15 Minutes, Medium
5.7%
$1.8 billion
PROBLEM 5.8B
THE GAP, INC.
*Average Stockholders’ Equity = ($4.1 billion + $2.8 billion)/2
a. $833 million ÷ $14.5 billion =
Net income percentage: Net Income/Total Revenue
Beginning of year: $3.9 billion – $2.1 billion
Working capital: Current Assets – Current Liabilitiesb.
25 Minutes, Strong
a.
b.
c.
d.
SOLUTIONS TO CRITICAL THINKING CASE
S
A
DEQUATE DISCLOSUR
E
CASE 5.1
Mandella Construction Co. should disclose the accounting method that it is using in the
notes accompanying its financial statements. When different accounting methods are
Generally accepted accounting principles do not require disclosure of changes in
personnel. Personnel changes normally do not have a direct (or at least measurable) effect
The fact that one of the company’s two processing plants will be out of service for at least
three months is relevant to the interpretation of the financial statements. Obviously, the
No disclosure is required under generally accepted accounting principles, because any
statements about the financial impact of this new product would amount to sheer
Group assignment:
No time estimate
a. •
The principal argument against an accountant serving clients who are direct competitors is:
CASE 5.2
We do not
p
rovide com
p
rehensive solutions for
g
rou
p
p
roblems. It is the nature of these
p
roblems
that solutions should reflect the collective experiences of the group. But the following
observations may be useful in stimulating class discussion:
WORKING FOR THE COMPETITION
ETHICS, FRAUD & CORPORATE GOVERNANCE
An accountant has access to much information about a company’s business
strategies. Thus, an accountant who also worked for a company’s competitors
5 Minutes, Easy
One would hope that the process will help to improve investor confidence in much the same way
as unqualified audit opinions contribute to investor confidence. In fact, the language used in the
The purpose of the personal certification process is to make CEOs and CFOs more accountable
and personally responsible for the contents in the annual reports issued by their companies.
CASE 5.3
CEOs AND CFOs
CERTIFICATIONS BY
15 Minutes, Easy
Debt and CommitmentsAccounting Policies
INTERNET
Finance Receivables Share-Based Compensation
CASE 5.4
ANNUAL REPORT DISCLOSURES
Listed below are the headings of the major disclosure items presented in Ford’s most recent financial statement footnotes.
Students are to discuss the general nature and content of the various topics. The advanced nature of some of these topics goes
beyond the scope of an introductory course.