Week 13, Chap 9 Accounting 1A, Financial Accounting

Size: px
Start display at page:

Download "Week 13, Chap 9 Accounting 1A, Financial Accounting"

Transcription

1 Week 13, Chap 9 Accounting 1A, Financial Accounting Reporting and Interpreting Liabilities Instructor: Michael Booth

2 Understanding the Business Debt is considered riskier than equity. Interest is a legal obligation. Creditors can force bankruptcy.

3 Define, measure, and report current liabilities.

4 Liabilities Defined and Classified Defined as probable debts or obligations of the entity that result from past transactions, which will be paid with assets or services. Maturity = 1 year or less Current Liabilities Maturity > 1 year Noncurrent Liabilities

5 Liabilities Defined and Classified Liabilities are measured at their current cash equivalent (the amount a creditor would accept to cancel the debt) at the time incurred.

6 Current Liabilities

7 Payroll Taxes Gross Pay Net Pay Less Deductions: Social Security Tax Medicare Tax Federal Income Tax State and Local Income Taxes Voluntary Deductions

8 Use the current ratio.

9 Current Ratio An important indicator of a company s ability to meet its current obligations. Current Ratio = Current Assets Current Liabilities Starbucks has current assets of $924 and current liabilities of $ Current Ratios Starbucks Panera Bread Krispy Kreme

10 Analyze the accounts payable turnover ratio.

11 Accounts Payable Turnover Ratio Measures how quickly management is paying trade accounts. Accounts Payable Turnover Cost of = Goods Sold Average Accounts Payable Starbucks has cost of goods sold of $1,685.9 and average accounts payable of $ Accounts Payable Turnove r Ratios Panera Krispy Starbucks Bread Kreme N/A Days = 365/11.06 Days= 33

12 Report notes payable and explain the time value of money.

13 Notes Payable

14 Notes Payable A note payable specifies the interest rate associated with the borrowing. To the lender, interest is a revenue. To the borrower, interest is an expense. Interest = Principal Interest Rate Time When computing interest for one year, Time equals 1. When the computation period is less than one year, then Time is a fraction.

15 Notes Payable Starbucks borrows $100,000 for 2 months at an annual interest rate of 12%. Compute the interest on the note for the loan period.

16 Learning Objectives Compute present values. Apply present value concepts to liabilities.

17 Present Value Concepts $1,000 invested today at 10%. In 5 years it will be worth $1, In 25 years it will be worth $10,834.71! Money can grow over time, because it can earn interest.

18 Present Value Concepts The growth is a mathematical function of four variables: 1. The value today (present value). 1. The value in the future (future value). 1. The interest rate. 1. The time period.

19 Present Value Concepts Most analysts use calculators or Excel to solve time value of money problems. Note: use of present value tables is also acceptable

20 Present Value Formula for Single Amount P = F / (1 + r) ^n Discount Factor = 1 / (1 + r) ^n P = Present Value F= Future Value r = interest rate n = number of periods

21 Present Value of a Single Amount The present value of a single amount is the worth to you today of receiving that amount some time in the future. Present Value Future Value Interest compounding periods Today Future

22 Present Value of a Single Amount How much do we need to invest today at 10% interest, compounded annually, if we need $1,331 in three years? The required future amount is $1,331. i = 10% & n = 3 years Using the present value of a single amount table (A.1), the factor is $1, = $1,000 (rounded)

23 Present Values of an Annuity An annuity is a series of consecutive equal periodic payments. Today

24 Present Value Formula for multiple future payments Amount P = C 1 / (1 + r) ^1 + C 2 / (1 + r) ^2 + C 3 / (1 + r) ^ Discount Factor = 1 / (1 + r) ^n P = Present Value F= Future Value r = interest rate n = number of periods C = cash payment

25 Present Values of an Annuity What is the value today of a series of payments to be received or paid out in the future? Payment 1 Payment 2 Payment 3 Present Value Interest compounding periods Today

26 Present Values of an Annuity What is the present value of receiving $1,000 each year for three years at an interest rate of 10%, compounded annually? The consecutive equal payment amount is $1,000. i = 10% & n = 3 years Using the Present value of an annuity table,(a.2), the factor is $1, = $2,486.90

27 Accounting Applications of Present Values On January 1, 2006, Starbucks bought some new delivery trucks. The company signed a note agreeing to pay $200,000 on December 31, The market interest rate for this note is 12%. Interest 12% Future Value 200,000 =pv(rate,nper,pmt,fv) Present value $ 159,439 Period 1 Interest$ 19,133 Period 2 Interest$ 21,429 Total $ 200,000 Let s prepare the journal entry to record the purchase.

28 Accounting Applications of Present Values Now, let s Present look Value at the journal Interest entry Rate = December Interest 31, $159, % = $19,133

29 Accounting Applications of Present Values The journal entries at December 31, 2007(year 2). Present Value Interest Rate = Interest ($159,440 + $19,133) 12% = $21,429

30 Present Value Computations Using Excel

31 Present Value Computations Using Excel Present Value of A Single Amount Formula = Payment/(1 + i)^n Interest 12% Future Value 200,000 Number of Periods 2 Interest Calc =pv(rate,nper,pmt,fv) Present value $ 159,439 Period 1 Interest $ 19,133 =FV(rate,NPer,,159439) Period 2 Interest $ 21,429 =FV(rate,NPer,,178572) Total $ 200,000

32 Report contingent liabilities.

33 Contingent Liabilities Potential liabilities that arise because of events or transactions that have already occurred.

34 Importance of working capital and its impact on cash flows.

35 Working Capital Management Working Capital = Current Assets - Current Liabilities Changes in working capital accounts affect cash flows as indicated in the following table.

36 Report long-term liabilities.

37 Long-Term Liabilities Creditors often require the borrower to pledge specific assets as security for the long-term liability. Maturity = 1 year or less Current Liabilities Maturity > 1 year Long-term Liabilities

38 Long-Term Notes Payable and Bonds Relatively small debt needs can be filled from single sources. Banks Insurance Companies or Pension Plans

39 Long-Term Notes Payable and Bonds Significant debt needs are often filled by issuing bonds to the public. Bonds Cash

40 Borrowing in Foreign Currencies When a company has operations in a foreign country, it often borrows in the local currency. This reduces exchange rate risk. Because interest rates vary from country to country, companies may borrow in the foreign market with the lowest interest rate.

41 Operating & Capital Leases

42 Operating vs. Capital lease Understand the rationale for leasing and the distinction between operating and capital leases Understand the income statement and the balance sheet differences between operating and capital leases from lessee s perspective

43 The nature of leases A lease is an agreement conveying the right to use property, plant or equipment usually for a stated period of time, in exchange for periodic cash payments The owner of the property is referred to as the lessor, and the renter is the lessee

44 Economic substance of leases Operating lease Lessee rents the property Lessee accrues rent expense Capital lease Lessee economically owns the property Lessee records the leased asset in the balance sheet (i.e. capitalizes the asset) and reflects the corresponding lease obligation

45 Economic Rational for lease Operational advantages to lease Leasing ready-to-use equipment can be more attractive if the asset requires lengthy preparation and set-up Leasing avoids having to own the asset that will be required only seasonally, temporarily or sporadically (leasing contract can be tailored) Leasing for short periods protects against obsolescence But lease payments are accordingly higher

46 Economic Rationale for Leases Financial advantages to the leases Lease payments can be tailored to suit the lessee s cash flows (up to 100% financing, instead of the 80% limit by banks) Properly structured leases may be off-balance sheet, avoiding debt-covenant restrictions Leasing can be tax advantageous when the lessee is unable to take the depreciation tax advantage of owning

47 Disadvantages to Leasing Disadvantages to lessee Leased ready-to-use equipment may be of lower quality than custom built (resulting in lower quality products and lower sales) Seasonal leasing may affect equipment availability and pricing Premium must be paid against obsolenscence Disadvantages to financial statement users: Off-balance sheet financing can hide the true leverage (debt obligations) of the firm

48 Operating and Capital Leases Operating Lease Capital Lease Short-term lease; No liability or asset recorded Long-term lease; Meets one of 4 criteria; Results in recording an asset Capital Lease Criteria 1. Lease term is 75% or more of the asset s expected economic life. 2. Ownership of asset is transferred to lessee at end and of lease. a liability 3. Lease permits lessee to purchase the asset at a price that is lower than its fair market value. 4. The present value of the lease payments is 90% or more of the fair market value of the asset when the lease is signed.

49 Accounting for operating leases (Lessee s Ledger) An operating lease is recorded as a rental of an asses in the financial statements When the lease agreement is signed and the lessee begins using the asset: A = L + SE (no entry) During the Lease (as payments are made): Cash = L + Retained Earnings (PP) = (PP), as rent expense PP = Periodic lease payment

50 Accounting for capital leases Lessee s Ledger A capital lease is recorded as an asset acquisition with 100% debt financing in the financial statements When the lease agreement is signed and lessee begins using the asset: Leased Property = Lease Obligation PVL = PVL During the lease (as payments are made) Cash + leased property acc depr. = lease obligation + RE - PP (PP Int expense) - Int Exp - Depr. -Depr Expense PVL = Present Value of Leas PP = Periodic lease payment Int Exp = beginning lease liability * %int, where beginning lease liability = present value remaining payment at int% Depr. Expense = depreciation expense

51 Operating and Capital Leases: An Example Delta transactions if treated as an capital lease: Leased Property = Lease Obligation $30,000 = $30,000 When the lease agreement is signed and lessee begins using the asset During the lease (as payments are made): Y1 Cash - Acc Depr = Lease oblig + RE - $ Int Exp Depr Exp (Depr=(30,000-0)/20) (Dec LO = ) (Int = * 16%) Y2 Cash - Acc Depr = Lease Oblig + Re -$ int Exp Depr Exp (Dec LO = ) (Int = (30, ) * 16%

52 Federal Income Tax Concepts

53 Federal Income Tax Concepts Corporations Are separate legal entities and are required to pay income taxes. Tax Obligation Determined by multiplying taxable income by the corporate tax rate.

54 Revenue and Expense Recognition for Income Tax Purposes 1. Interest revenue on state and municipal bonds is generally excluded from taxable income although it is included in accounting income. 2. Revenue collected in advance is included in taxable income when it is collected and in accounting income when it is earned. 3. Corporations that own less than 20% of another corporation s stock may exclude 70% of the dividends received from taxable income, although all dividends are included in accounting income. 4. For tax purposes, depreciation expense is generally based on the Accelerated Cost Recovery System (ACRS) or on the Modified Accelerated Cost Recovery System (MACRS).

55 Tax Minimization Versus Tax Evasion

56 Assignments: See web: http// This will be updated weekly as required Update your weekly journal for the Final Journal Work weekly on your final project, do the analysis with information learned during the week Note: Use McGrawHill HOMEWORK manager to submit assignments

Leases. Objectives. Understand the rationale for leasing and the distinction between Operating and capital leases.

Leases. Objectives. Understand the rationale for leasing and the distinction between Operating and capital leases. Leases Objectives Understand the rationale for leasing and the distinction between Operating and capital leases. Understand the Income Statement and Balance Sheet differences Between operating and capital

More information

Accounting for Leases

Accounting for Leases Accounting for Leases 15.511 Corporate Accounting Summer 2004 Professor SP Kothari Sloan School of Management Massachusetts Institute of Technology July 6, 2004 1 Agenda Understand the rationale for leasing

More information

Reporting and Interpreting Liabilities Irwin/McGraw-Hill

Reporting and Interpreting Liabilities Irwin/McGraw-Hill Chapter 9 Reporting and Interpreting Liabilities Business Background The acquisition of assets is financed from two sources: Debt - funds from creditors Equity - funds from owners Business Background The

More information

Understanding Financial Statements. For Your Business

Understanding Financial Statements. For Your Business Understanding Financial Statements For Your Business Disclaimer The information provided is for informational purposes only, does not constitute legal advice or create an attorney-client relationship,

More information

AFM 391 Case Concepts

AFM 391 Case Concepts AFM 391 Case Concepts a. Why do companies lease assets rather than buy them? 1. 100% financing at fixed rates. Leases are often signed without requiring any money down from the lessee, which helps to conserve

More information

Chapter 9. Plant Assets. Determining the Cost of Plant Assets

Chapter 9. Plant Assets. Determining the Cost of Plant Assets Chapter 9 Plant Assets Plant Assets are also called fixed assets; property, plant and equipment; plant and equipment; long-term assets; operational assets; and long-lived assets. They are characterized

More information

Accounting for and Presentation of Liabilities

Accounting for and Presentation of Liabilities 7 Accounting for and Presentation of Liabilities Liabilities are obligations of the entity or, as defined by the FASB, probable future sacrifices of economic benefits arising from present obligations of

More information

Current liabilities - Obligations that are due within one year. Obligations due beyond that period of time are classified as long-term liabilities.

Current liabilities - Obligations that are due within one year. Obligations due beyond that period of time are classified as long-term liabilities. Accounting Fundamentals Lesson 8 8.0 Liabilities Current liabilities - Obligations that are due within one year. Obligations due beyond that period of time are classified as long-term liabilities. Current

More information

G8 Education Limited ABN: 95 123 828 553. Accounting Policies

G8 Education Limited ABN: 95 123 828 553. Accounting Policies G8 Education Limited ABN: 95 123 828 553 Accounting Policies Table of Contents Note 1: Summary of significant accounting policies... 3 (a) Basis of preparation... 3 (b) Principles of consolidation... 3

More information

Accounting for Leases

Accounting for Leases CHAPTER 21 O BJECTIVES After reading this chapter, you will be able to: 1 Explain the advantages of leasing. 2 Understand key terms related to leasing. 3 Explain how to classify leases of personal property.

More information

Study Guide - Final Exam Accounting I

Study Guide - Final Exam Accounting I Study Guide - Final Exam Accounting I True/False Indicate whether the sentence or statement is true or false. 1. Entries in a sales journal affect account balances in both the accounts receivable ledger

More information

finreporting.com free online financial services

finreporting.com free online financial services LEASE ACCOUNTING -LESSEE POLICY PERSPECTIVE A Lease is defined as an agreement conveying the right to use property, plant, or equipment (land and/or depreciable assets) for a stated period of time. This

More information

Consolidated Interim Earnings Report

Consolidated Interim Earnings Report Consolidated Interim Earnings Report For the Six Months Ended 30th September, 2003 23th Octorber, 2003 Hitachi Capital Corporation These financial statements were prepared for the interim earnings release

More information

Chapter 9 Solutions to Problems

Chapter 9 Solutions to Problems Chapter 9 Solutions to Problems 1. a. Cash and cash equivalents are cash in hand and in banks, plus money market securities with maturities of 90 days or less. Accounts receivable are claims on customers

More information

Leases Learning Objectives. Overview of Leasing. Advantages of Leasing

Leases Learning Objectives. Overview of Leasing. Advantages of Leasing Leases Learning Objectives 1. Describe the characteristics and advantages of leases 2. Operating leases vs Captial leases 3. Determine rental payments 4. Account for operating leases - lessee 5. Account

More information

1 CONSOLIDATED FINANCIAL STATEMENTS (1) Consolidated Balance Sheets

1 CONSOLIDATED FINANCIAL STATEMENTS (1) Consolidated Balance Sheets 1 CONSOLIDATED FINANCIAL STATEMENTS (1) Consolidated Balance Sheets As of March 31,2014 As of March 31,2015 Assets Cash and due from banks 478,425 339,266 Call loans and bills bought 23,088 58,740 Monetary

More information

Understanding A Firm s Financial Statements

Understanding A Firm s Financial Statements CHAPTER OUTLINE Spotlight: J&S Construction Company (http://www.jsconstruction.com) 1 The Lemonade Kids Financial statement (accounting statements) reports of a firm s financial performance and resources,

More information

2-8. Identify whether each of the following items increases or decreases cash flow:

2-8. Identify whether each of the following items increases or decreases cash flow: Problems 2-8. Identify whether each of the following items increases or decreases cash flow: Increase in accounts receivable Increase in notes payable Depreciation expense Increase in investments Decrease

More information

Leases. Chapter 12. Prepared By: Eman Al-Aqeel. Professor : Dr: Amal Fouda

Leases. Chapter 12. Prepared By: Eman Al-Aqeel. Professor : Dr: Amal Fouda King Saud University College of Administrative Science Department of Accounting 2 nd Semester, 1426-1427 Leases Chapter 12 Prepared By: Eman Al-Aqeel Professor : Dr: Amal Fouda Leasing is an alternative

More information

Anadolu Hayat Emeklilik Anonim Şirketi Consolidated Balance Sheet As At 31 December 2015 (Currency: Turkish Lira (TRY))

Anadolu Hayat Emeklilik Anonim Şirketi Consolidated Balance Sheet As At 31 December 2015 (Currency: Turkish Lira (TRY)) Consolidated Balance Sheet As At ASSETS I- Current Assets A- Cash and Cash Equivalents 14 302,999,458 216,428,429 1- Cash 14 3,385 27,952 2- Cheques Received 3- Banks 14 145,598,543 87,301,020 4- Cheques

More information

Indian Accounting Standard (Ind AS) 7 Statement of Cash Flows

Indian Accounting Standard (Ind AS) 7 Statement of Cash Flows Contents Indian Accounting Standard (Ind AS) 7 Statement of Cash Flows Paragraphs OBJECTIVE SCOPE 1 3 BENEFITS OF CASH FLOW INFORMATION 4 5 DEFINITIONS 6 9 Cash and cash equivalents 7 9 PRESENTATION OF

More information

Acal plc. Accounting policies March 2006

Acal plc. Accounting policies March 2006 Acal plc Accounting policies March 2006 Basis of preparation The consolidated financial statements of Acal plc and all its subsidiaries have been prepared in accordance with International Financial Reporting

More information

University of Rio Grande Fall 2010

University of Rio Grande Fall 2010 University of Rio Grande Fall 2010 Financial Management (Fin 20403) Practice Questions for Midterm 1 Answers the questions. (Or Identify the letter of the choice that best completes the statement if there

More information

CONSOLIDATED STATEMENT OF INCOME

CONSOLIDATED STATEMENT OF INCOME CONSOLIDATED STATEMENT OF INCOME 4 th quarter (a) 3 rd quarter 4 th quarter 2009 Sales 40,157 40,180 36,228 Excise taxes (4,397) (4,952) (4,933) Revenues from sales 35,760 35,228 31,295 Purchases, net

More information

TOPIC LEARNING OBJECTIVE

TOPIC LEARNING OBJECTIVE Topic Mapping 1 Transaction Analysis Understand the effect of various types of transactions on the accounting equation, accounting journal and accounting ledger. Concepts and Skills Accounting Equation

More information

Lease vs. Buy. Lease. Benefits of Leasing Various types to meet your needs. Optimize cash flow. No loan. Maintain credit.

Lease vs. Buy. Lease. Benefits of Leasing Various types to meet your needs. Optimize cash flow. No loan. Maintain credit. www.stma.org Lease vs. Buy Deciding if you are going to lease or buy equipment depends on your situation. In general, leasing is more appropriate for businesses with limited capital or need equipment upgrades

More information

Consolidated Financial Statements

Consolidated Financial Statements Consolidated Financial Statements For the year ended February 20, 2016 Nitori Holdings Co., Ltd. Consolidated Balance Sheet Nitori Holdings Co., Ltd. and consolidated subsidiaries As at February 20, 2016

More information

Consolidated Balance Sheets

Consolidated Balance Sheets Consolidated Balance Sheets March 31 2015 2014 2015 Assets: Current assets Cash and cash equivalents 726,888 604,571 $ 6,057,400 Marketable securities 19,033 16,635 158,608 Notes and accounts receivable:

More information

Chapter 6 Statement of Cash Flows

Chapter 6 Statement of Cash Flows Chapter 6 Statement of Cash Flows The Statement of Cash Flows describes the cash inflows and outflows for the firm based upon three categories of activities. Operating Activities: Generally include transactions

More information

Statement of Cash Flows

Statement of Cash Flows STATUTORY BOARD FINANCIAL REPORTING STANDARD SB-FRS 7 Statement of Cash Flows This version of SB-FRS 7 does not include amendments that are effective for annual periods beginning after 1 January 2014.

More information

TREASURER S DIRECTIONS ACCOUNTING LIABILITIES Section A3.6 : Leases

TREASURER S DIRECTIONS ACCOUNTING LIABILITIES Section A3.6 : Leases TREASURER S DIRECTIONS ACCOUNTING LIABILITIES Section A3.6 : Leases STATEMENT OF INTENT Assets required by Agencies to deliver outputs can be obtained by purchase or by lease. This Section provides the

More information

CH 23 STATEMENT OF CASH FLOWS SELF-STUDY QUESTIONS

CH 23 STATEMENT OF CASH FLOWS SELF-STUDY QUESTIONS C H 2 3, P a g e 1 CH 23 STATEMENT OF CASH FLOWS SELF-STUDY QUESTIONS (note from Dr. N: I have deleted questions for you to omit, but did not renumber the remaining questions) 1. The primary purpose of

More information

Consolidated Balance Sheets March 31, 2001 and 2000

Consolidated Balance Sheets March 31, 2001 and 2000 Financial Statements SEIKAGAKU CORPORATION AND CONSOLIDATED SUBSIDIARIES Consolidated Balance Sheets March 31, 2001 and 2000 Assets Current assets: Cash and cash equivalents... Short-term investments (Note

More information

Report Description. Business Counts. Top 10 States (by Business Counts) Page 1 of 16

Report Description. Business Counts. Top 10 States (by Business Counts) Page 1 of 16 5-Year County-Level Financial Profile Industry Report Architectural Services (SIC Code: 8712) in Prince George County, Maryland Sales Range: $500,000 - $999,999 Date: 11/07/08 Report Description This 5-Year

More information

IF THE LEASE MEETS ONE OR MORE OF THE FOLLOWING FOUR CRITERIA, THE LESSEE MUST CLASSIFY AND ACCOUNT FOR THE ARRANGEMENT AS A CAPITAL LEASE:

IF THE LEASE MEETS ONE OR MORE OF THE FOLLOWING FOUR CRITERIA, THE LESSEE MUST CLASSIFY AND ACCOUNT FOR THE ARRANGEMENT AS A CAPITAL LEASE: ILLUSTRATION 22-1 LESSEE'S CAPITALIZATION CRITERIA IF THE LEASE MEETS ONE OR MORE OF THE FOLLOWING FOUR CRITERIA, THE LESSEE MUST CLASSIFY AND ACCOUNT FOR THE ARRANGEMENT AS A CAPITAL LEASE: 1. THE LEASE

More information

International Accounting Standard 7 Statement of cash flows *

International Accounting Standard 7 Statement of cash flows * International Accounting Standard 7 Statement of cash flows * Objective Information about the cash flows of an entity is useful in providing users of financial statements with a basis to assess the ability

More information

Sri Lanka Accounting Standard-LKAS 7. Statement of Cash Flows

Sri Lanka Accounting Standard-LKAS 7. Statement of Cash Flows Sri Lanka Accounting Standard-LKAS 7 Statement of Cash Flows CONTENTS SRI LANKA ACCOUNTING STANDARD-LKAS 7 STATEMENT OF CASH FLOWS paragraphs OBJECTIVE SCOPE 1 3 BENEFITS OF CASH FLOW INFORMATION 4 5 DEFINITIONS

More information

CHAPTER 21. Accounting for Leases ASSIGNMENT CLASSIFICATION TABLE

CHAPTER 21. Accounting for Leases ASSIGNMENT CLASSIFICATION TABLE CHAPTER 21 Accounting for Leases ASSIGNMENT CLASSIFICATION TABLE Topics Questions Brief Exercises Exercises Problems Cases *1. Rationale for leasing. 1, 2, 4 1, 2 *2. Lessees; classification of leases;

More information

Analyzing Cash Flows. April 2013

Analyzing Cash Flows. April 2013 Analyzing Cash Flows April 2013 Overview Introductions Importance of cash flow in underwriting decisions Key attributes to calculating cash flow Where to obtain information to calculate cash flows Considerations

More information

ACC 255 FINAL EXAM REVIEW PACKET (NEW MATERIAL)

ACC 255 FINAL EXAM REVIEW PACKET (NEW MATERIAL) Page 1 ACC 255 FINAL EXAM REVIEW PACKET (NEW MATERIAL) Complete these sample exam problems/objective questions and check your answers with the solutions at the end of the review file and identify where

More information

Preparing Agricultural Financial Statements

Preparing Agricultural Financial Statements Preparing Agricultural Financial Statements Thoroughly understanding your business financial performance is critical for success in today s increasingly competitive agricultural environment. Accurate records

More information

Interest Expense Principal

Interest Expense Principal ACCOUNTING BY THE LESSOR AND LESSEE A lease is a contract between a lessor (the owner of the property) and a lessee (the user of the property). Normally the lessee makes periodic payments in exchange for

More information

CHAPTER 19. Accounting for Income Taxes 6, 7, 13 2, 3, 4, 5, 6, 7, 9 14, 16, 17, 18,

CHAPTER 19. Accounting for Income Taxes 6, 7, 13 2, 3, 4, 5, 6, 7, 9 14, 16, 17, 18, CHAPTER 19 Accounting for Income Taxes ASSIGNMENT CLASSIFICATION TABLE Topics 1. Reconcile pretax financial income with taxable income. 2. Identify temporary and permanent differences. 3. Determine deferred

More information

E2-2: Identifying Financing, Investing and Operating Transactions?

E2-2: Identifying Financing, Investing and Operating Transactions? E2-2: Identifying Financing, Investing and Operating Transactions? Listed below are eight transactions. In each case, identify whether the transaction is an example of financing, investing or operating

More information

WORK PROCESS SCHEDULE ACCOUNTING TECHNICIAN O*NET-SOC CODE: 43-3031.00 RAIS CODE: 1125HY

WORK PROCESS SCHEDULE ACCOUNTING TECHNICIAN O*NET-SOC CODE: 43-3031.00 RAIS CODE: 1125HY Accounting Technician 1 WORK PROCESS SCHEDULE ACCOUNTING TECHNICIAN O*NET-SOC CODE: 43-3031.00 RAIS CODE: 1125HY DESCRIPTION: Compute, classify, and record numerical data to keep financial records complete.

More information

how to prepare a cash flow statement

how to prepare a cash flow statement business builder 4 how to prepare a cash flow statement zions business resource center zions business resource center 2 how to prepare a cash flow statement A cash flow statement is important to your business

More information

Glossary of Accounting Terms

Glossary of Accounting Terms Glossary of Accounting Terms Account: A record that holds the results of financial transactions. Accountant's Equation: The equation that is the basis of the Balance Sheet: Assets = Liabilities + Owners'

More information

You can select the equipment by working with a vendor or a manufacturer, which offers leasing.

You can select the equipment by working with a vendor or a manufacturer, which offers leasing. Why Should I Lease Equipment? As businesses prepare to compete and grow in a new millennium, many are searching for proven new ways to address their equipment financing challenge. The old ways won't meet

More information

EMERSON AND SUBSIDIARIES CONSOLIDATED OPERATING RESULTS (AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED)

EMERSON AND SUBSIDIARIES CONSOLIDATED OPERATING RESULTS (AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED) CONSOLIDATED OPERATING RESULTS (AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED) TABLE 1 Quarter Ended March 31, Percent Change Net Sales $ 5,854 $ 5,919 1% Costs and expenses: Cost of sales 3,548 3,583

More information

The Basics of Lease Accounting

The Basics of Lease Accounting The Basics of Lease Accounting Joe Sebik, VP - Global Originations & Structuring J. P. Morgan Leasing, Inc. (212) 899-1249 joseph.p.sebik@jpmorgan.com Howard Thompson, Director - Pricing & Economics Key

More information

Financial Accounting: Liabilities & Equities Class notes Barbara Wyntjes, B.Sc., CGA

Financial Accounting: Liabilities & Equities Class notes Barbara Wyntjes, B.Sc., CGA Module 5: Leases Part 2: Assignment 17-1 (Chapter 17, page 1080) The lease term is eight years. Guaranteed residual value, none. Unguaranteed residual value, unknown BPO, none. Minimum net lease payment,

More information

Walk Through Balance Sheet. Chapter 7. Learning Objectives. Learning Objectives 1, 2. Learning Objectives 1, 2. Cash and Receivables.

Walk Through Balance Sheet. Chapter 7. Learning Objectives. Learning Objectives 1, 2. Learning Objectives 1, 2. Cash and Receivables. Chapter 7 Walk Through Balance Sheet Cash and Receivables Chapters 1 6 Accounting cycle: JE, AJE, financial stmts Conceptual framework, GAAP, revenue Time value of money concepts Remaining chapters (ACTG

More information

* * * Chapter 15 Accounting & Financial Statements. Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall

* * * Chapter 15 Accounting & Financial Statements. Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 15 Accounting & Financial Statements Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall Bookkeeping vs. Accounting Bookkeeping Accounting The recording of business transactions.

More information

Case Western Reserve University Consolidated Financial Statements for the Year Ending June 30, 2001

Case Western Reserve University Consolidated Financial Statements for the Year Ending June 30, 2001 Contents Report of Independent Accountants 1 Part 1 Consolidated Financial Statements Consolidated Balance Sheet 2 Consolidated Statement of Activities 3 Consolidated Statement of Cash Flows 4 Part 2 Summary

More information

Types of Leases. Lease Financing. FINC 3630 Yost

Types of Leases. Lease Financing. FINC 3630 Yost Lease Financing Types of Leases Operating Leases Financial Leases or Capital Leases Sale and Leaseback Arrangements Combination Leases Synthetic Leases Operating Leases Payments include maintenance and

More information

Notes to Consolidated Balance Sheet

Notes to Consolidated Balance Sheet Notes to Consolidated Balance Sheet 1. Amounts less than one million yen have been omitted. 2. Standards for recognition and measurement of trading assets and liabilities are as follows: Recognition: Trading

More information

CHAPTER 13 Current Liabilities and Contingencies

CHAPTER 13 Current Liabilities and Contingencies CHAPTER 13 Current Liabilities and Contingencies 13-1 LECTURE OUTLINE This chapter can be covered in two or three class sessions. Students should be familiar with trade and payroll liabilities. Short-term

More information

Chapter 21 The Statement of Cash Flows Revisited

Chapter 21 The Statement of Cash Flows Revisited Chapter 21 The Statement of Cash Flows Revisited AACSB assurance of learning standards in accounting and business education require documentation of outcomes assessment. Although schools, departments,

More information

RELEVANT TO ACCA QUALIFICATION PAPER F7 AND P2. Studying Paper F7 or P2? Performance objectives 10 and 11 are relevant to this exam

RELEVANT TO ACCA QUALIFICATION PAPER F7 AND P2. Studying Paper F7 or P2? Performance objectives 10 and 11 are relevant to this exam RELEVANT TO ACCA QUALIFICATION PAPER F7 AND P2 Studying Paper F7 or P2? Performance objectives 10 and 11 are relevant to this exam The IASB s Conceptual Framework for Financial Reporting I am from England,

More information

Financial Statements

Financial Statements Financial Statements The financial information forms the basis of financial planning, analysis & decision making for an organization or an individual. Financial information is needed to predict, compare

More information

Large Company Limited. Report and Accounts. 31 December 2009

Large Company Limited. Report and Accounts. 31 December 2009 Registered number 123456 Large Company Limited Report and Accounts 31 December 2009 Report and accounts Contents Page Company information 1 Directors' report 2 Statement of directors' responsibilities

More information

Intercompany Indebtedness. Chapter 8. Intercompany Indebtedness. Consolidation Overview. Consolidation Overview. Intercompany Indebtedness

Intercompany Indebtedness. Chapter 8. Intercompany Indebtedness. Consolidation Overview. Consolidation Overview. Intercompany Indebtedness Chapter 8 Intercompany Indebtedness Intercompany Indebtedness One advantage of having control over other companies is that management has the ability to transfer resources from one legal entity to another

More information

Note 2 SIGNIFICANT ACCOUNTING

Note 2 SIGNIFICANT ACCOUNTING Note 2 SIGNIFICANT ACCOUNTING POLICIES BASIS FOR THE PREPARATION OF THE FINANCIAL STATEMENTS The consolidated financial statements have been prepared in accordance with International Financial Reporting

More information

Statement of Financial Accounting Standards No. 13

Statement of Financial Accounting Standards No. 13 Statement of Financial Accounting Standards No. 13 FAS13 Status Page FAS13 Summary Accounting for Leases November 1976 Financial Accounting Standards Board of the Financial Accounting Foundation 401 MERRITT

More information

ČEZ, a. s. BALANCE SHEET in accordance with IFRS as of March 31, 2015 in CZK Millions

ČEZ, a. s. BALANCE SHEET in accordance with IFRS as of March 31, 2015 in CZK Millions BALANCE SHEET Assets Property, plant and equipment: 31. 03. 2015 31. 12. 2014 Plant in service 345,012 344,246 Less accumulated provision for depreciation (199,841) (196,333) Net plant in service 145,171

More information

Types of Leases. Lease Financing

Types of Leases. Lease Financing Lease Financing Types of leases Tax treatment of leases Effects on financial statements Lessee s analysis Lessor s analysis Other issues in lease analysis Who are the two parties to a lease transaction?

More information

Unit 6 Receivables. Receivables - Claims resulting from credit sales to customers and others goods or services for money,.

Unit 6 Receivables. Receivables - Claims resulting from credit sales to customers and others goods or services for money,. Unit 6 Receivables 7-1 Receivables - Claims resulting from credit sales to customers and others goods or services for money,. Oral promises of the purchaser to pay for goods and services sold (credit sale;

More information

18 BUSINESS ACCOUNTING STANDARD FINANCIAL ASSETS AND FINANCIAL LIABILITIES I. GENERAL PROVISIONS

18 BUSINESS ACCOUNTING STANDARD FINANCIAL ASSETS AND FINANCIAL LIABILITIES I. GENERAL PROVISIONS APPROVED by Resolution No. 11 of 27 October 2004 of the Standards Board of the Public Establishment the Institute of Accounting of the Republic of Lithuania 18 BUSINESS ACCOUNTING STANDARD FINANCIAL ASSETS

More information

Residual carrying amounts and expected useful lives are reviewed at each reporting date and adjusted if necessary.

Residual carrying amounts and expected useful lives are reviewed at each reporting date and adjusted if necessary. 87 Accounting Policies Intangible assets a) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of identifiable net assets and liabilities of the acquired company

More information

5 BUSINESS ACCOUNTING STANDARD CASH FLOW STATEMENT I. GENERAL PROVISIONS II. KEY DEFINITIONS

5 BUSINESS ACCOUNTING STANDARD CASH FLOW STATEMENT I. GENERAL PROVISIONS II. KEY DEFINITIONS APPROVED by Resolution No. 1 of 18 December 2003 of the Standards Board of the Public Establishment the Institute of Accounting of the Republic of Lithuania 5 BUSINESS ACCOUNTING STANDARD CASH FLOW STATEMENT

More information

GUIDE TO THE SURVEY FINANCIAL BALANCE STATISTICS

GUIDE TO THE SURVEY FINANCIAL BALANCE STATISTICS 1(16) GUIDE TO THE SURVEY FINANCIAL BALANCE STATISTICS 1 GENERAL INFORMATION... 3 2 DEFINITION OF DATA... 3 2.1 Positions... 3 2.2... 3 2.3... 4 3 DEFINITION OF VARIABLES... 4 3.1 Financial assets... 4

More information

MITSUI SUMITOMO INSURANCE COMPANY, LIMITED AND SUBSIDIARIES. CONSOLIDATED BALANCE SHEETS March 31, 2005 and 2006

MITSUI SUMITOMO INSURANCE COMPANY, LIMITED AND SUBSIDIARIES. CONSOLIDATED BALANCE SHEETS March 31, 2005 and 2006 CONSOLIDATED BALANCE SHEETS March 31, 2005 and 2006 2005 2006 ASSETS Investments - other than investments in affiliates: Securities available for sale: Fixed maturities, at fair value 3,043,851 3,193,503

More information

Module 2: Preparing for Capital Venture Financing Financial Forecasting Methods TABLE OF CONTENTS

Module 2: Preparing for Capital Venture Financing Financial Forecasting Methods TABLE OF CONTENTS Module 2: Preparing for Capital Venture Financing Financial Forecasting Methods Module 2: Preparing for Capital Venture Financing Financial Forecasting Methods 1.0 FINANCIAL FORECASTING METHODS 1.01 Introduction

More information

Financial Statements and Ratios: Notes

Financial Statements and Ratios: Notes Financial Statements and Ratios: Notes 1. Uses of the income statement for evaluation Investors use the income statement to help judge their return on investment and creditors (lenders) use it to help

More information

CONSOLIDATED PROFIT AND LOSS ACCOUNT For the six months ended June 30, 2002

CONSOLIDATED PROFIT AND LOSS ACCOUNT For the six months ended June 30, 2002 CONSOLIDATED PROFIT AND LOSS ACCOUNT For the six months ended June 30, 2002 Unaudited Unaudited Note Turnover 2 5,576 5,803 Other net losses (1) (39) 5,575 5,764 Direct costs and operating expenses (1,910)

More information

Patricia McConnell: Will the elimination of operating lease accounting improve financial reporting by lessees?

Patricia McConnell: Will the elimination of operating lease accounting improve financial reporting by lessees? Patricia McConnell: Will the elimination of operating lease accounting improve financial reporting by lessees? 24 June 2010 To address investors concerns about off-balance sheet assets and liabilities

More information

Cork Institute of Technology. Autumn 2006 Advanced Financial Accounting (Time: 3 Hours)

Cork Institute of Technology. Autumn 2006 Advanced Financial Accounting (Time: 3 Hours) Cork Institute of Technology Bachelor of Business in Accounting Award Bachelor of Business in Management - Award Instructions Answer FOUR questions Answer all THREE questions in Section A and ONE question

More information

How To Grade Your Business

How To Grade Your Business ReportCard TheSmallBusiness Is your business making the grade? This number-crunching study guide has the answer. MasterCard Solutions For Small Business MasterCard Solutions for Small Business encompasses

More information

Chapter 20 Lease Financing ANSWERS TO END-OF-CHAPTER QUESTIONS

Chapter 20 Lease Financing ANSWERS TO END-OF-CHAPTER QUESTIONS Chapter 20 Lease Financing ANSWERS TO END-OF-CHAPTER QUESTIONS 20-1 a. The lessee is the party leasing the property. The party receiving the payments from the lease (that is, the owner of the property)

More information

Reporting and Analyzing Cash Flows QUESTIONS

Reporting and Analyzing Cash Flows QUESTIONS Chapter 12 Reporting and Analyzing Cash Flows QUESTIONS 1. The purpose of the cash flow statement is to report all major cash receipts (inflows) and cash payments (outflows) during a period. It helps users

More information

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ DETAILED BALANCE SHEET

ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ DETAILED BALANCE SHEET ASSETS I- Current Assets Audited Current Period Audited Previous Period A- Cash and Cash Equivalents 14 1.606.048.714 1.153.712.216 1- Cash 14 37.347 49.256 2- Cheques Received 3- Banks 14 1.356.733.446

More information

3,000 3,000 2,910 2,910 3,000 3,000 2,940 2,940

3,000 3,000 2,910 2,910 3,000 3,000 2,940 2,940 1. David Company uses the gross method to record its credit purchases, and it uses the periodic inventory system. On July 21, 20D, the company purchased goods that had an invoice price of $ with terms

More information

Long Island University C.W. Post GBA 521. Final Exam - review

Long Island University C.W. Post GBA 521. Final Exam - review Long Island University C.W. Post GBA 521 Name: _ (Last name) (First name) Date: _ Final Exam - review Multiple Choice Following are 14 multiple choice questions, worth 3 points each. Clearly identify the

More information

Plan and Track Your Finances

Plan and Track Your Finances Plan and Track Your Finances 9.1 Financing Your Business 9.2 Pro Forma Financial Statements 9.3 Recordkeeping for Businesses Lesson 9.1 Financing Your Business Goals Estimate your startup costs and personal

More information

Please see current textbook prices at www.rcgc.bncollege.com

Please see current textbook prices at www.rcgc.bncollege.com BUS 202 INTERMEDIATE ACCOUNTING I SYLLABUS LECTURE HOURS/CREDITS: 3/3 CATALOG DESCRIPTION Prerequisite: BUS 103, CIS 102 and MAT 101 or equivalent This course provides an expanded treatment of theory and

More information

Chapters 3 and 13 Financial Statement and Cash Flow Analysis

Chapters 3 and 13 Financial Statement and Cash Flow Analysis Chapters 3 and 13 Financial Statement and Cash Flow Analysis Balance Sheet Assets Cash Inventory Accounts Receivable Property Plant Equipment Total Assets Liabilities and Shareholder s Equity Accounts

More information

Consolidated Financial Statements Notes to the Consolidated Financial Statements for Fiscal Year 2014

Consolidated Financial Statements Notes to the Consolidated Financial Statements for Fiscal Year 2014 171 The most important exchange rates applied in the consolidated financial statements developed as follows in relation to the euro: Currency Average rate Closing rate Country 1 EUR = 2014 2013 2014 2013

More information

Learning Objectives: Quick answer key: Question # Multiple Choice True/False. 14.1 Describe the important of accounting and financial information.

Learning Objectives: Quick answer key: Question # Multiple Choice True/False. 14.1 Describe the important of accounting and financial information. 0 Learning Objectives: 14.1 Describe the important of accounting and financial information. 14.2 Differentiate between managerial and financial accounting. 14.3 Identify the six steps of the accounting

More information

Audited Prior Period 31 December 2014

Audited Prior Period 31 December 2014 As at ASSETS I- Current Assets A- Cash and Cash Equivalents 202.531.176 216.428.429 1- Cash 5.603 27.952 2- Cheques Received 3- Banks 49.703.075 87.301.020 4- Cheques Given and Payment Orders (31.536)

More information

CC.2.1.HS.F.5 -- Essential Choose a level of accuracy appropriate to limitations on measurement when reporting quantities. 1 -- Essential. them.

CC.2.1.HS.F.5 -- Essential Choose a level of accuracy appropriate to limitations on measurement when reporting quantities. 1 -- Essential. them. Topic: 04-Business Expense Management Know: Understand: Do: CC.2.1.HS.F.5 -- Essential Choose a level of accuracy appropriate to limitations on measurement when reporting quantities. CC.2.2.HS.D.8 -- Essential

More information

STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION. BALANCE SHEET As of

STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION. BALANCE SHEET As of STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION BALANCE SHEET As of ASSETS CURRENT ASSETS Cash and Cash Equivalents Cash - Restricted Accounts Receivable - Trade Accounts Receivable

More information

ČEZ, a. s. BALANCE SHEET in accordance with IFRS as of June 30, 2014 in CZK Millions

ČEZ, a. s. BALANCE SHEET in accordance with IFRS as of June 30, 2014 in CZK Millions BALANCE SHEET Assets Property, plant and equipment: 30. 6. 2014 31. 12. 2013 Plant in service 319 440 319 081 Less accumulated provision for depreciation (188 197) (182 282) Net plant in service 131 243

More information

Off-Balance Sheet Financing: Operating Leases & Other Topics

Off-Balance Sheet Financing: Operating Leases & Other Topics Off-Balance Sheet Financing: Operating Leases & Other Topics Session 7 FIN 551 - Financial Statement Analysis 1 Let s Discuss Leases FIN 551 - Financial Statement Analysis 2 1 Off-Balance-Sheet Obligation

More information

Proposed Lease Accounting Changes: Impact on Asset Finance Deals

Proposed Lease Accounting Changes: Impact on Asset Finance Deals Proposed Lease Accounting Changes: Impact on Asset Finance Deals In August 2010, the International Accounting Standards Board ( IASB ) issued a proposal which, if adopted, will overhaul lease accounting

More information

NEPAL ACCOUNTING STANDARDS ON CASH FLOW STATEMENTS

NEPAL ACCOUNTING STANDARDS ON CASH FLOW STATEMENTS NAS 03 NEPAL ACCOUNTING STANDARDS ON CASH FLOW STATEMENTS CONTENTS Paragraphs OBJECTIVE SCOPE 1-3 BENEFITS OF CASH FLOWS INFORMATION 4-5 DEFINITIONS 6-9 Cash and cash equivalents 7-9 PRESENTATION OF A

More information