In 20X1, two separate companies, Glenwood Heating, Inc., formed. and Eads Heaters, Inc., companies to sell home heating appliances. The main difference was that Glenwood Heating, Inc. chose to use operating leases when it came to equipment, while Eads Heaters, Inc. opted for a capitalized lease. At first glance or Tables 1.1 and 1.2, it is clear that Glenwood Heating, Inc. has a higher net income than Eads Heaters, Inc.
The largest difference comes from the depreciation of the building, equipment and leased equipment for Eads. Glenwood elected to use an operating lease and use the straight-line method to depreciate both the equipment and the building. Eads has elected to use the straight-line method to depreciate the building and leased equipment, and the double-declining balance method to depreciate the equipment.
However, it can interest the investors to see how much each company retains each year, because it shows the health and the possible growth of the company. So by looking at both retained earnings statements, the potential investor can see that Glenwood retained $69,542, while Eads only retained.
Balance Sheet
Appendix
Molson Coors Brewing Company Dr. Dickinson
ACCY 420
Executive Summary
The case focused on financial reporting and delving deeper into the financial statements to explain the aspects and meanings of the classifications. In this case, we needed to describe the parts of an income statement and the comprehensive income statement in a way that was easy to understand for someone with some financial knowledge, such as an accountant. The questions answered are intended to help more people know how to look at financial statements and how to obtain useful information.
This case showed me how difficult it can be to explain in words why we do certain things in accounting. I feel that this case helped me gain a better understanding of all aspects of the financial statements, thanks to the explanations I had to provide. The best way to fully learn something is to explain it to someone else, so that's exactly what this case forced me to do.
In the future, I feel I can take what I learned from this case and apply it to situations where I need to break down accounting and financial information into easier-to-understand ways. Molson Coors Brewing Company was an important case in understanding and explaining all aspects of financial statements.
Concepts
Part C: In general, why users of financial statements might be interested in a measure of continuing income. It is useful because it tells the user of financial statements how stable the company is. It only focuses on how the company does each period from their business operations and not by chance.
Persistence is important because it shows potential investors what to expect, giving them the ability to predict the future of the company. Comprehensive income is a more inclusive income statement because it includes unrealized gains and losses from things like available-for-sale securities and foreign currency exchanges. Net income does not include as much information about all the profits and losses the company faces, so comprehensive income is more detailed and complete.
Process
Explain why the company reports these on a separate line item rather than including them with another expense item. The company reports them separately because they are rare, so they are not common charges that the company usually faces. The investor needs to see these particular items to know where the company is spending its money, but they should not be used to predict the company's future because they are unlikely to occur again in the next period.
What is the difference between "Other income (expense), net", which is classified as a non-operating expense, and "Special items, net", which Molson Coors classifies as an operating expense. These items are peripheral expenses that cannot stand alone because the company would not have incurred these expenses if not first for the company's operations. In your own words, how are the items included in Molson Coors' total income related.
The difference is because comprehensive income includes unrealized gains, currency adjustments, derivative reclassification, retirement benefits, amortization of past service costs and ownership. Comprehensive income and net income are related because comprehensive income includes net income but only adds more information about various gains and losses that are important to the business but not directly related to the company's main activities.
Analysis
Pearson Plc-Accounts Receivable Dr. Dickinson
- What special skills are needed to use this tool to aid in business decision making. How might student like yourself gain those skills?
- How, specifically, would you use the tool in the following business settings?
- Write a few paragraphs to your future public accounting partner explaining why your team should invest in the acquisition of and training in this tool
The allowance for bad and doubtful debts includes the estimated bad debt expense that the company calculates at the end of the period. Because it gives us the terminal value of the fund, we know it is a future value fund. This means that the company takes the original cost of the asset and then subtracts its residual value and divides this number by the number of useful years the asset has.
The company could use the double-declining balance method, which depreciates each year based on a percentage of the remaining value. Therefore, the company uses the fair value of the asset to value the asset on its books. The gain represents the amount of increase in equity that the company received from the sale of the assets.
What is the total income statement impact of the equipment for the two years that Palfinger owned it. The impact on the income statement in the first year is that net income has decreased by €4,269 due to depreciation expenses. The impact on net income in the second year is that it has increased by €1,096 due to the profit from the sale.
What is the amount of capitalized product and software development costs, after deducting accumulated depreciation at the end of fiscal year 2009. One of the best features of Alteryx is that it does all the analysis for the user. The cash amount received is the face value of the banknote because the face interest rate was equal to the market rate.
Again, it is for the face value of the note because that was the original principal amount. The non-cash portion of interest expense is the amortization of the discount during the year (ie, the amount by which the discount was reduced during the year). This means that the rite aid in cash is less than the face value of the banknote.
This percentage is used to calculate the amount of interest expense based on the initial carrying value of the note. The amount of discount that is amortized each period is added to the carrying value of the note.
State Street Corporation – Marketable Securities Dr. Dickinson
If the market value of the held-to-maturity securities increases by $1, then no journal entry will be required. Therefore, the amount reported on the balance sheet is the fair value of the securities. The initial cost is the amount the company paid for the investment on the date the investment was purchased.
This is why, on the balance sheet, the balance for held-to-maturity securities will show the amortized cost and not the fair value as trading and available for sale. Since the fair value is higher than the amortized cost of the investment, this indicates that the market interest rate has fallen. It also gives the sum of the amortized costs, the unrealized capital gains and losses, and the fair value.
The amortized cost of the available-for-sale securities is $108,563 million, so when we add the The debit to the investment account is an asset and adds to the balance of the available-for-sale securities. These financial statements consisted of the balance sheet, the income statement, the statement of cash flows and the notes to the financial statements.
This means that deferred taxes are recorded as part of the total income tax expense. This indicates that deferred income taxes must be taken into account in order to calculate the correct amount of income tax expense. If the company did this, it would ignore the tax effects of the deferred tax assets and liabilities.
Therefore, in future years, when the company has a net profit, they can reverse part of the deferred tax asset created and use the income tax benefit to reduce the amount of income tax payable. Therefore, a deferred tax liability must also be recorded to make the journal entry balance, and this amount will be equal to the amount of the difference multiplied by the tax rate. The account is a contra asset account because it reduces the amount of the deferred tax asset account.
Encumbrance of a deferred tax liability means that part of the deferred tax liability is reversed. Finally, it is important for the company to know that the recovery of the money from the sale is probable.
