Molson Cors
Molson Coors Brewing Company
CONCEPTS
a. What are the major classifications on an Income Statement?
Sales, Cost of Goods Sold (COGS), OPERATING PROFIT (Includes A&M (Advertising & Marketing), G&A (General & Administrative Expenses)), OIOE (Other Income & Other Expenses), Earnings Before Interests and Taxes (EBIT) and Net Income.
b. Explain why, under GAAP, companies are required to provide “Classified” income statements.
First of all, because this helps to prevent fraudulent practices. It makes easier for management, shareholders and potential investors to digest the information. It also allows comparing these statements against business competitors or the company’s own past statements to measure performance. It’s also a measure to standardize financial information.
c. In general, why might financial statement users be interested in a measure of persistent income?
This will help users compare income to previous years (evolution of income) and business competitors knowing that these measurements are consistent across companies and through the years.
PROCESS
d. The income statements reports “Sales” and “Net Sales”. What is the difference? Why does Molson Coors report these two items separately?
Sales refer to the total of sales across all countries and products (Including not fully owned brands under licensing). Net sales refer to the amount of sales after taxes charged to products that are sold on different countries or subject to licensing fees.
e. Consider the income statement item “Debt extinguishment costs” and the information in Note 13.
i. Explain, in your own words, what these costs represent.
These costs represent fees for early termination of debt arrangements and unpaid interests. Molson Coors had to pay outstanding interests because of Senior Notes. They also repurchased bonds and this resulted in early termination fees in some cases.
ii. Prepare the journal entry to
CONCEPTS
a. What are the major classifications on an Income Statement?
Sales, Cost of Goods Sold (COGS), OPERATING PROFIT (Includes A&M (Advertising & Marketing), G&A (General & Administrative Expenses)), OIOE (Other Income & Other Expenses), Earnings Before Interests and Taxes (EBIT) and Net Income.
b. Explain why, under GAAP, companies are required to provide “Classified” income statements.
First of all, because this helps to prevent fraudulent practices. It makes easier for management, shareholders and potential investors to digest the information. It also allows comparing these statements against business competitors or the company’s own past statements to measure performance. It’s also a measure to standardize financial information.
c. In general, why might financial statement users be interested in a measure of persistent income?
This will help users compare income to previous years (evolution of income) and business competitors knowing that these measurements are consistent across companies and through the years.
PROCESS
d. The income statements reports “Sales” and “Net Sales”. What is the difference? Why does Molson Coors report these two items separately?
Sales refer to the total of sales across all countries and products (Including not fully owned brands under licensing). Net sales refer to the amount of sales after taxes charged to products that are sold on different countries or subject to licensing fees.
e. Consider the income statement item “Debt extinguishment costs” and the information in Note 13.
i. Explain, in your own words, what these costs represent.
These costs represent fees for early termination of debt arrangements and unpaid interests. Molson Coors had to pay outstanding interests because of Senior Notes. They also repurchased bonds and this resulted in early termination fees in some cases.
ii. Prepare the journal entry to