University of Arizona Accounting 554 Case #1: Dow Chemical Company Goals: • • • Become familiar with a set of financial statements including auditor opinion and significant accounting policy footnote, Perform basic analysis and interpretation of the financial statements, including common size analysis, Recognize the role of estimates in the measurement of financial statement amounts. Refer to the Dow Chemical financial statements for 2008 in answering the following: 1. Who are Dow’s external auditors? Describe the two opinion letters that Dow received for 2008. In your own words, explain what these opinions mean. Why are the opinions dated several weeks after Dow’s year end? 2. Use a spreadsheet to construct common-size income …show more content…
We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of The Dow Chemical Company and subsidiaries at December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. As discussed in Note U to the consolidated financial statements, the Company is involved in litigation related to an agreement to acquire Rohm and Haas Company. The Company has disclosed that it is reasonably possible that the ultimate resolution of the litigation could have a material adverse impact on the Company’s consolidated financial statements. As discussed in Note A to the consolidated financial statements, effective December 31, 2006, the Company changed its method of accounting for defined benefit pension and other postretirement plans to conform to Statement of Financial Accounting Standards No. 158. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company 's internal control over
If you work this problem as a group assignment, each group member should be prepared to
1. Using the excel spreadsheet provided, and the recommended consequential disclosures as a basis you your analysis, what recommendations would you give Phillips on each of the items listed below? In each case, justify your recommendations and estimate how much the decision will change the “true” value of the company and its value in the eyes of an investor in a private company.
In accounting there is much to be learned, about the financial aspects of a business. In the past five weeks I have learned the importance of financial reports and how they relate to the success of an establishment. These reports may include balance sheets and income statements, which help accountants and the public grasp the overall financial condition of a company. The information in these reports is really significant to, managers, owners, employees, and investors. Managers of a business can take and deduce financial
2. What do you think are the motives of Harnischfeger's management in making the changes in its financial reporting policies? Do you think investors will see through these changes?
Question #1: How would Sheryl Sandberg’s leadership style be described based on the four behavioral leadership styles?
Issue: Have the directors of the company breached their duties mainly related to the company’s insolvent trading.
Second, the manufacturing order costs for non-stocked items was calculated by dividing total manufacturing order costs for non-stocked items by the number of orders for non-stocked products. Non-stocked products have additional costs associated with processing orders that went above and beyond the costs associated with a stocked product. The third step involved determining what the S"A allocation factor would be for calculating the S"A volume related costs. This allocation factor would then be applied to manufacturing COGS. The fourth and final step involved the calculation of the operating profit based on backing out volume related costs from sales revenues followed by deducting S"A and manufacturing order costs from the resulting gross margin to arrive at a operating profit.
The estimates of ABC Company and all subsidiaries are thoroughly analyzed before their respective inclusion on the financial statement. If conditions warrant a change in accounting principle, the events surrounding the change are disclosed, and the effects of the changes in accounting principles are also disclosed. Although these instances are infrequent, full disclosure is practiced when they do occur. Our main areas of accounting estimates include estimates for intangible assets and trade receivables.
e. Who are General Mills external auditors? Describe the two "opinion" letters that General Mills received in 2006. In your own words, what do these opinions mean? Why are both opinions dated several months after General Mills' year end?
In 1967, M.S. Gazzaniga studied the split brain in man. Gazzaniga wanted to study how the two halves of the brain functioned independently. Since it a little unethical to snip the peoples corpus callosums just for fun, it wasn‘t until doctors discovered that cutting the corpus callosum could actually cure severe epileptic seizures that it was possible for Gazzaniga and Sperry to study them. They found that the test subjects intelligence, personality, and emotions had not changed. We use each half of our brains for specific skills. Three different tests were designed to check mental capabilities. It was found that the left-brain is better at speaking, writing, reading, and math, and the right brain is better at recognizing
The article discusses that in 1976 the U.S. Supreme Court ruled in one case that omitted financial statement information altering a reasonable investor’s decision proves the material nature of the information. The article continues by describing that lower courts earlier ruled that all financial information whether material or not must have full disclosure in a company’s financial statements. The rejection of the lower courts’ ruling by the U.S. Supreme Court gives the investor the ability to focus on the aspects of the financial statements that are most important by allowing the elimination of minute details (Sauer 2007, 317-357). In essence, this ruling allows for the elimination of financial information below the determined materiality threshold unless otherwise required by the ruling of a regulatory body.