New Semester
Started
Get
50% OFF
Study Help!
--h --m --s
Claim Now
Question Answers
Textbooks
Find textbooks, questions and answers
Oops, something went wrong!
Change your search query and then try again
S
Books
FREE
Study Help
Expert Questions
Accounting
General Management
Mathematics
Finance
Organizational Behaviour
Law
Physics
Operating System
Management Leadership
Sociology
Programming
Marketing
Database
Computer Network
Economics
Textbooks Solutions
Accounting
Managerial Accounting
Management Leadership
Cost Accounting
Statistics
Business Law
Corporate Finance
Finance
Economics
Auditing
Tutors
Online Tutors
Find a Tutor
Hire a Tutor
Become a Tutor
AI Tutor
AI Study Planner
NEW
Sell Books
Search
Search
Sign In
Register
study help
business
financial statement analysis
Financial Statement Analysis 10th International Edition John Wild - Solutions
5–24. When a balance sheet reports a substantial dollar amount for goodwill, discuss what we should be concerned with in our analysis.
5–22. When an acquisition accounted for as a purchase is effected for stock or other equity securities, discuss what our analysis should be alert to.
5–21. Describe the analysis procedure available to adjust an income statement using pooling accounting so as to be comparable with an income statement using purchase accounting.
5–20. Assume a company appropriately determines the total cost of a purchased entity. Explain how the company allocates this total cost to the following assets.a. Goodwill. g. Raw materials.b. Negative goodwill (bargain purchase). h. Plant and equipment.c. Marketable securities. i. Land and
5–18. Describe how you determine the valuation of assets acquired in a purchase when:a. Assets are acquired by incurring liabilities.b. Assets are acquired in exchange of common stock.
5–16. Identify and explain some of the important limitations of consolidated financial statements.
6–47A. In estimating the value of common stock, the amount of EPS is considered an important element.a. Explain why EPS is important in the valuation of common stock.b. Is EPS equally important in valuing a preferred stock? Why or why not?
6–46A. Accounting for earnings per share has certain weaknesses that our analysis must consider for interpreting EPS data. Identify and discuss at least two weaknesses.
6–45A. EPS can affect a company’s stock prices. Can a company’s stock prices affect EPS?
6–44A. How does the payment of dividends on preferred stock affect the EPS computation?
6–43A. What is the purpose underlying the reporting of diluted EPS?
6–42A. Discuss uses of EPS and reasons or objectives for the current method of reporting EPS.
6–41A. Why is a thorough understanding of the principles governing computation of EPS important to our analysis?
6–40. Identify and explain at least one flaw to which tax allocation procedures are subject.
6–39. What are the disclosure requirements when accounting for income taxes?
6–38. List four general cases giving rise to temporary differences between financial reporting and tax reporting.
6–37. What are the main requirements of accounting for income taxes?
6–36. What factors cause the effective tax rate to differ from the statutory rate?
6–35. Net income computed on the basis of financial reporting often differs from taxable income due to permanent differences. What are permanent differences and how do they arise?
6–34. What is option overhang? What does it measure? How is it determined?
6–33. What are the economic costs to issuing employee stock options at the prevailing market price?
6–31. List and discuss the factors that affect the fair value of an option.
6–30. Distinguish between the intrinsic value and the fair value of an option.
6–28. Contrast the computation of total interest costs of a bond issue with warrants attached to an issue of convertible debt.
6–27. What aspects of the valuation and the amortization of goodwill must analysts be alert to?
6–26. What information does our analysis need regarding R&D outlays, especially in light of the limited disclosure requirements in practice?
6–25. Discuss the accounting standards that govern R&D costs. What are the disclosure requirements?
6–24. Describe aspects of revenue recognition that an analyst must be especially alert to.
6–23. Distinguish between the two major methods used to account for revenue under long-term contracts.
6–22. Explain how accounting practice defines a product financing arrangement.
6–20. Identify the conditions that are usually required before a sale with right of return is recognized as a sale and the resulting receivable is recognized as an asset.
6–19. Describe the conditions that are usually required before revenue is considered realized.
6–18. How should an analyst treat special items?
6–17. How do companies use special charges to influence investors’ perceptions regarding company value?
6–16. Explain what special items are. Give three examples of special items.
6–15. Accounting practice distinguishes among different types of accounting changes. Identify three different types of accounting changes.
6–14. For each of the three items, (1) depreciation, (2) inventory, and (3) installment sales, explain:a. Two acceptable accounting methods for reporting purposes.b. How each of the two acceptable accounting methods identified affect current period income.(CFA Adapted)
6–13. Identify some accounting sources of income distortion.
6–12. What conditions are necessary for an item to qualify as a prior period adjustment?
6–11. Describe the accounting treatment for discontinued operations. How should an analyst treat discontinued operations?
6–10. How does accounting define an extraordinary item? Cite three examples of such an item. What are the analysis implications of such an item?
6–7. Analysts often refer to the core income of a company. What is meant by the term core income?
6–4. Explain how accountants measure income.
6–3. What are the two basic economic concepts of income? What implications do they have for analysis?
6–2. Define income. Distinguish income from cash flow.
6–1. Explain why an analyst attaches great importance to evaluation of the income statement.
5–13. Describe the accounting treatment for speculative derivatives.
5–12. Describe the accounting treatment for both fair value hedges and cash flow hedges.
5–11. Give an example of a cash flow hedge and an example of a fair value hedge.
5–10. When does a derivative security qualify for hedge accounting under SFAS 133?
5–9. What is a hedge transaction?
5–8. Describe an option contract. When is an option likely to be exercised?
5–7. Describe a swap contract. How are swaps typically used by companies?
5–6. Describe a futures contract.
5–5. Distinguish between hedging and speculative activities with regard to derivatives.
5–1. Describe accounting procedures governing valuation and presentation of noncurrent investments.Distinguish between accounting for investments in equity securities of an investee when holding (a) less than 20% of voting shares outstanding and (b) 20% or more of voting shares outstanding.
Discuss economics of employee stock options (Appendix 6B).
Analyze and interpret earnings per share data (Appendix 6A).
Explain supplementary employee benefits and analyze the disclosures for employee stock options (ESOs).
Analyze deferred charges, including expenditures for research, development, and exploration.
Analyze revenue and expense recognition and its risks for financial statement analysis.
Describe and analyze the impact of nonrecurring items, including extraordinary items, discontinued segments, accounting changes, write-offs, and restructuring charges.
Explain the concepts of income measurement and their implications for analysis of operating activities.
Describe investment return analysis (Appendix 5B).
Explain consolidation of foreign subsidiaries and foreign currency translation (Appendix 5A).
Analyze the fair value option for financial assets and liabilities.
Describe derivative securities and their implications for analysis.
Interpret goodwill arising from business combinations.
Analyze implications of the purchase (and pooling) method of accounting for business combinations.
Interpret consolidated financial statements.
Analyze financial statement disclosures for investment securities.
Analyze financial reporting for intercorporate investments.
4–10. Compare and contrast the effects of LIFO and FIFO inventory costing methods on earnings in an inflationary period.
4–12. Comment on the following: Depreciation accounting is imperfect for analysis purposes.
4–14. Identify analytical tools useful in evaluating deprecation expense. Explain why they are useful.
4–15. Analysts must be alert to what aspects of goodwill in their analysis of financial statements?
4–16. Explain when an expenditure should be capitalized versus when it should be expensed.
4–17. Distinguish between a “hard asset” and a “soft asset.” Cite several examples.
4–19. From the view of a user of financial statements, describe objections to using historical cost as the basis for valuing tangible assets.
4–21. Describe analysis implications for goodwill in light of current accounting procedures.
1. Explain cash management and its implications for analysis.
1. Analyze receivables, allowances for bad debts, and securitization.
1. Interpret the effects of alternative inventory methods under varying business conditions.
1. Explain the concept of long-term assets and its implications for analysis.
1. Interpret valuation and cost allocation of plant assets and natural resources.
1. Describe and analyze intangible assets and their disclosures.
1. Analyze financial statements for unrecorded and contingent assets.
1. Define current assets and their relevance for analysis.
4–22. Identify five types of deferred charges and describe the rationale of deferral for each.
4–23.a. Describe at least two assets not recorded on the balance sheet.b. Explain how an analyst evaluates unrecorded assets.
EXERCISE 4–1 Refer to the financial statements of Campbell Soup in Appendix A.Required:a. By means of T-account analysis, explain the changes in Campbell’s Property, Plant, and Equipment account for Year 11. Provide as much detail as the disclosures enable you to provide. (Hint: Utilize
EXERCISE 4–1 Trimax Solutions develops software to support e-commerce. Trimax incurs substantial computer software development costs as well as substantial research and development (R&D) costs related to other aspects of its product line. Under GAAP, if certain conditions are met, Trimax
EXERCISE 4–1 Assume that a machine costing $300,000 and having a useful life of five years (with no salvage PROBLEM 4–7 value) generates a yearly income before depreciation and taxes of $100,000.Required:Compute the annual rate of return on this machine (using the beginning-of-year book value
EXERCISE 4–1 Sports Biz, a profitable company, built and equipped a $2,000,000 plant brought into operation PROBLEM 4–6 early in Year 1. Earnings of the company (before depreciation on the new plant and before income taxes) is projected at: $1,500,000 in Year 1; $2,000,000 in Year 2; $2,500,000
EXERCISE 4–1 On June 30, Year 1, your client, the Vandiver Corp., is granted two patents covering plastic cartons that it has been producing and marketing profitably for the past three years. One patent covers the manufacturing process, and the other covers related products. Vandiver executives
EXERCISE 4–1 Falcon.Com purchases its merchandise at current market costs and resells the product at a price CASE 4–2 20 cents higher. Its inventory costs are constant throughout the current year. Data on the number of units in inventory at the beginning of the year, unit purchases, and unit
EXERCISE 4–1 Droog Co. is a retailer dealing in a single product. Beginning inventory at January 1 of this year is zero, operating expenses for this same year are $5,000, and there are 2,000 common shares outstanding.The following purchases are made this year:Units Per Unit Cost January
EXERCISE 4–1 Excerpts from the annual report of Lands’ End follow ($ in thousands):Year 9 Year 8 Inventory................. $219,686 $241,154 Cost of sales........... 754,661 675,138 Net income ............. 31,185 64,150 Tax rate................... 37% 37%Note 1: If the first-in, first-out
EXERCISE 4–1 BigBook.Com uses LIFO inventory accounting. Notes to BigBook.Com’s Year 9 financial statements disclose the following (it has a marginal tax rate of 35%):Inventories Year 8 Year 9 Raw materials ............ $392,675 $369,725 Finished products ....... 401,342 377,104 794,017 746,829
EXERCISE 4–1 Assume you are analyzing the financial statements of ABEX Chemicals. Your analysis raises concerns with certain accounting procedures that potentially distort its operating results.Required:a. Data for ABEX Corp. is reported in Case 10–5. Using the data in Exhibit I of that case,
Showing 4100 - 4200
of 5656
First
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
Last
Step by Step Answers
Get 50% OFF
Claim Now
