Focus company—find various accounting policy disclosures In Exercise 1.1, you were a...

Focus company—find various accounting policy disclosures In Exercise 1.1, you were asked to obtain the most recent annual report of a company that you were interested in reviewing throughout this term. Please read the “significant accounting policies” and review other note disclosures as necessary to answer the following questions:

Required:

a. What are the principal components included in the firm’s receivables (or accounts and notes receivable, or trade receivables)?

b. What inventory valuation method(s) is (are) being used for financial reporting purposes?

How much more would ending inventory have been if it were reported on a total FIFO basis? (Hint: This disclosure is sometimes referred to as the “LIFO Reserve.”)

c. Does the firm report a reconciliation of the statutory income tax rate with the effective tax rate? If so, what are these rates, and what principal temporary differences caused them to differ?

d. Have any significant subsequent events occurred since the balance sheet date? If so, describe the effects that these items will have on future financial statements.

e. What are the principal components included in the firm’s cash (or cash and equivalents, or cash and short-term investments)?

f. What depreciation method(s) is (are) being used for financial reporting purposes?

How much total depreciation and amortization expense did the firm report?

g. Does the firm have any stock options outstanding? If so, how many option shares are exercisable at the end of the year?

h. Does the firm have any significant contingencies or commitments that have not been reported as liabilities on the balance sheet? If so, describe the potential effects of these items from the perspective of a common stockholder.

Refer to Exercise 1.1:

Obtain an annual report Throughout this course, you will be asked to relate the material being studied to actual financial statements. After you complete this course, you will be able to use an organization’s financial statements to make decisions and informed judgments about that organization. The purpose of this assignment is to provide the experience of obtaining a company’s annual report. You may wish to refer to the financial statements in the report during the rest of the course.

Required:

Obtain the most recently issued annual report of a publicly owned manufacturing or merchandising corporation of your choice. Do not select a bank, insurance company, financial institution, or public utility. It would be appropriate to select a firm that you know something about or have an interest in.

Type www.firmname.com or use a search engine to locate your company’s website and then scan your firm’s home page for information about annual report ordering. If you don’t see a direct link to Investor Relations or Investors on the home page, look for links such as Our Company, About Us, or Site Map that may lead you to SEC Filings, Financial Information, or Annual Reports. Most companies allow you to save or print an Adobe Acrobat version of their annual reports.