Harnischfeger

Even though Mr. Fordham mentions that he in his “Statement of Cost of Goods Manufactured for Year Ended Dec. 31 1956” that he depreciated $24,000 of Plant and Equipment, I decided to change the depreciation schedule so that PP&E would be fully depreciated by the end of the 5 year period. Thus, I used a straight-line depreciation schedule that accumulated $40,000 worth of depreciation per year, which was spread evenly across the 12 months of this Balance Sheet (or $3,333.33 per month).

5. What was the effect on earnings per share of the change in depreciation method for 'hit" tapes (assume that hit tapes made up 25% of new tape purchases, and that the average hit tape was owned for half the year)?

Based on the financial statements in 1984 Harnischfeger made changes from the previous year, the corporation computed depreciation expenses on plants, machinery and equipment using the straight-line method. Prior to the accounting changes in 1984, the company had experienced some financial losses was able to recover. There has been a change in depreciation accounting when it comes to profit. Before they used to apply the accelerated methods for the operating

As stated in Note 2 of its financial statements, the accounting changes Harnischfeger made in 1984 are those of net sales of the products that were purchased from Kobe Steel which were then sold by Harnischfeger which added on to the net sales of the company. Harnischfeger included financial statements of certain foreign subsidiaries. Its effect would result in sales which totaled to $28.0 million in 1984. In addition, because Harnischfeger would go on to changed its method of depreciation to a more accelerated version, which would be a straight line

Note 2 (pg. 17) states that in 1984 Harnischfeger changed their depreciation method that was being used to expense their plants, machinery and equipment from the direct method to the straight-line method for financial reporting purposes. An adjustment of the residual values on certain machinery and equipment was made.

4. The depreciation accounting changes assume that Harnischfeger’s plant and machinery will last longer and will lose their value more slowly.  Given the business conditions Harnischfeger was facing in its primary industries in 1984, are these economic assumptions justified?

2. What do you think are the motives of Harnischfeger's management in making the changes in its financial reporting policies? Do you think investors will see through these changes?

1. Describe clearly the accounting changes Harnischfeger made in 1984 as stated in Note 2 of its financial statements. In the 1984 the corporation computed depreciation expense on plants, machinery and equipment by using the straight-line method for financial reporting purposes. These changes were made to provide a more equitable allocation of the cost of the plants.

-The estimated depreciation lives on certain U.S. plants, machinery and equipment changed. The economic life of these assets was increased, so the depreciation expense was lowered.

3. Assuming the average value of flight equipment that Delta had in 1993, how much of a difference do the depreciation assumptions it adopted on April 1, 1993 make? How much more or less will its annual depreciation expense be compared to what it would be were it using Singapore’s depreciation assumptions?

In conclusion to reading both the message to shareholders and management’s discussion and analysis, the current situation and the outlook for the future are very good in my opinion. This company may have had a slow start in the casegoods sales for example and the current situation may have suffered a little but the first part of the fiscal 2013 year. But they were looking to the future and making their transition in that area, for more efficiency in the future and picked up sales the second half of the year. They also made up for this transition with over a 70% increase in there upholstery division sales. The Outlook that Hooker Furniture Corporation is great, they are making new business deals and making employee transitions to help them make it through the Great Recession as the housing market goes back up.

This is a good sign towards future operation as the company cleaned up older and ineffective accounts and obligations to boost profits and shareholders’ equity.

It would also reduce the risk of price increases by negotiating future prices. As shown previously, Harnischfeger was able to successfully reduce its cost to sales ratio. Through targeting new growth, emphasizing the high technology portion of its business and developing the Industrial Technologies Group, would create new business and ultimately increase sales for the company, which is shown in its financials, a 24% increase in sales from 1983 to 1984.

The potential for new management to make operational or other improvements to the firm to boost cash flows;

The management team expected the performance index to be high this period. And as expected, the goal was reached with an asset administration of 20.9%. Because of the goal set the decisions taken allowed the bank to increase its asset