period and credit that amount.
When the actual amount of sales returns and charges has been determined, Pearson will debit that amount from the account. Complete a T-account showing the activity on the sales returns provision account during the year. 354 million, the amount of actual sales proceeds and allowances for the year was to be £443 million, which was debited from the account.
Finally, to end with the balance of £1,284 million, we find that credit sales for the year were £405 million, which is net of the £425 million estimate of sales proceeds and allowances.
CASE STUDY 4: TIME VALUE OF MONEY
The catch was that the problem had to be about a topic on the upcoming exam that we personally have difficulty with. One of the chapters covered on our exam is Chapter 6, Accounting and the Time Value of Money. I think part of the trouble I'm having is that I'm also currently taking a finance class where we also talked about the time value of money, but the two classes solve the word problems in different ways.
Julia Baker died, leaving her husband Brent an insurance contract that provides that the beneficiary (Brent) can choose any of the following four options.
Tutorial
The present value of the annuity is equal to the payment, $1,800, times the present value of a 40-period annuity maturity factor at an interest rate of 2.5%. We use the present value of an annuity that matures because the installments mature at the beginning of the quarter.
CASE STUDY 5: PALFINGER AG
Based on the description of Palfinger above, what kind of property and equipment do you think the company has. Any corporate office buildings the company has will also be classified in this category. Explain what these grants 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 gain or loss on this transaction assuming the company uses straight-line depreciation has.
Calculate any gain or loss on this transaction assuming the company used double-declining-balance depreciation.
CASE STUDY 6: VOLVO GROUP
Under the IFRS, companies are able to capitalize expenses incurred for research and development as long as they have a high degree of certainty that they will provide future financial benefits to the company. Research and development expenses include costs related to the investigation of new technologies or improvements to existing ones. 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).
Calculate the ratio of total research and development costs to net sales from operations (called net sales from manufactured products for Navistar) for both companies. The share of research and development in the net revenue from manufactured products for Navistar is increasing slowly, and it even decreased in 2008. The share of research and development held by the net revenue from operations for Volvo is higher every year than Navistar, and it is increasing in a faster pace.
This could be the case because the Volvo Group is able to capitalize product and software development costs that have a high degree of certainty that they will benefit the company, while US companies such as Navistar must bear all research and development costs, so American companies may not do that. are willing to spend as much of their net sales as some international companies.
CASE STUDY 7: ALTERYX
If a user is having trouble, there are instructional videos on the company's website that can help the user understand how to use the program. Accountants perform inventory counts to ensure that the assets the company claims to have exist. Alteryx would allow the company to analyze all the data and determine the positives and negatives of each option, so it could easily determine which location makes the most financial sense.
The company can use Alteryx to keep track of each machine's expected life and how much has already been written off. The company is one of the company's largest carriers, and it is constantly adding new cities to its list of destinations. For companies with large IT departments, the company will greatly benefit from having a program that every employee has the ability to use to analyze data.
Alteryx will save the company time and money, and its ease of use will be appreciated by employees of all types.
CASE STUDY 8: RITE AID
The interest expense of $39,143 divided by the carrying value as of the beginning of the period, . According to note 11, the yield of the notes at the time of issue was 98.2% of the face value of the notes. Prepare the journal entry Rite Aid should have made when these notes were issued. o The journal entry made when the notes were issued is as follows:.
At what effective annual interest rate were these notes issued. o The notes were issued at an effective interest rate of 10.1212%. The face value of this debt is o Interest payment is the face value of the bond times the coupon rate of the bond. The difference between the interest payment and interest expense is the amortization of the mortgage discount.
How many ordinary shares are outstanding per 31 December 2007. o The number of outstanding shares can be found by subtracting the number of treasury shares from the number of issued shares.
CASE STUDY 10: STATE STREET CORPORATION
Available-for-sale securities are adjusted to fair value through the fair value adjustment account. If the market value of available-for-sale securities increased by $1 during the reporting period, what journal entry would the company record. Note the balance sheet account “Available-for-sale investment securities” and related disclosures in Note 4.
What is the amount of net unrealized gains or losses on the available-for-sale securities held by State Street on December 31, 2012. What was the amount of net realized gains (losses) from sales of available-for-sale securities for 2012 Show the journal entry that State Street made to record the purchase of available-for-sale securities for 2012.
Show the journal entry that State Street made to record the sale of available-for-sale securities for 2012.
CASE STUDY 11: ZAGG INC
Because the deferred tax asset is a deductible amount in the future, it is taxed in the present. When the amount becomes deductible, the deferred tax asset does not become a deferred tax liability. Instead, the company would debit the deferred tax asset in the period in which the expense is deducted.
In the year the expense becomes taxable, the income tax payable will be higher than the income tax expense and the deferred tax liability will be debited. This is an example of a deferred tax liability because the company is liable to pay the tax in the future. A deferred income tax valuation allowance is a contra asset account listed on the balance sheet for the purpose of offsetting all or part of a company's deferred tax assets.
The net sum of deferred tax assets and deferred tax liabilities equals net deferred income taxes of $8,293 thousand.
CASE STUDY 12: APPLE INC
One aspect of this case that I particularly enjoyed was becoming more familiar with the new revenue recognition standard. However, changes such as the one in the revenue recognition standard are made in good faith to better reflect the financial condition of companies to interested parties. A normal entry for revenue recognition would be to debit Cash and Cost of Goods Sold and credit Inventory and Sales Revenue.
Under the new revenue recognition standard, there are several criteria that must be met before an entity can recognize a contract with a customer. Do they appear to be consistent with the revenue recognition criteria you described in part b above? What are multi-element contracts and why do they pose revenue recognition problems for companies?
Revenue from iPods sold to a third-party reseller in India will be included in the "Rest of Asia Pacific" segment. The revenue will be recorded similarly to products sold online.
