Refer to Adidas’ financial statements to answer Question 1. Use the latest years of annual reports and financial statements for the subject company. https://www.adidas-group.com/en/investors/financial-reports/
(a) Refer to the selected consolidated financial statements. Identify TWO (2) asset accounts which require adjusting journal entries before annual financial statements can be prepared based on the accrual accounting principle. Appraise the effect on the consolidated income statement and the statement of financial position if the two asset accounts were not adjusted.
Assume that you are working in Adidas and please give a report to your supervisor on the relevant effects. You will need to bear in mind that your supervisor has a good business mind with a decent understanding of accounting and financial reporting but is not a trained accountant.
(b) Identify and appraise the revenue recognition principle. Identify Adidas’s notes to discover how it applies the revenue recognition principle and discuss what you discover.