Accounting
huyhahy
ExtraCredit2-IntermediateI1.xlsxSUMMARY
| EXTRA CREDIT 2 | ||
| POINTS | 15 Points | |
| OBJECTIVE | This exercise is designed to further develop your understanding of how interest costs affect a company’s overall financial position. | |
| REQUIREMENTS | Complete the following requirements and upload a single Microsoft Excel file containing all of your work to Blackboard. | |
PART A
| PART A - REAL WORLD INTEREST DISCLOSURES | |||
| Choose two of the companies listed below. Review the financial statements and relevant disclosures and answer the following questions for each company. | |||
| Choose one from the following list: McDonald's 2018 Form 10-K, Disney's 2018 Form 10-K, Nordstrom 2018 Form 10-K (For the year ended February 3, 2019). | |||
| Company Name: | |||
| How much cash was paid for interest during the most recent fiscal year? | |||
| How much interest expense is included on the most recent fiscal year income statement? | |||
| How much interest was capitalized during the most recent fiscal year, if any? | |||
| Using your understanding of GAAP accounting for interest, briefly explain why the answers to questions 1 and 2 are not the same. | |||
| Provide a brief summary (1 paragraph or less) in your own words of the company’s long-term debt and related interest commitments according to its long-term note disclosure. |
PART B
| PART B - FINANCIAL STATEMENT IMPACTS OF INTEREST | ||||
| Create a unique three-year, par value loan by choosing reasonable values for the following items. Answer the questions below related to the loan’s impact on the financial statements for the borrower. The loan should be issued during 2020, sometime after January 1, and interest should be payable annually. Use formulas for all cells containing dollar amounts, except for the input cells below. | ||||
| Inputs: | ||||
| Face Value | ||||
| Interest Rate | ||||
| Date of Issuance (e.g. 4/1/2020) | ||||
| What is the loan's impact on earnings? | Year Ended December 31, 2020 | Year Ended December 31, 2021 | ||
| Account Name: | ||||
| Overall Dollar Value of Impact to Earnings (Ignore taxes): | ||||
| What is the loan's impact on cash flow? | Year Ended December 31, 2020 | Year Ended December 31, 2021 | ||
| Operating Impact (Dollar Amount): | ||||
| Investing Impact (Dollar Amount): | ||||
| Financing Impact (Dollar Amount): | ||||
| Overall Impact to Cash Flow (Dollar Amount): | ||||
| What is the loan's impact on the Balance Sheet? Remember the impact to Balance Sheet elements is cumulative, because the accounts are permanent. | Year Ended December 31, 2020 | Year Ended December 31, 2021 | ||
| Asset Impact (Dollar Amount): | ||||
| Liability Impact (Dollar Amount): | ||||
| Equity Impact (Dollar Amount): |
