ACCT323, Annual Report Review – BONUS ASSIGMENT (worth 20 points)
In this bonus assignment, students will complete an overview of the material covered this quarter by reviewing
the annual report of a public company. This bonus assignment is separate from the reading report bonus.
Obtain the annual report of U.S.-based corporation whose stock is traded publicly. Refer to both the financial
statements and to the notes to the financial statements. Unless otherwise stated, answer the questions for the most
recent year reported.
1. Earnings-per-Share (Textbook Ch. 16):
(A) T or F: No potentially dilutive securities exist, so basic EPS and dilated EPS are the same.
(B) If dilutive securities exist, describe their nature (e.g. stock options, convertible bonds, etc.).
2. Investments (Textbook Ch. 17):
(A) In the most recent year, did any AFS securities exist with unrealized gains/losses shown in
accumulated comprehensive income?
(B) Did any trading securities or HTM securities exist?
3. Revenue Recognition (Textbook Ch. 18):
In the note to the financial statements about revenue recognition, describe the principles used.
4. Deferred Income Taxes (Textbook Ch. 19):
(A) Which is greater: total deferred tax assets or deferred tax liabilities?
(B) What are the largest two deferred tax items?
(C) How much, if any, is the deferred portion of income tax expense?
5. Pensions (Textbook Ch. 20):
(A) Are the defined benefit retirement plans over or under funded?
(B) Did any amendments to the pension plan (prior service costs) occur?
(C) For the latest year, what were discount (settlement) rate and expected return on plan assets? Are
these reasonable in your opinion?
6. Leases (Textbook Ch. 21):
Did the company enter into leases? If so, are the leases mostly operating or capital leases?
7. Accounting Changes (Textbook Ch. 22):
(A) Were any changes in accounting principle, entity, or estimate reported?
(B) Were any litigation items reported as contingencies?
8. Statement of Cash Flows (Text Ch. 23):
(A) Was the direct or indirect method used? How can you tell?
(B) Were there any significant non-cash transactions reported? If so, describe?
(C) Based on section totals, assess the overall cash flow pattern for the latest year as normal/healthy or
abnormal/unhealthy. Explain.
9. Full Disclosure in Financial Reporting (Textbook Ch. 24):
(A) What segments, if any, were reported?
(B) Refer to the audit report of the independent registered accounting firm. Did the auditors give a clean
(an unmodified) opinion? How can you tell?
(C) Who were the auditors and how long after fiscal year end did it take them to complete their audit?