Ascertain whether direct or indirect method is used to prepare the statement of cash flows by these Companies with explanation.

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Answer 1

Question

Chapter 11, Problem 1IA

Requirement 1

To determine

Ascertain whether direct or indirect method is used to prepare the statement of cash flows by these Companies with explanation.

Requirement 2

To determine

Find out the activities that provide cash for each of the Companies for each of these years.

To determine

Find out the activities that use cash for each of the Companies for each of these years.

To determine

Explain the conclusion that can be drawn from these results.

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Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's expenses, Gross margin, and Net income?

Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's assets, Liabilities, and Equity?

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Answer 2

Question

Chapter 11, Problem 1IA

Requirement 1

To determine

Ascertain whether direct or indirect method is used to prepare the statement of cash flows by these Companies with explanation.

Requirement 2

To determine

Find out the activities that provide cash for each of the Companies for each of these years.

To determine

Find out the activities that use cash for each of the Companies for each of these years.

To determine

Explain the conclusion that can be drawn from these results.

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Answer 3

Question

Chapter 11, Problem 1IA

Requirement 1

To determine

Ascertain whether direct or indirect method is used to prepare the statement of cash flows by these Companies with explanation.

Requirement 2

To determine

Find out the activities that provide cash for each of the Companies for each of these years.

To determine

Find out the activities that use cash for each of the Companies for each of these years.

To determine

Explain the conclusion that can be drawn from these results.

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Answer 4

Question

Chapter 11, Problem 1IA

Requirement 1

To determine

Ascertain whether direct or indirect method is used to prepare the statement of cash flows by these Companies with explanation.

Requirement 2

To determine

Find out the activities that provide cash for each of the Companies for each of these years.

To determine

Find out the activities that use cash for each of the Companies for each of these years.

To determine

Explain the conclusion that can be drawn from these results.

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Answer 5

Chapter 11, Problem 1IA

Requirement 1

To determine

Ascertain whether direct or indirect method is used to prepare the statement of cash flows by these Companies with explanation.

Requirement 2

To determine

Find out the activities that provide cash for each of the Companies for each of these years.

To determine

Find out the activities that use cash for each of the Companies for each of these years.

To determine

Explain the conclusion that can be drawn from these results.

Answer 6

Chapter 11, Problem 1IA

Requirement 1

To determine

Ascertain whether direct or indirect method is used to prepare the statement of cash flows by these Companies with explanation.

Answer 7

Chapter 11, Problem 1IA

Requirement 1

To determine

Ascertain whether direct or indirect method is used to prepare the statement of cash flows by these Companies with explanation.

Answer 8

Requirement 2

To determine

Find out the activities that provide cash for each of the Companies for each of these years.

Answer 9

Requirement 2

To determine

Find out the activities that provide cash for each of the Companies for each of these years.

Answer 10

To determine

Find out the activities that use cash for each of the Companies for each of these years.

Answer 11

To determine

Find out the activities that use cash for each of the Companies for each of these years.

Answer 12

To determine

Explain the conclusion that can be drawn from these results.

Answer 13

To determine

Explain the conclusion that can be drawn from these results.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 11 - Prob. 1DQ Ch. 11 - Prob. 2DQ Ch. 11 - Prob. 3DQ Ch. 11 - A company issued bonds during the year. Would this...Ch. 11 - Prob. 5DQ Ch. 11 - When using the indirect method, why are gains on...Ch. 11 - Prob. 7DQ Ch. 11 - Prob. 8DQ Ch. 11 - Prob. 9DQ Ch. 11 - Prob. 10DQ

Ascertain whether direct or indirect method is used to prepare the statement of cash flows by these Companies with explanation.

Solution Summary: The author explains whether direct or indirect method is used to prepare the statement of cash flows for each of the Companies.

Ascertain whether direct or indirect method is used to prepare the statement of cash flows by these Companies with explanation.

Find out the activities that provide cash for each of the Companies for each of these years.

Find out the activities that use cash for each of the Companies for each of these years.

Explain the conclusion that can be drawn from these results.

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Chapter 11 Solutions