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In chapter 21, we discussed accounting for leases. A lease is a contractual agreement between a lessor (the owner of the property) and a lessee (the one getting the rights to use the property). There are a few advantages to leasing instead of purchasing. These advantages are: 100% financing at fixed rates, protection against obsolescence, flexibility in lease agreements, less costly financing, tax advantages, and possible off-balance-sheet financing. Each of these advantages are reasons for the growth of leasing amongst
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The FASB has established a reporting framework, which involves three types of accounting changes. The three types are: (1) change in accounting principle, (2) change in accounting estimate, and (3) change in reporting entity. A fourth category, errors in financial statements, necessitates change but it is not classified as an accounting change. A change in accounting principle involves a change from one generally accepted accounting principle to another such as LIFO to FIFO. Adaption of a new principle in recognition of events that have occurred for the first time such as adopting an inventory method for a newly acquired item is not a change in accounting principle. Reporting changes can be cumulative, retrospective, or prospective. The FASB requires that companies use the retrospective approach unless a company cannot reasonably determine the amounts in which they need to restate in prior periods. As discussed in class, upon a change in principle, a note should be reported in the notes of the financial statements as to why and the effects of the change on net income and therefore retained …show more content…
By looking at the investing activities we see that half of Coca-Cola’s net cash used is in relation to purchasing of investments of 2,152, which could lead to significant rates of return in the next coming years. Upon review of the financing activities we see that Coca-Cola has paid off 12,362 of its debt in 2009, which is a third more than the past two years combined, which in the eyes of a possible lender such as a bank is a very good sign. This shows that they are able to pay off their debts and not let them sit on the financial statements. Also Coca-Cola paid 3,800 in dividends this current year which is more than it has paid in the previous two years. This is a positive sign for possible speculators looking to buy stock in the company and also for current stock holders. Another positive is the net increase in cash from 2008 from 4,701 to 7,021. With the rise in cash and cash equivalents it shows that Coca-Cola is doing well and could have the ability to reinvest in other forms of securities. We can check to see that the correct balance was reached in the statement of cash flows by verifying it with the cash balance on the balance sheet. Upon review they both has the correct balance of
The FASB has established a reporting framework, which involves three types of accounting changes. The three types are: (1) change in accounting principle, (2) change in accounting estimate, and (3) change in reporting entity. A fourth category, errors in financial statements, necessitates change but it is not classified as an accounting change. A change in accounting principle involves a change from one generally accepted accounting principle to another such as LIFO to FIFO. Adaption of a new principle in recognition of events that have occurred for the first time such as adopting an inventory method for a newly acquired item is not a change in accounting principle. Reporting changes can be cumulative, retrospective, or prospective. The FASB requires that companies use the retrospective approach unless a company cannot reasonably determine the amounts in which they need to restate in prior periods. As discussed in class, upon a change in principle, a note should be reported in the notes of the financial statements as to why and the effects of the change on net income and therefore retained …show more content…
By looking at the investing activities we see that half of Coca-Cola’s net cash used is in relation to purchasing of investments of 2,152, which could lead to significant rates of return in the next coming years. Upon review of the financing activities we see that Coca-Cola has paid off 12,362 of its debt in 2009, which is a third more than the past two years combined, which in the eyes of a possible lender such as a bank is a very good sign. This shows that they are able to pay off their debts and not let them sit on the financial statements. Also Coca-Cola paid 3,800 in dividends this current year which is more than it has paid in the previous two years. This is a positive sign for possible speculators looking to buy stock in the company and also for current stock holders. Another positive is the net increase in cash from 2008 from 4,701 to 7,021. With the rise in cash and cash equivalents it shows that Coca-Cola is doing well and could have the ability to reinvest in other forms of securities. We can check to see that the correct balance was reached in the statement of cash flows by verifying it with the cash balance on the balance sheet. Upon review they both has the correct balance of