Essay in Case1

Case1

University or college of Az Accounting 554 Case #1: Dow Chemical substance Company Goals: • • • Understand a set of economic statements including auditor opinion and significant accounting coverage footnote, Perform basic research and model of the economic statements, including common size analysis, Acknowledge the role of estimates in the way of measuring of financial statement amounts.

Refer to the Dow Chemical economical statements to get 2008 in answering the subsequent: 1 . Whom are Dow's external auditors? Describe the 2 opinion letters that Dow received for 2008. That you really need words, describe what these kinds of opinions imply. Why are the opinions went out with several weeks following Dow's season end? 2 . Use a chart to construct common-size income statements for 08 and 3 years ago. (Note: common-size income statements are built by dividing each profits statement item by net sales). a. Was the firm profitable during 2008? During 2007? What really does the term " profitable” indicate? b. Calculate the percentage difference in net revenue and in net income from 3 years ago to 08. c. What are Dow's major categories of expenditures? Do you find any significant changes in the composition of costs in 2008 compared to 3 years ago? d. Dow shows separate lines around the income statement for goodwill impairment loss, restructuring charges, purchased in-process research and development expenses, acquisition-related bills and asbestos-related credits. So why do you think the corporation chose to never just consist of all of the sums within the range item to get " Selling, general and administrative expenditures. ” at the. How could the percentages you computed partly 2b transform if the things in part second were ruled out in calculating net income. (Caution: the items classified by part 2d are demonstrated before taxes, while net income is shown after duty. Be sure to adapt your solution accordingly, using the statutory taxes rate of 35%. ) f. Within a sentence, describe why Dow's profitability altered from 3 years ago to 2008. 3. Label the affirmation of cash goes. a. Evaluate Dow's net gain to money provided by procedures. Why is presently there such a positive change? b. Describe why (i) depreciation and (ii) reorganization, rearrangement, reshuffling charges happen to be shown because positive inclusions in cash given by operations. c. Based on reading the statement of cash runs, explain within a short passage where Dow got cash in 2008 and what happened to this cash. four. Several parts in Note A for the Dow financial statements refer to estimates (either using the expression " estimate” or otherwise). Make a list of accounting estimates mentioned in Note A. Which of such estimates do you consider is most crucial in computing Dow's income?

The Dow Chemical Business and Subsidiaries PART 2, Item almost eight. Financial Assertions and Supplementary Data. Statement of Independent Registered Open public Accounting Firm To the Panel of Company directors and Stockholders of The Dow Chemical Organization: We have audited the enclosed consolidated stability sheets from the Dow Chemical Company and subsidiaries (the " Company" ) by December 23, 2008 and 2007, plus the related consolidated statements of income, stockholders' equity, comprehensive income and cash moves for each from the three years inside the period concluded December 23, 2008. Each of our audits also included the economical statement timetable listed in the Index at Item 15 (a) installment payments on your These economic statements and financial declaration schedule will be the responsibility in the Company's managing. Our responsibility is to share an opinion within the financial transactions and financial statement plan based on each of our audits. We conducted our audits in accordance with the standards from the Public Company Accounting Oversight Board (United States). All those standards require that we strategy and carry out the review to obtain fair assurance about whether the economic statements are free of material misstatement. An review includes evaluating, on a test basis, proof supporting the amounts and disclosures in the financial transactions. An review also includes examining the accounting principles employed and...