Financial Statement Restatement Paper
A number of companies have faced restatements because of errors in their financial statements (Kieso, Weygandt, & Waterfield, 2007). Overstock.com is an online retailer offering closeout and discount brand and non-brand name merchandise. They also operate as part of their website an online auctions business- a marketplace for the buying and selling goods and services.
In February 2006, the company restated financial reports from Q1 2002 to Q3 2005 due to inventory accounting errors. In October 2008, Overstock.com disclosed new customer credit and refund accounting errors and restated all financial reports from Q1 2003 to Q2 2008. However, the October 2008 restatement did not include corrections arising from under billed offsetting costs and reimbursements that were already earned from its fulfillment partners during those same corresponding periods, less a reasonable estimate of uncollectable amounts. Subsequently on January 29,2010, Overstock.com announced they had to restate its previously issued financial statements for the fiscal year ended December 31, 2008 (including the interim periods within that fiscal year), and the quarterly periods ended March 31, 2009, June 30, 2009, and September 30, 2009 (Antar, 2010). Overstock.com incorrectly amortized the expense related to restricted stock units based on the actual three-year vesting schedule rather than a three-year straight line amortization and applied an outdated forfeiture rate in calculating its expense under the plans. Correction of these errors are expected to decrease income for fiscal year 2008 by approximately $350,000, and to decrease income for the nine months ended September 30, 2009 by approximately $900,000 (Ritholtz, 2010).
In the last two years, Overstock.com has restated its financial statements twice to comply with Generally Accepted Accounting Principles. On Overstock.com official website, 2008 financial statements have been...
References: Kieso, D. E. Weygandt, J.J., and Warfield, T.D. (2007). Intermediate Accounting
(12th ed.). Hoboken, NJ: John Wiley & Sons, Inc.
Kimmel, P.D., Weygandt, J. J., Kieso, D.E. (2007). Financial accounting; Tool for business decision making (4th ed.). Hoboken, NJ: John Wiley & Sons, Inc.
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