Harnischfeger Case Questions + Answers

8) What would BV's 1988 earnings per share be after all of the above adjustments?

Even though Mr. Fordham mentions that he in his “Statement of Cost of Goods Manufactured for Year Ended Dec. 31 1956” that he depreciated $24,000 of Plant and Equipment, I decided to change the depreciation schedule so that PP&E would be fully depreciated by the end of the 5 year period. Thus, I used a straight-line depreciation schedule that accumulated $40,000 worth of depreciation per year, which was spread evenly across the 12 months of this Balance Sheet (or $3,333.33 per month).

For the depreciation part, we adopted the straight-line method. Here since the depreciation of year 1984 was $1270, we just assumed all the depreciation amount to be equal to $1270 till the year 1989. With all of these previous assumptions, we obtain the complete pro forma financial statement and the cash flow table for the Collinsville Plant.

Describe clearly the accounting changes Harnischfeger made in 1984 as stated in Note 2 of its financial statements.

1. Describe clearly the accounting changes Harnischfeger made in 1984 as stated in Note 2 of its financial statements.

6. Note 8 states Harnischfeger’s allowance for doubtful accounts.  Compute the ratio of the allowance to gross receivables (receivables before the allowance) in 1983 and 1984.  What would the allowance have been if the company maintained the ratio at the 1983 level?  How much did the pre-tax

1. Identify all the accounting policy changes and accounting estimates that Harnischfeger made during 1984. Estimate, as accurately as possible, the effect of these on the company's 1984 reported profits.

1. Describe clearly the accounting changes Harnischfeger made in 1984 as stated in Note 2 of its financial statements. In the 1984 the corporation computed depreciation expense on plants, machinery and equipment by using the straight-line method for financial reporting purposes. These changes were made to provide a more equitable allocation of the cost of the plants.

Interest cost is the imputed interest on the liability during the year. The pension obligation also changes because of actuarial gains or losses that occur with the pension plan when the actuaries change their assumptions. For example, the pension liability will decrease and the company will record an actuarial gain if the actuary reduces the present value of the expected future payments (for example, by increasing the discount rate or decreasing the rate of wage increases). Last, the pension obligation decreases when benefits are paid to retirees. Paying benefits satisfies the obligation. c. The pension plan‟s assets increase when the assets earn a return (interest, dividends, capital appreciation). When securities and investments held by the plan drop in value, the plan‟s assets fall too. The plan assets

Note 9 indicates that Harnischfeger decreased its R&D expense considerably in 1984 relative to the previous two years. Do you think this change was motivated by business considerations or accounting considerations? How did this change affect the company’s reported profits in 1984?

Medford University is up against a financial crises and the management have found the need to tackle the crises on high priority. The primary focus is to tackle the considerable cost of fringe benefits and retirement benefits offered by the university to its employees. A whooping $100 million is spent annually by the management towards the fringe benefits for the employees (Brickley, Smith, & Zimmerman, 2009). In an attempt to find a solution for reducing these costs, the management could have approached the Human

For pensions and post-retirement accounting methods to recognize the benefit costs, estimates and assumptions on future events ascertaining the timing and amount of benefits payments must be sought first. This paper seeks to compare and contrast the early historical accounting for pensions and post-retirement healthcare and life insurance benefits with the rules and guidance applied today in addition to the changes to such guidance and rules that would improve the accounting and reporting of such benefits depending on the business and political changes and as such, predict the effect of such changes on financial reporting and accounting practices.

In February 2003, EITF reached a consensus on Issue of Accounting for the Transfer to the Japanese Government of the Substitutional Portion of Employee Pension Fund Liabilities. Toyota has already begun the separation process. However, no effect of this transaction has been recognized in the consolidated financial statements for the year ended March 31, 2003 as the completion of the transfer of the benefit obligation and related plan assets to the Japanese government is expected in the year ending March 31, 2004.

It would also reduce the risk of price increases by negotiating future prices. As shown previously, Harnischfeger was able to successfully reduce its cost to sales ratio. Through targeting new growth, emphasizing the high technology portion of its business and developing the Industrial Technologies Group, would create new business and ultimately increase sales for the company, which is shown in its financials, a 24% increase in sales from 1983 to 1984.

There are two possible sources of discrepancies we would like to disclose in this introduction: financial histories and restructuring charges. The first source of some discrepancies throughout the paper is a lack of some financial history. In the 1998 Darden Restaurants Annual Report, there was some inconsistency in whether history from FY 1996 was used or not. For this reason, we have been forced to omit FY 1996 in some