Accounting Analysis

Accounting Analysis

Forecasted Income Statement and Balance Sheet

Income Statement

Income Statement for the

Forecasted Income Statement

2008

2009

Revenues

2000

3000

Cost of Goods Sold

-850

-1275

Gross Margin

1150

1725

Depreciation Expense

-150

-225

Other operating Expenses

-450

-675

Operating profit

550

825

Interest Expense

120

-120

Income before Taxes

430

705

Income Taxes

120

-197

Net Income

310

508

Balance Sheet

Balance Sheet as at 31-Dec-08

Forecasted Balance Sheet 31-Dec-09

Cash

540

1273

Other Current Assets

350

350

Plant Property and Equipment Net

1000

775

Total Assets

1890

2398

Accounts Payable

100

100

Loans Payable

1000

1000

Common Stock

100

100

Retained Earnings

690

1198

Total Liabilities and Stock Holder's Equity

1890

2398

If company does not purchase any equipment the depreciation will not be increased as it would have been if new equipment would be purchased. However, depreciation expense of the current equipment will be charged and subtracted from plant property and equipment net.

Assumptions:

Cost of Goods Sold increased by 50% because, Revenues increased by 50%.

Expenses remained the same percentage of revenues as they were in 2008.

All Revenues are on Cash basis.

All Expenses will be paid thru Cash.

Tax Expense is the percentage of income before taxes taken from 2008.

Financial Statements presentation differences: US GAAP vs. IFRS

IFRS represents international Financial Reporting Standards. GAAP means Generally Accepted Accounting Principles

US GAAP

IFRS

Financial Comparison in Years

Balance Sheets should be presented for the two most recent years. Other financial Statements should have 3 most recent years

Information should only be disclosed to the previous periods.

Balance Sheet and Income Statement Layout

No specified requirement for preparation of Balance sheet and income statement

No defined standard layout but include the list of minimum items to be displayed

Presentation of Debt

If there is a covenant violation the debt may be displayed in non-current items

Debt which is subjected to covenant violation must be presented in as current till the time the agreement with lender has been reached

Classification of Deferred Tax assets and Liabilities

Totally depends on the nature of the asset or liability, that whether to classify in asset or liability

All amounts are stated in noon current assets or liabilities.

Income statement Classification of expenses

Companies registered with SEC need to display expenses on the basis of their nature.

Expenses may be expressed In terms of nature or functions. If function is selected then certain information must be disclosed in financial statements.

Presentation of Extra ordinary items

Only those items can be presented which ate unusual and infrequent

Not allowed

Presentation of discontinued operation in income statement

Only those items can be classified which are held for sale or being disposed off and will yield no future cash flows.

Only for those components which are part of a subsidiary, business lien or geographical area and are held for sale.

Third Balance Sheet

No requirement

When company is restating the financial statements or changing the ...