11 May WHAT IS THE COMPANY’S REVENUE RECOGNITION POLICY?
Problem 2-3: Locating Information on Published Financial StatementsAs with the Unit 1 assessment, for this problem, you will need to obtain the financial statements for Lowe’s Companies for 2011. You can obtain the financial statements directly from the EDGAR database of the Securities and Exchange Commission. Access the Securities and Exchange Commission Web site by clicking the link in the assessment resources. Then click in the Search EDGAR for Company Filings box about halfway down the page on the right side and type “Lowes Companies” in the Company Name box. You can leave the rest of the form blank. Select the 10-K form from the list of search results. You can also get this information from Lowe’s Web site by clicking on Investor Relations at the bottom on the page.Using the Lowe’s 2011 10-K and your prior knowledge of accounting, supplemented by textbooks or other references of your choosing, answer the following questions. Reference the source of each of your answers by including the page number from the Lowe’s 2011 10-K form if applicable.What is the company’s revenue recognition policy? Hint: Look in the notes to the financial statements.Assuming that $40 million of cost of sales was due to noninventory purchase expenses (distribution and occupancy costs), how much inventory did the company buy during the fiscal year ending 2012? Hint: Use the inventory flows as shown on the T-account for Inventory to calculate how much was purchased. You will need to compute purchases by starting with the Cost of Sales per Income Statement + Ending Inventory (Balance Sheet) – Beginning Inventory (Balance Sheet – last year’s ending 2011) = Purchases. Now subtract the noninventory purchases of $40M.Calculate general, administrative, and selling expenses as a percentage of sales for the fiscal years ended in 2012, 2011, and 2010. By what percentage did these expenses increase from fiscal year 2011 to 2012? From fiscal year 2010 to 2011? This is calculated as Percentage Change = (Current Year % Prior Year %) / Prior Year %.Compute the company’s total asset turnover for the fiscal year ended in 2012 and explain its meaning. Show all of your workAs with the Unit 1 assessment, for this problem, you will need to obtain the financial statements for Lowe’s Companies for 2011. You can obtain the financial statements directly from the EDGAR database of the Securities and Exchange Commission. Access the Securities and Exchange Commission Web site by clicking the link in the assessment resources. Then click in the Search EDGAR for Company Filings box about halfway down the page on the right side and type “Lowes Companies” in the Company Name box. You can leave the rest of the form blank. Select the 10-K form from the list of search results. You can also get this information from Lowe’s Web site by clicking on Investor Relations at the bottom on the page.Using the Lowe’s 2011 10-K and your prior knowledge of accounting, supplemented by textbooks or other references of your choosing, answer the following questions. Reference the source of each of your answers by including the page number from the Lowe’s 2011 10-K form if applicable.
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