Kapstone Paper And Packaging Analysis

884 Words 4 Pages
Kapstone Paper and Packaging recorded notes dealing with their current assets, intangibles, consolidations, and revenue recognition. The notes for current assets talk about their cash and cash equivalents, trade accounts receivables, and inventories and describe what each mean to the company. According to the notes, the intangible assets are labeled as goodwill or other intangible assets. The notes about consolidations describe how the consolidated financial statements are prepared and adjusted. Finally, the conditions of revenue recognition are defined and the point at which revenue is recognized is also elaborated upon. These notes help investors to see how the company operates and how the company defines specific points.
The cash and cash
…show more content…
In addition, cash and cash equivalents, as well as trade accounts receivables, have carrying values that approximate fair market value. Finally, the notes for current assets talks about how inventories are valued and how cost flow is assumed. The inventories for Kapstone are valued at whichever is lower between the cost of the inventories and the market value. In relation to cost flow assumption, FIFO is used to state the cost of raw materials, works in progress, and finished goods inventories while the average cost method is used to state the cost of replacement parts and other supplies.
Kapstone Paper and Packaging also addresses intangible assets and splits them into two categories; goodwill and other intangibles. Goodwill arises when the company acquires the entirety of another company. Goodwill is valued at
…show more content…
Before revenue is recognized, the title of ownership must be transferred to the customer and the prices of services and products must be “fixed and determinable and collectability reasonably assured” (p. 53). Once these two conditions are met, the company can then recognize revenue. When an item is labeled free on board (F.O.B) shipping point, revenue is recognized when the item is shipped. When it is labeled F.O.B. destination, revenue is then recognized when the customer actually receives the product. If the item is sold on consignment, revenue is recognized at the beginning of the month the goods are sold or after a period of time after the customer receives the product from the consignee. The notes on revenue recognition also talk about how rebates are netted against revenue on an accrual basis only if the customer who made the purchase qualifies for the rebate. Finally, customers will assume freight charges and those charges are included in net

Related Documents