Research and Writing Assignment: Income Statement Presentation
Assignment Goals:
- Obtain research experience in the Accounting Standards Codification
- Obtain experience using SEC filings and the SEC website
- Practice writing concise accounting-related deliverables
Note: You may complete the assignment on your own or with one other person in the course. If you complete the assignment with a classmate, you must turn in one, joint assignment.
Assignment Description:
Scenario:
After graduating from the University of Dayton, you joined the Securities and Exchange Commission. One of your tasks is to review public company financial statements filings and identify areas where companies may not be in compliance with GAAP accounting and disclosures. More specifically, you have been assigned the task of reviewing the financial statements of companies that report discontinued operations. Your supervisor has asked you to perform research in the FASB's Accounting Standards Codification and write a research memo answering questions on Bob Evans Farms' reporting of discontinued operations.
Tip: Before you get started, review memo examples on Isidore, as well as Appendix 1. They will provide you with a sense of the appropriate tone and detail to include in a research memo.
Memo Format:
• Prepare a memo using the format in Appendix1 attached.
• Length: Your write-up should be no more than 2.0pages in length
• Spacing: Single-spaced
• Font size and Style: 12 point Times New Roman
• Margins: One-inch on all sides
• Footer: Insert page numbers in the footer.
• Cover Sheet: A cover sheet is not necessary.
• Use the APA format to cite the sources. A reference page is not counted as a page.
• An appropriate in-text reference to the ASC is generally in the following format: XXX-XX-XX-XX
• Provide proper citations and references. Keep in mind that your textbook is not an appropriate source to cite in this assignment. References should be to the Accounting Standards Codification.
How Should I Approach Accounting Research and Memo Writing?
1. Understand the facts/background of the transaction.
2. Define the problem. That is, identify the "researchable question".
3. Stop and think: Based on what you know from class (and your general intuition from the Conceptual Framework), what accounting treatment will likely be appropriate?
4. Search potentially relevant sources of guidance, copying any relevant guidance into a Word document.
5. Analyze any alternatives you have identified, considering the applicability of each one.
6. Determine which accounting treatment is most appropriate and document your conclusion.
7. Justify and explain your conclusion.
8. Review your memorandum for appropriate content and writing
Step 1:
Understand the facts/background of the transaction.
The below resources provide appropriate information for the memo background AND provide appropriate information for background on the research issues. Where appropriate, use these resources to understand the company and the background for each issue.
Resources for understanding the facts/background:
Before proceeding, do the following:
• Go to sec gov website → Filings → Company filings search to find the April 28, 2017 10-K for Bob Evans Farms (Ticker symbol: BOBE). Recall that a 10-K is filed weeks or even months after the fiscal year end so a filing date is later than a year-end date.
• Read the first few pages of Item 1 (pages 5-7 of the document) on Bob Evans Farms, Inc. in the 10-K to obtain background on the Company's business. Your understanding of the company's business is necessary to discuss the below issues. I have not provided all of the details in the prompt, as I would like for you to navigate the 10-K.
• Look at the Consolidated Statements of Net Income to see whether Bob Evans Farms has reported discontinued operations.
• Read the "Description of the Business" in Note 1 to the financial statements. (Tip: Note 1 always provides a little background on the company.)
• Read the discussion on "Discontinued Operations" in Note 2 to the financial statements. (Tip: The notes will always provide additional information on large balances in the financial statements.)
• You will also need to read Note 2 to the financial statements of the January 27, 2017 10-Q, which is available on the SEC website. Recall that a 10-Q is filed weeks after the end of the quarter so a filing date is later than a quarter-end date.
Note: It is not acceptable to copy and paste language from the 10-K. Use your own language.
Step 2: Define the problem. That is, identify the "researchable question".
As you are new to accounting research, I will often give you the questions to research, but Professor Stover likely will not provide you with questions since that is more "real world". Even though I am giving you the questions, you do need to make sure you spend time on Step 1. You cannot appropriately answer the questions without understanding the company's business or the fact pattern. In other words, do not skip over steps. Following the steps really does help! In this assignment, your supervisor has instructed you to consider the following questions:
• Issue #1: Was it appropriate for Bob Evans Farms to present the Restaurants as discontinued operations in the January 27, 2017 10-Q?
• Issue #2: Should Bob Evans Farms have separately reported the gain on disposal of the Restaurants on the face of its annual Income Statement?
Note: The "face" of the Income Statement is a term often used in the real world. It means presenting/disclosing the information on the financial statement itself rather than disclosing the information in the notes.
Step 3: Stop and think: Based on what you know from class (and your general intuition from the conceptual framework), what accounting treatment will likely be appropriate?
You do not need to include this step explicitly in your memo, but it helps with the next step. Often, the item you are researching might be familiar to you, but you are uncertain about the precise answer. Using what you know to focus your search can be incredibly helpful.
Step 4: Search potentially relevant sources of guidance, copying any relevant guidance into a Word document
For this class, you will use the Accounting Standards Codification for research. (User ID: AAA51174and Password: N34FxPJ). You might not use all research that you find, but copying any possible relevant guidance into a Word document will help you to keep track of what you do find. Make sure you include the location of the guidance in your working document. It will help with writing your final memo. Here are some considerations for your search:
• Browse the topic in the codification that you feel will be most relevant
• Follow all leads that appear relevant. For example, if the codification uses a term you do not know, make sure you dig in by following any links or going to the glossary to understand the definition of the term and whether it applies to your setting.
• Review the guidance you have collected and weed out sources that appear less relevant
Please keep in mind that your textbook is not a citable source for a research assignment. You may use it to help you with Step 3, but you cannot use it to support your conclusions.
Step 5: Analyze any alternatives you have identified, considering the applicability of each one.
This step is not explicitly in your memo. However, try to keep track of your thought process as you are weighing your alternatives. You will use that thought process in the next step.
Step 6: Determine which accounting treatment is most appropriate and document your conclusion
After completing the first five steps, summarize your conclusion for each issue using two or three sentences. Place your conclusion for each issue into the Conclusion sections of the memo.
Step 7: Justify and explain your conclusion
Step 7 focuses on writing. Break down the writing of the memo into separate parts. You do not need to repeat information in the backgrounds. If it is mentioned once, you may assume that the reader remembers it.
Background and Facts of Memo: Summarize pertinent company background and state the purpose of your memo in "Background and Facts". See Appendix 1 and examples on Isidore for suggestions. You do not need to dive into details here. Pertinent details can be provided in the Background for specific issues.
Background for Each Issue: Summarize important information for the reader of your memo in the "Background" for Issue 1 (and then Issue 2). Act as if the reader knows nothing about the situation. Any key facts pertinent to your ultimate issue conclusion need to be provided by you in the background for the issue.
Research and Analysis for Each Issue: This section is the most challenging section of the memo to write. Carefully review the examples on Isidore and the tips in Appendix 1. In this Section, consider the following:
• Use succinct quotes from your research to explain and support the reasons for your conclusion.
• Explain and document the key factors at the Company that you considered when arriving at your conclusion. Make sure you link these factors back to specific research that you found.
• Most of all, make sure someone unfamiliar with the process can understand why/how you arrived at your conclusion.
Please keep in mind that this is not a homework problem where you are evaluated on copying and pasting the "right" research into the memo. Instead, this is a research and writing assignment where you are evaluated on your ability to identify appropriate research, interpret the research for the reader, and link that research back to your specific company situation to arrive at your conclusions.
Step 8: Review your memorandum for appropriate content and writing
Items to Consider as You Self-Review Your Work for Content
Your memorandum should be written in a manner that enables a person who is not involved with the issue to understand the issue background, relevant research, and your interpretation of the research.
• Would someone unfamiliar with the company and the issues be able to understand background on the company and the issues? In other words, are you providing the appropriate company background to allow someone to understand the issues in the context of the company?
• Do your research, your analysis, and your conclusion answer the question(s) being asked?
• Would someone unfamiliar with the research you are citing be able to understand what you found in the codification?Tip: You are encouraged to include well-cited quotes from the codification.
• Would someone unfamiliar with the company and the research you are citing be able to understand how you arrived at your conclusions? In other words, does your analysis (i.e., your discussion) illustrate how your research applies to the specific company facts? Tip: Do not make the reader "work" or require the reader to re-interpret the research. Interpret how the research applies to the specific circumstances for the reader.
• Are your conclusions clearly stated?
Items to Consider as You Self-Review Your Work for Writing
Your write-up should be clear, concise, complete, free of spelling and grammatical errors, and professional looking.
• Is your memo professional looking? For example, do you use the same font type and size throughout? Do you avoid "orphan" headings or subheadings? Have you removed the "Appendix 1" heading from the memo template?
• Do your tone and word choice fit your audience and the purpose of the memo (e.g., no contractions, no casual phrases, avoid use of "I" or "we", avoid use of strong or inflammatory words)?
• Is your writing grammatically correct?
- Do you refer to a company as an "it" (correct) as opposed to a "they" (incorrect)?
- Do you use "its" and other possessive words correctly?
- Do you use "their"/"there" and other words that are often confused correctly?
- Do you avoid sentence fragments?
- Do you avoid run on sentences?
- Do you use commas appropriately and where needed?
• Is your writing concise and easy to read? (Business memos do not require large words or complex phrases.)
• Do you avoid passive writing?
In addition, you may use writing support from the Knowledge Hub for this assignment. In the Knowledge Hub, all UD students can receive free research and writing assistance on any assignment, at any stage of the writing process.
Expectations for Writingand Research Assignment:
Acceptable Resources
• You may only use the resources mentioned above in this assignment. You do not need to cite the 10-K or sources mentioned above, but you do need to cite the Accounting Standards Codification.
• You must complete the assignment individually or with one classmate.You may not share your memo or your answers with other students. Using resources other than your textbook and those resources mentioned in this assignment (e.g., classmates, parents, CPA friends, other students' prior course memos, assignments that you find online) is a violation of the Honor Code. See the syllabus and Honor Code to understand implications of completing the assignment using unauthorized assistance.
Academic Honesty:
Here is some advice to help you avoid plagiarizing:
It is best to express the ideas you use in your own words. In the case of both individual and group work, words or ideas that come from someplace or someone else must be cited: "A good rule of thumb is this: Whenever you consciously borrow any important element from someone else, any sentence, any colorful phrase or original term, any plan or idea-say so, either in a footnote, bibliography, or parenthesis" (from "Academic Honesty in the Writing of Essays and Other Papers," Carleton College, 1990).
Attachment:- Income-Statement-Assignment.rar