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Limitations: Most assets are recorded at historical cost rather than at market value. Resources such as employee skills and reputation are not recorded on the balance sheet. Usefulness: Liquidity information. Long-term solvency information. Balance Sheet. Case 3-5.
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Limitations: Most assets are recorded at historical cost rather than at market value. Resources such as employee skills and reputation are not recorded on the balance sheet. Usefulness: Liquidity information. Long-term solvency information. Balance Sheet
Case 3-5 • Which items require further disclosure?
Claims against resources (Liabilities) Remaining claims accruing to owners (Owners’ Equity) Balance Sheet Resources (Assets)
Assets are probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events.
Assets Cash Receivables Inventories Prepayments Current Assets Converted to cash or consumed within one year or the operating cycle, whichever is longer
Assets Investments and Funds Property, Plant, & Equipment Intangibles Other Noncurrent Assets Not expected to be converted to cash or consumed within one year or the operating cycle, whichever is longer
Liabilities are probable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities as a result of past transactions or events.
Liabilities Accounts Payable Notes Payable Accrued Liabilities Current Maturities of Long-Term Debt Current Liabilities Obligations expected to be satisfied through current assets or creation of other current liabilities
Liabilities Capital Leases Bonds Payable Long-Term Notes Payable Pension Liabilities Long-Term Liabilities Obligations that will not be satisfied within one year or operating cycle, whichever is longer
Equity is the residual interest in the assets of an entity that remains after its liabilities are deducted.
Shareholders’ Equity Other Contributed Capital Capital Stock Treasury Stock Retained Earnings
Some Examples • SEARS Balance Sheet • Sears Footnotes • Kohl's Balance Sheet • Kohl’s Footnotes
Disclosure Notes • Summary of Significant Accounting Policies • Subsequent Events • Noteworthy Events and Transactions
Management Discussion and Analysis (MDA) Includes management’s views on significant events, trends, and uncertainties regarding the company’s operations, liquidity, and capital resources.
