It is the end of 2013, and, as an accountant for Newell Company, you are preparing its

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It is the end of 2013, and, as an accountant for Newell Company, you are preparing its 2013 financial statements. On December 29, 2013, Newell's management decided to sell one of its major divisions, subject to some legal work that is expected to be completed during the first week in April 2014 (after the 2013 financial statements have been issued). During 2013, the division earned a small operating income that is just enough for the company to report ''record earnings'' for the year. However, the estimated fair value of the division at the end of 2013 is less than its net book value, so that management anticipates the component will be sold at a loss.
Newell's president stops by your office and says,
''You have been doing a fine job. Keep up the good work because you are heading for a promotion in early 2015. Once we report the record earnings for 2013, our shareholders and creditors will be happy. Then I think our earnings for 2014 will be high enough so that the loss we expect to report in 2014 on the sale of the division will not look so bad.'' After the president leaves your office, you continue preparing the 2013 financial statements.
Required:
From financial reporting and ethical perspectives, what information, if any, will you include about the upcoming sale of the division in the 2013 financial statements?
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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Related Book For  book-img-for-question

Intermediate Accounting Reporting and Analysis

ISBN: 978-1111822361

1st edition

Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach

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