Report for CEO At the most recent strategic planning meeting, the board of directors of your company has voted to issue additional stock to raise capital for major expansions for the company in the next five years. The board is considering $5 billion. Take the most recent financial statements and prepare a set of projected financial statements based on the given assumptions. The CEO requests that you prepare a written report (including the financial statements) for her.
A. Generate a projected income statement based on the given scenario.
B. Analyze the impact on the income statement based on the given scenario.
C. Generate a projected statement of retained earnings based on the given scenario.
D. Analyze the impact on the statement of retained earnings based on the given scenario.
E. Generate a projected balance sheet based on the given scenario.
F. Analyze the impact on the balance sheet based on the given scenario.
G. Generate a projected cash flow statement based on the given scenario.
H. Analyze the impact on the cash flow statement based on the given scenario .
You will continue to work with the retail company you have chosen either in ACC 610 or at the beginning of this class. If you are transferring into SNHU’s financial reporting courses, you will choose from five retail companies (Wal-Mart, Target, Sears, Kroger, or Amazon). This company will be yours throughout the Financial Reporting Series (ACC 610, ACC 620, ACC 630). You will adopt this company to apply learning concepts in authentic scenarios. Through this assessment, you will continue building your Financial Reporting Series portfolio.
Your portfolio pieces for this project will include memos, spreadsheets, and a final report.
At the most recent strategic planning meeting, the board of directors of your company has voted to issue additional stock to raise capital for major expansions for the company in the next five years. The board is considering issuing a total amount of stock worth $5 billion. The CEO has asked you to analyze the impact of issuing this stock on the income statement, statement of retained earnings, balance sheet, and cash flow statement. Take the most recent financial statements and prepare a set of projected financial statements based on the given assumptions.
Specifically, the following critical elements must be addressed:
I. Stockholders’ Equity
A. Determine how your company got its initial financial start in terms of debt (liabilities) or equity (capital). Support your response.
B. Analyze the equity section of your company’s balance sheet as compared to your company’s industry average. Rate the company’s performance against its competitors.
C. Review your company’s dividend policy and its history. Based on the information, discuss the trends over the past year.
II. Income Measurement/Revenue Recognition
A. Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) came together on a unified project to outline the accounting principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and IFRS. Research IAS-18, Revenue, and discuss how it would apply to your company.
B. Review your company’s revenue over the past two years. Analyze the change in revenue (increase/decrease) and give the reasons for this change.
C. Reflecting upon your company’s balance sheet, identify the unearned revenue accounts listed. How does your company handle the proper accounting treatment with regard to recognizing revenue from unearned revenue accounts?
III. Income Taxes
A. If Congress voted to eliminate corporate taxes, what would be the effect on your company’s income statement and balance sheet? Defend your response.
B. Calculate the income tax rate for your chosen company. What effect will an increase in income of $2,000,000 have on your company?
C. What are the effects on the balance sheet and income statement? Justify your response.
D. How much did your company pay in foreign taxes last year? What percentage of its income is United States vs. foreign?
IV. Leases
A. What are the differences between operating and capital leases?
B. Describe the particular leases of your company based on the liability section of your company’s balance sheet.
C. What impact have the leases had on the company’s financial statements for the most recent year?
D. Discuss the advantages and disadvantages of leasing a building versus purchasing one.
V. Pensions
Address the following elements in the form of a memo to your CEO:
A. From your company’s financial information, what type of pension plan does it have? Discuss the reasons why your company has chosen this particular plan.
B. What was the effect of the pension plan on your company’s financial statements? Defend your response.
C. Your CEO has informed you—the controller of your company—that the board of directors has made the decision to look at other options of types of retirement plans. Investigate what other alternatives would be available, and determine which would be appropriate for your particular company.
VI. Statement of Changes in Financial Position
A. From the perspective of an investor, determine whether or not you would invest in your chosen company based on the company’s statement of changes in financial position (SCFP). Support your opinion.
B. Review the company’s SCFP for any concerns that may need to be addressed. As controller of your company, prepare a memo to your CEO, giving a summary report for possible recommendations.
VII. Report for CEO
At the most recent strategic planning meeting, the board of directors of your company has voted to issue additional stock to raise capital for major expansions for the company in the next five years. The board is considering $5 billion. Take the most recent financial statements and prepare a set of projected financial statements based on the given assumptions. The CEO requests that you prepare a written report (including the financial statements) for her.
A. Generate a projected income statement based on the given scenario.
B. Analyze the impact on the income statement based on the given scenario.
C. Generate a projected statement of retained earnings based on the given scenario.
D. Analyze the impact on the statement of retained earnings based on the given scenario.
E. Generate a projected balance sheet based on the given scenario.
F. Analyze the impact on the balance sheet based on the given scenario.
G. Generate a projected cash flow statement based on the given scenario.
H. Analyze the impact on the cash flow statement based on the given scenario.
Milestones
Milestone One: Stockholders’ Equity and Revenue Recognition
In Module Three, you will submit critical elements I and II for review by your instructor. It is important that you incorporate your instructor’s feedback from this milestone into your final submission. This milestone will be graded with the Milestone One Rubric.
Milestone Two: Income Taxes and Pensions
In Module Five, you will submit critical elements III and V for review by your instructor. It is important that you incorporate your instructor’s feedback from this milestone into your final submission. This milestone will be graded with the Milestone Two Rubric.
Milestone Three: Leases and Changes in Financial Position
In Module Seven, you will submit critical elements IV and VI for review by your instructor. It is important that you incorporate your instructor’s feedback from this milestone into your final submission. This milestone will be graded with the Milestone Three Rubric.
Final Submission: Financial Reporting Series Portfolio
In Module Nine, you will submit your final project. It should be a complete, polished artifact containing all of the critical elements of the final product, including critical element VII: Report for the CEO. It should reflect the incorporation of feedback gained throughout the course. This submission will be graded with the Final Project Rubric.
