Harnischfeger Corp case study 1. Describe clearly the accounting changes Harnischfeger made in 1984 as stated in Note 2 of its financial statements. Note 2 (pg. 17) states that in 1984 Harnischfeger changed their depreciation method that was being used to expense their plants‚ machinery and equipment from the direct method to the straight-line method for financial reporting purposes. An adjustment of the residual values on certain machinery and equipment was made. Harnischfeger also included
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Harnischfeger Corp I. Introduction In 1984 Harnischfeger Corporation was a leading producer of construction equipment. During the decade of the 1970s the company experienced tremendous growth. Annual sales grew from $150 million in 1970 to $646 million in 1981. However the company began to experience financial trouble in 1979. This was caused by a variety of factors: the company wasted a large amount of resources on an unsuccessful merger‚ the government of Iran defaulted on a $20 million order
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Case Study Harnischfeger Corporation 1. Identify all the accounting policy changes and accounting estimates that Harnischfeger made during 1984. Estimate‚ as accurately as possible‚ the effect of these on the company’s 1984 reported profits. Net sales products purchased overseas and sold by the corporation. Change in the depreciation method. Before 1984 the company conducted accelerated method for its operating plans and after 1984‚ the straight-line method is used (Note 2). As a result‚ this
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Directions Read the “Harnischfeger Corp” case study and answer the following questions. Submit your completed assignment no later than the last day of Week 2. 1. Describe clearly the accounting changes Harnischfeger made in 1984 as stated in Note 2 of its financial statements. • Based on the financial statements in 1984 Harnischfeger made changes from the previous year‚ the corporation computed depreciation expenses on plants‚ machinery and equipment using the straight-line method. Prior to
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1. Describe clearly all of the accounting changes Harnischfeger made in 1984. -In 1984‚ there was a switch from accelerated to straight line depreciation retroactively. Because of this‚ the depreciation expense decreased. -The estimated depreciation lives on certain U.S. plants‚ machinery and equipment changed. The economic life of these assets was increased‚ so the depreciation expense was lowered. -There was an improvement in the minimum pension benefit. This change produced a lower pension
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Harnischfeger 1. Describe clearly the accounting changes Harnischfeger made in 1984 as stated in Note 2 of its financial statements. In the 1984 the corporation computed depreciation expense on plants‚ machinery and equipment by using the straight-line method for financial reporting purposes. These changes were made to provide a more equitable allocation of the cost of the plants. 2. What is the effect of the depreciation accounting method change on the reported income in 1984? How will
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Vishal SachdevApril 19‚ 2013Harnischfeger Corporation 1. Describe clearly the accounting changes Harnischfeger made in 1984 as stated in Note 2 of its financial statements. Harnischfeger made two accounting changes from which one made its net sales increase‚ and the second change made its net income increase. For the net sales increases‚ they included sales from certain foreign subsidiaries which increased their net sales. Also‚ in the past when having sold equipment generated from their supplier
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Read the “Harnischfeger Corp” case study and answer the following questions. Submit your completed assignment no later than the last day of Week 2. Describe clearly the accounting changes Harnischfeger made in 1984 as stated in Note 2 of its financial statements. They included products purchased from Kobe Steel in their net sales causing them to increase by $5.4 million. They changed the way they compute depreciation expense by using the straight-line method‚ resulting in an increase in net income
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1. Identify all the accounting policy changes and accounting estimates that Harnischfeger made during 1984. Estimate as accurately as possible the effect of these on the company’s 1984 reported profits. 1. Products purchased from Kobe Steel were included in net sales‚ as opposed to only reporting the gross margin on Kobe equipment. These net sales amounted to $28 million in 1984‚ although the amount was insignificant on net income. 2. Financial statements of some foreign subsidiaries
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Harnischfeger Corporation • Includes in net sales products purchased from Kobe Steel. Financial Statements of certain foreign subsidiaries are included on the basis of their fiscal years ended July 31. Although this has no significant impact on net income‚ it did increased net sales by $5.4 million. • Perhaps one of the most significant accounting changes would be changing the method for depreciation expenses on plants‚ machinery and equipment – from principally accelerated methods to straight
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