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UB MGA 201 - CH 5_select topics_lecture(1)-2

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Slide 1Slide 2The Needs of Financial Statement UsersFinancial Reporting in the U.S.Accounting FraudThe Sarbanes-Oxley (SOX) ActSlide 7Comparative Financial StatementsMultistep Income StatementsStatement of Stockholders’ EquitySlide 11Slide 12Slide 13Slide 14Slide 15Slide 16Slide 17Slide 18Slide 19End of Chapter 5 select topicsMcGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.Chapter 5Financial Reporting EnvironmentFinancial Statement Formatting PowerPoint Authors:Brandy MackintoshLindsay HeiserEdited by: Muriel T. Anderson, MBA, CPA5-2Describe the environment for financial reporting, includingthe Sarbanes-Oxley Act.5-3The Needs of Financial Statement Users5-4Financial Reporting in the U.S.December 31, 2013Middle of February, 2014End of February, 2014Fiscal Year EndPreliminary Release of Key ResultsFinal Release of Annual ReportFinalize Financial StatementsFinalize External AuditEnhance financial statement formatObtain independent external auditRelease additional financial information5-5Accounting Fraud5-6The Sarbanes-Oxley (SOX) Act5-7Prepare a comparative balance sheet, multistep income statement, and statement of stockholders’ equity.5-8Comparative Financial StatementsA comparative format reveals changes over time.ACTIVISION BLIZZARD, INC.Balance Sheet(in millions of U.S. dollars)AssetsCurrent Assets Cash Short-term Investments Accounts Receivable Inventories Other Current Assets Total Current AssetsProperty and Equipment, netOther Noncurrent AssetsGoodwill Total AssetsLiabilities and Stockholders’ EquityCurrent Liabilities: Accounts Payable Unearned Revenue Accrued and Other Liabilities Total Current LiabilitiesOther Noncurrent Liabilities Total LiabilitiesStockholders’ Equity Contributed Capital Retained Earnings (Accumulated Deficit) Total Stockholders’ Equity Total Liabilities and Stockholders’ EquityDecember 31, 2009$ 2,768477739241 1,1045,3291381,121 7,154$13,742$ 3021,426 7792,507 479 2,98611,117 (361) 10,756$13,742December 31,2010$ 2,812696640112 1,1255,385169720 7,132$13,406$ 3631,726 8182,907 296 3,20310,146 57 10,203$13,4065-9Multistep Income StatementsACTIVISION BLIZZARD, INC.Income Statement(in millions of U.S. dollars)Sales and Service RevenuesExpenses: Production Research and Development Marketing and Sales General and Administrative Total Operating ExpensesIncome (Loss) from OperationsRevenue from InvestmentsIncome (Loss) before Income TaxIncome Tax Expense (Recovery)Net Income (Loss) 2008$ 3,0261,839592464 364 3,259(233) 46(187) (80)$ (107) 2009$ 4,2792,307627544 827 4,305(26) 18(8) (121)$ 113 2010$ 4,4472,126642520 690 3,978469 23492 74$ 418Year Ended December 31,5-10Statement of Stockholders’ EquityACTIVISION BLIZZARD, INC.Statement of Stockholders’ EquityFor the Year Ended December 31, 2010(in millions of U.S. dollars)Balances at December 31, 2009 Net Income Dividends Declared Issued Shares of Stock Repurchased Shares of StockBalances at December 31, 2010RetainedEarnings (Deficit)$ (361)418(0)$ 57ContributedCapital$ 11,11773 (1,044)$ 10,146McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.Chapter 5Solved ExercisesM5-4, M5-5, M5-10, E5-115-12M5-4 Preparing and Interpreting a Multistep Income StatementNutboy Theater Company reported the following single-step income statement. Prepare a multistep income statement that distinguishes the financial results of the local theater company’s core and peripheral activities. Also, calculate the net profit margin using the company’s core revenues and compare it to the 8 percent earned in 2012. In which year did the company generate more profit from each dollar of sales?5-13M5-4 Preparing and Interpreting a Multistep Income StatementNUTBOY THEATER COMPANYIncome StatementFor the year ended December 31, 2013Revenues Ticket Sales Concession Sales Total Sales RevenuesOperating Expenses: Salaries and Wage Expense Advertising Expense Utilities Expense Total Operating ExpensesIncome from OperationsOther Revenue (Expense): Interest Revenue Other RevenueIncome before Income Tax ExpenseIncome Tax Expense Net Income$ 50,000 2,500 52,50030,0008,000 7,000 45,0007,500200 507,750 2,500$ 5,250= Net Income/Total Sales Revenues= $5,250 / $52,500= 10%Net Profit Margin5-14M5-5 Preparing a Statement of Stockholders’ EquityOn December 31, 2011, WER Productions reported $100,000 of contributed capital and $20,000 of retained earnings. During 2012, the company had the following transactions. Prepare a statement of stockholders’ equity for the year ended December 31, 2012.a. Issued stock for $50,000.b. Declared and paid a cash dividend of $5,000.c. Reported total revenue of $120,000 and total expenses of $87,000.5-15M5-5 Preparing a Statement of Stockholders’ EquityWER PRODUCTIONSStatement of Stockholders’ EquityFor the Year Ended December 31, 2012Balances at December 31, 2011 Net Income Dividends Declared Issued Shares of StockBalances at December 31, 2012RetainedEarnings$ 20,00033,000(5,000)$ 48,000 Stockholders' Equity$120,00033,000(5,000) 50,000$198,000ContributedCapital$100,000 50,000$150,0005-16M5-10 Preparing Comparative Financial StatementsComplete the blanks in the following comparative income statements, statement of stockholders’ equity, and balance sheets.(a) Income from Operations(b)Income before Income Tax Expense(c) 1005-17M5-10 Preparing Comparative Financial Statements(d) 480(e) 80 (from December 31, 2012, Balance Sheet)(f) 1205-18M5-10 Preparing Comparative Financial Statements(g) 480(h) 1805-19E5-11 Finding Financial Statement InformationIndicate whether each of the following would be reported on the balance sheet (B/S), income statement (I/S), or statement of stockholders’ equity (SSE).1. Insurance costs paid this year, to expire next year2. Insurance costs expired this year.3. Insurance costs still owed.4. Cost of equipment used up this accounting year.5. Equipment book value (carrying value).6. Amounts contributed by stockholders during the year.7. Cost of supplies unused at the end of the year.8. Cost of supplies used during the accounting year.9. Amount of unpaid loans at end of year.10.Dividends declared and paid during this year. B/S I/S B/S I/S B/SSSE B/S I/S B/S SSE5-20End of


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