Siemens AG, a German company, is Europe’s largest engineering and electronics company. The company prepares its financial statements according to IFRS. Required: 1. Use the Internet to locate the most recent financial report for Siemens. The address is www.siemens.com. Locate the significant accounting policies disclosure note. 2. How does the company account for research and development expenditures? Does this policy differ from U.S. GAAP?

Based on the fifth problem in the problem set A of this chapter

The General Ledger tool in Connect automates several of the procedural steps in the accounting cycle so that the accounting professional can focus on the impacts of each transaction on the various financial reports. The following General Ledger questions highlight the operating cycle of a merchandising company. In each case, the trial balance is automatically updated from the journal entries recorded.

How is a change in accounting principle distinguished from a "change in accounting estimate effected by a change in accounting principle"?

The City of Hampshore is currently preparing financial statements for the past fiscal year. The city manager is concerned because the city encountered some unusual transactions during the current fiscal period and is unsure as to their handling.

Required
Find a copy (either in hard copy or online) of GASB’s Codification of Governmental Accounting and Reporting Standards. Either through an online search or a review of the index, answerthe question.

For government accounting, what is the definition of a special item?

Listed below are five items that may-or may not-require disclosure in the notes that accompany financial statements.
c. Shortly after the balance sheet date, but before the financial statements are issued, one of Coast Foods's two processing plants was damaged by a tornado. The plant will be out of service for at least three months.

Instructions
For each case, explain what, if any, disclosure is required under generally accepted accounting principles. Explain your reasoning.

Assume a firm is considering a new project that requires an initial investment and has equal sales and costs over its life. Will the project reach the accounting, cash, or financial break-even point first? Which will it reach next? Last? Will this ordering always apply?

Select a company that you can visit in person or interview on the telephone. Call ahead to the company to arrange a time when you can interview an employee (preferably an accountant) who helps prepare the annual financial statements. Inquire about the following aspects of its accounting cycle:

1. Does the company prepare interim financial statements? What time period(s) is used for interim statements?

2. Does the company use the cash or accrual basis of accounting?

3. Does the company use a work sheet in preparing financial statements? Why or why not?

4. Does the company use a spreadsheet program? If so, which software program is used?

5. How long does it take after the end of its reporting period to complete annual statements?

Discuss whether Colston Company correctly reported the following items in the financial statements:

b. In a recent year, the company voluntarily changed its method of accounting for long-term construction contracts from the percentage of completion method to the completed contract method. Both methods are acceptable under generally accepted accounting principles. The cumulative effect of this change was reported as a separate component of income in the current period income statement.

The funds of Lake City include a debt service fund, a capital projects fund, and an internal service fund.

Required

Explain the use of debt service funds. Include what they account for, the basis of accounting used, unusual entries and accounts, and their financial statements.

In Vogue, a T-shirt business, is growing fast and needs a better accounting information system. Consider the features of an effective system. Which features are most important? Why? Which feature must you consider if your financial resources are limited?

An example of an accounting assumption is a(n) a. accounting system. b. accounting statement. c. going concern. d. computerized accounting.

As part of the year-end audit, you are discussing the disclosure checklist with your client. The checklist identifies the items that must be disclosed in a set of GAAP financial statements. The client is surprised by the disclosure item related to accounting policies. Specifically, since the audit report will attest to the statements being pre- pared in accordance with GAAP, the client questions the accounting policy checklist item. The client has asked you to conduct some research to verify the accounting policy disclosures.

Instructions

If your school has a subscription to the FASB Codification, log in and prepare responses to the following. Provide Codification references for your responses,

a. In general, what should disclosures of accounting policies encompass?

b. List some examples of the most commonly required accounting policy disclosures.

Air France–KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF’s financial statements and disclosure notes for the year ended December 31, 2013, are provided with all new textbooks. This material also is available at http://www.airfranceklm-finance.com . Required: 1. What amounts did AF report for the following items for the year ended December 31, 2013? a. Total revenues b. Income from current operations c. Net income or net loss (AF equity holders) d. Total assets e. Total equity 2. What was AF’s basic earnings or loss per share for the year ended December 31, 2013? 3. Examine Note 4.1.1 of AF’s annual report. What accounting principles were used to prepare AF’s financial statements? Under those accounting principles, could AF’s financial information differ from that of a company that exactly followed IFRS as published by the IASB? Explain.

Which type of firm is more likely to experience a loss of customers in the event of financial distress:

a. Campbell Soup Company or Intuit, Inc. (a maker of accounting software)?

b. Allstate Corporation (an insurance company) or Adidas AG (maker of athletic footwear, apparel, and sports equipment)?