Essay on Hernischfeger Corporation Case Analysis

7) What was the effect on 1988 earnings per share, of the non-recurring items: area development

If the depreciation method changes from straight-line method to accelerated method then, depreciation expense would be increase and net income would decrease. The EPS ratio would represent a loss of $0.19 per share.

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?

9. How did the pension plan changes affect Harnischfeger’s financial statements in 1984? Are these changes likely to affect future profits?

Interest cost is the imputed interest on the liability during the year. The pension obligation also changes because of actuarial gains or losses that occur with the pension plan when the actuaries change their assumptions. For example, the pension liability will decrease and the company will record an actuarial gain if the actuary reduces the present value of the expected future payments (for example, by increasing the discount rate or decreasing the rate of wage increases). Last, the pension obligation decreases when benefits are paid to retirees. Paying benefits satisfies the obligation. c. The pension plan‟s assets increase when the assets earn a return (interest, dividends, capital appreciation). When securities and investments held by the plan drop in value, the plan‟s assets fall too. The plan assets

-In 1984, there was a switch from accelerated to straight line depreciation retroactively. Because of this, the depreciation expense decreased.

Medford University is up against a financial crises and the management have found the need to tackle the crises on high priority. The primary focus is to tackle the considerable cost of fringe benefits and retirement benefits offered by the university to its employees. A whooping $100 million is spent annually by the management towards the fringe benefits for the employees (Brickley, Smith, & Zimmerman, 2009). In an attempt to find a solution for reducing these costs, the management could have approached the Human

For pensions and post-retirement accounting methods to recognize the benefit costs, estimates and assumptions on future events ascertaining the timing and amount of benefits payments must be sought first. This paper seeks to compare and contrast the early historical accounting for pensions and post-retirement healthcare and life insurance benefits with the rules and guidance applied today in addition to the changes to such guidance and rules that would improve the accounting and reporting of such benefits depending on the business and political changes and as such, predict the effect of such changes on financial reporting and accounting practices.

 What is the plan to maximize asset and increase asset turnover, which decreased from 2005 to 2008

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?

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.

In terms of the financial outlook for the O.M Scott & Sons Company for the next few years, there are several notable changes that occur as a result of the changes management enacted through 1957-1961. It is important to note that both the pro forma income statement and balance sheet assume a 23.5% annual compounded growth figure based on the years stated earlier. Emphasis will be placed on forecasted numbers for the years 1962-1964 in order to provide readers with projected figures established through several key assumptions.