Explore BrainMass

Notes to Consolidated Financial Statements

Requesting assistance for course project. Please see attached document.

© BrainMass Inc. brainmass.com July 19, 2018, 5:33 am ad1c9bdddf


Solution Preview

In accordance with Brainmass rules, this is not a completion of assignment but only background help.

1. Nature of Operations:
Exwyzed Corporation is a leading provider of agricultural implements for farmers. Exwyzed's implements provide farmers with solutions that improve productivity, reduce the cost of farming and produce better crops for consumers. Exwyzed manages its business in two segments motor driven implements and electrical implements. Through its electrical implements, it introduces state of the art implements that help increase agricultural productivity. Unless otherwise indicated Exwyzed and the company are used interchangeably.

2. Use of Estimates:
The preparation of financial statements has been made in conformity with generally accepted accounting principles in the United States. These principles require the management of Exwyzed to make some estimates. The estimates are adjusted to show actual figures when so required. The items in the financial statement where estimates have been made include doubtful trade receivables, sales returns and allowances, income tax liabilities and assets and related valuation allowances, inventory, asset impairments, employee benefit plan assets, valuations of goodwill and other intangible assets, and liabilities, and marketing program liabilities. Estimates have also been made to find the fair value and useful lives of assets. Actual results may differ from those estimates. These may affect income, financial position, or cash flow.

3. Revenue Recognition:
The company derives most of its revenues from two main sources: sale of motor driven implements and electrical implements. Exwyzed follows the revenue recognition topic of the ASC. Revenues from all implements are recognized when the title of the implement is transferred. Specifically, Exwyzed recognizes revenue on the implements it sells to distributors and wholesalers when delivery has been made, performance is complete, expected returns can be estimated, and price is determinable at the time of sale. When right of return exists, the sales revenues are reduced when sales are made to reflect expected returns. The other conditions for recognition of revenue include the collection of sales proceeds are assured.

4. Selling, General and Administrative Expense:
Selling, general and administrative expenses include all operating costs of Exwyzed, except cost of sales. As a result a majority of sending the implements to the distributors and warehousing costs are including in the Selling, General and Administrative Expense. As Exwyzed does not include the cost of shipping and warehousing in cost of sales, its gross profit may not e comparable to other firms making agricultural implements in the United States.

5. Currency Translation:
The assets and liability of all foreign subsidies of Exwyzed are translated from the respective local currency to the US dollar using exchange rates at the balance sheet date. ...

Solution Summary

The response provides you a structured explanation of how notes to consolidated financial statements are written for a company. It also gives you the relevant references.