Assignment 2: Financial Reporting Problem - CISCO

Assignment 2: Financial Reporting Problem - CISCO

Introduction

CISCO Systems Inc. is an internet protocol (IP) based networking and other related products designer, manufacturer and seller to the information technology and communication industry (Annual Report, 2013).The market segmentation includes telecommunication companies & related service providers, enterprise businesses, personal residences, public institutions and commercial businesses.CISCO is headquartered in the San Jose, California. The organization was incorporated in the year of December, 1984 in California.CISCO has specifically designed various products and services in order to cater their customers with the technology that shall aid in (Annual Report, 2013):

Addressing their business imperatives and opportunities, improving productivity and user experience

Enhancing the productivity and user experience.

To achieve cost-effectiveness

To attain a competitive advantage

Ensuring effective connectivity with the important stakeholders i.e. business partners, customers, employees, prospect and suppliers.

Simplifying and securing the infrastructure of the customers' network in what CISCO's networking products & solutions are designed for. Not only simplifying and securing but leveraging the delivery of product and solutions related to the transitional customer requirements such as virtualization, video, collaboration and cloud.

The assignment entails the details about the CISCO's financial reporting areas such as listing of accounts in the financial statements, classification of assets, current liabilities for the year and previous year(s), and theessentiality of the aforementioned information for the users of financial statements.

Listing of Current Assets under the Balance Sheet of CISCO

According to the International Accounting Standards (IAS 1), assets are the economic resources owned and managed by the entity in order to gain the future economic benefits from it and are a result of any past event or transaction.The IAS Framework defines the aforementioned characteristics of the asset as its definition.According to Generally Accepted Accounting Principles (GAAP), the assets are further categorized according to their benefits spread over the period of time i.e. current and fixed assets. The current assets are the short-term assets that are owned and managed by the company i.e. the benefit spreads within or a year maximum. Fixed assets, in contrast to current assets, are those assets whose economic benefits is spread over the number of years or more than a year at least.

The list of current assets in the CISCO's Balance Sheet is appropriate. The accounts include in the cash & its equivalent, net short-term investments, trade debts (net of doubtful trade debts), merchandise, net financing receivables, deferred tax assets and other non-fixed assets. The accounts are listed with the order of liquidity in its current assets section of the CISCO's Balance Sheet. The concept of listing the currents on the basis of order of liquidity means that the non-fixed assets are listed on the basis of the liquidation time taken by the current assets. The most liquid assets are on the top of the list whilst the least liquid are at the end of the list of current assets accounts.

Classification of Assets

The assets are classified on the basis of the term of benefits spread within a year or more than a year ...