Accounting Theory – Spring 2017
Instructions:
1. Each question is worth 50 points each except as indicated – You must answer TWO questions
2. For full credit..pleaseCOPY THE QUESTION INTO YOUR ANSWER!
3. You should reference and cite your sources as appropriate. (You may use any appropriate format – MLA, APA etc.) If you think the article is interesting, consider submitting it as well.
4. Due by the beginning of CLASS 8 – (25-point deduction for each late day – starting at 6:00 onMay 3)
5. Your answers to each question should be approximately 1-2 pages single spaced.
6. Please note that a plagiarism tool is used in the drop box.
7. PLEASE DON0T FORGET THE SIGNATURE PAGE (see page 3) – YOU MAY SUBMIT IT AS A SEPARATE FILE. You may type your name that will serve as your signature on the form attached
8. Note that plagiarism software is enabled. Any significant evidence of plagiarism will result in a grade of zero on the question.
(Suggested page length per question – two/three pages single spaced.)
Answer any TWO question
1. COUNTS AS two QUESTIONSPeabody Energy – See Form Attached
a. (30 Points) Part 1 Perform a trend analysis for Peabody Energy (see format attached)
b. (50 points) Part 2 Clearly explain Trend Analysis – including:
• A definition of trend analysis as it applies to analyzing financial performance
• Explain the many ways trend analysis can be used by managers to make decisions
• Explain the role of accounting information in trend analysis
c. (20 Points) Part 3 Assume you are the partner in charge of the audit, in a brief memo explain the difference between the audit opinion for the years ended December 2013, 2014 and December 2015
2. COUNTS AS two QUESTIONS Designing a Compensation Plan using Benchmarks
a. (40 Points) Explain what is meant by Benchmarking as it pertains to designing executive compensation schemes. (feel free to examine the compensation scheme of the companies we used in class)
• Outline the variety of benchmarks used in executive compensation plans.
• How does the Balanced Scorecard enter into the development of a compensation scheme?
• Where do companies find benchmarks
b. (30 Points) Explain the role of Accounting Information in designing compensation schemes.
c. (15 Points) Find and evaluate an executive compensation plan with a variety of benchmarks.
d. (15 Points) Explain how a compensation plan can lead to suboptimal behavior – including financial fraud.
3. Find an international company that does not use IFRS nor GAAP.
a. Include the financial statement
b. Explain the differences between financial reporting for the company and GAAP
c. Detail any cultural, political, economic, demographic or other factors that impact the financial reporting standards used by the company/country.
4. Find the report (from 2013 or later) publically held company with an audit opinion that has an Adverse Opinion, a Disclaimer of Opinion or a Qualified Opinion related to a Going Concern Issue.
a. Explain the going concern audit opinion and the “qualified” audit opinion.
b. Explain how the opinions differ based upon IFRS and GAAP and the implications of SAS 126.
c. Include the audited financial statement
d. Highlight the opinion
e. Explain what happened to the company including:
• The stock price both before, during and after the report was issued
• What happened the following year
• Anything else interesting
5. Explain the changes to Revenue Recognition as it would apply to a specific industry that interests you where the impact is significant.
6. We looked at a variety of financial statements in the class. Develop a rubric for evaluating financial statements – getting back to our original topic of effectively telling the economic story of the company.
7. Prepare a “Comment” on a recent exposure draft out for comments – consult the Journal of Accountancy for a list outstanding drafts.
8. What role does accounting theory play in the development of GAAP. In your analysis,
a. note specific pronouncements to support your answer
b. relate your analysis to the theme of the course
c. tie your answer to a particular financial statement.
9. Compare and contrast a 10K from a year prior to 2001 with a 10K for a year ending after July 31, 2016. Explain the differences in GAAP between the years and how they impact the differences. Be sure to indicate the implication for “telling” a better story. Be specific.
If none of the questions above are interesting to you, propose additional questions as alternatives, please check with me first.
This page MUST be included in the drop box with your exam or attached your exam:
Name ______________________________
I assert that I did not receive assistance from any individual in preparing this exam. All of the work is my own. I have properly referenced all source used and included copies of those sources with my exam. I have include the question in my response.
Signature (by typing your name, you are providing an electronic signature) ____________________________________
Remember to
COPY THE QUESTION INTO YOUR ANSWER
