Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 8

Find various accounting policy disclosures Refer to the financial statement footnotes or financial review section of the annual report you have obtained either as a result of completing Exercise 1.1 or otherwise. Read the “significant accounting policies” footnote disclosures and 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)?

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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.”)

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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?

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d. Does the firm have an employee stock purchase plan, an employee stock owner­ship plan (ESOP), or other restrictive stock plans? If so, describe the key charac­teristics of these plans from the perspective of a common stockholder.

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f. 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.

Step 1 of 6

Note the answers will vary depending as the company selected and analyzed. However for illustration as mentioned in the problem one needs to take information from Exercise 1.1. Thus we did choose here ESAB India limited that could be following for requirement asked in problem: