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Proctor & Gamble: Financial Statement footnotes

The financial statements of Procter & Gamble Company available at http://www.pg.com/en_US/index.shtml . Refer to P&G's financial statements and the accompanying notes to answer the following questions:

Using the notes to the consolidated financial statements, determine P&G's revenue recognition policies. Discuss the impact of trade promotions on P&G's financial statements.
Give two examples of where historical cost information is reported in P&G's financial statements and related notes. Give two examples of the use of fair value information reported in either the financial statements or related notes.
How can we determine that the accounting principles used by P&G are prepared on a basis consistent with those of last year?
What is P&G's accounting policy related to advertising? What accounting principle does P&G follow regarding accounting for advertising? Where are advertising expenses reported in the financial statements?

Solution Preview

Using the notes to the consolidated financial statements, determine P&G's revenue recognition policies.
From footnote 1:

"Sales are recognized when revenue is realized or realizable and has been earned. Revenue transactions represent sales of inventory. The revenue recorded is presented net of sales and other taxes we collect on behalf of governmental authorities. The revenue includes shipping and handling costs, which generally are included in the list price to the customer. Our policy is to recognize revenue when title to the product, ownership and risk of loss transfer to the customer, which can be on the date of shipment or the date of receipt by the customer. A provision for payment discounts and product return allowances is recorded as a reduction of sales in the same period that the revenue is recognized."
Discuss the impact of trade promotions on P&G's ...

Solution Summary

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