Lecture05 2010.09.25 PostClass

Lecture05 2010.09.25 PostClass - Lecture 5 Income Statement...

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1 Lecture 5 Income Statement Concepts Adjusting Entries
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Announcements Recitations this week will cover: (i) E3-3 (ii)E3-13 (iii)E3-14 (iv)CP3-2 Conflicts for Exam 1 send us email! 2
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Announcements Lunch programs: 1. Student-initiated Small group 2-3 Designated eateries, No bill 2. Professor-initiated Larger group 3-7 Anywhere I pay and get reimbursed 3
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4 Goals of Today’s Class Finish the Simpson Corp example from last class Continue discussion of adjusting entries Discuss depreciation as an adjusting entry • Exercises
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In the news…rebates 5 Nov 4, 2009 CNET News New York Attorney General Andrew M. Cuomo filed the federal lawsuit against Intel accusing it of paying computer makers rebates to illegally maintain its monopoly power and preventing AMD from gaining business with PC makers. The complaint singles out Dell as a large recipient of Intel's "largesse”… Quoting often graphic exchanges between Intel and Dell executives, the suit alleges that Intel gave Dell massive rebates totaling in the billions of dollars over a period of, at least, several years… …For example, over the four-year period from February 2002 to January 2007, Dell received approximately $6 billion in 'rebates ’. The attorney general also makes some alarming allegations about the extent to which Dell's net income was tied to rebates A comparison of Dell's reported net income with the rebates it received from Intel for some quarterly periods show that, by 2004, the rebate payments amounted to more than a third of Dell's earnings …In 2006, Dell received approximately $1.9 billion in rebates .... and in two quarterly periods of that year, rebate payments exceeded reported net income . From February to April of 2006, rebates ($805 million) amounted to 104 percent of net income ($554 million of rebates and $776 million in net income). The following 3 months, between May and July of 2006, the proportion was even higher, 116 percent ($554 million of rebates and $480 million in net income). Income includes rebates, So what does it mean that rebates were greater than net income???
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In the news…deferrals 6 Navistar Cuts Revenue Outlook , TheStreet.com - September 8, 2010 Truck builder Navistar , striving to rebound after spilling red ink amid the recession, cut its revenue outlook for fiscal 2010 even as it posted third-quarter results that surpassed Wall Street estimates… Navistar blamed the dimmed top-line guidance on deferred revenue from military customers, which the company expects to realize in 2011 instead of this year ... …Navistar now expects to post revenue of $12 billion for the fiscal year 2010, which ends Oct. 31. That's down from the company's earlier targeted range of $13.2 billion to $13.7 billion. .. …In pre-market trading Tuesday, Navistar shares were changing hands at $44.17, down 19 cents from the close in the previous session. The stock has gained about 15% year-to-date, but has mapped a downward trajectory since topping out at $58 in mid June.
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