Question

Information for year 2017 are provided. Can you be more expilcit about what you need? you have every information already

Balance Sheet(values in 000's)

	period ending 1/28/2017 1/30/2016 current assets cash and cash equivalents 2,512,000 4,046,000 short-term investments 0 0 net receivables 0 0 inventory 8,039,000 8,601,000 Other Current Assets 1,169,000 1,483,000 Total Current Assets 11,990,000 14,130,000 Long-Term Assets Long-Term Investments 0 0 Fixed Assets 24,658,000 25,217,000 Goodwill 0 0 Intangible Assets 0 0 Other Assets 783,000 915,000 Deferred Asset Charges 0 0 Total Assets 37,431,000 40,262,000 Current Liabilities Accounts Payable 10,989,000 11,654,000 Short-Term Debt / Current Portion of Long-Term Debt 1,718,000 815,000 Other Current Liabilities 1,000 153,000 Total Current Liabilities 12,708,000 12,622,000 Long-Term Debt 11,031,000 11,945,000 Other Liabilities 1,878,000 1,915,000 Deferred Liability Charges 861,000 823,000 Misc. Stocks 0 0 Minority Interest 0 0 Total Liabilities 26,478,000 27,305,000 Stock Holders Equity Common Stocks 46,000 50,000 Capital Surplus 5,661,000 5,348,000 Retained Earnings 5,884,000 8,188,000 Treasury Stock 0 0 Other Equity ($638,000) ($629,000) Total Equity 10,953,000 12,957,000 Total Liabilities & Equity 37,431,000 40,262,000

Cash flow (values in000's)

period ending	1/28/2017	1/30/2016
Net Income	2,737,000	3,363,000
Cash Flows-Operating Activities
Depreciation	2,298,000	2,213,000
Net Income Adjustments	508,000	($812,000)
Changes in Operating Activities
Accounts Receivable	0	0
Changes in Inventories	293,000	($316,000)
Other Operating Activities	36,000	227,000
Liabilities	($543,000)	579,000
Net Cash Flow-Operating	5,436,000	5,958,000
Cash Flows-Investing Activities
Capital Expenditures	($1,547,000)	($1,438,000)
Investments	28,000	24,000
Other Investing Activities	46,000	1,922,000
Net Cash Flows-Investing	$1,473,000)	508,000
Cash Flows-Financing Activities
Sale and Purchase of Stock	($3,485,000)	($3,183,000)
Net Borrowings	($664,000)	($85,000)
Other Financing Activities	0	0
Net Cash Flows-Financing	($5,497,000)	($4,630,000)
Effect of Exchange Rate	0	0
Net Cash Flow	($1,534,000)	1,836,000

IV. Adjusting Entries:

A. Explain the type of depreciation method Target Corporation uses and why they use this method.

B. Identify an example of an adjusting entry (other than depreciation), such as prepaid expenses, supplies, or unearned revenue, and whether or not Target Corporation has this account listed on the balance sheet. You could consider why this might not be listed.

VI. Communication: For this part of the assessment, you will prepare memorandums to upper management addressing certain scenarios or situations.

A. As the controller of Target Corporation, compose a memo to the CEO addressing the advantages and disadvantages of transitioning from GAAP to IFRS.

B. As the controller of Target Corporation, compose a memo to the CEO addressing the following scenario: Your biggest customer has just gone bankrupt, and you must inform the CEO how this will affect your accounts receivable. Assume that the accounts receivable balance is at least $100,000.

When writing your paper considers the following:

A company may use several different depreciation methods or just one. This information will be disclosed in the notes. If the company has not explained why they use the method, you will want to consider the pros and cons of the method and use the information you know about the method to provide why you think they chose the method.

For the adjusting entry think about gift cards (accrued liabilities) and prepaid (accrued expenses), etc. Many items are adjusted based on revenue and expense recognition principles.

Transitioning from GAAP to IFRS does have advantages and disadvantages.  

When discussing Accounts Receivable make sure you do consider whether Target Corporation uses the direct write-off method, or an allowance? How would handling this scenario be different based on the method used? What accounts would be affected based on the method used to account for bad debt?

Please do make sure you fully address each critical element with appropriate detail and that you defend your content in your paper with scholarly sources.

Support your arguments with at least three peer-reviewed sources cited in APA format

Answer 1

IV: Adjusting Entries:

A. The method of depreciation company is using is Written Down Value Method. The model used for showing the asset is cost model approach in which the assets are shown at cost less accumulated depreciation if any. They use this method because under this method the assets are shown at their written down value method which shows the true and correct picture of the asset.

B. The example of an adjusting entry is unaccured income of $508000 which shows that the income is received by the company but the same has not been accured for the company. This could be shown under any current liability head but has not been shown separately.

VI. Communication:

A. Memo to CEO regarding advantages and disadvantages of transitioning from GAAP to IFRS:

Memo

To: Chief Executive Officer

From: XYZ, Controller

Date: 10th January, 2018

Re: Advantages and Disadvantages of transitioning GAAP to IFRS

Dear Sir/Madam,

It is essential to bring into your notice the advantages and disadvantages of using IFRS from GAAP since the company is planning to use the accounting policies and methods as per IFRS from GAAP. So the main advantages of IFRS are:

1. Business using IFRS can compare their financial information with other companies using IFRS. Thus it promotes comparability.

2. It is beneficial for both small and large investors as it shows the fiancial information more accurately, clearly and transparently.

3. It saves the cost of the investors which they have to be paid to their analyst as the financial information is more clearly shown under IFRS

4. It promotes the principle of univarsality as all the financial information are prepared using the same accounting principles.

Disadvantages of IFRS:

1. Whether large or small all the business enterprise has to invest high amount of money in the use of IFRS. Although large companies could afford it but it is not convenient for the small companies to adopt the IFRS.

2. It is prone to manipulation

3. It is not globally accepted till now and the acceptance will require some sort of time. Till then the companies may lack the feature of comparability.

B. Memo in case the customer has gone bankrupt:

Memo

To: Chief Executive Officer

From: XYZ, Controller

Date; 10th January, 2018

Re: Bankruptcy of the customer

Dear Sir/Madam,

It is to bring your notice that one of our prominent customer has been declared as bankrupt due to a severe fire in its godown of stock. The amount due to him is $100000 out of our account receivables. The customer is very prominent and accounts for 40% of the sales during the current year. This memo has been drafted to bring your attention towards the bankruptcy of the customer and what steps are required to reclaim the amount to the extent possible at the earliest.