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Discusses merger and acquisition accounting.

Dot-coms provide unique financial reporting situations.

Using historical cost and conservatism to identify and value assets, this case explains the criteria for asset reporting in straightforward situations and then examines scenarios where implementing the criteria for recognition and valuation of assets is conceptually challenging. These more complex situations occur when: 1) Ownership or control of a resource is uncertain; 2) The economic benefits from outlays are uncertain or difficult to quantify; or 3) Resource values have changed.

Recording expenses is not often clear-cut and can require considerable management judgment. This case discusses expense recognition in straightforward situations and then considers expense transactions that may be more complex to record. It uses examples that include situations in which: 1) The value of resources consumed is difficult to define; 2) Resources provide benefits for multiple years; 3) Resources are consumed, but the timing and amount of future payments is uncertain; and 4) Unused resources have declined in value.

By examining key criteria for recognizing a liability, this case explores liability recognition in straightforward situations and then examines the most difficult reporting issues in recording liabilities. These often arise when: 1) uncertainty arises about whether an obligation has been incurred; or 2) measuring the value of the obligation is difficult.

This case discusses revenue recognition in straightforward situations and then considers revenue transactions that may be more complex to record. Revenue recognition criteria can be implemented for the following situations: 1) Customers pay prior to delivery; 2) Products/services are provided over multiple years; 3) Credit-worthiness of the customer is questionable; and 4) Money-back guarantees are offered.

Spreadsheet Supplement for case 101016

Spreadsheet Supplement for case 101017.

This case is designed to familiarize students with the use of financial ratios. Two retailers, Sears, Roebuck and Co. and Wal-Mart Stores, Inc., have a very similar value for return on equity (ROE) in the 1997 fiscal year. Students use the information in the case and the accompanying exhibits, which include financial statements as well as disclosures regarding corporate strategies and accounting policies for each company, to analyze the value creation process for each firm. This case provides a good introduction regarding the combination of such information to create a powerful tool for financial statement analysis. A rewritten version of an earlier case.

Bausch & Lomb (B&L) instituted an aggressive sales program in the final weeks of its 1993 fiscal year that pushed a large amount of inventories onto distributors. The company recognized revenues on these products when they were shipped. A rewritten version of an earlier case.

Spreadsheet Supplement for case 800292

Supplements the (A) case.

Describes a company's struggles in implementing a subjective performance rating system for its employees. In particular, it describes the difficulties faced by the CEO in getting managers to combat "ratings inflation"--that is, to produce numerical ratings that are both differentiated and "not too high."

Describes a company's changing of its compensation and incentive plan. In particular, it shows how a change from hourly pay to piece rate pay (for windshield installers) affected productivity, pay, and turnover.

Spreadsheet Supplement for case 800290

Spreadsheet Supplement for case 100066.

This case describes the unique underlying economics of a start-up Internet retailing company. It highlights the fact that costs in that setting have a component that varies with volume and thus seriously impacts profitability.

Should Novartis drop 20% of its global pharmaceutical product brands that account for only 3% of its pharmaceutical revenues?

The chief financial officer and acting chief executive officer of PixStream Incorporated, a high-tech video networking solutions company, was contemplating how going public in the next couple of years might affect his decisions and choices relating to the company's accounting practices for research and development expenditures. He needed to determine if he should continue expensing all research and development costs or if he should capitalize and amortize some or all of the costs over the period of time the company is expected to benefit from the research and development efforts. There were many practical business reasons for keeping development costs off the balance sheet, but he wanted to ensure that PixStream would get its proper valuation when the time came for the company to go public. He wanted to approach his analysis from a proper accounting perspective and from a practical business perspective, to make sure that all angles were covered. Once he has decided on his course of action, he must determine the ramifications of his decision and the actions that he will have to take as a result.

Spreadsheet Supplement for case 800269