/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} 19Q What approaches have been sugges... [FREE SOLUTION] | 91影视

91影视

Log out

Learning Materials

Features

Discover

Chapter 24: 19Q (page 1445)

What approaches have been suggested to overcome the seasonality problem related to interim reporting?

Short Answer

Expert verified

One of the recommended approaches to address the issue of regularity related to interim reporting is to normalize fixed non-manufacturing costs based on anticipated sales.

Step by step solution

01

Meaning of Interim Reporting

An interim reporting can be a financial report covering a period of less than one year. Interim reporting is used to communicate a company's performance prior to the conclusion of normal full-year financial reporting cycles. Not at all like annual statements, is interim reporting not required to be overseen.

02

Explaining the approaches that have been suggested to overcome the seasonality problem related to interim reporting

One suggestion has been to normalize the fixed non-manufacturing cost based on expected sales. The issue with this strategy is that future sales are unclear, and consequently, an extraordinary deal of subjectivity is involved.

Another approach is to charge as one-period costs that are incomprehensible to designate for any one period. Under this approach, the detailed results for a quarter will reflect only fixed costs and commitment to profits, which is basically a commitment edge approach.

To mitigate the issue of regularity, the profession recommends that companies subject to material seasonal varieties highlight the regular nature of their business and with data for the 12-month period ending on interim dates for the current and preceding years. Consider supplementing your annual report.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

(Post-Balance-Sheet Events) For each of the following subsequent (post-balance-sheet) events, indicate whether a company should (a) adjust the financial statements, (b) disclose in notes to the financial statements, or (c) neither adjust nor disclose.

  1. Settlement of federal tax case at a cost considerably in excess of the amount expected at year-end.
  2. Introduction of a new product line.
  3. Loss of assembly plant due to fire.
  4. Sale of a significant portion of the company鈥檚 assets.
  5. Retirement of the company president.
  6. Prolonged employee strike.
  7. Loss of a significant customer.
  8. Issuance of a significant number of shares of common stock.
  9. Material loss on a year-end receivable because of a customer鈥檚 bankruptcy.
  10. Hiring of a new president.
  11. Settlement of prior year鈥檚 litigation against the company (no loss was accrued).
  12. Merger with another company of comparable size.

Answer each of the questions in the following unrelated situations.

d) A company has current assets of \(600,000 and current liabilities of \)240,000. The board of directors declares a cash dividend of $180,000. What is the current ratio after the declaration but before payment? What is the current ratio after the payment of the dividend?

Tina Bailey, a student of intermediate accounting, was heard to remark after a class discussion on segment reporting, 鈥淎ll this is very confusing to me. First we are told that there is merit in presenting the consolidated results, and now we are told that it is better to show segmental results. I wish they would make up their minds.鈥� Evaluate this comment.

Distinguish between ratio analysis and percentage analysis relative to the interpretation of financial statements. What is the value of these two types of analyses?

Snider Corporation, a publicly-traded company, is preparing the interim financial data which it will issue to its shareholders at the end of the first quarter of the 2017鈥�2018 fiscal year. Snider鈥檚 financial accounting department has compiled the following summarized revenue and expense data for the first quarter of the year.

Sales revenue \(60,000,000

Cost of goods sold 36,000,000

Variable selling expenses 1,000,000

Fixed selling expenses 3,000,000

Included in the fixed selling expenses was the single lump-sum payment of \)2,000,000 for television advertisements for the entire year.

Instructions

a) Snider Corporation must issue its quarterly financial statements in accordance with IFRS regarding interim financial reporting.

  1. Explain whether Snider should report its operating results for the quarter as if the quarter were a separate reporting period in and of itself, or as if the quarter were an integral part of the annual reporting period.
See all solutions

Recommended explanations on Business Studies Textbooks

Change Management

Read Explanation

Intermediate Accounting

Read Explanation

Managers

Read Explanation

Business Development

Read Explanation

Business Case Studies

Read Explanation

Strategy

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.