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ACTG Project

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by

Millan Jankovic

on 14 July 2013

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Transcript of ACTG Project

Performance and Financial Analysis
Companies capitalize:
Related Material
Construction
Overhead Costs
Interest on debt used to finance significant project

Rogers does not capitalize interest

Implications?
Assets include:
Telecommunications assets
Machinery & Equipment
Buildings
Software

Assets are recorded at cost
Capitalization
Accounting Policies
CAPITALIZATION
AMORTIZATION
INVENTORY
U.S. – Canadian GAAP differences
Deferred development costs
Amortization
Most use straight-line
Best reflects use of capital assets
Rogers (exception)

To estimate useful life companies use models such as:
Future usage, physical wear and tear, replacement history, and assumptions about technological evolution
Models for each company are slightly different
Change in useful life estimate
Asset depreciated over revalued useful life

Group depreciation (Bell)
Immaterial assets or similar assets grouped
Diminishes comparability
Inventory
Inventory Valuation Methods
Telus: Average Cost
Bell: Specific Identification
Rogers: First In First Out
Sprint: First In First Out
Inventory Write downs

All companies, including Sprint, use the Lower of Cost
or NRV rule to account for Inventory.

Telus: Future sales trends and expectations, and Inventory turnover data.
Bell: Inventory Aging.
Sprint: Sales forecasts and Inventory Aging.
IFRS
Detailed Changeover Plan
Initial impact assessment and scoping phase,
Key elements phase,
Ebedding phase,
Communication and training phase,
Information technology infrastructure phase,
Business policy assessment phase
IFRS Communication
Annual Financial Statements
Select Quarterly Statements
IFRS Conversion
Business Combinations and Non-Controlling Interests: 
Measuring business acquisitions at the fair value of the acquired business.
A choice of whether or not to recognize the fair value of goodwill attributable to non-controlling interests
Performance and Financial Analysis
TELUS saw its operating revenue increase between 2007 and 2008

However, TELUS’ net income did decrease during this time
Rogers net income actually increased over this same time
2008-2009 Recession
Liquidity and Solvency
TELUS’ current ratio of 0.51 in 2008 was lower than the industry average of 0.76

May lead to creditors and lenders not wanting to offer credit to TELUS
TELUS has grown more dependant on long-term debt

TELUS’ debt-to-equity ratio of 1.66 is higher than the industry average of 0.81
TELUS’ operating leases, contingencies, and commitments are less than those of Bell and Rogers
Wrap-Up
From the surface it appears as though TELUS is performing well
Some evidence does suggest that TELUS is performing well in some respects
A careful analysis reveals that TELUS may not be performing as well as it appears to be, at least when compared to its competitors
Thank You!
Accounting Research Project
Aarti Rattan
Ryan Hurst
Millan Jankovic
Samuel Pelaez
Marcus Joo
Jun-Yeol Park
Full transcript