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Disclosure Analysis Paper Essay

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❶In fact, the annual report contains far more pages of disclosures than actual financial data. For example, if the company discovers that it reported expenses lower than what actually occur, it will likely result in decreased net profit being reported than what is expected by investors.

Disclosure Analysis Paper Essay Sample

Disclosures Related to Receivables
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The first note to the reader talks about reconciliations between consolidated and sector financial statements, which is the difference between the total assets and total liabilities that are presented on the sector balance sheet and the consolidated balance sheet by netting the deferred income tax assets and liabilities.

Ford Motor gives information about the accounting standards that have been issued. Another accounting standard that is used deals with financial services-insurance. This standard was put into place by the FASB and it addresses the deferral of acquisition costs within the insurance industry.

Basically the standard changed or modified the type of costs in a company that can be capitalized in the renewal and acquisition of insurance industry.

In section four of the notes, it contains information regarding the Fair Value Measurements. The note continues to explain where the reader of the Ford Motor Company financial statements would be able to find the fair value of debt, finance receivables, along with the carrying value related to these receivables and debt.

Note five deals with restricted cash disclosures. This note informs the reader of the financial statements that restricted cash would not include cash used to secure debt set up because of securitization business deals.

Also discussed in this section is how restricted cash does not include the required minimum balances or cash securing debt through a transaction of securitization. All of these elements are considered highly liquid and are to be used by the Ford Motor Company for short-term needs, if required. The last note, note nine, deals with inventories. Also stated is that a large part of the United States inventories cost are determined by a last-in, first-out LIFO inventory method.

First-in, first-out FIFO inventory method is used for determining cost for their other inventories. Current Assets Cash - A current asset account which includes currency, coins, checking accounts, and undeposited checks received from customers. The amounts must be unrestricted. Restricted cash should be recorded in a different account. Petty Cash Fund - A current asset account that represents an amount of cash for making small disbursements for postage due, supplies, etc.

Every major financial statement contained in the annual report is likely to contain important information to help readers fully understand the data. After analyzing the Annual report of American Airlines , it became clear that the disclosures play an important role in explaining how certain material figures were determined.

The most airline industry has to contend with many dynamic and rapidly changing business conditions, such as fuel, safety regulations, and other global economic and political factors. The disclosures help explain any material decisions the company has made as it relates to the preparation of its financial reports.

In the Annual Report, American Airlines explains that they entered Chapter 11 bankruptcy and are still in the middle of the proceedings. Being in bankruptcy puts strict limits and what the company can do with its cash and equivalents. Essentially, the company is warning investors that its cash may not be sufficient to remain liquid if it experiences a sharp change in business conditions.

A large corporation like American Airlines must manage cash efficiently because it is essential to long term viability. There have been many examples of airlines being forced into chapter 11 bankruptcy when cash on hand becomes insufficient to cover operating costs, and American Airlines is no exception.

With this disclosure, the company explains that it is exposed to a large number of foreign currencies, creating a greater exposure to currency fluctuation risks.

If the US Dollar is devalued in relation to these currencies, it will cause a decrease in net profit when reported on financial statements.

American Airlines utilized short-term investment to earn the highest possible cash on hand when not being used for immediate business needs. This strategy is employed by most companies with significant amounts of cash on hand and helps the company meet its obligations that have been arranged through Chapter 11 arrangements.

This section also lets the reader s know of any new accounting standards used by the company. In the year a few of these new standards were how the company financed receivables, fair value measurements, transfers of financial assets, and variable interest entities.

In note three the company gives information about accounting standards, which have been issued, but are not yet in use in the General Motors Company. However, this standard was not to go into effect until January 1, so it was not incorporated into the financial statements. Another accounting standard that had not yet be adopted dealt with financial services-insurance. Basically the new standard changed or modified the type of costs in a company that can be capitalized in the renewal and acquisition of insurance industry.

This standard would not go into effect until January 1, , so it was not adopted for the financial statements. Within the notes section Note four contains information about Fair Value Measurements.

The note goes on to explain where the reader s of the General Motors Company financial statements will be able to find the fair value of debt, finance receivables, along with the carrying value related to these receivables and debt.

Note five deals with Cash and Restricted Cash disclosures. This note informs the reader s of the financial statements that restricted cash would not include cash used to secure debt set up because of securitization business deals.

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Disclosure Analysis of American Airlines. Disclosures are an essential component of any public company’s annual report. Every major financial statement contained in the annual report is likely to contain important information to help readers fully understand the data.

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View Essay - Disclosure Analysis Paper. Individual Assignment. Week1 from ACC ACC/ at University of Phoenix. DISCLOSURE ANALYSIS PAPER 1 Disclosure Analysis Paper ACC/ May %(6). Disclosure Analysis Paper Analyzing the disclosures contained in a company’s financial statement is important to understanding the heath of the company. Starbucks is the corporation that I will be analyzing.

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Disclosures are an essential part of financial reporting for publically traded corporations. The following analysis will look into General Motors Company’s disclosure relating to the company’s current assets of cash equivalents, inventory, and receivables. Disclosure Analysis Paper General Motors, one of the largest cars and trucks manufacturer, is more than a century old and has a large scope of the industrial activities, mostly focusing on the motorized transportation with engineering and manufacturing to make all possible. GM was founded in