The company I selected is Tesla Inc. Tesla Inc is a company founded on July 1st, 2003 in
Delaware by Elon Musk. The original name was Tesla Motors Inc. It changed to Tesla Inc on
Feb 2nd, 2017. The main income for Tesla Inc is revenue from automobiles. Tesla is leading
in the new technology revolution in the automobile industry. The stock ticker is TSLA. The
current stock price is 733.63 USD. I was about 1000 USD per share in the early of this year.
After the CEO of Tesla. Elon Musk bought twitter; the stock price is going down.
One important thing on the balance sheet is inventories. This is very important for a company
like Tesla. Because the company's income has a strong relationship with the company's
inventory. The higher inventories mean Tesla has more inventory in the hand. Tesla is trying
to sell more automobiles to the market. It will have more revenue in the future. The value for
the company will increase.
CVS Health Corporation (NYSE: CVS) is a U.S.-based chain of retail pharmacy stores,
headquartered in Woonsocket, Rhode Island. CVS opened its first store in 1964 and in 1968,
pharmacies departments were added to the stores-- paving the way for the company to
become the largest drugstore chain in the United States (Pederson, 2002). CVS Corporation
became a public company in 1996. In 2007, CVS Corporation merged with Caremark Rx, Inc.
to became CVS Caremark Corporation. In September 2014, the name was changed to CVS
Health Corporation to better align with the company’s “health care commitment to patients,
payors, and providers.” (CVS Health, 2022) Today, CVS Health Corporation is divided into
four segments-- Health Care Benefits, Pharmacy Services, Retail/ Long Term Care,
Corporate/Other—that run multiple subsidiaries, most notably CVS Pharmacy, MinuteClinic,
Navarro Discount Pharmacies, Omnicare, and Aetna (CVS Health, 2022; SEC, 2018).
CVS has over 9,800 retail locations, many of which are leased. The company lists these assets
as “Operating lease right-of-use assets” on the balance sheet. The company determines if the
contract they enter into contains a lease and, if so, the right-of-use and lease liabilities are
recognized at the commencement date of the lease. In instances where significant remodeling
is done to the leased space, the present value of the remaining future minimum lease
payments is used. CVS uses operating leases as the criteria for capital leases are, in general,
not met. CVS does not lease the building for more than 75% of its useful life, ownership does
not transfer at the end of the lease term, CVS will not purchase the building under a bargain
purchase option, and the lease payments do not equal at least 90% of the fair market value of
the asset.
Using a “right-of-use” operating lease for the retail spaces seems to be the correct option for
CVS. A retail store’s success can be highly dependent on the area it is in—good foot traffic,
parking, safety, etc. By not purchasing over 9,000 individual buildings, CVS has allowed
themselves the mobility to close stores when needed. While they are still required to meet
their lease obligations, the company does not then have to attempt to sell a building in a less
desirable area. From the accounting side, CVS cannot claim these building as capital leases
and must use operating leases. While this can be a benefit as some of the risk is removed,
there are also drawbacks. Once the lease is entered into, CVS becomes obligated to pay for
the use of the building, regardless of the store’s productivity. Also, the company cannot take
advantage of depreciation—the lease amount stays the same even as the building ages. CVS
has chosen the correct accounting policy for claiming its retail spaces.
The company I have chosen is the Walt Disney Company. The company's stock is publicly
traded on the stock market under the stock ticker DIS. The Walt Disney Company trades
under the Cable industry and other pay T.V. services. The Walt Disney Company is one of the
world's largest leading forces in the entertainment industry. Disney is known for bringing
fantasy and fun to families through its amusement parks, television series, and several live
action/animated motion pictures. Disney has also gained success through its acquisition of
several other companies as well as through its sales of its products in its stores, and most
recently through the development and launch of Disney's digital streaming services. The Walt
Disney Company lists construction in progress on their balance sheet within the property,
plant, and equipment line. This can be one of the largest fixed asset accounts. Costs are
accumulated in the construction in progress account, but depreciation does occur because it
has not yet been placed in service. It is not depreciated until once the asset is placed in service
and shifted to its final fixed asset account. I believe listing construction in progress on the
balance sheet is wise. "It gives a clear vision to the company for its future costs. The
construction work in progress helps to control unwanted costs. The construction work in
progress account measures all the expenses and allows its users to prevent wastage of money
in various areas. They help the management to control its risk factors for future events"
(Thakur, 2022). The true picture of Disney's financial position is depicted.
The company I decided to go with for this project is CVS Health Corp. This company was
founded by brothers Stanley and Sidney Goldstein and partner Ralph Hoagland. The first
CVS store opened in 1963 and was in Lowell, Massachusetts. From the start the company was
extremely successful and opened 17 additional stores in 1964. When the company started it
initially sold only health and beauty products. In 1967, CVS would add pharmacy to their
portfolio when they opened two additional stores in Rhode Island. In 1969, the company was
sold to Melville Corporation. Stanley Goldstein would become the president and COO of
Melville Corporation in 1986. In 1996, CVS becomes a public traded company.
An item I decided to go with is goodwill and intangible assets. Goodwill value for CVS is
currently at 79,121 and intangible assets are at 29,026 as of December 31, 2021. (Edgar, n.d.)
This creates value for the company. The valuation policies help determine its value and
intangibles includes things like copyrights, patents, and other agreements that generate
revenue for the company. There is some value also with CVS trademark like Kraft-Heinz
which placed a lot of worth. d
References
Edgar. (n.d.). Retrieved July 07, 2022, from
https://www.sec.gov/ix?doc=/Archives/edgar/data/64803/000006480322000016/cvs-
20220331.htm#ibac2be002d984e48800851722099625c_13
Construction Work in Progress - Definition & Examples (wallstreetmojo.com)
CVS Health. (2022, February 9). 2021 Annual Report. Retrieved from
https://s2.q4cdn.com/447711729/files/doc_financials/2021/ar/CVS2021_Annual-Report.pdf
Pederson, J. P. (2002). International Directory of Company Histories (Vol. 45). St. James
Press.
SEC. (2018). Subsidiaries of CVS Health Corporation. SEC. Retrieved from
https://www.sec.gov/Archives/edgar/data/64803/000006480319000013/subsidiariesofcvsheal
thcor.htm
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Mergent. (2021). Tesla Inc Retrieved July 2, 2022, from https://www-mergentonline-
com.ezproxy.snhu.edu/companydetail.php?compnumber=129614
