Full Disclosure in Financial Reporting
The full disclosure principle mandates financial reporting of any and all financial actualities, which are significant enough to stimulus the judgment of an informed reader. Complete financial reporting leads to durable capital markets by helping investors and creditors make knowledgeable decisions regarding an organization or business. The intent of financial reporting is to offer an objective look at a company’s financial status. In order for an informed reader to make a knowledgeable decision, there are certain components one must understand. Therefore, the context of this subject will be to outline the disclosure requirements on accounting policies and determine if this information is helpful for decision making. It will also
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Secondly, Verizon’s noted an update to accounting standard. In particular, the company adopted first quarter of 2014 the standard update that provides that a liability related to an unrecognized tax benefit should be offset against same jurisdiction deferred tax assets for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed (Verizon, 2013, p.31). Although Verizon was unable to evaluate the impact of the recent accounting standard update on the consolidated balance sheet, users were made aware the adoption may have a material effect in a later period.
Explain the importance of the management discussion and analysis section of an annual report. Select three (3) items from Verizon’s management and discussion analysis of the annual report that could be useful to potential investors. Provide three (3) specific examples of how the three (3) items you selected could influence a potential investor’s decision to invest in Verizon.
Management discussion and analysis (MD&A) is an interrelated part of an entity’s annual financial statements required by the SEC. The MD & A encompasses the entity’s liquidity, capital resources, and results of operations in addition to highlighting favorable and unfavorable trends and identifies significant events and uncertainties that affect these