Financial Reporting and Analysis

Financial Reporting and Analysis Essay example
Ph.D.
Essay
Finance & Accounting
Pages 8 (2008 words)
Download 0
Case 6-1 steel making a)Working capital=current assets –Current Liabilities $2,002.8-$734.2=$1,268.6 b) LIFO reserve account records LIFO reserve which is the difference between the values of inventory accounting cost calculated using FIFO method and the one that is calculated using LIFO method. …

Introduction

The LIFO reserve calculation in inflationary environment where the value of FIFO is higher than the value of LIFO inventory is LIFO Reserve=valuation by FIFO –valuation by LIFO. In a deflationary environment, LIFO Reserve has a possibility of having a negative balance caused by LIFO inventory valuation being higher than its FIFO valuation. LIFO reserve indicates the value which a business entity taxable income as a result of using LIFO method has subsequently been deferred. The balance on LIFO reserve account in 2008 is $524.4 c) If LIFO reserve account was added to the inventory at LIFO, the resulting inventory at the end of 2008 would be $1,346.8. I would consider inventory under LIFO to be more realistic. d) Use of LIFO or FIFO during price increase results to an inflated amount of income. During price decreases, it results to lower income. During constant prices, a normal income results when FIFO or LIFO is used. e) Use of LIFO or FIFO results to inflated cash flows during price increase, a lower cash flow during price decreases and a normal cash flows during normal costs assuming no increase or decrease in inventory quantity. This is a similar case in both pre-tax and after-tax cash flows. ...
Download paper
Not exactly what you need?

Related papers

Financial Reporting and Analysis
Favourism on one party over the other which is intentional should not exist concerning the information on financial reports. The financial statements will henceforth, provide a balanced scorecard to all the parties I relation to the effects of the transactions. b) The Board may be required to abandon neutrality and establish standards of reporting that conceals the particular transactions impact…
Financial Reporting and Analysis
NBA franchise and other intangible assets have a value of $164,703 $164702 and $165 035 in years 1996, 1997, and 1998 respectively. This shows that the method of amortisation reflect the pattern of the usage of assets in generation of income. NBA intangible assets are defined in cost less amortisation that has accumulated. Straight line method spread over the useful estimated lives of the…
current issues in financial reporting
Because of this, there is a huge interest as well as apprehension regarding the basis upon which accounting data is collected and reported. Thus, the statement made by Solomons (1991) that ‘[i]f accounting is to retain any credibility – and without credibility it is worthless – its guiding light must be neutrality in financial reporting’, surely, assumes that the records on a balance sheet…
Financial Reporting and Analysis for Decision Making
There appears no true definition under the ordinance or the HKAS. Most cases require the knowledge of the accountant discretion. When companies comply with the Company’s Ordinance the HKAS depicts the situation as true and fair. The moment there appears a problem; the term comes straight from the legislative or the investment discretion (Oporowski, 2005). Hong Kong citizens tend to analyze the…
Disclosure and Financial Reporting
It also helps the other market players to decide on mergers and acquisitions. Through disclosure of financial statements, the companies also endorse the financial information that has been sent to their regulating authorities like Securities and Exchange Commission (SEC). It is important to understand the key issues that affect the financial decisions of managers in disclosures and financial…
Financial Reporting Case analysis
The Generally Accepted Accounting Principles (GAAP) also play a major role in the solving of the issues at hand (Epstein and Nach 77). The case involving Philadelphia Communications Inc. first of all presents the issue of disclosures before, during and after an Initial Public Offer. Since Philly had just recently completed an IPO, the SEC, FASB and IFRS requirements require certain disclosures…
Financial Reporting
Due to this increase in performance of the financial statements of the company, the earnings per share increased as well as the dividend payout ratios went up with a coverage of 2.8 times for the full year, which is the shareholder’s interest in the organization. As compared with the market ratios from IHG company, Next company shown a growth in all its financial aspects. The accounts have been…