Central Washington University
Department of Accounting
Accounting 350 – Fall 2009
Annual Report Project
NAME
The purpose of this project is to allow you to examine the effects of various accounting practices
and reporting procedures first hand. You will select an annual report of a major corporation for a
fiscal period beginning in 2008. This report will be turned in accompanied by the annual report
no later than December 2, 2009.
Company Name
Date of Annual Report
2
Annual Report SECTION I - Financial Statements
A. General Information:
1. Describe the principal business activity(ies) of the firm.
2. Where is the corporate headquarters located?
3. Over what stock exchange is the firm's stock traded?
4. Complete the following table:
*Date
E.P.S.
Dividends
Per Share
Closing Market
Price of
Common Stock
Price/
Earnings
Ratio
12/31/06
12/31/07
12/31/08
*Adjust dates if company's fiscal year is not the calendar year.
5. The Auditor's Report
a) Audit firm ____________________________
b) Audit opinion
______ Unqualified
______ Qualifed
______ Adverse
______ Disclaimer
c) If the opinion is not unqualified, describe reason
for opinion given.
d) Was a change in auditors evident? Was reason for change
disclosed?.
B. Income Statement
1. Title used _________________________________
2. Report format (multiple step, single step, other )
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C. Balance Sheet
1.Title used ___________________________________
2. Report format (report, account, other)
D. Retained Earnings
How was the change in Retained Earnings presented?
__________ Separate statement
__________ Part of Income Statement
__________ Other (please describe)
E. Statement of Cash Flows
1. What was the net change in cash during the year?
$ ________________________
2. What was the net change in working capital during the year?
$ ________________________
3. What approach (direct or indirect)
was used to compute cash from operations?
Cash from/used by:
Operations $ ________________________
Investing $ ________________________
Financing$ ________________________
4. Identify the three largest sources of cash and
compute the following:
Source
Amount
% of Total Sources
5. Identify the three largest uses of cash and complete the following:
Use or
Application
Amount
% of Total Application
4
F. Notes to the Financial Statement
List, in order presented in the annual report, the title used to describe each footnote
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
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Section II. - Specific Accounting Issues
A. Accounts and Notes Receivable:
Prior
Current
Year
Year
1. Current accounts receivable.
____________
___________
2. Estimated uncollectible accounts.
____________
___________
3. Net current accounts receivable.
____________
___________
4. Net sales.
____________
___________
5. # of days' sales in receivables.
____________
___________
6. Receivalbe Turnover
____________
___________
.
7. Describe (summarize) the accounting principles used by the firm to account for receivables.
B. Inventory
1. Summarize the valuation method(s) used by the firm to account for
inventory.
2. Complete the following table:
Prior Year
Current Year
Amount
Amount
Beginning Inventory
_______________
_______________
Ending Inventory
_______________
_______________
Net Sales
_______________
_______________
Cost of Goods Sold
_______________
_______________
Inventory turnover
Replacement cost or
current value
_______________
_______________
_______________
_______________
6
C. Investments
1. Summarize the accounting principles used by the firm to account for
marketable equity securities.
2. Complete the following table: Marketable Securities
Prior Year
Cost
Current Year
______________
______________
Market value ______________
______________
Book value
______________
______________
4. Complete the following table:
Prior Year
Current Year
Book value of long-term
investments in MS
____________
____________
Book value of
equity investments
____________
____________
____________
____________
____________
____________
Market value of
equity investments
(use year-end stock prices)
Income reported for
equity investments.
D. Property, Plant and Equipment:
1. Summarize the accounting principles used by the firm to account for
property, plant and equipment.
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2. Complete the following table:
Prior Year
Current Year
Depreciable fixed assets
_____________
_____________
Non-depreciable fixed assets
_____________
_____________
Depreciation expense
_____________
_____________
Total assets
_____________
_____________
Percent of total fixed assets
to total assets
_____________
_____________
E. Intangible Assets:
1. Does the annual report balance sheet indicate an amount assignable to
intangible assets or assets that you know to be intangible in nature?
If yes, complete the following items.
2. Complete the following table. Break out the intangibles by type. Be sure to
provide totals.
Intangible
Item
Method of
Amortization
Prior Year
Dollar Amount
Additions/
Reductions
Current Year
Dollar Amount
3. What is the percentage of intangible assets to
total assets?
________________
F. Long-Term Liabilities
1.Does the annual report balance sheet indicate that the firm has long-term
obligations?
If yes, complete the following items.
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2. Complete the following table for the five largest long- term obligations.
Description of Is the Debt
Obligation
Secured
Identify
Collateral
Interest
Rate
--- Amount --Beg/Yr End/Yr
G. Income Taxes
1. What was the effective average tax rate, given the
reported tax expense, on corporate earnings:
For the current year?
___________
For the prior year?
___________
If the difference between last year and this year's effective average tax
rate was > 5 percentage points(say 50% to 45%), provide an explanation
of the difference.
2. What was the effective average tax rate, given taxes paid, on corporate
earnings
For the current year?
__________
For the last year?
__________
3. In comparing the taxes paid with tax expense for both last year and this
year, a difference would suggest that taxable income was not equal to
financial statement income. Report the following:
LastYear
This Year
Current taxes (per income statement)
__________
__________
Deferred taxes (per income statement)
__________
__________
Estimate the amount of tax actually paid
__________
__________
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If deferred taxes were zero for both years, ignore the remaining items.
a. To what specific event(s) can you attribute the
deferred tax items for both years?
b. The balance sheet account(s) related to deferred
taxes were:
Current
Year
Prior Year
Increase
(Decrease)
Deferred Tax Assets
____________
____________
____________
Deferred Tax Liabilities
____________
____________
____________
Explain what caused the increase or decrease.
H. Leases (lessee only)
1. Capital Leases:
a. What is the total capital lease debt?
b. What is the % of total capital lease debt
to total debt?
c. Complete the following for assets under capital leases.
$ Gross
Value
Accumulated
Amortization
Net
Book Value
(1)Land
__________ __________ __________
(2) Buildings
__________ __________ __________
(3) Machinery &
Equipment
__________ __________ __________
(4) Other
(specify)
__________ __________ __________
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2. Operating Leases:
a. What is the total commitment (minimum annual fixed rental
payments) under non-cancelable operating leases?
b. What is the % of operating lease rental payments to
total revenues?
c. What is the present value (use a 12% rate) of the commitments under
non-cancelable operating leases for the next five years?
d. What is the percentage of (c) above to total assets.
I. Pensions
1. Does the firm offer a pension plan? YES NO
If yes, identify the type of plan:
Defined benefit plan _____ Defined contribution plan _____
Other (describe)
_____
2. Identify the actuarial cost method used.
___________
3. a. What is the accumulated benefit obligation?
_______________
b. What is the projected benefitobligation?
_______________
c. What are the plans' net assets available for benefits?
_______________
d. What is the accrued pension expense liability or prepayment
reflected in the balance sheet?
_______________
J. Stockholders Equity
1. Complete the following table:
Shares
Outstanding
Beg. of Yr
End of Yr
Total Paid
In Capitals
Stock Class
Shares
Authorized
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J. Stockholders Equity (continued)
b. What method does the company use to account for treasury
stock?
________ Cost
________ Par
________ Other (describe)
4. Summarize the EPS statistics as follows:
a. Basic
Prior Year Current Year
Earnings before extraordinary items
Extraordinary items, net of tax
Effect of accounting change,
net of tax
Net earnings
b. Diluted
Net earnings
6. Did the company report cumulative comprehensive income? If so, what
types of items contributed to the difference between net income and
comprehensive income. Also, how was the change in comprehensive
income for the year presented.
K. Segment Reporting
1. Does the company report segment information
a . By reportable industry segments?
YES NO
b .By geographic location?
YES NO
c. By major customer?
YES NO
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L. Interim Reporting
1. Are quarterly results of operations reported in the annual
report?
YES NO
If yes, complete the following:
lst Qtr.
2nd Qtr.
3rd Qtr.
4th Qtr.
Sales
_________
_________
________
________
Net income
_________
_________
________
________
Total assets
_________
_________
________
________
Return on
Total Assets
_________
_________
________
________
M. Accounting Changes
1. Did the company report a change in accounting
principle for either of the years?
YES NO
If yes, complete the following:
2. Briefly describe the nature of the accounting change.
3. The company used the
_______ a. current approach.
_______ b. retroactive approach to record the effects of the accounting change.
4. The effect on current year net income was
a. in dollars? Net income before
Net income after
$ __________
$ _____________
b. in percentage of effect to net income _________