accounting homework 41

Part 1B

Research the annual reports of various companies to find examples of the following, and explain the meaning of your findings to Craig:

  • Equity securities: Find a company that has investments and equity securities listed on its balance sheet.
    • Cite the source of the statement(s).
    • Look at the footnotes to the financial statements and comment on its holdings in equity securities.
    • Explain how this information is used by an investor.
  • Cumulative effect: This has an impact on shareholders equity. Find a company that has an impact on their financial statements because of cumulative effect.
    • Cite the source of the statement(s).
    • Explain its footnotes.
    • Explain how this information is used by an investor.
  • Leases: Find a company that has leases.
    • Cite the source of the statement(s).
    • Examine its footnotes. See if it has capital leases or operating leases. What is the difference in the presentation in the financial statements? Provide an explanation of the notes to financial statements about leases.

Part 2

Identify, analyze, and record accounting error corrections.

  • Find a company that has accounting changes or correction of errors in its annual report.
    • Cite the source of the statement(s).
    • Discuss the footnote that explains the accounting change.
    • Explain the net impact on the financial statements.
  • In 20X0, ABC company purchased machine for $300,000 that had a useful life of 5 years, with a salvage value of $50,000 at the end its life. Depreciation was calculated over 2 years on straight-line basis. In 20X2, it determined that the total life should be 10 years with the salvage value of $5,000 at the end its life.
    • Prepare the entry to correct the depreciation for 20X1.
    • Prepare the entry to record the depreciation for 20X2.