Assignment 1: Full Disclosure in Financial Reporting - Verizon Communications
According to the textbook, the goal of financial reporting is to report financial information that is transparent and complete and truthfully report the financial performance of a company. Investors and other interested parties need to read and understand all aspects of financing reporting.
Use the Internet to research Verizon Communications' financial statements, annual report, notes to the financial statements, president's letter, and management discussion and analysis from the most recent year in order to complete this assignment.
Write a five to six (5-6) page paper in which you:
1. Discuss the disclosure requirement on accounting policies, and identify at least two (2) examples of the most commonly required disclosure. Explain the key ways in which the examples you provided are useful to financial statement users. Analyze Verizon Communications' disclosure on accounting policies, and give your opinion on whether or not the information is helpful for decision making. Provide a rationale for your response.
2. Explain the importance of the management discussion and analysis section of an annual report. Select three (3) items from Verizon's management and discussion analysis of the annual report that could be useful to potential investors. Provide three (3) specific examples of how the three (3) items you selected could influence a potential investor's decision to invest in Verizon.
3. Describe segmented information, and explain the way in which companies determine segments. Identify at least three (3) advantages and three (3) disadvantages of segmented financial data. Give your opinion on whether or not the advantages outweigh the disadvantages. Outline the manner in which Verizon segments its financial data. Suggest key actions that Verizon's management can take in order to improve the company's segmented financial data. Provide a rationale for your response.
4. Analyze the various types of auditor's reports, and determine the impact that the auditor's report has on a company's ability to obtain financing from a bank. Identify the type of auditor's report issued on Verizon, and speculate the manner in which you believe banks will perceive Verizon's auditor's report.
The specific course learning outcomes associated with this assignment are:
- Analyze and explain the requirements for full disclosure in financial reporting.
- Evaluate the importance and impact of full disclosure or non-disclosure in accounting practices.
- Use technology and information resources to research issues in intermediate accounting.
- Write clearly and concisely about intermediate accounting using proper writing mechanics.
Assignment 2: Foreign Currency Risk
Albert, CEO of XYZ, Inc., desires to expand the company's sales through exports to three (3) foreign subsidiaries. Albert knows that the target subsidiaries are located in countries that require transactions to be denominated in the local currencies. Albert has researched foreign currency risk and knows that there is accounting exposure in accounting statements, operating exposure in future cash flows, and transaction exposure in outstanding obligations. Albert does not understand how these risks apply to XYZ, Inc. under his proposal or if there are any mitigating risk strategies available. Albert requests you, the head of the Risk Management division, to prepare a report that he can present to the Board of Directors on the potential foreign currency risk if XYZ, Inc. expands sales into these markets. XYZ, Inc.'s reporting currency is the U.S. dollar and the subsidiaries would purchase the merchandise as inventory items.
Note: You may create and / or make all necessary assumptions needed for the completion of this assignment.
Write a three to five (3-5) page paper in which you:
1. Specify accounting exposure, operating exposure, and transaction exposure. Determine the main financial statement effects of each type of exposure if XYZ, Inc. expands as proposed.
2. Determine two (2) types of hedges regarding foreign exchange risk, in general, and recommend the most advantageous risk mitigation strategy for XYZ, Inc. Provide support for your rationale. Note: Refer to Chapter 9 of the textbook for more information on corporate strategies regarding hedging foreign exchange risk.
3. Determine the main accounting assumptions underlying each currently used method (e.g., current rate method and temporal method). Determine the fundamental differences in balance sheet exposure from the application of each method.
4. Suggest the translation method that XYZ, Inc. should use in order to minimize balance sheet exposure. Provide support for you choice.
5. Compare the U.S. GAAP approach to the IFRS approach of translating foreign currency financial statements. Determine the main similarities and differences between the two (2) methods of translation. Assuming one (1) of the subsidiaries of XYZ, Inc. is located in a highly inflationary country, determine the appropriate translation method under FASB and provide the theoretical justification for your response.
6. Use at least two (2) quality academic resources in this assignment. Note: Wikipedia and other Websites do not qualify as academic resources.
The specific course learning outcomes associated with this assignment are:
- Examine and prepare the accounting entries for intra-entity asset transactions.
- Examine the impact that specific differences between IFRS and U.S. GAAP have on financial statements.
- Explain foreign currency transactions and analyze the accounting requirements for the translation of financial statements of foreign entities.
- Use technology and information resources to research issues in advanced accounting.
- Write clearly and concisely about advanced accounting using proper writing mechanics.