Question

Amgen Abbvie Competitor) Most Prior Most Prior Recent Year Recent Year Year Year $7.842B $8.394B $7.882B $5.687B 59.15B $11.296B $13.324B 13.427B $5.709B $14.339B $596BS-1.006B Net income Cash Flow from Operations Cash Flow from Investing Activities Cash Flow from Financing Activities $-15.767 S-22.49B $18.708B S-14.396B Accounting Policies and Footnotes 1. Which accounting policies have the most significant impact on the financial statements? Contrast the key accounting policies to those of the competitor. (For example, is one LIFO and the other FIFO? Does one use accelerated depreciation and the other straight-line? Are the depreciable lives of their long-term assets significantly different?) What choices in policies has your company made that limit the ability to directly compare the financial position or profitability of the two companies? Would you characterize the accounting policies of your company as aggressive or conservative?

Answer 1

PARTICULARE A/C HEAD NET INCOCME CASH FLOW FROM OPERATION CASH FLOW FROM INVESTING ACTIVITIES CASH FLOW FROM FINANCIAL ACTIVITIES TOTAL ($) AMGEN CURRENT YR PRIOR YR 7.842 9.15 5.709 15.767 38.468 8.394 11.296 14.339 22.49 56.519 COMBINED BOTH ABBVIE THE YR CURRENT YR PRIOR YR 16.236 7.882 5.687 20.446 13.324 13.427 20.048 5.96 38.257 18.708 14.396 94.987 45.874 34.516 COMBINED BOTH THE YR 13.569 26.751 6.966 33.104 80.39 1.006 1 WHICH ACCOUTING PILICIES ARE THE MOST SIGNIFICANT IMPACT ON THE FINANCIAL STATEMENT: Accounting policies are very important for the proper understanding of the information provided in the financial statement Its so important because it state the accounting policies it has used while preparing and presenting the financial statement because many accounting standards allow alternative treatments for a same transaction. As per financial statements of a firm is defined to consist if three main account: These are : balance sheet, profit and loss a/c & cash flow Main object of a corporation to earning profit, shareholder, investor are usually following information is required: - revenue; ,-finance costs; - share of the profit or loss of associates and joint ventures accounted for using the equity method; - tax expense; -an aggregate figure for the profit or loss of discontinued operations and the gain orloss in relation to the re- measurement, or disposal, of discontinued operations; -profit or loss; - share of other comprehensive income of associates. Valuation of inventory represent a largest portion of impact in the profit of the organisation. The First-In, First-Out (FIFO) method assumes that the oldest unit of inventory is the sold first. A retailer alwaws expect that his fist age will be sell first else age will wastage due to hot climate climate The Last-In, First-Out (LIFO) method assumes that the last unit to arrive in inventory or more recent is sold first where as a wine seller expect his last purchase item wll be sell first because older stock will be costlier. FIFO is the most logical choice since companies typically use their oldest inventory first in the production of their goods. CONCLUSION The accounting policy to be chosen is part of the need for the firm to reduce contracting costs. Therefore, different accounting policies that can be employed by a reporting entity have significant impact on the interpretation of financial statement and ratio analysys. Difference accounting policies affect the income statement as well as financial position. financial position. This has both direct and indirect impact on accelarated and straight line depreciation In the accelerated depreciation model, assets depreciate at a faster rate during the beginning of their lifetime and slow down near the end of the asset's life. The total depreciation amount remains the same as straight line. However depreciation expenses is grear-up front State Line depreciation meansdecrease in the value of fixed assets due to normal wear and tear, efflux of time or obsolescence due to technology.. Thus, it is important to measure the decrease in value of an asset and also account for it. There are various methods of providing depreciation. A corporate conservative or aggressive. In the investment word these word describe how much stand to gain or loss when it comes to your investments and your portfolio. The more conservative your investments, the steadier your returns will be, while a portfolio that's more aggressive is apt to experience more of a roller coaster effect, typified by higher highs, but potentially lower lows. Conservative portfolio is most appropriate for an older investor who wants to keep their capital intact as they near retirement A investor wants an aggressive portfolio-one that is focused on growth, growth, growth. This type of investor demonstrates a high risk tolerance: