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SEC 10-K Analysis and week 3 assignment

Read the SEC 10-K for Ford Motor Company. Alternatively, you can use Securities and Exchange Commission’s (SEC) Edgar filing system to view this information.

Write a 350- to 700-word paper describing the amounts of current and deferred income taxes.

Explain the items that affect both these classifications.

Provide details of the current and long-term portion of the deferred taxes. Be sure to list the Note number where you found your information.

Format your paper consistent with APA standards.

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15-2 and 17-6

CA15-2 (Issuance of Stock for Land) Martin Corporation is planning to issue 3,000 shares of its own $10 par value common stock for two acres of land to be used as a building site.

Instructions

(a)What general rule should be applied to determine the amount at which the land should be recorded?

(b)Under what circumstances should this transaction be recorded at the fair value of the land?

(c)Under what circumstances should this transaction be recorded at the fair value of the stock issued?

(d)Assume Martin intentionally records this transaction at an amount greater than the fair value of the land and the stock. Discuss this situation.

17-6

CA17-6 ETHICS (Fair Value) Addison Manufacturing holds a large portfolio of debt securities as an investment. The fair value of the portfolio is greater than its original cost, even though some debt securities have decreased in value. Sam Beresford, the financial vice president, and Angie Nielson, the controller, are near year-end in the process of classifying for the first time this securities portfolio in accordance with GAAP. Beresford wants to classify those securities that have increased in value during the period as trading securities in order to increase net income this year. He wants to classify all the securities that have decreased in value as held-to-maturity.

Nielson disagrees. She wants to classify those debt securities that have decreased in value as trading securities and those that have increased in value as held-to-maturity. She contends that the company is having a good earnings year and that recognizing the losses will help to smooth the income this year. As a result, the company will have built-in gains for future periods when the company may not be as profitable.

Instructions

Answer the following questions.

(a)Will classifying the portfolio as each proposes actually have the effect on earnings that each says it will?

(b)Is there anything unethical in what each of them proposes? Who are the stakeholders affected by their proposals?

(c)Assume that Beresford and Nielson properly classify the entire portfolio into trading, available-for-sale, and held-to-maturity categories. But then each proposes to sell just before year-end the securities with gains or with losses, as the case may be, to accomplish their effect on earnings. Is this unethical?

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