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Disclosure Analysis

Autor:   •  January 26, 2014  •  Research Paper  •  755 Words (4 Pages)  •  802 Views

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Disclosure Analysis

According to Cisco Systems financial reporting of 2012, there was a net income of $8,041; which is an increase from the $6,490 reported the previous year (Cisco Systems, 2013). Among the balance sheet that is provided by Cisco Systems, there are a number of disclosures listed in the notes section of the financial statement for 2012. "The disclosures in the notes should consequently provide information that explains the primary financial statement while the notes focus on past transactions and other events existing within the reporting date" (. Cisco Systems provides relevant and detailed descriptions in regards to the disclosures contained within the notes of the financial statements relating to cash and cash equivalents, financial receivables, and inventories.

Cash and Cash Equivalents

The cash and cash equivalents reported on Cisco Systems' financial statement of 2012 is $9,799, which is a $2,137 increase from 2011. Cisco System considers "all highly liquid investments purchased with an original or remaining maturity of less than three months at the date of purchase to be a cash equivalent" (Cisco System, 2013). Cash and cash equivalents are maintained with a vast of different financial institutions.

Financing Receivables

Cisco Systems reports their financing receivables for 2012 to be $7,246, an increase of $647 from the previous year. Cisco Systems provides "financing arrangements, such as leases, financed service contracts and loans for certain customers allowing them to build and maintain their network" (Cisco Systems, 2013). Sale-type and direct-financing leases are represented by lease receivables calculated at $2,932. Cisco System's historical experience, age of receivable balances, any economic conditions that can prevent the customer from paying, and age of receivable balances are all factors considered in "evaluating lease and loan receivables and the earned portion of financed service contracts for possible impairment on an individual basis" (Cisco Systems, 2013). As with most companies, Cisco Systems write-off financing receivables that are not collectible as well as the out-standing balance. Receivables are considered past due at 31 days or more from the agreed contractual payment date.

Cisco Systems managements allow their financing receivables be placed on a nonaccrual status early only if a collection of the interest and full principle is not certain. Only then will interest be recognized when cash is received from customers. The only time a financing


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