Corporate Accounting complete package

Discussion of Accounting ƒ Why is accounting interesting? ƒ Why do we need accounting? ƒCourse objective ƒ Sophisticated financial statement user ƒAn overview of information in financial statements

Discussion of Accounting An accountant’s functions include Classifying and summarizing, made easier by the repetitive nature of business transaction

Balance Sheet: Investments and Financing Management Discussion „ Auditor’s Report „ Consolidated Balance Sheet „ Consolidated Net Income „ Consolidated Statement of Stockholders Equity „ Consolidated Cash Flow Statements „ Notes to Accounts

Administrative matters ƒDiscussion of Accounting ƒ Why is accounting interesting? ƒ Why do we need accounting? ƒCourse objective ƒ Sophisticated financial statement user ƒAn overview of information in financial statements

What is annual depreciation expense for each of the first two years? „ What is book value at the end of 2nd year? „ How do we account for the improvement? „ What is annual depreciation expense for years 3 and beyond?

Understand how differences in “book” vs. tax accounting for ,lead to deferred taxes Understand how the matching principle influences „ the capitalization of long-lived assets „ the expensing of capitalized costs to match revenues generated in the use of long-lived assets

Inventory is defined as goods held for sale in the normal course of business or items used in the manufacture of products that will be sold in the normal course of business

ALLOWANCE FOR RETURNS Receivables and Revenue Recognition A Quick Look at Intel’s Statements

Receivables and Revenue Recognition Why do we care about revenue recognition? Criteria for revenue recognition Some Details of SAB 101

What is financial statement analysis? ƒ What is ratio analysis? ƒ The mechanics of and inferences from: ƒ Profitability ratios ƒ Risk ratios

Accounting – Mapping of actions and events into financial statements „ (Economic) Principles governing the accounting mapping: Objectivity, conservatism, revenue recognition, and matching

Understand that the accounting method used for acquisitions depends on the extent to which the investor exerts influence over the investee.

Tax Depreciation „ Accelerated depreciation „ No judgment in determining depreciation expense „ Tax Reporting ≠ Financial Reporting ==> timing differences in measurement of income „ Why would a firm prefer accelerated depreciation for tax purposes? „ Why does government allow t...

Understand when accounting departs from the “transactions- based” model and towards market-driven valuations