Wiley GAAP: Financial Statement Disclosure Manual. Joanne M. Flood
many factors, including the age of the balances, customers' historical payment history, their current credit‐worthiness, and current economic trends. Receivables are considered past due after 180 days. Accounts Receivable are written off against the allowances only after exhaustive collection efforts.
Other receivables represent mainly prepaid employee insurance and welfare benefits, which will be subsequently deducted from the employee payroll, and guarantee deposits on behalf of shipowners as well as office lease deposits.
Example 7.4: Accounts Receivable, Including Amounts of Allowance Accounts Accounts receivable are recorded, net of allowance for doubtful accounts and sales returns. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentration, customer credit worthiness, current economic trends, and changes in customer payment patterns to determine if the allowance for doubtful accounts is adequate. An estimate for doubtful accounts is made when collection of the full amount is no longer probable. Delinquent account balances are written off after management has determined that the likelihood of collection is not probable and known bad debts are written off against the allowance for doubtful accounts when identified. As of August 31, 20X2 and 20X1, the allowance for uncollectible accounts receivable was $829,054, and $1,015,282, respectively.
Advertising
Example 7.5: Marketing and Advertising Expenses Marketing and advertising expenditures are expensed in the annual period in which the expenditure is incurred.
Example 7.6: Advertising Expenses and Promotional Costs Advertising and promotional costs are generally expensed at first showing. Advertising and promotional costs and cooperative advertising allowances were as follows:
| 20X3 | 20X2 | 20X1 | |
| (In millions) | |||
| Gross advertising and promotional costs | $1,358 | $1,397 | $1,547 |
| Cooperative advertising allowances | 196 | 289 | 394 |
| Advertising and promotional costs, net of cooperative advertising allowances | $1,162 | $1,108 | $1,153 |
| Net sales | $24,971 | $24,939 | $25,908 |
| Advertising and promotional costs, net of cooperative advertising allowances, as a percent to net sales | 4.7% | 4.4% | 4.5% |
Cash Equivalents
Example 7.7: Cash Equivalents For the purpose of the statement of cash flows, cash equivalents include time deposits, certificate of deposits, and all highly liquid debt instruments with original maturities of three months or less.
Example 7.8: Cash Equivalents—No Cash Equivalents Cash and cash equivalents include cash on hand and on deposit at banking institutions as well as all highly liquid short‐term investments with original maturities of 90 days or less. The Company did not have cash equivalents as of December 31, 20X2 and 20X1.
Comprehensive Income
Example 7.9: Comprehensive Income (Loss) The Company reports comprehensive income (loss) in accordance with the FASB issued authoritative guidance which establishes standards for reporting comprehensive income (loss) and its component in financial statements. Comprehensive income (loss), as defined, includes all changes in equity during a period from nonowner sources.
Concentrations of Risk
Example 7.10: Concentration of Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company places its cash with high quality banking institutions. The Company had cash balances in excess of the Federal Deposit Insurance Corporation limit as of December 31, 20X1.
Example 7.11: Concentration of Risk Accounts receivable are primarily from wholesale accounts, for landlord lease inducements, and from license and supply arrangements. The Company does not require collateral to support the accounts receivable; however, in certain circumstances, the Company may require parties to provide payment for goods prior to delivery of the goods. The accounts receivable are net of an allowance for doubtful accounts, which is established based on management's assessment of the credit risk of the underlying accounts.
Cash and cash equivalents are held with high‐quality financial institutions. The amount of cash and cash equivalents held with certain financial institutions exceeds government‐insured limits. The Company is also exposed to credit‐related losses in the event of nonperformance by the counterparties to the forward currency contracts. The credit risk amount is the Company's unrealized gains on its derivative instruments, based on foreign currency rates at the time of nonperformance. The Company has not experienced any losses related to these items, and it believes credit risk to be minimal. The Company seeks to minimize its credit risk by entering into transactions with credit‐worthy and reputable financial institutions and by monitoring the credit standing of the financial institutions with whom it transacts. It seeks to limit the amount exposure with any one counterparty.
The Company's derivative contracts contain certain credit risk‐related contingent features. Under certain circumstances, including an event of default, bankruptcy, termination, and cross‐default under the Company's revolving credit facility, the Company may be required to make immediate payment for outstanding liabilities under its derivative contracts.
Consolidation Policy
Example 7.12: Basis of Presentation and Basis of Consolidation: Combined Note The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP). The consolidated financial statements include the accounts of all directly and indirectly owned subsidiaries and variable interest entity. All intercompany transactions and balances have been eliminated in consolidation.
Example 7.13: Basis of Consolidation with Detail The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: NSHL, New Star Peak Health Inc., New Star Healthnet Rehab Limited, Blake Assessments Inc., an 80% interest in New Star Healthnet Rockville Centre, Inc., a Recovery Physical Therapy and Health Centre clinic operated by NSHL, and a 50% stake in a joint venture with the Joseph Coffey Dental Hygiene Professional Corporation operated as New Star Dental. All of the Company's subsidiaries are incorporated under the laws of the Province of Victoria, Australia. All intercompany transactions have been eliminated.
Example 7.14: Basis of Consolidation, Including a VIE The consolidated financial statements include the accounts of the Company, its subsidiaries, and its affiliates. All significant intercompany transactions and balances are eliminated in consolidation. Global Shipping (“Global”), a People's Republic of China (PRC) corporation, is considered a variable interest entity (“VIE”),