ACC 100 Study Guide - Final Guide: Financial Statement

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lavendermole636

12 Apr 2016

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As such you would have to review all the costs necessary to purchase and make the intangible assets useful. If the answer is yes, record the cost into the long-lived asset account. If not, assess using the criical and enhancing quesions to determine how you should record those costs. What is material or immaterial is a decision made by the individuals who prepare the inancial statements and it requires professional judgment. It is dependent on many factors and must be assessed (reviewed) on a regular basis. The simplest example is something you see oten: a penny (or nickel) on the ground. Some people doand that is because that amount is material (makes a diference) to them. Other people don"t stop to pick up even a dime or a quarter because these amounts are immaterial (don"t mater) to them. Noice that the idea of materiality is diferent to diferent peopleand at diferent imes in their lives.

Related Questions

Make orBuy
Walsh Corporation currently makes the nylon mooring cover for itsmain product, a fiberglass boat designed for tournament bassfishing. The costs of producing the 2,000 covers needed each yearfollow:

Nylon fabric				$325,000
Wood battens				64,000
Brass fittings				32,000
Direct labor				128,000
Variable manufacturing overhead				96,000
Fixed manufacturing overhead				160,000

Calvin Company, aspecialty fabricator of synthetic materials, can make the neededcovers of comparable quality for $325 each, F.O.B. shipping point.Walsh would furnish its own trademark insignia at a unit cost of$20. Transportation in would be $16 per unit, paid by WalshCorporation.

Walsh's chiefaccountant has prepared a cost analysis that shows that only 30% offixed overhead could be avoided if the covers are purchased. Thecovers have been made in a remote section of Walsh's factorybuilding, using equipment for which no alternate use is apparent inthe foreseeable future.

a. Prepare adifferential analysis showing whether or not you would recommendthat the mooring covers be purchased from Calvin Company.

If appropriate, use anegative sign with your answer to represent a net disadvantageanswer. Do not use negative signs with any other answers.

Make or Buy Differential Analysis
Cost to purchase covers:		$Answer
Costs avoided by purchasing covers:
Direct materials	$Answer
Direct labor	Answer
Variable manufacturing overhead	Answer
Fixed manufacturing overhead	Answer	Answer
Net advantage (disadvantage) to purchase alternative		$Answer

b. Assuming that theproduction capacity released by purchasing the covers could bedevoted to a subcontracting job for another company that netted acontribution margin of $65,000, what maximum purchase price couldWalsh pay for the covers?

Round answer to twodecimal places, if applicable.

$Answer

graymarten985

To analyze the financial statements of a publicly tradedcompany

Obtain an annual report from a publicly traded corporation thatis interesting to you. Be sure the company has property andequipment, intangible assets, and long-term debt on its balancesheet. Using techniques you have learned in the previous weeks,respond to the following questions.

What is the amount of property and equipment on the balancesheet for the two most recent years? What is the amount ofdepreciation expense? What amounts are on the cash flow statementfor the most recent year that relate to depreciation, gains andsales of property and equipment, and purchases and sale of propertyof equipment? What amounts are permitted for inclusion in thecapitalized cost of property and equipment?

Looking at the footnote disclosures of the company, what are theindividual components of property and equipment? For example, whatare the amounts for land, building, equipment, accumulateddepreciation, and so forth? How do companies account fornonmonetary exchange and dispositions of property andequipment?

Does the company have intangible assets? If so, what are thetypes of intangible assets (patent, copyrights, etc.) and theiramounts? What is the amount of amortization expense? What amountson the most recent cash flow statement relate to the purchase andsale of intangible assets? How do intangible assets differ fromproperty and equipment? What costs do we include in intangibleassets?

Does the company have goodwill? What are the footnotedisclosures relating to goodwill and the related acquisition?Please also describe the calculation of goodwill and how we accountfor differences between fair value and book value of assetsacquired.

What are the company's depreciation methods? What is the rangeof estimated useful lives used for depreciating its assets? Doesthe company use the same depreciation methods for financialstatements and tax returns? If not, please describe the methodsused for tax purposes.

What are the company's footnote disclosures relating toimpairment? Please also describe how to determine whether animpairment exists and how to calculate the impairment loss.

What are the amounts and descriptions of the company's currentliabilities for the most recent year? Does the company have anycontingent liabilities? If yes, please describe. What are the threecategories of contingent liabilities and the treatment for eachtype? Does the company have any subsequent events disclosed in itsfootnotes? If so, please describe them.

What are the amounts and descriptions for all of the company'slong-term liabilities on its balance sheet for the two most recentyears? What is the interest expense for the two most recent years?What amounts are included in the cash flow statements for proceedsfrom issuance of debt and repayment of debt for the most recentyear? For each note payable discussed in the footnotes disclosures,what is the interest rate, total amount borrowed, and maturitydate?

Does the company have bonds payable? If so, what are theamounts? Please also describe how bonds payable differ from notespayable and how to account for the issuance of bonds at par, at adiscount, and at a premium. How is the discount and premiumamortized? What is the effective interest method?

Does the company have capital leases? If so, what are theamounts and terms of the leases? What are the four criteria for alease to be considered a capital lease? What are the additionalcriteria for the lessor? What is the difference between asales-type lease and a direct financing lease?

To analyze the financial statements of a publicly tradedcompany

Obtain an annual report from GM (GENERAL MOTORS YEARS 2013-2014)a publicly traded corporation that is interesting to you. Be surethe company has property and equipment, intangible assets, andlong-term debt on its balance sheet. Using techniques you havelearned in the previous weeks, respond to the followingquestions.

1.What is the amount of property and equipment on the balancesheet for the two most recent years? What is the amount ofdepreciation expense? What amounts are on the cash flow statementfor the most recent year that relate to depreciation, gains andsales of property and equipment, and purchases and sale of propertyof equipment? What amounts are permitted for inclusion in thecapitalized cost of property and equipment?

2. Looking at the footnote disclosures of the company, what arethe individual components of property and equipment? For example,what are the amounts for land, building, equipment, accumulateddepreciation, and so forth? How do companies account fornonmonetary exchange and dispositions of property andequipment?

3.Does the company have intangible assets? If so, what are thetypes of intangible assets (patent, copyrights, etc.) and theiramounts? What is the amount of amortization expense? What amountson the most recent cash flow statement relate to the purchase andsale of intangible assets? How do intangible assets differ fromproperty and equipment? What costs do we include in intangibleassets?

4. Does the company have goodwill? What are the footnotedisclosures relating to goodwill and the related acquisition?Please also describe the calculation of goodwill and how we accountfor differences between fair value and book value of assetsacquired.

5. What are the company's depreciation methods? What is therange of estimated useful lives used for depreciating its assets?Does the company use the same depreciation methods for financialstatements and tax returns? If not, please describe the methodsused for tax purposes.

6.What are the company's footnote disclosures relating toimpairment? Please also describe how to determine whether animpairment exists and how to calculate the impairment loss.

7.What are the amounts and descriptions of the company's currentliabilities for the most recent year? Does the company have anycontingent liabilities? If yes, please describe. What are the threecategories of contingent liabilities and the treatment for eachtype? Does the company have any subsequent events disclosed in itsfootnotes? If so, please describe them.

8. What are the amounts and descriptions for all of thecompany's long-term liabilities on its balance sheet for the twomost recent years? What is the interest expense for the two mostrecent years? What amounts are included in the cash flow statementsfor proceeds from issuance of debt and repayment of debt for themost recent year? For each note payable discussed in the footnotesdisclosures, what is the interest rate, total amount borrowed, andmaturity date?

9.Does the company have bonds payable? If so, what are theamounts? Please also describe how bonds payable differ from notespayable and how to account for the issuance of bonds at par, at adiscount, and at a premium. How is the discount and premiumamortized? What is the effective interest method?

10,Does the company have capital leases? If so, what are theamounts and terms of the leases? What are the four criteria for alease to be considered a capital lease? What are the additionalcriteria for the lessor? What is the difference between asales-type lease and a direct financing lease?

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ACC 100 Study Guide - Final Guide: Financial Statement

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