Club Med put fixed assets before current assets but U.S. companies would do it inversely. Also, the current assets, U.S. companies follow order of liquidity so they would put bank and cash in first place and then receivables. Ordering of liabilities: U.S. companies would put liabilities before shareholder’ equities but Club Med did it inversely. Also, U.S. companies would divide liabilities into short term liabilities and long term liabilities. Short term liabilities would follow the order of liquidity
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recognized in the current period. These expenses could be incurred due to damage or faulty materials. As such, a liability has been incurred to honor the warranty at the same date as the recognition of the revenue. Based on prior experience or technical analysis, the occurrence of warranty claims can be reasonably estimated and a probable dollar estimate of the liability can be made. The contingent liability for warranties meets both of the requirements from the accrual of a loss contingency, and the estimated
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performed, we will also take a look at the 2009 financial statements and use it as a reference to show how the company improved or declined in 2010. We are going to look at the corporation’s current and long-term liabilities to examine if Harley is managing their finances well. Also, we will be discussing contingencies that are important to realize an uncertain gain or loss that will not be determined until future events. ???LIKE? Furthermore, we will look at the statement of cash flows to determine how
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CHAPTER 11 FINANCIAL INSTRUMENTS AS LIABILITIES CHAPTER OVERVIEW An astounding variety of financial instruments, derivatives, and nontraditional financing arrangements are now used to fund corporate activities and to manage risk. Statement readers face a daunting task when trying to fully grasp the economic implications of some financial innovations. Off-balance sheet obligations and loss contingencies are difficult to evaluate because the information needed is often not disclosed. Derivatives—whether
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Lawrence Sports Working capital management is very important in running a business because it involves managing all current assets and liabilities. Working capital management involves making appropriate investments in cash, marketable securities, receivables, and inventories, as well as the level and mix of short-term financing (Emery, Finnerty, Stowe, 2007, p. 639, para. 3). Currently Lawrence sports, a multi-million dollar company that manufactures and distributes sports equipment is seeking
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Response, Compensation, and Liability Act being enacted after Johnson, Co. disposed of their toxic chemicals, there was no knowledge of wrong-doing, and any issues arising from this law are not due to negligence. However, the EPA is firm in its response to any known site where this kind of dumping has occurred. The issues we now face is that of whether or not to take ownership for Johnson Manufacturing, by informing either the EPA directly, or reporting an environmental liability on our balance, which
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this goes on for trial. They decided to report $50,000 as reserve for contingencies corresponding debit to retained earning. In 2004 plant maintenance expenditure was $44000. Normally plant maintenance was about $60,000 a yr. $60,000 had indeed been budgeted for 2006. Income statement of company contains this $60,000for plant maintenance expenses with an offsetting credit to reserve account as a noncurrent liability. In January 2006 company issued $100000 bond in return of $80
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Given a company’s financial statements and current and long-term liability transactions, the student should able to understand and explain them to other accountants, managers and business people. Their understanding and explanation should include concepts relating to the borrowing process (debt finance), the legal basics of debt and transactions that bring debt into the company’s financial structure (sales taxes, payroll taxes, warranties, contingencies, purchases on credit, bank loans, bonds and
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with the quality of a traditional coffee machine. (2.) Determine the business structure that best fits your Innovative Idea. The business structure that best fits this idea would be a limited liability company. Limited Liability is a hybrid type of legal structure that provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. The "owners" of an LLC are referred to as "members." Depending on the state, the members can consist
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information may become available indicating that an asset was impaired or a liability was incurred after the date of the financial statements or that there is at least a reasonable possibility that an asset was impaired or a liability was incurred after that date. The information may relate to a loss contingency that existed at the date of the financial statements. On the other hand, the information may relate to a loss contingency that did not exist at the date of the financial statements. Since the risk
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