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Financial Statement Restatement Paper

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Restatement of the Company
Zynga is a social gaming company. Many of their games are seen on social media networks such as Facebook, or Google+. On August 11, 2011, Zynga restated their first quarter revenue to reflect an accounting error in their initial IPO (initial public offering) registration. Their second quarter revenue report was increased by 3% over what was reported in first quarter. The error was due to a previous policy estimate (Primack, August, 2011).
Accounting Principles Involved
In the first quarter, the company’s previous policy was to apply most current estimates of paying players to current period sales. The accounting department did not adjust the deferred revenue balance for revised estimates of related sales in previous periods. Zynga determined the adjustment of the deferred revenue ending balance was necessary according to ASC 250. March 31, 2011 financial statements were restated because Zynga found they had an internal control material weakness of financial reporting for the first quarter (Primack, August, 2011).
Effects of Errors and Changes on Statements
The effect of the error/change on the restatement was to increase revenue by $7.5 million, as well as an increase to a provision of income taxes by $2.5 million for January, February, and March 2011. In addition, Zynga decreased deferred revenue by $7.5 million as of the end of March 2011 (Primack, August, 2011).
Stockholders
The shareholders involved in Zynga include: o Kleiner Perkins Caufield & Byers – 11% stake o Institutional Venture Partners – 6.1% stake o Foundry Group – 6.1% stake o Avalon Ventures – 6.1% stake o DST Group – 5.8% stake, and o Union Square Ventures – 5.5% stake

The article does not specifically suggest the impact on the shareholders. However, I would think their shares would increase slightly because they revenue increased by 3% (Primack, August,…...

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