Solution manual financial accounting 8th by harrison analysis issues

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San Jose State University
Financial Statement Analysis
F/S Adjustment Issues
Revenue Recognition and Earnings Management
Returned merchandise volume
A/R aging
Level of warranty expense
Earnings management vs. earnings fraud
Inventory Cost Flows
LIFOFIFO restatement
Choice of cost flow assumption
LIFO liquidation layers
Obsolescent and/or slow-moving inventory
Inventory financing
Capital Assets
Historical vs. current value
Depreciable lives and methods
Maintenance and repair policies
Intangibles
Hidden values on the balance sheet
Cost expiration periods
In-process R&D and goodwill issues
Intrinsic nature of recorded and unrecorded intangibles
Liabilities
Expense recognition
Solvency and liquidity
Contingencies
Off balance sheet financing (leases)
Hybrid securities—what is really debt?

Concentration of risk
Leases
Operatingcapital lease conversion
FASB 13 rationale for classification as capital lease
Retirement Benefits
Underfunding/overfunding analysis
Reasonableness of assumptions
Magnitude of actuarial gains and losses
Income Taxes
Composition of deferred liabilities and assets
Composition of income tax expense
Effective tax rate
Use of the valuation allowance


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Equity and Comprehensive Income
Earnings sustainability impact
Corporate Acquisitions
Method used; earnings/cash drag impact
Earnings management via reserves and “hidden” assets
Investments
Classification
Unrealized gains or losses
Equity method impact on cash and income
Consolidation policies
Foreign Exchange Reporting
Functional currency determination
Currency movement risk

Consistency with respect to unrealized gains and losses on translation/remeasurement
Segment Reporting
Shifts in source of profitable operations
FX exposure
Industry exposure