Ford Motors Company
Ford Motors Company is a public limited automotive company which deals with trading of automobiles and commercial vehicles branded the name ford.it shares are traded in the New York stock exchange, and currently, its network is at the US $ 34.89 billion. In generating its income, the firm deals with automotive finance vehicle leasing and vehicle services. And the products the firm have fully invested in include not only automobiles but also sale commercial, luxurious and spare parts of the same. It has three divisions or segments that Is Ford, Lincoln and motor craft .it has also invested in shares in other companies that are subsidiary companies and they include transportation sectors, financing sector and other services including international investment. In funding of its operations, Ford Company adopts a segregated reporting system where different segment are allowed to report as a separate entity before consolidation at the end of every financial year. (Endres, 2009).
Disclosure
The firm has adopted both compliances to generally accepted accounting principles as well as Non-generally accepted accounting principles. The international standard board is mandated to issue a mostly acceptable standard which different firms registered need to comply with all disclosures of every operation need to be made. Since each transaction has a different economic implication and its treatment affects the films value as well as the service of the firm (Asay, 2018). It is the role of every firm to comply with standard rules and regulations. Every organization registered and mandated to trade in the stock market needs to conform to specific rules and regulations concerning the disclosure of its financial affairs that is the position of the firm and its profitability. Meeting these requirements, international financial reporting standards IFRS 15 concerning declaration states that an organization may: (Berger, 2018)
Within a few months left or proper to the end of the financial year may wish to plan or implement to make disclosure few months before the end of the fiscal year or
An entity may desire to change the economic aspects of the components contained in the statement of financial position. Or financial; reports s and objectively may want to expand the numbers of elements that are reported in the financial statement when the firm adopt a newly implemented standard and regulation, for example, revenue recognition standard which the international standard of accounting board issued. Even if the firm does not expect to make the required disclosure which will be useful in adding to the firm's revenue for the year.
In case of the post balance sheet events that may occur as a result of perils unsystematic risks, a necessary adjustment needs to be made in the firm's processes, a control system to capture the required data to meet the standard requirement and presentation be done according to stipulated regulation.
Key Points of Disclosure
Accenting standard updates 2016-2009 revenue recognition from contracts from customers, according to ASC 606, in reporting the firm's revenue in the comprehensive income statement. If the firm has entered into a contractual agreement and out of it, revenue is gained, these revenues have to be reported since its omission is material to the income of the firm
Retirement benefit improvement as stated in the ASU 2017-07, the net periodic cost benefit since its amendment needs to be amortized and the respective amortization it being a non-financial expense needs to be reported in the statement of income in the retrospective basis.
Leases ASU 2016-09 issue on recognition of leases and other when to recognize lease and how to make its disclosure if it is paid before the maturity or expiry of the period and how lease income is recorded if settled in between the required period of the lease terms. Since it is an agreement, issues related to lease and lessee need to be recognized.
How the Company Has disclosed the Above Items?
With contractual incandesces the firm need to recognize as an income, in 2017 after the adoption of the creation and implementation of the standard, the firm has continually recognized it as an income and its recognition as help the firm in assuring its continuity and solvency (Endres, 2009). With limited non-recognition of the contractual income, it means that the firm is reporting higher profit margin as compared to other firms at since taxation is a compulsory payment to the government as a portion out of the profit depending on the domicile of the firm. (Carroll, 2014) Ford Company pays taxes to the government and overstating the advantage increases the amount of income attributable to tax which reduces the shareholder's profit due at the end of the financial period.
With retirement benefit improvement, being a newly adopted law, disclosure needs to be made in the sense of being taken as an asset to the firm, its amortization cost needs to be recognized since at its maturity. The firm is liable to pay its employees retirement benefits and amortizing it will act as a method of creating a reserve which will act as a mode of refinancing the future costs to be incurred by the company (Bevan, 2002)
With segment to the firm, its employees also contribute to the retirement benefit; the cumulative amount needs to be apportioned to the share-based payment where the whole affair is shared between the parent company which is ford and its non-controlling interest.
Revenue recognition principle is predominantly applicable to ford company because as required by the law, the firm is charged to recognize any revenue when the service or a sale is made. With this recognition, lease agreement rendered is a form of firms financing, and in 2017, ford recognized after adoption as a law that as income which adds to the company revenue.
Firm's disclosures show that the company is in compliance to set rules and regulations established by the accounting standards board and these indicates an element of strong governance in the firm. It is also an indication of the good internal control system. Achieving a higher revenue and compliances depends on firm's ability to meet set limits and based on Ford Company, the disclosure of contractual income and the lease income aids since it acts as a guiding map to the financial investment. It gives potential investors confidence, and through it, the firm if adopting the disclosure that is newly repealed will add to its reputation hence increased investment made by third parties.
The disclosures are effective since declaring full income attracts benefits and waiver by the tax authority and there is an addition to the firm's reserves which will increase firm's investment decision.
Treating the parent and non-controlling interest as separate entities increase the accountability and parent being the overall overseer of the subsidiaries will only aid when faced with difficult financial distresses. Adjustments are reporting periods before the actual dates give the firm management autonomy to review rules and firm's policy concerning financing, investment among other affairs which are beneficial to the firm.
References
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Berger, T. M. (2018). Ipsas Explained: A Summary of Standards and Principles of International Public Sector Accounting Standards. . John Wiley " Sons.
Bevan, A. a. (2002). Capital structure and its determinants in the UK-a decompositional analysis. Applied Financial Economics, 12(3), pp.159-170.
Burton P, i., " Burton Peter Geoffrey, a. ( 2002 ). Financial instruments. United States patent application. US.
Carroll, A. ". (2014). Business and society: Ethics, sustainability, and stakeholder management. . Routledge: Nelson Education.
Coelli, T. J. (2005). An introduction to efficiency and productivity analysis. . Springer Science " Business Media.
Endres, W. J. (2009). Ford Motor Company.
Forbes, K. F. (2015). Capital-flow management measures: What are they good for?. . Journal of International Economics, 96,, S76-S97.
