Expert answer:remove plagiarism, thank you
Solved by verified expert:help me asap
financial_of_schu_and_motor..docx
Unformatted Attachment Preview
Companies chosen stating the financial information for year ending 2016.
1. A. Schulman, Inc. (Domestic Company listed in NASDAQ)
2. Tata Motors Ltd (Indian company listed in NYSE)
Part -1 Determine the accounting principles (GAAP) the foreign and domestic companies
use to prepare financial statements.
Revenue recognition
For A. Schulman, Inc The Company’s accounting policy regarding revenue recognition is to
recognize revenue when there is persuasive evidence of a sales agreement, the delivery of goods
has occurred where both title and the risks and rewards of ownership are transferred, the sales
price is fixed or determinable and collection of related billings is reasonably assured. A provision
for payment discounts is recorded as a reduction of sales in the same period that the revenue is
recognized.
For Tata Motor Ltd
(i) Sale of products The Company recognizes revenue on the sale of products, net of discounts,
sales incentives, customer bonuses and rebates granted, when the products are delivered to the
dealer / customer or when delivered to the carrier for exports sales, which is when risks and
rewards of ownership pass to the dealer / customer. Sales include income from services and
exchange fluctuations relating to export receivables. Sales include export and other recurring and
non-recurring incentives from the Government at the national and state levels. Sale of products is
presented gross of excise duty where applicable, and net of other indirect taxes. Revenues are
recognized when collectability of the resulting receivables is reasonably assured.
(ii) Revenue from sale of vehicles with guaranteed repurchase option / repurchases arrangement
some of the subsidiary companies sell vehicles to daily rental car companies and other fleet
customers subject to guaranteed repurchase options and to Ford Motor Group management
employees, with repurchase arrangements. At the time of sale, the proceeds are recorded as
deferred revenue in other current liabilities and the cost of the vehicles are recorded as
inventories. The difference between the proceeds and the guaranteed repurchase amount is
recognized in Sales over the term of the arrangement, using a straight-line method. The
difference between the cost of the vehicle and the estimated auction value is netted off against
revenue over the term of the lease.
(iii) Revenue from software consultancy on time and materials contracts is recognized based on
certification of time sheet and billed to clients as per the terms of specific contracts. On fixed
price contracts, revenue is recognized based on milestone achieved as specified in the contracts
on the proportionate completion method on the basis of the work completed. Foreseeable losses
on such contracts are recognized when probable. Revenue from rendering annual maintenance
services is recognized proportionately over the period in which services are rendered. Revenue
from third party software products and hardware sale is recognized upon delivery.
(iv) Dividend from investments is recognized when the right to receive the payment is
established and when no significant uncertainty as to measurability or collectability exists.
(v) Interest income is recognized on the time basis determined by the amount outstanding and the
rate applicable and where no significant uncertainty as to measurability or collectability exists.
Inventories
For A. Schulman, Inc Inventories are recorded at lower of cost or market. The Company
generally does not distinguish between raw materials and finished goods because numerous
products that can be sold as finished goods are also used as raw materials in the production of
other inventory items. Management establishes an estimated excess and obsolete inventory
reserve based on historical experience and amounts expected to be realized for slow-moving and
obsolete inventory.
For Tata Motor Ltd
Inventories are valued at the lower of cost and net realizable value. Cost of raw materials and
consumables are ascertained on a moving weighted average / monthly moving weighted average
basis, except for Jaguar and Land Rover which is on FIFO basis. Costs, including variable and
fixed overheads, are allocated to work-in-progress and finished goods determined on full
absorption cost basis. Net realizable value is estimated selling price in the ordinary course of
business less estimated cost of completion and selling expenses.
Use of Estimates
For A. Schulman, Inc
The preparation of the accompanying consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America requires management
to make estimates and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying disclosures. Actual results could differ from those estimates. Such
estimates include the value of purchase consideration, valuation of accounts receivables,
inventories, goodwill, other intangible assets, other long-lived assets, contingencies, and
assumptions used in the calculation of income taxes, pension and other postretirement benefits,
share-based incentive compensation, and restructuring, among others. These estimates and
assumptions are based on management’s judgment. Management evaluates its estimates and
assumptions on an ongoing basis using historical experience and other factors. Management
monitors any factors which may have an impact and adjusts such estimates and assumptions
when required. Changes in those estimates are reflected in the consolidated financial statements
in the period of change.
For Tata Motor Ltd
The preparation of financial statements requires management to make judgments, estimates and
assumptions, which affect the application of accounting policies and the reported amounts of
assets, liabilities, income, expenses and disclosures of contingent liabilities at the date of these
financial statements. Actual results may differ from these estimates. Estimates and underlying
assumptions are reviewed at each balance sheet date. Revisions to accounting estimates are
recognized in the period in which the estimate is revised and future periods affected.
Part-2 determines whether the foreign or domestic companies provide a set of financial
statements that include the same components.
Yes
1. Consolidated Balance Sheets
2. Consolidated Statements of Cash Flows
3. Notes to Consolidated Financial Statements are in common. Whereas Consolidated Statements
of Operations, Consolidated Statements of Comprehensive Income, Consolidated Statements of
Stockholders’ Equity are not form part of Tata Motors Ltd.
Part-3 List 5 format differences in the companies’ income statements.
1. Reported for three periods 2016, 15, and 14 in case of A. Schulman, Inc. and only two years in
case of Tata motors Ltd
2. No note references are given in A. Schulman, Inc. compared to Tata motors Ltd
3. Signing authorities are not mention to the statement in case of A.Schulman
4. Exceptional items are reported in Tata Motors income statement.
5. Earnings are allocated as from continuing operations and discontinued operation in
A.Schulman where not present in The Motors Ltd.
Part-4 List 5 format differences in the company’s balance sheets.
1. Equity and Liabilities are shown as part-1 in Tata Motors Ltd whereas part-2 in A.Schulman
Inc.
2. No disclosure of shareholders’ funds in A.Schulman Inc., which is presented in Tata Motors
Ltd.
3. In Tata Motors Ltd First Non-current liabilities or assets are shown in face of balance sheet
where it is reversed in case of A.Schulman Inc.
4. No note references are given in A. Schulman, Inc. compared to Tata motors Ltd
5. Signing authorities are not mention to the statement in case of A.Schulman
Part e.
The difference is the currency symbols in the balance sheet and income statement. The domestic firm
presents their financial statements in US dollars while the domestic firm based in India presents its
financial statement in Indian Rupee. From exchange rate, I Indian Rupee equals to 0.015 US dollar.
Part f.
Yes, the scope and content of financial statements are the same for both the companies. Both the
company uses the balance sheet to show the incomes and expenses of the companies during a given
financial period. They also use the income statement to show the amount of money in a given company
at a point in time. The compute these by calculating the total amount of revenues collected and subtract
the amount of expenses incurred by the company. This provides the amount of capital that the firms
have at a given point in time. Both of the companies calculate the net amount of capital at a given point
in time quarterly hence the income statements are released four times during a given financial year.
Part G.
The financial statements are significant in the financial operations of both the companies. It is a tool
used by both the companies to assess their performance and make necessary financial strategic
planning to increase the net income of the company. The companies present their financial statements
quarterly for management purposes and assess the success of the organization. Moreover, from both
the financial statements, the companies have made good progress with huge amount of profits that has
fueled the operation of the firms.
Both of the companies use the income and expenditure income statement; they both use multistep
income statement. However, the foreign company does not use accrual based financial statement and
instead use cash based income statement.
Both of the companies use vertical and horizontal balance sheets. The domestic company uses service
enterprise balance sheet while the foreign use merchandising enterprise balance sheet.
…
Purchase answer to see full
attachment
How it works
- Paste your instructions in the instructions box. You can also attach an instructions file
- Select the writer category, deadline, education level and review the instructions
- Make a payment for the order to be assignment to a writer
- Download the paper after the writer uploads it
Will the writer plagiarize my essay?
You will get a plagiarism-free paper and you can get an originality report upon request.
Is this service safe?
All the personal information is confidential and we have 100% safe payment methods. We also guarantee good grades