Tag Archives: Accounting essays

Principles of Income Tax Law


Principles of Income Tax Law

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Question 1 (4 points)

Discuss the deductibility of the $70 000 expense for Paper Co (4 marks).

Paper Co (the taxpayer) imports and manufactures specialty paper products for printing and design. In 2018, Paper Co was required to defend itself and its directors in legal proceedings.  Paper Co had been charged criminally with paying bribes to officials to allow them to import certain paper products from Indonesia. The charges were eventually dropped against Paper Co, but they had already incurred $70 000 in fees to their lawyer to defend against the charges in court.

Question 2 (4 points)

 

Explain, citing sections, whether or not the following expenses can be incurred in the cost base for each of the following situations. Note that all assets are post CGT (1 mark each).


I. The cost of repairing a damaged drainpipe caused by a storm to the taxpayer’s rental property.

II. Expenses paid to the auctioneer on the sale of the taxpayer’s property.

III. Land tax expenses on a property that was purchased in 2011 and sold for a loss in 2017.

  1. An apartment gifted (for no consideration) to the taxpayer. The apartment was valued at $400 000 at the time of transfer. It was later sold at a profit.

 

Question 3 (4 points)

 

Showing workings, calculate Claude’s net capital gain or loss (assuming he has no other CGT events)(4 marks).

Claude purchased a home in Kew on 1 September 1999 for $300 000 incurring legal costs of $10 000 at that time. Settlement was on 1 October 1999. In March 2012 Claude spent $12 000 on legal fees defending the boundary to his property in a dispute against his neighbour. In December 2017 Claude was tired of fighting with his neighbour and he decided to sell the property. He sold the property for $600 000 and the purchaser also gave him a small boat valued at $40 000.

 

Question 4 (4 points)

 

Calculate the highest deduction for depreciation available for Matthew for the financial year ended 30 June 2017. Please ignore the small business immediate write off for the purposes of this question (4 marks).

Matthew has owned an accounting business for many years. On 1 May 2017 he purchases a new projector for presentations to his clients. The projector cost him $8 000 and has an effective life of 6 years. He takes the projector home on weekends to watch movies with his children so he estimates that the projector is used 90% for business purposes, and 10% private purposes.

Question 5 (4 points)

 

Discuss briefly, citing sections, whether the following are deductible (1 mark each).

I. The cost of a golf club membership incurred by an accountant who likes to take clients to play golf each Friday

II. The travel costs incurred by the taxpayer with the identical facts to those in FCT v. Collings (1976).

III. An amount of $5 000 held in a savings account by the taxpayer as he anticipates having to pay long service leave for a staff member in the next financial year.

  1. Borrowing expenses incurred by the taxpayer in relation to a business loan to finance the purchase of a new factory.

Question 6 (4 points)

 

Showing workings, calculate Lucy’s net capital gain or loss for House A (assuming she has no other CGT events)(4 marks).

Lucy purchased House A in Perth on 1 February 2012 for $450 000 and moved into it straight away. On 1 January 2013 Lucy decided to move to Melbourne where she rented House B for herself.  She decided to get tenants to move into House A. The market value of House A at that time was $500 000. Lucy soon had enough of Melbourne and decided to move back to House A in Perth on 1 February 2017. She sold House A for $600 000 on 5 March 2018 and incurred $ 3 000 expenses from advertising the house for sale.

Question 7 (4 points)

 

Consider whether the $50 000 is deductible for the taxpayer (4 marks).

The taxpayer is a large eco-caravan hirer in regional Victoria.  During the current tax year they made a lump sum payment of $50 000 to the Victorian Government to be the only government accredited eco-caravan provider in Victoria for the next 2 years.  As a result, the Victorian Government agreed to promote the eco-caravans as part of its tourism campaigns. Tourists were still able to hire any type of caravan they wanted when traveling through Victoria, but they would receive a special discount if they hired this particular eco-caravan as a result of the advertising campaign.

 

Question 8 (4 points)

 

For the following transactions state for the taxpayer the CGT event, whether there is a capital gain/loss, and whether the Division 115 discount is available (2 marks each).

I. The taxpayer, Century Pty Ltd, owned a factory that was destroyed by fire and they received $500 000 as an insurance payout in March 2018. They purchased the factory for $200 000 on 22 September 1999.

  1. The taxpayer, Marcia, entered into a contract in January 2015 with her former employer agreeing not to work as a tax consultant within 300km of Melbourne for a period of 3 years.  Marcia was paid $120 000 on entering into this agreement.

Question 9 (4 points)

 

Discuss the deductibility of the $1 000, $4 000 and $450 amounts for Joey (4 marks).

Joey is a lawyer who has an office in Melbourne city. On Friday he takes care of his children and works from home in Brunswick. He has converted one of the bedrooms into a home office and it occupies about 10% of the floor space of his house. This financial year he incurs the following expenses: $1 000 internet costs, $4 000 interest payments on his mortgage, and a $450 accountant fee paid to his accountant for preparing his income tax return.

 

Question 10 (4 points)

 

Showing workings, calculate Steph’s overall net capital gain or loss (consider both the house and the shares but assume she has no other CGT events)(4 marks).

In March 2012 Steph inherited a house from her friend who had passed away on 1 October 2011. The house had a market value of $500 000 at that time. Steph’s friend had bought the house on 21 September 1984 for $150 000 incurring $500 in legal fees on purchase. Steph decided she did not want to live in the house so she rented it out until March 2018 when she sold it for $700 000. At the same time, she sold a parcel of shares in HBank for $25 000 which she had purchased for $50 000 in June 2016.

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ACC6040: Integrated Accounting Projects


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ACC6040: Integrated Accounting Projects

Unit learning outcomes:

  1. Evaluate a research problem and specify key variables of the underlying accounting relationship.
  2. Conduct a targeted search of the accounting literature.
  3. Formulate a conceptual framework to guide the examination of the research problem.
  4. Develop hypotheses to support the testing of a relationship.
  5. Evaluate the most appropriate method of data collection in addressing a research problem.

Providing AoL for CLO 1:

  1. Demonstrate mastery of a global body of ACCOUNTING knowledge and practice, including knowledge of research principles and methods [AQF K1, K2, S1].
    • Demonstrate breadth and depth of global discipline knowledge;
    • Demonstrate knowledge of practice in the global environment;
    • Demonstrate knowledge of relevant research principles and methods;
    • Integrate theory and practice.

Providing AoL for CLO 4:

  1. Independently initiate, plan and execute a substantial project to meet agreed deliverables [AQF S5, A1, A2, A3].
    • Demonstrate autonomy and accountability in the execution of a substantial research or industry project;
    • Apply knowledge and skills with initiative and/or creativity to new situations.

Assignment 1: Literature Review 30%

The objective for this assignment is to fulfil the first stage of completing an accounting research proposal. As a research proposal you should look at current unresolved issues in accounting research and practice. The Literature Review will help to identify unresolved accounting issues and research opportunities. Accounting here is broadly defined to include financial accounting, corporate accountability, management accounting, auditing and accounting education.

Marking Criteria

  • Demonstrates breadth and depth of global knowledge and practice [CLO1.1, 1.2, 1.4].
  • Critically evaluates discipline literature [CLO1.3].
  • Positions research within a conceptual framework for the area of study [CLO4.2].
  • Structure, language, referencing, conventions etc.

 

 

Criteria Fail

 

Pass

Threshold

Credit Distinction High Distinction

 

Demonstrates breadth and depth of global knowledge and practice
[10 marks]
Does not demonstrate sufficient knowledge of the topic. Insufficient research, research is irrelevant to the topic, or out of date. Demonstrates adequate global knowledge of the topic from a satisfactory range of research. Research is fairly contemporary and mostly related to the topic. Demonstrates thorough global knowledge of the topic from the breadth and depth of research. Research is up to date and related to the topic. Demonstrates comprehensive global knowledge of the topic from the wide-ranging breadth and depth of research. Research is up to date and explicitly related to the topic. Demonstrates profound global knowledge of the topic from the extensive breadth and depth of research. Research is discerning, up to date and explicitly related to the topic.
  0–4 5 6 7 8–10
Critically evaluates discipline literature
[10 marks]
Fails to critically evaluate the literature. Summarises only. Literature is critically evaluated in a satisfactory manner considering quality, reliability and validity, theories and methods applied and areas of consensus and contradiction. Literature is critically evaluated in an effective manner considering quality, reliability and validity, theories and methods applied and areas of consensus and contradiction. Literature is critically evaluated in a comprehensive manner considering quality, reliability and validity, theories and methods applied and areas of consensus and contradiction. Literature is critically evaluated in a meticulous manner considering quality, reliability and validity, theories and methods applied and areas of consensus and contradiction.
  0–4 5 6 7 8–10
Positions research within a conceptual framework for the area of study
[5 marks]
Fails to identify a general area or ‘gap’ for the research and does not present a satisfactory rationale for further research. Identifies a general area or ‘gap’ for the research and presents a satisfactory reason for further research. Identifies the ‘gap’ or position for the research and presents an effective argument for further research. Clearly identifies the ‘gap’ or position for the research and presents a strong argument for further research. Very clearly identifies the ‘gap’ or position for the research and presents a compelling argument for further research.
  0–2 2.5 3 3.5 4-5
Structure, language, referencing, conventions, presentation
[5 marks]
The review is confusing, lacks cohesion and demonstrates poor command of language with too many errors that affect comprehension. Inconsistent in-text referencing with many omissions on the reference list. Poor presentation. Mostly, the review is logical, cohesive, and uses appropriate language with some errors. Appropriate and consistent in-text referencing with some omissions on the reference list. Adequate presentation. Good logical flow, cohesive, and uses appropriate language with minor errors or typos. Appropriate and consistent in-text referencing with few omissions on the reference list. A capable presentation. Very good logical flow, cohesion, and excellent command of language with minor typos. Appropriate and consistent in-text referencing and accurate and complete reference list. A successful presentation. Outstanding logical flow, cohesion, and command of language. Appropriate and consistent in-text referencing and accurate and complete reference list. Highly polished presentation.
  0-2 2.5 3 3.5 4-5

 

 

 

 

 

 

 

 

 

Guide to Prepare a Self- Reflection Sheet for Assignment 1

Each member of group needs to submit this individually to the instructor via an email. If the assignment is done individually this is not a requirement and not applicable.

  • Self-reflection should be limited to 1 page of “Word Document”
  • Use Font as Times New Roman 12 point, 1.5 spacing
  • Self-reflection should describe individual contribution towards “Literature Review” Task (e.g. which journal articles you read, what sections of the literature review you developed etc)
  • Self-reflection should also highlight what were the positive outcomes experienced from the assignment and what were the issues encountered/possible improvements for future tasks

 

Guide to Prepare Group Evidence

Each group needs to submit this document via an email to the instructor may be as a PDF combined document. (One from each group). If the assignment is done individually this is not a requirement and not applicable. It should indicate evidence for group meetings/tasks allocation and also % of contribution of each group member towards the task.

Evidence may include the following but not limited to:

  • Group contract
  • Meeting logs

 

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Case 5-1:Harrington Company- Buy your research paper oline [http://customwritings-us.com/orders.php]


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Case 5-1

  1. A. Harrington Company
  2. A. Harrington Company is a U.S.-based company that prepares its consolidated financial statements in accordance with U.S. GAAP. The company reported income in 2015 of $5,000,000 and stockholders’ equity at December 31, 2015, of $40,000,000.

The CFO of S. A. Harrington has learned that the U.S. Securities and Exchange Commission is considering requiring U.S. companies to use IFRS in preparing consolidated financial statements. The company wishes to determine the impact that a switch to IFRS would have on its financial statements and has engaged you to prepare a reconciliation of income and stockholders’ equity from U.S. GAAP to IFRS. You have identified the following five areas in which S. A. Harrington’s accounting principles based on U.S. GAAP differ from IFRS.

  1. Restructuring
  2. Pension plan
  3. Stock options
  4. Revenue recognition
  5. Bonds payable

The CFO provides the following information with respect to each of these accounting differences.

Restructuring Provision

The company publicly announced a restructuring plan in 2015 that created a valid expectation on the part of the employees to be terminated that the company will carry out the restructuring. The company estimated that the restructuring would cost $300,000. No legal obligation to restructure exists as of December 31, 2015.

Pension Plan

In 2013, the company amended its pension plan, creating a past service cost of $60,000. The past service cost was attributable to already vested employees who had an average remaining service life of 15 years. The company has no retired employees.

Stock Options

Stock options were granted to key officers on January 1, 2015. The grant date fair value per option was $10, and a total of 9,000 options were granted. The options vest in equal installments over three years: one-third vest in 2014, one-third in 2015, and one-third in 2016. The company uses a straight-line method to recognize compensation expense related to stock options.

Revenue Recognition

The company entered into a contract in 2015 to provide engineering services to a long-term customer over a 12-month period. The fixed price is $250,000, and the company estimates with a high degree of reliability that the project is 30 percent complete at the end of 2015.

231

Bonds Payable

On January 1, 2014, the company issued $10,000,000 of 5 percent bonds at par value that mature in five years on December 31, 2018. Costs incurred in issuing the bonds were $500,000. Interest is paid on the bonds annually.

Required

Prepare a reconciliation schedule to reconcile 2015 net income and December 31, 2015, stockholders’ equity from a U.S. GAAP basis to IFRS. Ignore income taxes. Prepare a note to explain each adjustment made in the reconciliation schedule.

 

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ACCT 201 Assignment help


Course Project for ACCT 201

Exploring Financial Statements*

Fall 2016

  ACCT 201 Assignment help

The objectives of this project are:

-To explore the 10-K of a company and to become familiar with its industry, which will enable you to learn about the financial health of your company.

-To develop a beginning understanding of and begin to use financial databases and software available on the Internet and the Library for financial reporting, analysis and interpretation.

 

The due date is December 13, 2016, the last day of class.

 

This project may earn the authors up to 15 points toward their final grade.

 

A hard copy must be submitted. Each team member should keep a copy of the submitted assignment.  Note, do not include this instruction page with your submission. The title page that follows should be the first page of your submission.

 

 

ASSIGNMENT FORMAT: It is expected that you will use a word processing program to complete this assignment and to use writing reference books as appropriate (dictionary, thesaurus, writing guides).  Please insert your names, in the space provided in the case assignment booklet. Then, insert your answers immediately after each question and print out the completed case assignment booklet.  Please remember that the presentation of your work (appearance, grammar, syntax, typographical errors, etc.) reflects your ability to communicate as a business professional and will be taken into consideration when your grade is determined. Efficient writing is important. Bullet points and other organizational formats are not only acceptable, they are encouraged.

 

GROUP WORK: By signing the case submission at the end (see step 12), each member is affirming that s/he was engaged in a meaningful way with each question, and concurs with the submission in its entirety.

 

ACADEMIC HONESTY:

Plagiarism is not just copying and pasting (though copying and pasting IS plagiarism). You need to summarize your article and industry information in your own words; try to connect ideas from different parts of the sources you are reading.  By citing your sources you let your reader know where you got that information so that they can check out the original source themselves.  By doing your own original work on this assignment, and not copying others’, you will learn more and do better in your classes.

 

 

 

* Adapted from an assignment co-authored with Karen Osterheld


ACCT 201 Course Project

Students’ Names:

___________________________________________________________________________________________________________________________________________________________________________________________________

 

 

Company Name:

 

 

 

 

Obtain the most recent and complete 10-K for your company from the company website. This can be found in the area on their website titled investor relations, SEC filings, or some similar description. Find the most recent 10-K. The 10-K includes the Annual Report. If you do not find the complete 10-K on the company website, you should check the SEC’s EDGAR database at sec.gov. Be careful that you are not getting summary data or generalized data compiled by a third party website. Unless otherwise specified, all answers must come from the 10-K.  Please include a copy of your company’s income statement, balance sheet, and statement of cash flows with your submission.

 

  1. What is the exact name of your company?  What is the ticker symbol for your company, on what stock exchange(s) does it trade, and when is the company’s fiscal year end? How many shares does your company have outstanding at the end of the company’s most recent fiscal year end as shown on the Balance Sheet and/or Statement of Retained earnings and/or Notes to the Financial Statements?  What is the company’s market capitalization at the end of the fiscal year? (Note: Compute the company’s market capitalization by finding the shares outstanding at year end in the 10-K and the price per share at year end from a Trading Room source).

 

  1. Using the 10-K, show that the fundamental accounting equation, Assets = Liabilities + Stockholders’ Equity, is true for your company at the end of the most recent year-end.

 

Assets                                __________

Liabilities                          __________

Stockholders’ Equity        __________

 

  1. Look at the Statement of Cash Flows from the 10-K. What is the cash flow generated (or used) from Operating Activities? __________________

What does this indicate about the financial health of the company?

 

  1. In the 10-K, you will find footnotes to the financial statements.  Thoroughly read the first (or second) footnote, which is usually called “Summary of Significant Accounting Policies.”  Summarize any portions of that footnote that describe the company’s policies about recording revenues, uncollectible accounts, inventory and depreciation.  Focus on when and/or how revenues are recorded, and the methods of accounting for uncollectible accounts, inventory and depreciation. Attach a copy of this footnote to your submission.

 

  1. Find and read the “Report of Management Responsibilities” or “Certification of Chief Executive Officer/Chief Financial Officer” (or similarly titled report) found in the company’s 10-K. These reports are required by the Sarbanes-Oxley Act. Who signed it?  In your own words, summarize the responsibilities management assumed regarding financial statements and internal controls based on this statement. Do not copy what is written in the certification letter. Attach a copy of this page from the 10-k to your submission.

 

  1. Find and read the “Report of Independent Registered Public Accounting Firm” (or similarly titled report) in the 10-K.  Who are the auditors of your company and what type of opinion did they issue? (unqualified, unqualified with modified wording, qualified, adverse or disclaimer). What is the interpretation and significance of this type of opinion? Summarize the responsibilities the auditors assumed regarding the financial statements and internal controls based on their report. Attach a copy of this page from the 10-k to your submission.

 

  1. 10-Ks generally include a summary of financial data for the last 5- or 10-year period.  Use Excel (or a similar spreadsheet program) to prepare three separate graphs of the following data that can be found directly in the financial summary or can be calculated from data that are provided in the summary.  Use a line graph to illustrate the trends in these items.  In a separate area, or on the graphs, clearly indicate the numerical values used in each graph.  If the data for all the years needed are not in the current 10-K, you may have to access prior year 10-Ks. Attach a copy of relevant pages used from all 10-k’s to your submission.

 

  1. Net Income for the past 5 years
  2. Sales for the past 5 years
  3. Stock Price per share for the last 3-5 years

 

 

  1. Find an article relating to your company from the financial press:

The article must:

  • have been published within the last 6 months.
  • have a listed author or byline.
  • be over 300 words.

This article should provide meaningful information to a potential investor in your company, and not simply, for example, a list of stock performances on a single day. The best route to finding reliable articles is through the library’s electronic databases. You can use the Sawyer library website to find reliable sources such as the Wall Street Journal, Barrons, The New York Times etc … Do NOT use business wires, press releases, blogs, announcements, or short pieces. This is an important step to identify the major issues facing your company now and in the future.

 

List the article as a citation in MLA format. Write a paragraph on why you chose this article and how it would help a potential investor make a decision. Attach a copy of the article.

 

  1. Information about your company relative to its competitors can be found in the Value Line database linked to the library website: Sawyer Libarary > Research > Find Articles > Business > Company Information > Value Line. What industry is your company in? What products does it sell that leads you to believe that it belongs in this industry? Generate a list of at least four peers that compete most directly with your firm and list them. What grade does Value Line give your company? What grade does Value Line give to the competitors that you listed?

 

  1. Use the library’s resources on industry to answer the following questions; look in the databases Standard & Poor’s NetAdvantage (click on the Industries tab) or Mergent WebReports (click on the Industry Reports tab).  Look up your industry by name or NAICS/SIC code. Attach a copy of the report you selected to your submission.

 

Using bullet points:

  • Identify and explain two trends that are currently developing in your company’s industry.
  • List several characteristics of this industry’s customer base.
  • What types of regulations affect this industry?
  • Identify a growing market in this industry.

 

  1. Based on all the information you gathered throughout this project and what you have learned in ACCT 201, would you buy this company’s stock today?  Why or why not?  Your response should be one to two pages, double-spaced.  Your comments should at a minimum reference:
  1. the graphs prepared in question 7,
  2. information obtained from the article listed in question 8,
  3. information on the industry obtained in questions 9 & 10.

 

  1. Each group member should sign the bottom of the submission.

 

ACCT 201 Assignment help

Need help-Accounting Theory Questions


Need help-Accounting Theory Questions

Positive accounting theory and agency theory make certain central assumptions about what influences people’s decisions.

 

What are these assumptions?  (3) Discuss whether you believe these are realistic of stakeholder behaviour?  (5) How does this differ from the perspective embraced within normative research? (5) Does the current conceptual framework embrace a wide group of stakeholders? (2) Do you think that this framework is more aligned to the assumptions underlying a positive view by virtue of the stakeholders identified to be relevant?  Discuss. (5)

 

Some information of how the question should be handled?

 

PAT (reference to self-interest, opportunistic behaviour, focus on wealth), Normative (reference to Legitimacy Theory – acceptability of actions to a community) (reference to ‘ethical’ dimension of stakeholder theory – addressing stakeholder ‘needs’)

 

Difference(s) – PAT descriptive and prescriptive – looks at what is, and therefore what is expected; Normative – looks at what should be – should be in terms of societal expectation, or the intrinsic needs of stakeholders.

 

Discussions of assumptions

 

Explain to a positive theorist – discuss in the context of an appeal to the assumptions underlying PAT – that is, when CSR reporting can be demonstrated to be important to generating wealth.

 

Note:  use of examples to exemplify discussion is important.

 

Economics-based theories such as Positive Accounting Theory and Agency Theory make assumptions about what motivates human actions (for example, a quest to maximise personal wealth), and such motivations are attributed to all individuals.

 

By contrast, normative research studies consider what ‘should be’ and this may be explored empirically (legitimacy and stakeholder studies for example).  These studies may explore individuals as groups or/and individuals’ actions and choices such as motivations to report information.  They typically do not make broad-based assumptions about how all individuals behave, or about what motivates them to behave in a particular way (although there could be an acceptance that many individuals will tend to adopt specific strategies or biases when making decisions).

Stakeholder Engagement

There has been an increasing trend since the 1990’s to broaden the concept of reporting to stakeholders.  Prior to this time, the focus was on financial reporting of monetary amounts, and a strong focus on meeting compliance requirements.  Since that time, financial and compliance requirements have increased significantly, but so has a trend to report on environmental and social activities, and more recently corporate governance matters.  This has been an interesting change in terms of the expectations of what is required to report to stakeholders.  Arguments have also moved to discussion that perhaps there are alternative reporting methods to monetary amounts, that in some cases monetary amounts may not be the most appropriate approach to reporting. This has implications for accountants who have had the main responsibility for both guiding reporting and offering assurance in regard to these reports.

 

Discuss this change in focus, ensuring you make clear the difference between integrated, sustainability and traditional financial reports. (14) In your response, you may like to consider whether this achievable in the historical cost framework?  (6)

 

Some Information of how the Question should be handled

 

  • What do you understand by traditional financial reporting (historic cost/variations on ‘true’ historic cost/reporting on past events??/basis to understand the future??). Traditional financial reporting focuses on recognising the financial effects of an entity’s transactions. It follows generally accepted accounting principles and accounting standards and is audited by an external auditor. The financial report is limited to transactions that have a financial impact.  Sustainability reporting however goes beyond this. It includes reporting on the environmental activities and of the entity as well as its social impacts. These are combined with financial information.

 

  • The following benefits can be gained from preparing sustainability reports:
  • Embedding sound corporate governance and ethics systems throughout the organisation
  • Improved management of risk through enhanced management systems and performance monitoring
  • Formalising and enhancing communication with key stakeholders
  • Attracting and retaining competent staff
  • Ability to benchmark performance with other entities. Explain what is meant by sustainability reporting (the 3 dimensions/forward thinking)

 

  • Differences between the two:
  • Economic financial compared to eco/soc and env
  • Report on past performance /future performance
  • Historic cost/intergenerational equity
  • Eco efficiency/eco-justice

 

  • Resolution??
  • Need to change the outlook of accounting – the underlying process is based on historic cost and the past??

 

 

 

  • How does the HCA model seek to achieve this? By recording actual business events/transaction in monetary form.    A contract where a good/service is exchanged for $.

 

  • However, this is a fiction:

 

  • The HCA model operates as a mixed method model. There are judgements made relating to what is included making the model to a greater or lesser degree subjective, not totally reliable nor necessarily faithfully representative of events without bias. [1]
  • Choice within accounting standards (Depreciation method, stock valuation, independent revaluations, impairment, fair value)
  • Professional judgement in choices made
  • Value systems of the accountant
  • Approach where there not an accounting standard/regulation
  • Implications of the additivity problem/changing prices

 

Need help-Accounting Theory Questions

Need Help-Corporate Governance


Title:
corporate governance
Paper type
Essay
Deadline
27th Nov 2016 @ 16:50:53 PM
Paper format
Harvard
Course level
Master
Vip support: _
Subject Area
Accounting
By Premium writer: _
# pages
7   ( or 1925 words Minimum)
Spacing
Double Spacing

 

Details of what you are expected to do:

1.  Rationale

The aim of this assignment is to evaluate students’ understanding of critical issues which have an impact on accountability of a firm particularly with reference to the effect of compliance or non-compliance of corporate governance principles.  A secondary aim is to develop and assess students’ critical appreciation of how globalization impacts the accounting and auditing profession.

2.  The learning outcomes being assessed

ILO 4 will be assessed – The ability to appraise critically the role of accounting and auditing in the arena of corporate governance.

3.  Overview of assignment

Following the ‘Brexit’ referendum, the following blog appeared on the global website, Accounting Web:

“I hope we take back control of our accounting,” said Bournemouth University Professor Stella Fearnley. “Once we’re out of the EU, we won’t have to follow the directives if we don’t want to or comply to the letter with IFRS. So far the EU’s EFRAG committee has endorsed everything the IASB has done with almost no criticism.”

The UK has gone along with financial reporting and auditing decisions coming out of the EU – and the UK Financial Reporting Council (FRC) and BIS still hasn’t resolved the highly significant semantic differences with IFRS and UK company law such as the requirement for accounts to present a “true and fair” view and the definition of distributable profits.

“If we give ourselves the power to push back the IASB, it’s something other countries might follow.

“In the future if we want an Urgent Issues Task Force, we can have one and adapt IFRS to our own needs,” she said. “We can go with what the UK demands. It’ll give us more flexibility and we could call it ‘UK IFRS’ if we want.”

According to Fearnley, the big accounting firms were very enthusiastic about the global convergence project, partly because it would protect US standards-setters (and auditors) from the impact of the Enron scandal, and partly because those firms stood to make billions of dollars from IFRS adoption. “But the state boards and the Securities and Exchange Commission would never give up control of their accounting to a group like the IASB,” she said.

Based on the US model of stronger, more interventionist regulation, Fearnley would like to see the creation of an official UK Companies Commission to take over responsibility for reporting and auditing and investigation of misconduct from the FRC, which has recently been designated as a ‘single competent authority’ by the EU arising from its recent auditing directive.

“The FRC can only investigate UK-qualified accountants,” she said. “If a CFO is a South African accountant or MBA, they can’t go near them. And what about other managers or directors – who goes after them? We need an organisation that can call anyone to account and go in quickly and get on with investigating scandals in a more timely manner than the UK’s ridiculously fragmented system currently allows.”

Required –

With reference to the contents in the blog above, write a critical review of extant literature which covers the following requirements:

  1. Keeping in mind the sense of globalisation and the current Brexit status, critically analyse and discuss if it is reasonable for the UK to develop “UK IFRS” and the possible impact on the accounting and auditing profession.
  2. Critically evaluate corporate governance principles that should be addressed in the IASB to resolve the semantic differences and meet UK’s demand.
Word Count Guidance

The word count for this assignment is 2,000 words (you may split the word count in any way between the two questions mentioned above) and must be electronically submitted via Turnitin.

What is included in the word count?

·         Footnotes, except where these are used ONLY to give references to your sources. The use of footnotes to expand upon points you have made in the body of your report will count towards the word limit.

·         Appendices – except where these merely reproduce material from your sources / calculations / tables / graphs / diagrams

·         Any additional explanation of terms / glossaries etc. WILL count towards the word limit.

·         Any tables pasted as picture (.jpeg for example) will be reviewed by the marker and word count added to the main body of the text.

What does not count towards the word limit?

·         Appendices exceptions noted above.

·         Brief quotes – about 5 lines is the maximum acceptable for each quote, and you should not have more than 6 quotes in your essay.  You don’t need to include any at all if you don’t want to.  If you do use quotes, it is important that you have a good reason for including it – the quote must be properly introduced, appropriately referenced and you must make some comments on each one.

·         References and bibliography

 

How the word  limit will be enforced:

Up to 50 words above  the limit – no penalty

For each additional 50 words (or part thereof) beyond that, 1 mark will be deducted from whatever mark would have given in the absence of a penalty.

Thus for an essay with a limit of 1250 words, which is actually 1430 words, which has marked at 65% initially, a penalty of 3% would then be applied, bringing the mark down to 62%.

4.  Assessment criteria and weightings

This assignment is an individual assignment and accounts for 40% of your total mark.  Elements of this assignment are being assessed as Assurance of Learning in accordance with AACSB standards.

You will be assessed on the critical content you can bring forth in your answers. Critical discussion on a topic is often improved by the following –

  •  a clear and confident refusal to accept the conclusions of other writers without evaluating the arguments and evidence that they provide;
  • a balanced presentation of reasons why the conclusions of other writers may be accepted or may need to be treated with caution;
  • a clear presentation of your own evidence and argument, leading to your conclusion; and
  • a recognition of the limitations in your own evidence, argument, and conclusion.

The marking criteria have been clearly set out in a rubric appended to this assignment brief.

 

Disclaimer: The information provided in this assignment brief (version number: 1) is correct at time of publication.

In the unlikely event that any changes are deemed necessary, they will be communicated clearly via e-mail and/or myBU and a new version of this assignment brief will be circulated.


Appendix to Assignment Brief 2: Rubric

 

Aspects of the work

 

 

Fail( <50) Pass (50-59) Merit (60-69) Distinction (70-100)
Integration of Knowledge

(10%)

 

 

 

Lacks demonstration and comprehension of key concepts and background of the assignment

 

To some extent understands and has applied some concepts to the assignment set. Also appreciates the background knowledge behind it

 

 

Mostly appreciate the background knowledge of the assignment.

For the most part, understands and has applied concepts relevant to the requirements

Thoroughly appreciates the background knowledge of the assignment and has integrated it with all the key concepts as well as own perspective
Content and Focus

(15%)

 

 

 

Fails to address the task set or little focus on the set requirement

 

Lacks evidence or limited evidence of knowledge to the topic and/or significantly misuses terminology

 

Selection of theory/principle is not appropriate as some aspects have been misconstrued

 

Has addressed to some extent the main purpose of the assignment

 

Has given a factual and/or conceptual knowledge base and appropriate terminology

 

Most key theories/principles are included in the work in a good manner

 

 

Has addressed the purpose of the assignment and with some attempt to demonstrate imagination

 

Reasonable knowledge of topic and an awareness of a variety of ideas/contexts/frameworks

 

Insightful and appropriate selection of theory/concept/principle in key areas

 

 

Has addressed the main purpose of the assignment comprehensively and imaginatively

 

Comprehensive/detailed knowledge of topic with areas of specialisation is depth and awareness of provisional nature of knowledge

 

Demonstrates the integration and theory/concept/principle key for the assignment

 

Depth of Discussion/Analysis

(25%)

 

 

 

 

No evidence of literature being consulted or presented but in an uncritically manner, in a purely descriptive way and indicates limitations of understanding

 

Lacks evidence of critical analysis and rationale for work

 

Clear evidence and application of readings relevant to the subject; uses indicative texts identified

 

Demonstrate application of theory and concepts through critical analysis of the assignment set

Can analyse and apply major theories to some extent and compare alternative ideas

 

Able to critically appraise the literature and theory gained from variety of sources, developing own ideas in the process

 

Clear application of theory through critical analysis and discussion

Can analyse information and using a wide range of theories, principles and techniques

 

Has developed and justified using own ideas based on a wide range of sources which have been thoroughly analysed, applied and discussed

 

Consistently demonstrates application of critical analysis well integrated in the whole work

Cohesiveness

(10%)

 

 

 

 

Does not piece together information and lacks flow which appeared to be created from disparate issues. No headings to link concepts where necessary Sometimes ties together information from some sources. Ideas flow to some extent though mostly disjointed For the most parts, ties together information from all sources. Ideas flow mostly across with some few disjointedness Ties together information from all sources and also flows from one issue to another to the extent that headings may not be needed
Clarity of Expression

(10%)

 

 

 

 

Meaning unclear, language not fluent, grammar and/or spellings contain frequent errors Language quite fluent; grammar and spelling somehow accurate Language mainly fluent; grammar and spelling mainly accurate Fluent writing style appropriate to document; grammar and spelling accurate
Presentation and Communication

(10%)

 

 

 

 

Communication is unstructured and unfocused and/or in a format inappropriate to the assignment

 

Little attempt to organise work in a logical manner

Can communicate effectively to some extent in an appropriate format and report procedures follow a clear and concise manner with all relevant information

 

Shows organisation and some level of logical presentation

Can communicate effectively in a format appropriate to the discipline and report procedures in a clear and concise manner mostly with all relevant information in a variety of formats

 

Carefully and logically organised

Can engage effectively in debate/discussion in a professional manner and produce detailed and coherent essays/reports

 

Shows a polished and imaginative approach in presentation

Conclusion

(10%)

 

 

 

 

 

Limited evidence or invalid conclusions of findings supported by literature Some evidence of findings and conclusions grounded in literature Good development shown in summary of arguments based in literature/theory for most findings and evidence Analytical and clear conclusions well-grounded in theory and literature showing development of new concepts in addition to findings and evidence
Referencing

(10%)

 

 

 

 

Referencing is absent or missing Some attempt at referencing, poor consistency Referencing is mainly accurate, few omissions Referencing is consistently accurate and presented well

 

Write my project on Ethics at Enron


Write my project on Ethics at Enron

Quiz #5

Ethics at Enron

Footer:  Type your name and ZID# into the footer.

Assignment:  Ethics at Enron.

Requirement:  Answer Questions 1 – 11 below.

Estimated Time To Complete the Assignment:  1hr. 50 min for movie time and 60 minutes for questions

Enron:  The Smartest Guys in the Room:

Watch the movie Enron:  The Smartest Guys in the Room (Magnolia Home Entertainment, 2005, Los Angeles, California).  1 hr. 50 min.  $2.99 at You Tube, Vudu, Amazon Video, or Google Pay Movies & TV.  It is also available on Netflix.

Here are some additional sites that may give free access to the above documentary (some may have subtitles though):

https://freedocumentaries.org/documentary/enron-the-smartest-guys-in-the-room#watch-film

 

http://documentaryheaven.com/enron-the-smartest-guys-in-the-room/

 

http://documentary-movie.com/enron-the-smartest-guys-in-the-room/

 

Each question below is worth 3 pts.  Total regular points are 22 plus 11 pts. extra credit possible, depending on how thorough your answer is.  If you answer just “Yes” or “No” or in simple short phrases, you will not receive full credit.  All answers are to be typed into this word document.  Use complete sentences and treat each question as a short essay.  Explain your answers.  Your completed assignment should be about 3 1/2 – 4 pages in length.

Answer the following questions below:

  1. Do you think such behavior is common at other companies or do you think this was a fairly isolated event?  Why?
  2. How important is the “tone at the top” (the tone set by company leadership? Why?

 

  1. Do you think you could be tempted to follow along if the leadership at your company had the same mentality as the leadership at Enron, or do you think you would have the courage to “just say no” or even be a whistle-blower”?
  2. Why do you think some people can so easily justify (at least to themselves) their unethical behavior?
  3. In general, do you think people stop to think about how their actions will affect other people, (e.g., the elderly in California who suffered due to electricity blackouts) or do they just “do their job”?
  4. What was your reaction to the psychology experiment shown in the DVD? Studies have shown that unlike the traders at Enron (who received large bonuses), most employees really have very little to gain from following a superior’s directive to act unethically.  Why then do some people do it?
  5. Do you think people weigh the potential costs of acting unethically with the potential benefits?
  6. The reporter from Fortune magazine asked the question, “How does Enron make its money?” Why should every employee and manager (at every company) know the answer to this question?
  7. In light of the “market-to-market” accounting that enabled Enron to basically record any profit it wished to record, can you understand why some of the cornerstones of financial accounting are “conservatism” and “recording transactions at historical cost”?
  8. How did employees of Enron (and employees of the utilities company in Oregon) end up losing billions in retirement funds?
  9. You are a business student and will someday work for a company or own a business. How did watching this movie impact the way you intend to conduct yourself as an employee or owner?

 

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Corporate Accounting I:Researching a Financial Accounting Issue


Financial Reporting Assignment

Researching a Financial Accounting Issue
Corporate Accounting I
Financial Reporting Assignments
Portions of this document are based on: May, C. and May, G.S. Effective
Writing: A Handbook for Accountants, 4th Ed. Upper Saddle River, NJ:
Prentice Hall 1996.
Research in financial accounting is often required because certain financial
transactions and issues encountered in business may not always be clearly
addressed in the professional accounting literature. In these cases, a staff
accountant may be directed to research the transaction, find whatever guidance
might be available in the professional literature, provide alternative treatments for
the issue, and make a recommendation on the proper accounting treatment.
Accountants most often use a database maintained by the Financial Accounting
Standards Board (FASB) to perform their professional research. The public
version of this database is called FARS; several public accounting firms have
developed their own databases encompassing the same literature and using a
very similar search engine. FARS is available online and access to it is available
to students at reasonable rates.
The Financial Reporting Assignments that we use in this course are fairly simple
issues so that you can get used to working with FARS as well as writing a
technical memo. Try to follow these steps when doing your financial accounting
research:
1. Determine the relevant facts.
2. Identify the issues involved.
3. Research the accounting literature (FARS).
4. Identify alternative solutions and arguments for and against each.
5. Evaluate alternative solutions and choose the one that can be best
defended.
6. Communicate the results of your research to the interested parties.

Financial Reporting Assignment

Corporate Accounting I

 #5: Current Liabilities

Pleasant Co. manufactures specialty bike accessories. The company is known for product quality. It has offered one of the best warranties in the industry on its higher-priced products – a lifetime guarantee, performing all the warranty work in its own shops. The warranty on these products is included in the sales price.

 Due to the recent introduction and growth in sales of some products targeted to the low-price market, Pleasant Co. is considering partnering with another company to do the warranty work on its lower-priced products. Pleasant Co. has called you to advice the company on the accounting for this new warranty arrangement.

 Use the FASB Codification to respond to the following issues.

 What is a warranty?

  • In what conditions can Pleasant Co. accrue losses from warranty obligations that incur in connection with the sales of its higher-priced products?
  • Pleasant Co. is considering to design the new warranty arrangement on its lower-price products to be extended and separately priced. What is the accounting literature that addresses the accounting for the type of separately priced extended warranty? What is a separately priced extended warranty?
  • When should Pleasant Co. recognize revenue from a separately priced warranty?
  • How should Pleasant Co. recognize costs from a separately priced warranty?

 

 

Your paper should include responses to each of the above questions, and consist of at least 3 paragraphs: an introduction, one or more paragraphs containing the results of your research, and a conclusion. Your paper should be well written and well constructed and should be written in a professional tone (and not a casual or familiar tone). Also, it should be formatted as an integrated essay or memorandum rather than a bulleted list of answers. Your paragraph must be in your own words and you may NOT use direct quotations. You must also provide a full citation reference.

 

The citation expected should include a reference to the topic number, subtopic number, section number, and paragraph number. As an example, suppose that the question you are asked to research is why to report “comprehensive income.” Go to the area of “Presentation”, access the topic “220 – Comprehensive Income” and then access the subtopic “10-Overall”. Further choose the section “10 – Objectives”. You will find that paragraph 10-1 describes the objective as “to report a measure of all changes in equity of an entity that result from recognized transactions and other economic events of the period other than transactions with owners in their capacity as owners.”

 

The proper citation is FASB ASC 220-10-10-1. Of course, you would need to phrase the definition in your own words rather than providing the quotation as I did above. For example:

 

The objective for a company to report comprehensive income is to report all changes that affect owners’ equity in a company, except those resulting from owners’’ own activities (FASB ASC 220-10-10-1).

 

Submit the completed Word document through the assignment tool on LEARN. If you meet technical difficulties in submitting work through LEARN, you can bring and submit a hardcopy at the beginning of the class (No handwriting work will be accepted!!) Your submission may not exceed two double spaced pages, but brevity is greatly appreciated (i.e., less is often more!). This assignment will be graded on the basis of style, grammar and content and is worth a maximum of 10 points. This assignment is intended to be an individual assignment (not a group assignment), so it is CHEATING to copy all or a part of another student’s work.

 

 

 

 

Overview of Financial Statements Using the Dupont Analysis Approach


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Overview of Financial Statements Using the Dupont Analysis Approach

Providing Students with an Overview of Financial Statements Using the Dupont Analysis Approach
Dr. Gene Milbourn, University of Baltimore, Maryland
Dr. Tim Haight, California State
University, Los Angeles, CA
ABSTRACT
This paper uses the Dupont Analysis as a teaching
aid to equip students with
an understanding of how
management decisions influence the bottom line. This simplified approach allows students to see the “big picture”
and to logically follow how management decisions affect components that contribute to firm’s performance. As such
it can be a valuable tool in building a student’s critical th
inking competencies in evalua
ting the health, prospects and
valuations of companies.
INTRODUCTION
The volume of information contained in the balance sheet and income statement often overwhelms students
in an introductory finance class. Wh
ile basic accounting classes prepare studen
ts in the preparation of financial
statements, finance classes typically focu
s on their interpretation to aid in d
ecision-making. Unfo
rtunately, entering
students are often lost in the detail and are unable to see the forest for the trees.
The ultimate goal is for students to understand the interrelationships between financial statements and how
management decisions affect firm’s performance. To be sure, our future managers must fully understand the
financial consequences of all the decisions an
d how these decisions affect the bottom line.
Fortunately, there is a very powerful financial tool to assist students in understanding the ramifications of
decisions on profitability. The
Dupont Analysis
is a measurement instrument that can provide students with several
insights into key factors that contribute to bottom line perfo
rmance. This tool is used to evaluate a firm’s financial
condition by comparing relationships within the income statement and balance sheet, or between the two statements.
The
Dupont Analysis
provides information on the firm’s liquidity, profitability, efficiency, and leverage
status, thus allowing students to see how well a firm is operating as a result of changes in one or more of these
factors. It is a very powerf
ul tool that allows one to trace the financia
l impact of decisions
and to understand the
interrelationship between the income statement, balance sheet and firm profitability
RETURN ON ASSETS: THE
OPERATING INCOME VIEW
Dupont analysis begins by using the firm’s return on assets (ROA). Return measures can either be on a
before-tax or an after-tax basis. Here, we will illustrate
return using ROA, an after tax measure which is defined as
follows:
ROA =
Net Income After Taxes (NIAT)
{equation 1}
Assets (invested capital)
ROA measures the firm’s profits as a percent of its asse
ts. Note that ROA increases if any one of the three
following factors changes while the other two remain the same:
if costs decrease, income
increases, so ROA increases;
if revenue increases, income
increases, so ROA increases;
if assets decrease, ROA increases.
Students can quickly gain an understanding of how any of these changes affect return. To provide a context
for classroom discussion, the instructor will evaluate a firm’s performance, ROA with either an industry average or
the firm’s historic returns. If the firm has higher ROA than
the industry, the firm is more profitable. Similarly, if the
firm’s ROA is lower than the industry’s it is viewed as less profitable.
The Journal of American Academy of Business, Cambridge * March 2005
46
DUPONT ANALYSIS: BREAKING RO
A DOWN INTO TWO ELEMENTS
In Dupont analysis, the ROA is expanded and broken down into two components:
ROA = NIAT/ Revenue
X
Revenue/Assets {equation #2}
Where:
Revenue/Assets = Asset turnover (meas
ure of resource efficiency)
and
NIAT/Revenue = Net Profit Margin (pro
fits related to sales generated)
Thus, Dupont analysis translates the basic ROA ratio into the following:
ROA = Asset Turnover x Net Profit Margin {equation 2}
These two sub-measures are useful in the following way:
Asset turnover measures the efficiency of the firm’s asse
ts. The higher this ratio, the more efficient the assets.
Operating profit margin is an
indicator of the firm’s profitability as it relates to revenue.
These two measures, when combined, permit students to
see the relative contributio
ns of asset efficiency
and profitability on the firm’s Return on Assets.
The use of the Dupont System to investigate firm performance can employed on a time series basis or as
part of a cross sectional analysis within a given indust
ry or sector. Typically, a fi
rm can isolate the causes of
deteriorating ROA over time by separating the relative imp
act of its asset turnover and profit margin during the
period under investigation. Once the source of the deterior
ating ROA is isolated, firms can then focus on the area
suggested by the Dupont System. Often changes in firm’s
performance are a result of ex
ternal factors that may be
affecting the entire industry and/or sector within the indu
stry. Here, cross sectional an
alysis can be employed to
ascertain whether performance problems are isolated within the firm or are being experienced by competitors as
well.
ILLUSTRATION
The analysis below will investigate the relative firm performance of two firms within a hypothetical
industry. The Dupont Analysis is illustrated using the income statements and balance sheet statements of firms A
and B in Table 1 and Table 2. For this illustration we
will assume that accounting tr
eatment of such items, as
depreciation and inventory valuation are consistent. Each firm is examined on the basis of ROA and compared to its
industry norm in Table 3. The Dupont analysis is then us
ed to examine the relative cont
ributions of the efficiency
and profitability components to each firm’s ROA to understand in greater depth
the key factors affecting the firm’s
performance.
Table 1 Firms A and B: Income Statements
A
B
Sales
$550,000
$600,000
Cost of Goods Sold
305,000
400,000
Gross profits
$245,000
$200,000
General & Administrative
110,000
95,000
Net Operating Income
$135,000
$105,000
Interest expense
7,500
10,000
Earnings before taxes
$127,500
$95,000
Taxes (40%)
51,000
38,000
Net Income After Taxes (NIAT)
$ 76,500
$ 57,000
*Analysis assumes a 40% marginal tax rate
The Journal of American Academy of Business, Cambridge * March 2005
47

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