ACC 230 WEEK 7 CHECKPOINT - NORTEL NETWORKS CASE

ACC 230 WEEK 7 CHECKPOINT - NORTEL NETWORKS CASE - Week 7...

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Week 7 CheckPoint: Nortel Networks Case · Resources: Ch. 5 of Understanding Financial Statements; Exhibit 5.1: A Checklist for Earnings Quality on p. 153 (Ch. 5) · Due Date: Day 5 [Individual forum] · Compose a 200- to 300-word response to question 3 of the Nortel Networks Case on p. 182 (Ch. 5). Refer to the checklist, Exhibit 1, on p. 153 (Ch. 5) for assistance with identifying quality issues.
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From the annexed notes, it appears that Nortel has seven cases of guarantees and four commitments. The criteria for  effective disclosure of guarantees is that the disclosure is fair if the following points have been provided: Description and nature of guarantee/indemnity Its financial effect An indication of the uncertainty posed by the situation Any possibility of reimbursement By analyzing the disclosure notes relating to guarantees and commitments, we come to a conclusion that: Guarantee in general has been defined according to FASB guidelines Ample instances of guarantees and commitments have been provided, which are of material importance to  financial statements Every instance has been properly explained with regard to its nature The financial effect of all guarantees/commitments has been provided where it could not be provided, it has been  stated that Nortel was unable to provide an estimate In almost every case, the effect of uncertainty has been clearly provided for The length of time for a guarantee/commitment has also been provided for One instance, which require improvement is third party debt agreements, where a provision should have been  created in order to give a more positive picture In general, the disclosures do conform to FASB guidelines, International Accounting Standards and USGAAP.   The annexed table, which should not be taken as the word count, is supplementary information and sheds some more light  on the detailed picture. Guarantee/commitment Maxim Present Proof of existence from text Guarantee- general Description and definitionYes FIN 45 defines a guarantee as a contract that contingently requires Nortel to make payments to a third party based on changes in an underlying economic characteristic that is related to an asset, a liability or an equity security of the guaranteed party or a third party's failure to perform under a
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This note was uploaded on 11/21/2011 for the course ACC 230 acc 230 taught by Professor Connie during the Spring '11 term at University of Phoenix.

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ACC 230 WEEK 7 CHECKPOINT - NORTEL NETWORKS CASE - Week 7...

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