...Object: Report on issues concerning consolidated financial statements The following report deals with the issues and problems concerning the consolidated financial statements. The first concern was about the meaning of deferred income taxes and deferred tax assets. As you know, the accounting income in income statement may be not equal to the taxable income in tax reporting. This can be explained by the fact that the rules in accounting and in tax regulations may differ. Often differences in the timing of the recognition of revenues and expenses occur. These differences lead to a gap between tax payable and tax expense and create temporary differences. A temporary difference is called taxable when it creates a future amount of tax payable. It is called deductible on the opposite side. IAS 12 requires that these temporary differences be recognized in the balance sheet using the Balance Sheet Liability method. Under this method, for each asset and liability a comparison is made between the tax base, i.e. the amount associated for tax purposes, and the amount recorded on the balance sheet. Then, temporary differences are recognized. For example, in the case of a deferred income tax, the amount on the balance sheet is greater than its tax base. So tax expense exceeds tax payable. Thus, a taxable temporary difference appears. In the income statement, a liability equal to the amount of this difference is recorded as a deferred income tax. On the contrary, a deferred...
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...Table of Content: Notes to Consolidated Financial Statements 1. Summary of Significant Accounting Policies Principles of Consolidation Description of the Company New Accounting Pronouncements Cash and Cash Equivalent Inventories Investments Property, Plant and Equipment and Depreciation Earnings per Share Revenue Recognition Research and Development Use of Estimates Income Taxes Annual Closing Date 2. Cash, Cash Equivalents and Current Marketable Securities 3. Inventories 4. Property, Plant and Equipment 5. Intangible Assets and Goodwill 6. Long-Term Liabilities 7. Income Taxes 8. Employee Related Obligations 9. Pensions and Other Benefit Plans 10. Merger and Acquisitions 11. Earnings per share 12. Rental Expense and Lease Commitments 13. Investments 14. Share-Based Compensation Plans 15. Recent Accounting Pronouncement 16. Subsequent Events 3 3 3 3 3 4 4 4 4 5 5 5 5 6 6 6 6 7 7 8 8 8 9 9 9 10 10 10 11 ACCT551 Class Project Page 1 ACCT551 Class Project Excerpts from 2009 Annual Report for the Procter & Gamble Company 1. Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of the Procter & Gamble Company and its subsidiaries (the “Company”, “we” or “us”). Intercompany transactions are eliminated. Description of the Company and Business Segments The Procter & Gamble Company’s business is focused on providing branded consumer goods products of superior quality and value. Our product are sold...
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...or services used in the process of earning revenues. Instead, dividends are considered a distribution of earnings to stockholders. Summary The transactions of NetSolutions are summarized below. Each transaction is identified by letter, and the balance of each item is shown after every transaction. Assets Liabilities Stockholders’ Equity Accounts Capital Fees Wages Rent Supplies Utilities Misc. Cash Supp. Land Payable Stock Dividends Earned Exp. Exp. Exp. Exp. Exp. a. 25,000 25,000 b. 20,000 20,000 Bal. 5,000 20,000 25,000 c. 1,350 1,350 Bal. 5,000 1,350 20,000 1,350 25,000 d. 7,500 7,500 Bal. 12,500 1,350 20,000 1,350 25,000 7,500 e. 3,650 2,125 800 450 275 Bal. 8,850 1,350 20,000 1,350 25,000 7,500 2,125 800 450 275 f. 950 950 Bal. 7,900 1,350 20,000 400 25,000 7,500 2,125 800 450 275 g. 800 800 Bal. 7,900 550 20,000 400 25,000 7,500 2,125 800 800 450 275 h. 2,000 2,000 Bal. 5,900 550 20,000 400 25,000 2,000 7,500 2,125 800 800 450 275 Nov. 30, 2009 NetSolutions pays $2,000 to stockholders (Chris Clark) as dividends. Copyright 2009 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to:Chapter 1 Introduction to Accounting and Business 15 You should note the following in the preceding summary: 1. The effect of every transaction is an increase or a decrease in one or more of the accounting equation elements. 2. The two...
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...Method Relates to Consolidated Financial Statements As we'll see, the equity method is in many ways a partial consolidation. If a company acquires more than 50% of the voting stock of another company, it's said to have a controlling interest, because by voting those shares, the investor actually can control the company acquired. The investor is referred to as the parent; the investee is termed the subsidiary. For reporting purposes (although not legally), the parent and subsidiary are considered to be a single reporting entity, and their financial statements are consolidated. Both companies continue to operate as separate legal entities and the subsidiary reports separate financial statements. However, because of the controlling interest, the parent company reports consolidated financial statements. p. 645 Consolidated financial statements combination of the separate financial statements of the parent and subsidiary each period into a single aggregate set of financial statements as if there were only one company - combine the separate financial statements of the parent and the subsidiary each period into a single aggregate set of financial statements as if there were only one company. This entails an item-by-item combination of the parent and subsidiary statements (after first eliminating any amounts that are shared by the separate financial statements).28 For instance, if the parent has $8 million cash and the subsidiary has $3 million cash, the consolidated balance sheet...
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...BUSN 258 Week 3 Case Study Consolidated Edison company of New York or Con Ed is a utility company that services the five boroughs of New York City and parts of Westchester County. Con Ed supplies electric, gas and steam to over three million customers and prides itself on its reliability. While Con Ed does hold a positive image in their customers’ eyes some incidents recently have left a negative image in many customers’ eyes. Con Ed has been in the news due to two gas explosions in New York City where there have been fatalities as well. These come at a time when Con Ed is trying to persuade customers to covert from oil to gas through incentives. Customers feel oil is safer due to recent events they see on the news. I interviewed Mr. Stampfel a Specialist from the call center to ask him some question s on the importance of customer service and relations. Michael has 9 Customer Service Representatives reporting directly to him, and has been a Customer Service Representative himself before being promoted into management. When Mr. Stampfel was asked about the role and importance of Customer Service to the organization he replied, “ Look around, this whole floor is dedicated to customer service, without customers there would be no Con Edison. We take customer service and satisfaction very seriously. Our CEO even added enhancing the customer experience into our principles.” (Stampfel, personal interview 2015). When asked the three most common issues faced by the organization...
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...6) How does CSX intend to take control of Conrail? Explain how they intend to accumulate 50% of Conrail’s shares. As of October 15, 1996 CSX Corporation (CSX) intended to merge with Consolidated Rail Corporation (Conrail) by offering a two-tier deal, structured in the following manner. CSX would purchase 90.5 million fully diluted Conrail shares by paying $92.50 per share for the first 40% of the shares (the front-end offer) and would enter a share exchange for the remaining 60% of the required shares (the back-end offer). The front-end offer would be executed in two stages. The first stage, which began the day after the merger announcement, would be a cash tender offer to acquire 17.86 million shares at $92.50 per share (accounting for 19.7% of Conrail’s acquisition shares). The second stage, which could only be executed by mid-November once Conrail shareholders decided to void the “fair value” statute under Pennsylvania law, would be to acquire another 18.4 million shares at $92.50 per share (accounting for another 20.3% of Conrail’s acquisition shares) Following shareholder approval, and successful completion of the second cash tender offer, CSX would proceed with the back-end offer through a share swap of 1.85619 CSX shares for every 1 Conrail share in addition to an extra $16 of new convertible preferred stock. This two-tier structure of paying in both cash and stock not only allows CSX to abide by Pennsylvania’s antitakeover laws, but also saves on cash spent in...
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...Executive Summary Conrail has received two acquisition bids from CSX and Norfolk Southern. Introduction Conrail and CSX, the nation’s first and third largest railroads, have decided toparticipate in a merger of equals. CSX has offered to acquire Conrail in a two tiereddeal. The first 40% of tendered Conrail shares will be bought at a price of $92.50while the remaining 60% will be acquired through a stock swap at a ratio of 1.8561921 (CSX:Conrail). In the midst of this offer, a hostile Bid comes in fromNorfolk Southern, a competitor in the Industry. Norfolk Southern offers ____ Analysis Case A, Question 1: Why is CSX interested in Conrail? How much should CSX payfor Conrail? The Stagger’s Rail Act of 1980 has created a deregulated environment in whichacquisitions are used to improve the competitive positioning of existing companieswithin the railroad industry. CSX is interested in Conrail for a couple of reasons.Primarily, CSX would like to acquire Conrail because its routes are complementaryto their own, allowing the combined company to provide “long-haul, contiguous,and therefore low-cost service between the Southern, Eastern, and Mid-Westernparts of the United States.” Additionally, CSX’s acquisition of Conrail would preventthe company’s main competitor Norfolk Southern from gaining access to routes inthe Northeastern United States. This would leave Norfolk Southern at a largestrategic disadvantage. Lastly, the combination would provide cost synergies andreductions, even...
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...REPORTING ANALYSIS: FINANCIAL EVALUATION OF BOWATER INCORPORTED INTRODUCTION Headquartered in Greenville, SC, Bowater Incorporated is a leading producer of coated and specialty papers and newsprint. Founded in 1881 in England, Bowater has evolved into an international public corporation that is among the largest manufacturer in North America. Bowater common stock (BOW) is listed on the New York Stock Exchange. It operates in five divisions: Newsprint, Coated Papers, Specialty Papers, Lumber and Market Pulp. There are currently 14 analysts following the stock. On January 29, 2007, Abitibi-Consolidated Inc. and Bowater Incorporated announced a definite agreement to combine in an all-stock merger of equals. On October 29, 2007, the completion of the transaction was announced by the two companies and the combination of Abitibi-Consolidated Inc. and Bowater Incorporated formed a new merger of AbitibiBowater. Bowater originally announced that over the next two years it is expected to realize in excess of $250 million in annualized synergies. The Company also expects to achieve a debt-reduction of $1 billion over the next three years in order to enhance its global competitiveness . AbitibiBowater focus is to provide access to a broad range of forest products and best-in-class customer service, as well as a relentless commitment to the environment. Several significant to rigorously evaluate Bowater financial evaluation. Now that the merger with Abitibi is now complete...
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...CASE A CSX ACQUISITION OF CONSOLIDATED RAIL CORPORATION CSX has put up a bid of $8.3 B in order to horizontally integrate with Conrail in order to increase the combined profitability based on perceived improvement in Synergies. A) Lower Cost Structure: Railroad is capital intensive industry with very high fixed cost. CSX-Conrail merger will lower company’s cost-structure by creating increasing economies of scale. Operating ratio of Conrail is 87.63% and CSX’s operating ratio is 81.99% (Exhibit 1). According to American Investment research report (Exhibit 10), proposed merger will bring operating ratio to 65 % (an 18.75% decrease). Both CSX and Conrail have low ROA (2.33% and 4.11%) compared to Norfolk’s ROA of 5.06 % (Table 6). If CSX and Conrail will achieve its projected revenue growth and cost-savings, CSX-Conrail will become more efficient than Norfolk. B) Gain Market Power : Based on revenue data from 1995 (Exhibit 1), CSK control 38.5%, Conrail controls 29.4% and Norfolk controls 32.1% of Northeast rail freight market. The proposed merger will allow CSX to control major share (~70 %) of the lucrative North Eastern rail market and enable them to take advantage of synergies in the space. In addition, CSX – Conrail can further improve on its market position by limiting Norfolk’s access to long-haul routes either from south or Midwest. MECHANICS OF THE CSX – CONRAIL DEAL CSX has offered a two-tiered offer for the stocks of Conrail. For the first 40% of the shares...
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.... Why is CSX interested in acquiring Consolidated Rail Corporation (Conrail)? Describe thearguments for the offer being motivated by synergies, as well as arguments for the motivationto pre-empt a bid by Norfolk. The 1999 acquisition of Conrail, jointly split with CSX, was perhaps the most important and critical time in the company’s history. If CSX had been allowed to purchase Conrail outright, not only would NS have been entirely surrounded but also it could never againeffectively compete with CSX, even if it was able to run a railroad much more efficientlyand effectively than CSX. NS had been interested in Conrail for some time because itwould add an important addition the railroad needed, direct lines to the markets of NewYork City and Philadelphia which Conrail had been effective in developing and exploitingby becoming a intermodal (i.e., the movement of ship containers which can be movedvia over-the-road trucks as well) juggernaut moving containers between Chicago andthe Northeast.Not only was intermodal the wave of the future but NS also did not contain an effectivebusiness in such and had CSX gained complete control of the Northeast it would onlyhave been a matter of time before NS was gobbled up as well, mostly likely by aWestern road (by rules of competition, CSX would not have been allowed to purchaseNS and control the entire Eastern rail market).So, thus began the battle for Conrail in the mid-1990s when CSX announced itsintentions of purchasing the railroad...
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...Onion Strike During the year 1979 a group of Mexican American farm workers organized a strike to protest poor wages and bad working conditions in Raymondville, Texas. Raymondville was known for its agricultural area and it was also known as the onion capital of the world. Mexican Americans realized they were being treated poorly and that they were Americans as well and had the exact same rights as the whites who were living at Raymondville. Juanita Valdez was one of the leaders in charge of the onion strike. She thinks there was change in the community and that they were successful with the strike because it marked the birth of a political movement. The people from Raymondville knew they needed change in their life’s and had to do something about it so they organized strikes that either helped Raymondville for the better or for the worse. The strikes affected the people from Raymondville in the long run instead of helping them. The leaders who organized the strikes were Tony Andrea and Juanita Valdez and they believe the strike was won in their favor, but many local residents such as Thomas Rains a former Raymondville school board member stated “The strike crippled the onion business that fueled much of the local economy.” Willacy County used to be the main county as far as onions are concerned and it was all lost after the onion strikes protest. Instead of bringing progress towards the community it decreased job opportunities to Mexican Americans. As of result of protesting...
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...A comparative studies of consolidated financials Table of Contents: 1. A. Description of Expanded accounting equation for Hal Burton Web consulting for the period of 1-30, 2015 B. Basic and consolidated financial statements of Hal Burton Web consulting for the period of 1-30, 2015 1. Income Statement. 2. Statement of financial position 3. Statement of owner’s equity 4. Statement of Cash Flows. 2. A. Requirements of International Accounting Standards (IAS-1) and its comparison with US-GAAP for the presentation of financial statements. B. Supporting examples of financial statements prepared under IFRS and US GAAP References. 1) A. Analyze and summarize the below transactions using the accounting equation in the form of a table showing different assets, liabilities, capital, revenue and expenses. Table 1. Expanded Accounting Information | | | |Hal Burton Web | | | | |Consulting | | | Statement of Owners Equity | | | | ...
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...[Appropriate Address] Report on the Financial Statements We have audited the accompanying consolidated financial statements of ABC Company and its subsidiaries, which comprise the consolidated balance sheet as of December 31, 20x1 and 20x0, and the related consolidated statements of income, changes in stockholders’ equity and cash flows for the years then ended, and the related notes to the financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial stamens in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America,. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected...
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...Financial reporting developments A comprehensive guide Consolidated and other financial statements Revised November 2013 Noncontrolling interests, combined financial statements, parent company financial statements and consolidating financial statements To our clients and other friends This Financial reporting developments (FRD) publication is primarily designed to help you understand financial reporting issues related to the accounting for noncontrolling interests. This publication also includes interpretive guidance on consolidation procedure and on the presentation of combined, parentonly, and consolidating financial statements. The publication reflects our current understanding of the relevant guidance in these areas, based on our experience with financial statement preparers and related discussions with the FASB and SEC staffs. The accounting for noncontrolling interests is based on the economic entity concept of consolidated financial statements. Under the economic entity concept, all residual economic interest holders in an entity have an equity interest in the consolidated entity, even if the residual interest is relative to only a portion of the entity (that is, a residual interest in a subsidiary). Therefore, a noncontrolling interest is required to be displayed in the consolidated statement of financial position as a separate component of equity. Likewise, the consolidated net income or loss and comprehensive income or loss attributable to both controlling...
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...10-K. Form 8-K is a very broad form used to notify investors of any unscheduled material event that is important to shareholders or the SEC. Form 10-K : is an annual report required by the U.S. Securities and Exchange Commission (SEC), that gives a comprehensive summary of a public company‘s performance. Although similarly named, the annual report on Form 10-K is distinct from the often glossy “annual report to shareholders”, which a company must send to its shareholders when it holds an annual meeting to elect directors (though some companies combine the annual report and the 10-K into one document). The 10-K includes information such as company history, organizational structure, executive compensation, equity, subsidiaries, and audited financial statements, among other information. Form 10-KSB: Similar to the SEC Form 10-K, the Form 10-KSB contains crucial information for investors researching potential investments. This is especially true with the companies that file the Form 10-KSB since the stocks of these small companies most often trade as “penny stocks.” Consequently, they do not receive significant coverage by third-party analysts. GENERAL MOTORS CORPORATION AND SUBSIDIARIES CONSENT OF INDEPENDENT AUDITORS The Board of Directors General Motors Corporation: We consent to the incorporation by reference of our report on page II-20 dated January 16, 2003 (March 12, 2003 as to Note 26) and of our report in Section IV...
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