Question

You work for an organization that is seeking growth and recently has hired new district managers to assist in this growth. In talking to other regional managers, you have heard that some district managers do not have a thorough understanding of commonly used accounting tools including an income statement and balance sheet. You have a new district manager hire, John, and see the need to do some training with him so he has a solid understanding of income statements, balance sheets, and the elements that go into them, including advertising costs, Web development costs, and store opening costs.
In preparing to train your new hire, you have determined that the use of examples (a picture is worth a thousand words) can be a great approach to use. So you have decided to gather some examples from the company’s summary of significant accounting policies from its latest financial statements.

You may apply this scenario to either Option 1 or Option 2, described in Requirements below.

Your Role

You are a regional manager for Urban Outfitters or your selected organization and oversee a number of districts. You have recently brought a new district manager on board and want to ensure he has the knowledge and tools needed to effectively do his job.

Requirements

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.

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.

Option 2:

Use a firm or scenario of your choosing.

Before choosing a company, read the assessment thoroughly to ensure:

The company fits the assessment requirements.

You have access to the financial statement’s summary of significant accounting policies and the Note disclosures from which you are drawing your materials. Include this information in the appendix for reference.

You can distribute the data without disclosing confidential company information.

Answer 1

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.