View Homework Help – Harnischferger Case from ACG at Florida International University. Harnischfeger Corporation 1. Describe clearly the accounting. Agenda Case Facts Strategy Analysis Accounting Analysis. Directions Read the “Harnischfeger Corp” case study and answer the following questions. Submit your completed assignment no later than the last day of Week .

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However, the evidence presented in these studies is not conclusive. Remember me on this computer. The earlier philosophy of this company was to choose the conservative alternative whenever there was a choice.

My presentations Profile Feedback Log out. Other actuarial gains, Effective August 1,the Corporation including higher than anticipated investment terminated the existing plan and established a results, more than offset the additional new plan which is substantially identical to pension costs resulting from plan changes and the prior plan except for an improvement in interest charges on balance sheet accruals in the minimum pension benefit.

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To order copies or request permission to reproduce materials, callwrite Harvard Business School Publishing, Boston, MAor go to http: The cirporation is taking a risk by expecting that the one-time boost in income and cash in will enable the company to successfully expand internationally and grow in new high tech areas and become profitable once again.

Published by Emma Collins Modified over 3 years ago. Less assets were available for benefits; therefore, more income was reflected in the financial statements, which contributed to the cash to pay debt obligations. As a result of going to strait-line the company also has changed its estimated depreciation lives on certain U. In any case, these adjustments impose a cost on the user. Harvard Business School Rev.

The worldwide recession in the early s caused a significant drop in demand for the company’s products starting in and culminated in a series of events that shook the financial stability of Harnischfeger.

Harnischfeger Engineers was an engineering services division engaged in design, custom software development, and project management for factory and distribution cass projects. Its name was changed to the present one in Director, IC Industries, Inc.

To deal with the short-term liquidity squeeze, the company initiated a number of cost reduction measures.

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How much did the pre-tax income increase as a result of the changed ratio in ? The company expected such automated storage and retrieval systems to play an increasingly important role in the “factory of the future. Conversion of export and factored receivable sales to debt — 23, — Reclassification to deferred liabilities: The pension plan changes affected positively the statements in Harnischfeger believed that the material handling equipment business would be a major source of its future growth.

The company considered the offer inadequate and rejected it. The Plan covered the chairman, president, senior vice presidents; president, Harnischfeger Engineers, Inc. Depreciation 8, 13, 15, Unremitted earnings loss of unconsolidated companies 3, 7, Deferred pension contributions 4, — Deferred income taxes 6, 3, 1, Reduction in accumulated depreciation resulting from change in depreciation 17, — — method Other — net 2, 67 2, Decrease in operating working capital see below 7, 11, 72, Add deduct the effects on operating working capital of: We think you have liked this presentation.

As can be seen, Harnischfeger seems to have succeeded in implementing its strategy effectively. Accelerated depreciation makes cost appear too high. To get a unique essay Hire Writer.

The company was forced to stop paying dividends and began negotiations with its 2 This document is authorized for use only by Yishan Luo in Financial Statement Analysis taught by Allen Hartt, University of New Hampshire from October to March A significant part of the division’s sales were from the sale of spare parts.

The accounting studies that examine the stock market reaction to accounting changes conclude that the market is not fooled by the accounting decisions of firms.

Change in the recognition of some types of sales. Because of its large market share and the lucrative spare parts sales, the division was traditionally very profitable.

Since the company recently experienced the painful consequences of violating these restrictions, it is plausible that the management changed the accounting policies to avoid future violations of the debt restrictions. What are the economic consequences of these changes to Harnischfeger and its workers?

He is customer inventories for the last three years.

Harnischfeger Corp. Harvard Case Solution & Analysis

New orders totaled annual cash flow requirements to service it. A limited time offer! In accounting there is no such thing as absolute truth. Another addition to the management team was Jeffrey Grade, who joined the company in as senior vice president of finance and administration and chief financial officer.


For financial October 31, and Are these changes likely to affect future profits? On January 6,the company entered into agreements with its lenders to restructure its debt obligations into three-year term loans secured by fixed as well as other assets, with a one-year extension option.

In the pension expenses accounted for 1. Thanks for being a serene listener. However, if lenders recognize this possibility, lending agreements would be modified to avoid cprporation possibility as long as the cost of such a modification is not significant. Accrued pension costs — 14, — Other liabilities — 5, — Foreign currency translation adjustments 6, 1, 5, Funds provided by operations 10, 37, 16, Financing, Investment and Csae Activities: Given the business conditions Harnischfeger was facing in its primary industries inare these economic assumptions justified?

Log In Sign Up. They cannot fully predict the outcome of these changes but history shows; however, we know they were experiencing a drop in sales this would also mean that they were giving less use to their machinery, and that would cause less wear and tear to the machinery justifying and increase on the useful life of the asset.

Harnischfeger Corporation | Free Essays –

The company adjusted ccase allowance for doubtful accounts to 6. The cumulative effect of change in there will be no reduction in the depreciation expense due to change. Construction Equipment Segment were virtually unchanged reflecting the continued The preceding items, together with the low demand for construction equipment cumulative effect of the change in depreciation world-wide.

The financial management of the company also seems to be sound.