Aol Controversial Accounting Policies

First, on the basis of assumptions underlying the acceleration of the Company’s strategy refocus, management projects a decline in the net cash flows for the A2 Americas segment. As a result, in the third quarter of 2010, management has tested the long-lived assets of this segment for recoverability. They recorded a pretax impairment charge of $1.76 billion in cost of sales.

Cisco allocates the fair value of the purchase consideration of its acquisitions to the tangible assets, liabilities, and intangible assets acquired. The excess fair value of the purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill.

Answer: The revenue coming from the promise to integrate internet technologies on Windows 95 and office would be recognized in the future by the revenue recognition policy. However, the development costs to provide these enhancements are already incurred in the and expensed in the company’s treatment for the software development costs. The combined effect of these two policies is the mismatch of expense with revenue.

when dealing with their number one assets: telecommunication licenses and Goodwill. A summary of the critical accounting estimates used in preparing Verizon financial statements is as follows: Wireless licenses and Goodwill are a significant component of the company’s consolidated assets. Both wireless licenses and Goodwill are treated as indefinite-lived intangible assets and, therefore are not amortized, but rather are tested for impairment annually in the fourth fiscal quarter, unless there are events requiring an earlier assessment or changes in circumstances during an interim period that indicate these assets may not be recoverable. Verizon believes its estimates and assumptions are reasonable and represent appropriate marketplace considerations as of the valuation date. Although the company uses consistent methodologies in developing the assumptions and estimates underlying the fair value calculations used in its impairment tests, these estimates are uncertain by nature and can vary from actual results. It is possible that in the future there may be changes in the assumptions, including estimated cash flow projections, margins, and growth rates and discount rates which could result in different fair value estimates and an impairment charge.

The grounds for any merger depend on the competitive nature of both firms. If one firm is highly competitive and tries to

Intangible assets are one of the most significant items in Myers financial statement. It consists of goodwill, brand names and trademarks, software and leases. AASB 136 Impairment of Assets requires Goodwill and some of the brand names that are indefinite useful life to test for the impairment. In Myer, there is no impairment loss. Furthermore, the accumulated amortisations of the other intangible assets are shown in the table X have a total value of $73585 thousand. According to AASB 117 Leases, the total rentals leases over the leases term are being expensed on a straight-line basis. In contrast, Myer’s competitor David Jones has only two intangible assets goodwill and software. The accumulated amortisation for software is $28808 thousand which is shown in the table X and it is the total value of accumulated amortisation.

Merger motives that are questionable on economic grounds are diversification, purchase of assets below replacement cost, and control. Managers often state that diversification helps to stabilize a firm's earnings and reduces total risk, hence benefits shareholders. Stabilization of earnings is certainly beneficial to a firm's employees, suppliers, customers, and managers. However, if a stock investor is concerned about earnings variability, he or she can diversify more easily than the firm can. Why should Firm A and Firm B merge to stabilize earnings when stockholders can merely purchase both stocks and accomplish the same thing? Further, we know that well-diversified shareholders are more concerned with a stock's market risk than with its total risk, and higher earnings instability does not necessarily translate into higher market risk.

In 1984, Harnischfeger changed its depreciation policy for financial reporting purposes to a straight-line method from a principally accelerated method. A net income of $11 million was realized for 1984 when the straight-line method was applied retroactively to all assets depreciated under the accelerated method. The management viewed this as an approach to match the company’s standard with that of industry peers. We

1. What accounting approach has AOL used in the past that it is now changing (related to the $385 million)?

Following Beaver & Ryan (2005), we refer to this as conditional conservatism, also referred to as income statement conservatism (Ball, Kothari, & Robin, 2000; Basu, 1997), ex post conservatism (Pope & Walker, 2003; Richardson & Tinaikar, 2004), and news-dependent conservatism (Chandra, 2011). Notable examples of such conservatism include the application of the lower of cost or market rule accounting for inventory, and the impairment accounting for long-lived tangible and intangible assets. This definition is in contrast to that of Unconditional conservatism, also often referred to as balance sheet conservatism (Beaver & Ryan, 2005), ex post conservatism (Pope & Walker, 2003; Richardson & Tinaikar, 2004), and news-independent conservatism (Chandra,

Share holders suffered even more, as stock prices plummeted from the time the merger was first announced. A major part of the failure of this merger was the fact that developing a “learning culture” was never considered, and no strategic vision was created for the newly merged organizations. For example Time Warner Cable’s high speed Internet services, Road Runner, as part of its profitable cable operations was never integrated with AOL as Case explained in his 2005 article in the Washington Post (6/ 11/05: B01). The first AOL Time Warner Annual Report (2000) claimed that it was fostering “… a nimble, entrepreneurial culture that recognizes that it can only succeed if everyone supports the new organization based on a shared set of values and common goals.” Unfortunately, the team-work necessary to integrate the two companies never happened, because there was no shared strategic vision of what the merger should be, and where it would be going. Merger Failure and the Need for a Culture of Learning According to some estimates, 85% of merger failures are related to the mismanagement of cultural issues. Awareness of cultural differences is then seen as an issue of primary concern when organizations merge. According to Miller (2000:8): “Once you develop an understanding of the current culture, and have compared that with the goals of the merged

At the beginning the offer was a reaction to the CSX bid; then other factors came into play, such as time, the time span until the vote of the shareholders, the legal procedure (since the judge ruled against Norfolk Southern). Secondly, the outcome of this process will determine the future development of the companies involved. The merged companies, the winners, will survive, whereas the loser will disappear from the market. Based on this fact we might assume that each

One of the biggest debates in financial accounting is expensing advertisement and research and development activities as opposed to them being considered an asset. The idea was that they don’t meet the reliability criteria. The future benefits associated with research and development are very uncertain making it difficult to record the expenditures as an asset. At this point there is little research to support an intangible capital treatment of research & development and advertising. Currently research and development expenditures are not considered to be an investment. With all of those uncertainties, GAAP states that any research and development activities be a current period expense. Although these expenditures treatment is vastly acknowledged as an incorrect concept, the measurements surrounding the treatment of research and development as an investment were seemingly insurmountable to overcome. That ideology however can be challenged under the advancements within the IT and computer equipment industry since the early 90’s. It was identified as a main source of productivity growth which made it necessary to consider research and development as an investment. In this paper, we will discuss GAAP’s treatment of research and development expenditures and propose a different alternative. Throughout the paper we will define research and development, its activities and many of the guidelines, regulations, and Acts surrounding it.

For example, in the annual report of Woolworth’s limit, which follows the A-IFRS mostly, it is easy to discover from the table 1 and table 2, that the expenses of amortization will be counted every year.

The purpose of this project is to analyses the accounting policies of the following three industries (manufacturing, retail and service), based on their 2015 annual 10-K Consolidated Balance Sheet, and Consolidated Income Statement, GAAP, FASB and SEC. There were a few accounting polies that will be discussed that are outdated and should probably not be used, due to the inaccurate of the fair or market value, and the industries should find an alternative accounting policy to use. All of the six industries reviewed do use some different accounting policies, but for the most part companies with in the same industry are using the same accounting policies.