Intangible assets with lives that have a foreseeable end are amortized, whereas ones with indefinite useful lives are not Spiceland. Determining whether or not an intangible asset has a limited life or not can be tricky; companies must consider the fact that there may be a similar product or object already in existence, and, if so, base their projections on that. Innovators who develop an idea that is completely revolutionary have a much more difficult time valuing an intangible asset although, that risk is counterbalanced by the greater chance for a hefty reward.
The earnings announcement contains much less detail than the financial statements, which are only released after they are prepared and audited. Although the earnings announcement contains few details, it does contain important summary data such as the results of operations.
By making an earnings announcement, the company conveys important information to the market in a timely manner. The Securities and Exchange Commission serves as an advocate for investors. As such, the SEC requires registrant companies to file periodic standard reports. These reports allow the SEC to oversee the financial reporting activities of the company and allow the SEC to make key financial information available to all investors.
Some of the reports required by the SEC are summarized in Exhibit 2. The Form K is a filing that includes audited annual financial statements and management discussion and analysis. The Form Q is filed on a quarterly basis and contains quarterly financial statements and management discussion and analysis.
The Form F is an annual filing by foreign issuers of financial securities. This report reconciles reports that were prepared using non-U. GAAP to reports prepared using U. The Form 8-K is a report of current activities that must be filed within 15 days of the occurrence of any of the following events: Regulation A is commonly called the Proxy Statement.
The Proxy Statement contains details of directors, managerial ownership, managerial compensation, and employee stock options. The Prospectus contains audited statements and other information about proposed project or share issues. Contemporary generally accepted accounting principles GAAP is the set of rules and guidelines of financial accounting that are currently mandated as the acceptable rules and guidelines for preparing financial reports for the external users of financial information.
These rules are comprised of the following: GAAP is also influenced by generally accepted practices in certain industries. The accounting profession currently establishes accounting standards.
The Financial Accounting Standards Board is currently the primary rule making body. The FASB proposes rules by first issuing a discussion memorandum. Interested parties are asked to render an opinion regarding the proposal by the FASB.
Finally, based on input received via the exposure and comment process, the FASB issues the new rule. Managers have the main responsibility for ensuring fair and accurate financial reporting by a company.
Managers have discretion in financial reporting in most cases. This discretion may result from either of two sources. First, managers often have a choice between alternative generally accepted rules in accounting for certain transactions.
Second, managers often have to make estimates of uncertain future outcomes. Each of these managerial judgments creates managerial discretion. Monitoring and control mechanisms include SEC oversight, internal and external auditor review, corporate governance such as Board of Director subcommittees assembled to oversee the audit and financial reporting, and the omnipresent threat of litigation.
Statutory financial reports are not the only source of information about a company that is available to interested parties outside of the organization.
Also, management will often provide voluntary disclosure of information that is not required by GAAP or other regulatory mandate. Financial intermediaries analysts play an important role in capital markets.
They are an active and sophisticated group of users that provide useful information to market participants. Tasks performed by intermediaries include collecting, processing, interpreting, and disseminating information about the financial prospects of companies. Under the historical cost model, asset and liability values are determined on the basis of prices obtained from actual transactions that have occurred in the past.
Under the fair value accounting model, asset and liability values are determined on the basis of their fair values typically market prices on the measurement date i.The statement of cash flows shows that Borland spent a large portion of its expenditure on acquisitions of different companies (Legadero, TeraQuest, and Segue Software), technologies, and investments that include goodwill and intangibles, which further supports this analysis.
Borland Software Corporation Case Study Concepts A) Intangible assets are operational assets that lack physical substance. However, the future economic benefits that are derived from intangible assets are usually less certain than tangible operational assets.
Goodwill is an intangible asset, probably the most intangible of all intangible assets, hard to measure and even more difficult to account for. Goodwill today constitutes a much larger part of acquisition prices than it did previously, resulting in a much greater impact on financial statements.
The statement of cash flows shows that Borland spent a large portion of its expenditure on acquisitions of different companies (Legadero, TeraQuest, and Segue Software), technologies, and investments that include goodwill and intangibles, which further supports this analysis.
More Essay Examples on Software Rubric. The financial reporting process is governed by accounting rules and standards, managerial incentives, and enforcement and monitoring mechanisms - Borland Software Corporation-goodwill and other intangible assets introduction.
It is important for a user of financial information to understand the . Goodwill is an intangible asset recorded on the balance sheet when one business acquires another business and when the purchase price, or carrying value, is greater than the fair market value. It includes the reputation, brand, geographic location, patents, employee commitments, and etc of .