Understanding Financial Statements-3

Understanding Financial Statements-3 - Complexities...

Info icon This preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
Complexities (cont.) GAAP provide some measure of uniformity but they allow considerable discretion Accounting choices and estimates affect amounts on financial statements Depreciation of fixed assets is a good example (choice of method, different “good faith” estimates possible for asset life and salvage value) 1-1 Mythical Mountain
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
1-2 More Complications Goodwill and Other Intangible Assets Consolidation of parent and  subsidiaries Accounting for leases and pensions Translation of foreign operations Off-balance sheet financing Accounting for derivatives Two sets of books (yes, it’s legal!!) -  financial vs. tax reporting 
Image of page 2
Quality of Financial Reporting Management has considerable discretion within GAAP Potential exists to “manipulate” the profit/loss reported 1-3
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Quality of Financial Reporting (cont.) Reflect an accurate picture of a company’s financial condition and performance Information should be useful both to assess the past and predict the future 1-4 Ideally, financial statements should:
Image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern