Coach Accounting Analysis Step 1-3: Identify principal accounting policies, Assessing accounting flexibility & Evaluating the accounting strategy Coach uses the generally accepted accounting principles (GAAP) as imposed by the United States when preparing financial statements. They mention in the 10k that the requirements cause management to make estimates and assumptions that may result differently from the actual amount. Of course, prediction of future events are never completely accurate (especially in retail), however the policies and estimates of the company are periodically reviewed with the Audit Committee of the Board. In the upcoming paragraphs, we will explain and evaluate in the assumptions and policies used by Coach. One of the …show more content…
Here, overall company revenues are recognized once there is credible proof that there has been a delivered arrangement (with agreed upon price and confirmed collectability) with risks and ownerships being transferred to the buyer. When it concerns retail stores and internet orders, however, revenues are recognized at the point of sale and upon delivery and receipt of the shipment by its customers. All of which can be reduced based on estimates for returns. As for wholesales, the title has to be passed to the consumer (along with the risk of loss) for recognition. But instead of being estimated as net returns, the company also takes into account discounts, and markdown allowances. Most of which are based on historical trends, market conditions, and other …show more content…
This is based on a review of forecasted operating cash flows (that are estimated by taking into account many factors that may cause impairment when the estimate does not meet the expectation) and the profitability of the related asset group. Coach recognizes the cost of equity awards to employees and the non-employee director as well as the share-based compensation awards that are given to certain executives (based on historical experience and considering their continued employment). Other compensations are based on different calculations that take into consideration past values and other factors which can affect net income if estimates are too far off. For example, the Coach 10k stated that “A hypothetical 10% change in our stock-based compensation expense would have affected our fiscal 2014 net income by approximately $7