10- The Directors’ Report of financial condition and operating results requires Next’s board of directors to make judgments, estimations and assumptions that affect the reported values of assets, liabilities, revenues and expenses in its consolidated fina

 It is a financial reporting homework and i am disprite i can’t do it any more. please i need help.

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<p>FinancialReporting on the Internet

(Case study: Next Plc)

The internet is a good place to get information that is useful to you in your study of accounting. For example, you can find information about current events, professional accounting organizations, and specific companies that may support your study.

The NEXT retail chain was launched in February 1982 and the first store opened with an exclusive coordinated collection of stylish clothes, shoes and accessories for women. Collections for men, children and the home quickly followed. NEXT clothes are styled by its in-house design team to offer great style, quality and value for

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money

 with a contemporary fashion edge.

Today NEXT trades from more than 500 stores in the UK and Eire and almost 200 stores in more than 30 countries overseas. Over the last few years several larger format fashion and home stores have opened across the UK and, in August 2011, NEXT opened its first combined fashion, home and garden store at Shoreham-by-Sea.

Access the Next home web page at: www.next.co.uk. From Next’s home page and then “The Company”, click on “FINANCIAL INFORMATION”, followed by “Reports and results”, then select the year 2012 to display and download the “Annual report and accounts” January 2012 on Form PDF.

Note: the financial statements of Next plc are available at:

http://www.nextplc.co.uk/~/media/Files/N/Next-PLC/pdfs/latestnews/2012/ar2012


Instructions
Use the annual report and accounts of 2011/2012 to answer the following questions:

1- As you learned in Unit 1, Session 3, the major environmental factors impacting on an organization can be grouped under four headings: political/legal, economic, social/demographic and technological (PEST analysis). Giving examples from the annual report, discuss the impact of each of the elements in the PEST analysis on Next Plc.

[Marks (Words): 16(500)]

2- Refer to Next’s Annual Report. Identify which basis or qualitative characteristic of accounting information is best described in each item below.

a- The annual report of Next is audited by Ernst & Young LLP, Statutory Auditor.

b- Next issues its quarterly reports immediately after each quarter ends.

c- The Directors report that, having reviewed current performance and forecasts, they have a reasonable expectation that the Group has adequate resources to continue its operations for the foreseeable future.

d- Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided to customers outside of the Group, stated net of returns and sales taxes.

e- The allowance for doubtful debts in 2012 is £113.7 million.

[Marks (Words): 10(100)]

3- As mentioned in p. 23 from the annual report:

In preparing those financial statements, the directors are required to select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently.

How can it be determine from the financial statements or related notes that the accounting principles used by Next in 2012 are prepared on a basis consistent with those of last year?

[Marks (Words): 9(100)]

4- What type of income statement format does Next plc use? Explain why this format might be used by the company.

[Marks (Words): 7(100)]

5- Using Next’s financial statements and related notes, identify four items that may result in adjusting entries for deferrals and accruals.

[Marks (Words): 8(60)]

6- Give three examples of where historical cost information is reported in Next’s financial statements and related notes. Give three examples of the use of fair value information reported in either the financial statements or related notes.

[Marks (Words): 9(120)]

7- Analyse the information provided by the detailed age analysis of trade and customer debtors. Advise Next about any actions that should be taken in respect your analysis.

[Marks (Words): 9(120)]

8- Nike, Inc. is a U.S. company. Nike Corporate web site, located at:

www.nike.com

Access to Nike’s 2012 annual report, available at: http://investors.nikeinc.com/files/doc_financials/AnnualReports/2012/docs/nike-2012-form-10K

a- Explain at least four differences in balance sheet reporting between British and U.S. firms, as shown in Next’s balance sheet.

b- Review Next’s balance sheet and explain how the format of this financial statement provides useful information, as illustrated in Unit 4, Session 6.

[Marks (Words): 12(200)]

9- The Company mentioned in its annual report, p. 55 that:

Intangible assets acquired separately from a business are carried initially at cost. An intangible asset acquired as part of a business combination is recognised outside goodwill if the asset is separable or arises from contractual or other legal rights and its fair value can be measured reliably. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and impairment losses. Intangible assets with a finite life have no residual value and are amortised on a straight line basis over their expected useful lives as follows:

Brand names and trademarks

10 years

Customer relationships

4 years


Required

Write a memo, in no more than 400 words, explaining: (Hint: Explain and support your memo by suitable figures from the Next’s annual report.)

a- The contents of the statement above in relation to international accounting standards (IAS). What was the effect of the adoption of IAS 36 on Impairment of Intangible Assets by Next?

b- Who is responsible for estimating the useful lives of intangible assets?

c- What is the estimated amortization rate of the intangible assets being amortised?

d- Why do you think Next uses straight line method rather than using the accelerated method?

e- What was the composition of identifiable and unidentifiable intangible assets reported by Next at January 2012 and 2011?

[Marks (Words): 12(400)]

10- The Directors’ Report of financial condition and operating results requires Next’s board of directors to make judgments, estimations and assumptions that affect the reported values of assets, liabilities, revenues and expenses in its consolidated financial statements and accompanying notes.

Is the given statement true or false? Substantiate your answer by four different examples from the annual report.

[Marks (Words): 8(100)]

[Total Marks (Words) = 100(1,800)]

In your answer, you should explain each point or inquire separately. References: Recorded according to the Harvard style

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