GOLDCROP Inc. Harvard Case Solution & Analysis

GOLDCROP Inc. Case Study Solution 

Evaluate the quality of the company’s reporting in its 2015 annual report for the following topics

Incometaxes

To evaluate the quality of the GOLD CORP’s reporting regarding its Income taxes, it was determined after analyzing the Annual report of 2015. However, it was identified that the overall quality of the corporation’s reporting regarding its income taxes was high. As it presented and compared its current year’s (2015) and previous year’s (2014) income taxes in its annual report, which enabled its concerned investors and potential stakeholders to evaluate the income tax (both current and deferred) situation faced by the corporation to determine its financial status regarding the taxes imposed on the company. Furthermore, it was identified from its annual report that the federal and provincial income tax rates had remained the same as compared to its previous years. Similarly, the corporation believed that its operations in the future would generate sufficient taxable income to realize the deferred income tax provision taken in 2015. Moreover, it had exhibited its unrecognized deferred taxes in its annual report, which would guide its stakeholder in making effective financial decision regarding the corporation.

Financialinstruments

The quality of GOLD CORP’s reporting regarding its financial instruments was determined after analyzing the annual report of 2015. However, it was identified that the overall quality of the corporation’s reporting regarding its financial instruments was high. As it presented and compared its current year’s (2015) and previous year’s (2014) financial assets and liabilities by categories in its annual report. It exhibited its loans and receivable, securities available for sale, fair value through profit and loss, and maturity held separately, which enabled its concerned investors and potential stakeholders to evaluate the financial asset (loans, receivables, securities, and other financial liabilities) condition in the corporation to determine its financial assets position as compared to the competitors available in the marketplace, which would ultimately depict the financial performance of GOLD CORP compared to its competitors. Furthermore, it exhibited and compared its financial assets and liabilities classified as fair value through profit and loss for its current year (2015) and previous year (2014) in its annual report. Similarly, it included non-current and current assets, as well as liabilities on the consolidated balance sheet. Additionally, it presented account receivables arising from the sales of metal concentrate under the fair value through profit and loss in its annual report. In addition to this, it had shown its realized and unrealized losses regarding its net losses on derivatives. However, it guided its stakeholders in making effective decision regarding the corporation.

Stock-basedcompensation

Stock based compensation is a technique employed by the company to use the stock options available to reward its employees. Since tax depends on the FMV of the stocks,  if it is subjected to withholding tax, then it is mandatory that the taxable amount be paid in cash. However, under ASC 718, it had established four disclosures requirements that GOLD CORP should meet to enable its concerned investors or potential stakeholders to understand the nature of the awards that were either outstanding or granted to its employees and its potential effect on its shareholders. Furthermore, it should evaluate and determine the effect of the award compensation cost on the company’s income statement. Moreover, it should effectively estimate the FV of its received goods and services during the period. Similarly, it should estimate the FV of equity instruments that it granted during the period. Additionally, it should the effects of the awards compensation on the company’s cash flows. However, it can be identified after analyzing the annual report of GOLD CORP that it had succeeded in fulfilling the requirements of ASC 718 under US GAAP where the company had provided information regarding the stock options and compared its outstanding options with its current year (2015) and previous year (2014) in its annual report. Furthermore, it represented its contribution towards employees’ share purchase plan using the market price of underlying shares. Moreover, it shared its information regarding the total amount and time vested in its employees, which enabled the potential users of the annual reports to make effective decision regarding the company.

GOLDCROP Inc. Harvard Case Solution & Analysis

 

Cashflows

Under ASC-230, Gold corp should disclose the information related to all noncash investing and financing activities during the period that would affect the liabilities or recognized assets, but would not result in cash payments and receipts. Furthermore, it should disclose the example of noncash financing and investing activities that are converting debt to equity. Similarly, the cash portion of the transactions in the statement of cash flows should be reported. However, other supplementary disclosure includes accounting policies note, debt to property, plant and equipment note, income taxes note, acquisition note, leases note and shareholders’ equity note. Nevertheless, it can be determined after analyzing the annual report of GOLDCORP that it succeeded in fulfilling the requirements of ASC-230 under US GAAP therefore, it would provide the potential users of the statement with relevant information that could help the potential investors and the company’s creditors and other potential stakeholders to make effective decisions with respect to the company. Moreover, it would enable the user of the statement to assess the company’s ability to generate future net cash flows and estimate its ability to fulfill its obligations and pay dividend to its stake holders. Additionally, it would evaluate and determined the cause for the differences between its net income and associated cash payment and receipt. Furthermore, it would determine the effect on the financial statement of the company with respect to its cash and non cash financing and investing activities..................

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