Answer:
Option 1:
Option 1 is a better approach
The organization you work for is Urban Outfitters. Use the U.S. Securities and Exchange Commissionwebsite to find the Urban Outfitter’s 2016–2017 financial statement’s summary of significant accounting policies. Look at the data for 2015, 2016, and 2017 for the following examples of essential elements you need to cover with John and ensure his understanding.
Advertising. Examine the criteria used to expense and capitalize advertising costs and where these costs appear in the financial statement.
Store opening costs. Examine how store opening and organization costs were handled and where these costs appear in the financial statement.
Website development costs. Examine the approaches taken during the application and infrastructure development stage and the planning and operating stage.
Explanation:
Option 1:
The organization you work for is Urban Outfitters. Use the U.S. Securities and Exchange Commissionwebsite to find the Urban Outfitter’s 2016–2017 financial statement’s summary of significant accounting policies. Look at the data for 2015, 2016, and 2017 for the following examples of essential elements you need to cover with John and ensure his understanding.
Firstly it is better to show the previous years financial statements because company policies do not change every year. Each company follows some particular accounting policies example it may follow different accounting periods or it may choose accrual basis of accounting. Showing other companies financial statements is of not much use as they have their own accounting policies which result in different values of profit etc.
Advertising. Examine the criteria used to expense and capitalize advertising costs and where these costs appear in the financial statement.
Advertising expenses are listed under the marketing expenses in the income statement and deducted from the gross profit.
Store opening costs. Examine how store opening and organization costs were handled and where these costs appear in the financial statement.
Store opening costs like land or building are capitalized and recorded as an asset anddepreciated or amortized over time. Other costs like running expenses are recorded in the corresponding expense ledgers .
Website development costs. Examine the approaches taken during the application and infrastructure development stage and the planning and operating stage.
Website development costs are recorded under the research and development in the income statement and deducted in the period as they incur. Like the whole years website charges are $3600 . They may be deducted like $300 every month.
