In the end, as a manager, part of your role is to develop strategy, and share this strategy with various stakeholders within the organization. This assignment will allow you to….
Reviewing the financial statements of public companies
As a reviewer for the Ontario Securities Commission, you are in the process of reviewing the financial statements of public companies. The following items have come to your attention: 1. A merchandising company overstated its ending inventory two years ago by a material amount. Inventory for all other periods is correctly calculated. 2. An automobile dealer sells for $137,000 an extremely rare 1930 S type Invicta, which it purchased for $21,000 10 years ago. The Invicta is the only such display item that the dealer owns. 3. During the current year, a drilling company extended the estimated useful life of certain drilling equipment from 9 to 15 years. As a result, amortization for the current year was materially lowered. 4. A retail outlet changed its calculation for bad debt expense from 1% to 0.5% of sales because of changes in its clientele. 5. A mining company sells a foreign subsidiary that does uranium mining, although the company continues to mine uranium in other countries. 6. A steel company changes from straight-line amortization to accelerated amortization in accounting for its plant assets stating that the expected pattern of consumption of the future economic benefits has changed. 7. A construction company, at great expense to itself, prepares a major proposal for a government loan. The loan is not approved. 8. A water pump manufacturer has had large losses resulting from a strike by its employees early in the year. 9. Amortization for a prior