Question

I need this response with year ending 2017 on any company, please: Access the latest annual report, or Form 10-K, of a publicly-traded company of your choice using the company’s website or www.sec.gov. You can usually access from a company’s website by clicking on investor relations, then annual reports, and search for latest form 10K. From the SEC website (www.sec.gov), search for the selected company’s name and then search for its latest form 10-K. Using form 10-K of your selected company, answer the following questions in an essay format. • Identify three accounts on your selected company’s and balance sheet that provide evidence that the company utilizes accrual accounting. Ensure you provide explanations as well as the income statement account that would be affected by the adjustment process. • Identify and explain three income statement accounts that may result in accrual and deferrals adjusting entries. • Explain depreciation expense, amortization expense, accumulated depreciation, and accumulated amortization? In the financial statements and notes of your selected company, identify the four accounts. How much was each of these four accounts for the most recent year and on which financial statements were each reported? • What are income taxes and income tax expense (or provision for income taxes)? In the financial statements and notes of your selected company, identify cash paid for income taxes as well as income tax expense (or provision for income taxes). How much was each of these accounts for the most recent year and on which financial statements was each reported?

Answer 1

The company I selected for analysis is Tesla Inc.

a.) Three Accounts on Balance Sheet that show Accrual Concept of Accounting

Accounts Receivable: This is an account that wouldn't even exist without the accrual concept. This denotes the amount that is receivable for services or goods sold but the cash has not yet been received. Hence receivable. Without accrual concept in the income statement, revenue pertaining to these non-cash sales would have been recorded only after receiving cash, which is now included normally in the revenue.

Accounts Payable: This is an account that wouldn't even exist without the accrual concept. This denotes the amount that is payable for services or goods purchased but the cash has not yet been paid. Hence payable. Without accrual concept in the income statement, expenses pertaining to these non-cash purchases would have been recorded only after receiving cash, which is now included normally in the cost of goods sold.

Prepaid Expenes: This is an account that shows the expenses that have already been paid for but not yet received. Without this account, or in the cash based system, this amount would have been recognised in the income statement as an expense.

b.) Three Accounts on Income Statement that show Accruals and Deferrals

Accruals and deferrals mean money has been received or paid, but income or expense has not been recognised because of accrual concept.

Depreciation: These are accruals of cash that has been paid for assets and then the amount is spread over the life of assets. This account shows accrual concept that cost should accrue over the life of asset as it is used. This is deducted from the asset balance in the balance sheet.

Deferred Revenue: This is income that has been received but the conditions are not yet satisfied to recognise it, so it is deferred and shown as liability in balance sheet.

Provision of Income Taxes: This account shows the taxes pertaining to the period but have not been paid yet, and hence accrued in the income statement and showed in the balance sheet on liabilities side.

c.) Accumulated Depreciation, Accumulated Amortization, Depreciation and Amortization

Depreciation Expense: These are accruals of cash that has been paid for assets and then the amount is spread over the life of assets. This account shows accrual concept that cost should accrue over the life of asset as it is used. This is deducted from the asset balance in the balance sheet. $726.309 Million

Accumulated Depreciation: This is the total depreciation that has been deducted from the asset balance in the balance sheet. This is maintained to retain the cost of asset in the asset account and to enote the total depreciation/usage of asset over it's life. Every year, the current depreciation is added to this account and it is deducted as a whole from the fixed asset and shown as net fixed asset. $1,723.794 Millions

Amortization: These are accruals of cash that has been paid for intangible assets and then the amount is spread over the life of assets. This account shows accrual concept that cost should accrue over the life of asset as it is used. This is deducted from the asset balance in the balance sheet. $39,611 Million

Accumulated Amortization: This is the total amortization that has been deducted from the intangible asset balance in the balance sheet. This is maintained to retain the cost of asset in the asset account and to denote the total depreciation/usage of asset over it's life. Every year, the current depreciation is added to this account and it is deducted as a whole from the fixed asset and shown as net fixed asset. $46,655 Million

d.)Income Tax, Income Tax Expense

Income Tax and Income Tax Expense: These are taxes paid on the income earned during a year, to be paid to the respective governments. These are generally paid in the next year, so they are accrued in the current year in the income statement as an expense in the form of Income Tax Expense account deducted from Earnings Before Tax and shown as a provision for taxes in the balance sheet on the liabilities side.

Income Tax paid in Cash: $ 26,646 Thousands

Provision for Income Tax: $ 31,546 Thousands