Case Scenario: Investments & Revenue Recognition
Question 1. On the third tab of your Excel file, report on the investments your company has and their dollar amounts. Also report the amount of interest, dividends, and gains on sale of investments that occurred in the most recent year. Be sure to include any investments in other companies.
Question 2. On the fourth tab of your Excel file, report the sales of your company over the last 3 years and the net income generated from each year of sales. Try to determine if there are any trends upward or downward in terms of sales or net income. Present charts/graphs as necessary.
Question 3. On your Word file, explain the types of investments your company has. By reviewing their financial statement notes, report on the presentation of investments on the financial statements (fair value, historical cost, equity method, etc.). Also present the amount of cash your company has on hand and whether you feel they are making good use of that cash or if they should be investing more.
Question 4. On your Word file, explain the process of revenue recognition for your company (installment, percentage-of-completion, etc.). You can find this information in the notes to the financial statements. Look at a competitor’s financial statements and determine whether that company uses the same revenue recognition principal. Report similarities and differences in your writing.