Overview
According to the AICPA (American Institute of Certified Public Accountants), a CPA in today’s environment must not only have a high level of technical
competence and a sense of commitment to service, but must also have good communications and analytical skills and the ability to work well with people.
Employers are looking for individuals who have the ability to analyze and evaluate complex business problems and the interpersonal skills and maturity to make
decisions in a client and customer service environment.
By continuing to use the company that you adopted in ACC 610, you will apply the technical competence and other skills required by today’s CPAs. Through casestudy analysis, you will develop skills such as communication, presentation, and interpersonal relations in conjunction with technical accounting knowledge. If
you have transferred directly into ACC 620 and have not had the opportunity to choose a company, you will do so at this time. You will also use this company in
ACC 630. Throughout ACC 620 and ACC 630, you will apply the concepts you are learning using the financial data and business scenarios of a prominent retail
company. You may choose from Wal-Mart, Target, Sears, Kroger, or Amazon.
ACC 620: Financial Reporting II is a continuation of ACC 610. In ACC 620, your focus in the final project will be on developing skills in critical thinking and applying
accounting theories and practices according to generally accepted accounting principles (GAAP). You will be analyzing situations and communicating results to
decision makers with an emphasis on stockholders’ equity, income measurement, income taxes, pensions, leases, and statements of changes in financial
positions.
The project is divided into three milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final
submissions. These milestones will be submitted in Modules Three, Five, and Seven. The final product will be submitted in Module Nine.
In this assignment, you will demonstrate your mastery of the following course outcomes: Analyze stockholder sections of balance sheets for how they inform stakeholders of equity positioning
Interpret income measurement for determining the accuracy of financial statements
Analyze the effect of income taxes and their impact on financial statement accounts for appropriate estimation and planning
Evaluate various pension plans for their implications on balance sheets and income statements
Differentiate between operating and capital leases for addressing their impact on balance sheets and income statements
Analyze complex financial statements for informing stakeholders in making economic decisions Prompt
You will continue to work with the retail company you have chosen either in ACC 610 or at the beginning of this class. If you are transferring into SNHU’s
financial reporting courses, you will choose from five retail companies (Wal-Mart, Target, Sears, Kroger, or Amazon). This company will be yours throughout the
Financial Reporting Series (ACC 610, ACC 620, ACC 630). You will adopt this company to apply learning concepts in authentic scenarios. Through this assessment,
you will continue building your Financial Reporting Series portfolio.
Your portfolio pieces for this project will include memos, spreadsheets, and a final report.
At the most recent strategic planning meeting, the board of directors of your company has voted to issue additional stock to raise capital for major expansions
for the company in the next five years. The board is considering issuing a total amount of stock worth $5 million. The CEO has asked you to analyze the impact of
issuing this stock on the income statement, statement of retained earnings, balance sheet, and cash flow statement. Take the most recent financial statements
and prepare a set of projected financial statements based on the given assumptions.
Specifically, the following critical elements must be addressed:
I. Stockholders’ Equity
A. Determine how your company got its initial financial start in terms of debt (liabilities) or equity (capital). Support your response.
B. Analyze the equity section of your company’s balance sheet as compared to your company’s industry average. Rate the company’s performance
against its competitors.
C. Review your company’s dividend policy and its history. Based on the information, discuss the trends over the past year. II. Income Measurement/Revenue Recognition
A. Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) came together on a unified project to
outline the accounting principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and IFRS. Research IAS-18,
Revenue, and discuss how it would apply to your company.
B. Review your company’s revenue over the past two years. Analyze the change in revenue (increase/decrease) and give the reasons for this
change.
C. Reflecting upon your company’s balance sheet, identify the unearned revenue accounts listed. How does your company handle the proper
accounting treatment with regard to recognizing revenue from unearned revenue accounts? III. Income Taxes
A. If Congress voted to eliminate corporate taxes, what would be the effect on your company’s income statement and balance sheet? Defend your
response.
B. Calculate the income tax rate for your chosen company. What effect will an increase in income of $2,000,000 have on your company?
C. What are the effects on the balance sheet and income statement? Justify your response.
D. How much did your company pay in foreign taxes last year? What percentage of its income is United States vs. foreign? IV. Leases
A.
B.
C.
D. What are the differences between operating and capital leases?
Describe the particular leases of your company based on the liability section of your company’s balance sheet.
What impact have the leases had on the company’s financial statements for the most recent year?
Discuss the advantages and disadvantages of leasing a building versus purchasing one. V. Pensions
Address the following elements in the form of a memo to your CEO:
A. From your company’s financial information, what type of pension plan does it have? Discuss the reasons why your company has chosen this
particular plan.
B. What was the effect of the pension plan on your company’s financial statements? Defend your response.
C. Your CEO has informed you—the controller of your company—that the board of directors has made the decision to look at other options of
types of retirement plans. Investigate what other alternatives would be available, and determine which would be appropriate for your particular
company. VI. Statement of Changes in Financial Position
A. From the perspective of an investor, determine whether or not you would invest in your chosen company based on the company’s statement of
changes in financial position (SCFP). Support your opinion.
B. Review the company’s SCFP for any concerns that may need to be addressed. As controller of your company, prepare a memo to your CEO,
giving a summary report for possible recommendations. VII. Report for CEO
At the most recent strategic planning meeting, the board of directors of your company has voted to issue additional stock to raise capital for major
expansions for the company in the next five years. The board is considering $5 million. Take the most recent financial statements and prepare a set of
projected financial statements based on the given assumptions. The CEO requests that you prepare a written report (including the financial statements)
for her.
A. Generate a projected income statement based on the given scenario.
B. Analyze the impact on the income statement based on the given scenario.
C. Generate a projected statement of retained earnings based on the given scenario.
D. Analyze the impact on the statement of retained earnings based on the given scenario.
E. Generate a projected balance sheet based on the given scenario.
F. Analyze the impact on the balance sheet based on the given scenario.
G. Generate a projected cash flow statement based on the given scenario.
H. Analyze the impact on the cash flow statement based on the given scenario. Milestones
Milestone One: Stockholders’ Equity and Revenue Recognition
In Module Three, you will submit critical elements I and II for review by your instructor. It is important that you incorporate your instructor’s feedback from this
milestone into your final submission. This milestone will be graded with the Milestone One Rubric.
Milestone Two: Income Taxes and Pensions
In Module Five, you will submit critical elements III and V for review by your instructor. It is important that you incorporate your instructor’s feedback from this
milestone into your final submission. This milestone will be graded with the Milestone Two Rubric.
Milestone Three: Leases and Changes in Financial Position
In Module Seven, you will submit critical elements IV and VI for review by your instructor. It is important that you incorporate your instructor’s feedback from
this milestone into your final submission. This milestone will be graded with the Milestone Three Rubric.
Final Submission: Financial Reporting Series Portfolio
In Module Nine, you will submit your final project. It should be a complete, polished artifact containing all of the critical elements of the final product, including
critical element VII: Report for the CEO. It should reflect the incorporation of feedback gained throughout the course. This submission will be graded with the
Final Project Rubric. Deliverables
Milestone
One
Two
Three Deliverable
Stockholders’ Equity and Revenue Recognition Module Due
Three Grading
Graded separately; Milestone One Rubric Five Graded separately; Milestone Two Rubric Leases and Changes in Financial Position Seven Graded separately; Milestone Three Rubric Final Submission: Financial Reporting Series
Portfolio Nine Graded separately; Final Project Rubric Income Taxes and Pensions Final Project Rubric
Guidelines for Submission: Your portfolio should be 6–10 pages (including spreadsheets, memos, and summary), double-spaced, with one-inch margins, 12point Times New Roman font, and APA format.
Instructor Feedback: This activity uses an integrated rubric in Blackboard. Students can view instructor feedback in the Grade Center. For more information,
review these instructions.
Critical Elements
Stockholders’
Equity: Initial
Financial Start Exemplary
Meets “Proficient” criteria and
uses concrete examples to
substantiate claims
(100%) Stockholders’
Equity: Industry
Average Meets “Proficient” criteria and
uses concrete examples to
substantiate claims
(100%) Stockholders’
Equity: Dividend
Policy Meets “Proficient” criteria, and
discussion is exceptionally clear
and contextualized
(100%) Income
Measurement/
Revenue
Recognition: IAS-18 Meets “Proficient” criteria and
uses concrete examples to
substantiate claims
(100%) Income
Measurement/
Revenue
Recognition:
Revenue Meets “Proficient” criteria, and
rationale is well supported with
concrete evidence
(100%) Proficient
Determines whether the
company obtained its startup
financing from debt or equity
and supports response
(90%)
Analyzes the company’s equity
section as compared to the
industry average and accurately
rates the company’s
performance against
competitors
(90%)
Analyzes the company’s
dividend policy and its history
to discuss the trends over the
past year
(90%)
Discusses IAS-18’s application
to the company
(90%) Needs Improvement
Determines whether the
company obtained its startup
financing from debt or equity,
but does not support response
(70%)
Analyzes the company’s equity
section as compared to the
industry average, but does not
accurately rate the company’s
performance against
competitors
(70%)
Analyzes the company’s
dividend policy and its history,
but does not discuss the trends
over the past year
(70%)
Discusses IAS-18’s application
to the company, but discussion
is cursory or lacks detail
(70%) Not Evident
Does not identify how the
company obtained its startup
financing
(0%) Analyzes the change in revenue
and gives the reasons for the
change
(90%) Analyzes the change in revenue,
but does not give the reasons
for the change
(70%) Value
4.8 Does not analyze the company’s
equity section
(0%) 4.8 Does not analyze the company’s
dividend policy
(0%) 4.8 Does not research IAS-18
(0%) 4.8 Does not analyze the change in
revenue
(0%) 4.8 Income
Measurement/
Revenue
Recognition:
Unearned Revenue Meets “Proficient” criteria and
displays a nuanced
understanding of the
company’s internal processes
(100%) Income Taxes:
Corporate Taxes Meets “Proficient” criteria, and
defense is well supported with
quantitative evidence
(100%) Income Taxes:
Increase in Income Meets “Proficient” criteria, and
determination is well supported
with quantitative evidence
(100%) Accurately calculates the
income tax rate for the
company and determines the
effect an increase in income
would have on the company
(90%) Income Taxes:
Effects Meets “Proficient” criteria, and
justification is well supported
with quantitative evidence
(100%) Accurately determines the
effects on the balance sheet
and income statement and
justifies response
(90%) Income Taxes:
Foreign Taxes Identifies unearned revenue
accounts listed as well as how
the company handles the
proper accounting treatment
with regard to recognizing
revenue from unearned
revenue accounts
(90%)
Accurately describes the effect
on the company’s income
statement and balance sheet if
Congress voted to eliminate
corporate taxes, and defends
response
(90%) Accurately determines how
much the company paid in
foreign taxes last year and what
percentage of its income was
United States versus foreign
(100%) Identifies unearned revenue
accounts listed, but does not
determine how the company
handles the proper accounting
treatment with regard to
recognizing revenue from
unearned revenue accounts
(70%)
Describes the effect on the
company’s income statement
and balance sheet if Congress
voted to eliminate corporate
taxes, but does not defend
response, description contains
inaccuracies, or defense is
illogical
(70%)
Calculates the income tax rate
for the company and
determines the effect an
increase in income would have
on the company, but calculation
or determination contains
inaccuracies
(70%)
Determines the effects on the
balance sheet and income
statement, but determination
contains inaccuracies, does not
justify determination, or
justification is illogical
(70%)
Determines how much the
company paid in foreign taxes
last year and what percentage
of its income was United States
versus foreign, but
determination contains
inaccuracies
(70%) Does not identify unearned
revenue accounts listed
(0%) 4.8 Does not describe the effect on
the company’s income
statement and balance sheet
(0%) 4.8 Does not calculate the income
tax rate for the company
(0%) 4.8 Does not determine the effects
on the balance sheet and
income statement
(0%) 4.8 Does not determine how much
the company paid in foreign
taxes last year
(0%) 4.8 Leases: Operating
and Capital Meets “Proficient” criteria, and
description is exceptionally
clear and contextualized
(100%) Comprehensively describes the
differences between operating
and capital leases
(90%) Leases: Particular Meets “Proficient” criteria, and
description is exceptionally
clear and contextualized
(100%) Describes the particular leases
of the company based on the
liability section of the
company’s balance sheet
(90%) Leases: Impact Meets “Proficient” criteria, and
defense is well supported with
concrete examples
(100%) Comprehensively discusses the
impact the leases had on the
company’s financial statements
for the most recent year
(90%) Leases: Building Meets “Proficient” criteria and
uses concrete examples to
illustrate claims
(100%) Comprehensively discusses the
advantages and disadvantages
of leasing a building versus
purchasing one
(90%) Meets “Proficient” criteria and
shows a nuanced understanding
of the company’s decisionmaking rationale
(100%)
Meets “Proficient” criteria, and
defense is well supported with
concrete examples
(100%) Discusses the type of pension
plan the company has and the
reasons why the company has
chosen that plan
(90%)
Accurately determines the
effect of the pension plan on
the company’s financial
statements and defends
response
(90%) Pensions: Pension
Plan Pensions: Effect Describes the differences
between operating and capital
leases, but description is
cursory or lacks detail
(70%)
Describes the particular leases
of the company, but does not
base description on the liability
section of the company’s
balance sheet
(70%)
Discusses the impact the leases
had on the company’s financial
statements for the most recent
year, but discussion is cursory
or lacks detail
(70%)
Discusses the advantages and
disadvantages of leasing a
building versus purchasing one,
but discussion is cursory or
lacks detail
(70%)
Discusses the type of pension
plan the company has, but does
not discuss the reasons why the
company chose that plan
(70%)
Determines the effect of the
pension plan on the company’s
financial statements, but
determination lacks accuracy,
does not defend determination,
or defense is weak or illogical
(70%) Does not describe the
differences between operating
and capital leases
(0%) 4.8 Does not describe the particular
leases of the company
(0%) 4.8 Does not discuss the impact the
leases had on the company’s
financial statements
(0%) 4.8 Does not discuss the
advantages and disadvantages
of leasing a building versus
purchasing one
(0%) 4.8 Does not identify the type of
pension plan the company has
(0%) 4.8 Does not determine the effect
of the pension plan on the
company’s financial statements
(0%) 4.8 Pensions: Other
Options Meets “Proficient” criteria and
is well supported with concrete
examples
(100%) Evaluates other types of
retirement plans available and
determines which would be
appropriate for the company
(90%) Statement of
Changes in Financial
Position: Invest Meets “Proficient” criteria, and
opinion is well supported with
concrete examples
(100%) Determines whether or not to
invest in the company based on
the SCFP and supports opinion
(90%) Statement of
Changes in Financial
Position:
Recommendations Meets “Proficient” criteria, and
recommendations are well
supported and logical
(100%) Composes a memo to the CEO
making recommendations that
would effectively resolve any
concerns identified in the SCFP
(90%) Report for CEO:
Projected Income
Statement
Report for CEO:
Impact on the
Income Statement Meets “Proficient” criteria and
cites specific, relevant examples
from the projected statement
(100%) Report for CEO:
Projected Statement
of Retained Earnings Report for CEO:
Impact on the
Statement of
Retained Earnings Generates a projected income
statement based on the given
scenario
(100%)
Analyzes the impact on the
income statement based on the
given scenario
(90%)
Generates a projected
statement of retained earnings
based on the given scenario
(100%) Meets “Proficient” criteria and
cites specific, relevant examples
from the projected statement
(100%) Analyzes the impact on the
statement of retained earnings
based on the given scenario
(90%) Evaluates other types of
retirement plans available, but
does not determine which
would be appropriate for the
company
(70%)
Determines whether or not to
invest in the company based on
the SCFP, but does not support
opinion, or support for opinion
is weak or illogical
(70%)
Composes a memo to the CEO
making recommendations to
address concerns identified in
the SCFP, but recommendations
would not effectively resolve
concerns
(70%)
Generates a projected income
statement, but does not use the
given scenario
(70%)
Analyzes the impact on the
income statement, but does not
base analysis on the given
scenario
(70%)
Generates a projected
statement of retained earnings,
but does not use the given
scenario
(70%)
Analyzes the impact on the
statement of retained earnings,
but does not base analysis on
the given scenario
(70%) Does not evaluate other types
of retirement plans available
(0%) 4.8 Does not determine whether or
not to invest in the company
(0%) 1.6 Does not compose a memo to
the CEO
(0%) 1.6 Does not generate a projected
income statement
(0%) 1.6 Does not analyze the impact on
the income statement
(0%) 1.6 Does not generate a projected
statement of retained earnings
(0%) 1.6 Does not analyze the impact on
the statement of retained
earnings
(0%) 1.6 Report for CEO:
Projected Balance
Sheet
Meets “Proficient” criteria and
cites specific, relevant examples
from the projected statement
(100%) Generates a projected balance
sheet based on the given
scenario
(100%)
Analyzes the impact on the
balance sheet based on the
given scenario
(90%) Report for CEO:
Impact on the Cash
Flow Statement Meets “Proficient” criteria and
cites specific, relevant examples
from the projected statement
(100%) Generates a projected cash flow
statement based on the given
scenario
(100%)
Analyzes the impact on the cash
flow statement based on the
given scenario
(90%) Articulation of
Response Submission is free of errors
related to citations, grammar,
spelling, syntax, and
organization and is presented in
a professional and easy-to-read
format
(100%) Report for CEO:
Impact on the
Balance Sheet Report for CEO:
Projected Cash Flow
Statement Submission has no major errors
related to citations, grammar,
spelling, syntax, or organization
(90%) Generates a projected balance
sheet, but does not use the
given scenario
(70%)
Analyzes the impact on the
balance sheet, but does not
base analysis on the given
scenario
(70%)
Generates a projected cash flow
statement, but does not use the
given scenario
(70%)
Analyzes the impact on the cash
flow statement, but does not
base analysis on the given
scenario
(70%)
Submission has major errors
related to citations, grammar,
spelling, syntax, or organization
that negatively impact
readability and articulation of
main ideas
(70%) Does not generate a projected
balance sheet
(0%) 1.6 Does not analyze the impact on
the balance sheet
(0%) 1.6 Does not generate a projected
cash flow statement
(0%) 1.6 Does not analyze the impact on
the cash flow statement
(0%) 1.6 Submission has critical errors
related to citations, grammar,
spelling, syntax, or organization
that prevent understanding of
ideas
(0%) 2.4 Total 100%
