| Course | AC466 Fraud Detection and Financial Statement Analysis |
|---|---|
| Unit | Unit 7 |
| Paper type | Disclosure note analysis |
| Length | About 630 words, 5 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Accounting |
| Updated | October 2026 |
Free sample paper for AC466 Unit 7
Five Passages That Carried the Year: A Unit 7 Disclosure Note Analysis of a Pool Equipment Maker's 2025 Report
[Student Name]
Purdue University Global
AC466: Fraud Detection and Financial Statement Analysis
Unit 7 Disclosure Note Analysis
[Instructor Name]
[Date]
Tidewell Pool Systems and every note passage are composite; the standards and textbook cited are real.
Passage 1: Units Held at Distributors' Request
The revenue note reads: "Beginning in 2025, revenue for certain early-buy orders is recognized when the customer has requested that product be held at our facilities and all other criteria for transfer of control have been met." The sentence is new. It permits revenue on goods still in Tidewell's warehouses, provided the bill-and-hold criteria are met. The note discloses $41.2 million recognized this way, about 7.5 percent of 2025 revenue. What it does not say is how much of that product had shipped by the report date, or whether any was redirected to other customers.
Passage 2: A Revised Selling Price for Service Plans
"In 2025 we updated our estimate of the standalone selling price of extended service plans to reflect current market pricing." Allocating a smaller share of each bundled sale to the service plan moves revenue from later years, when the service is provided, into the year of sale. Had deferred service revenue stayed at 2024's 4.1 percent of revenue, it would be $22.4 million rather than $13.7 million, so roughly $8.7 million may have shifted into 2025 revenue.
Each passage describes a choice the standards permit, and each moves income into 2025, so the analysis is not about whether any single change was allowed but about why five permitted choices all pointed the same way in the year growth peaked.
Passage 3: A Lower Warranty Rate
The warranty note reads: "Based on improved product reliability, we reduced our estimated warranty cost from 2.5 percent to 1.6 percent of sales, a change in accounting estimate applied prospectively." A change in estimate revises a judgment as new information arrives and is applied going forward, without restating prior years (Financial Accounting Standards Board, n.d.). On 2025 sales of $547.1 million, the change lowered warranty expense by about $4.9 million. The note offers no claims data to support the improved reliability.
Passage 4: A Smaller Allowance on Longer Terms
"The allowance for credit losses decreased to 2.4 percent of gross receivables, reflecting strong collection experience." The prior year's allowance was 5.7 percent. On gross receivables of about $137.8 million, the lower rate reduced the allowance by about $4.5 million compared with the old rate. The same report describes payment terms stretched to as long as 18 months and a new distributor financing program. A current expected credit loss estimate must consider forecasts and current conditions, not only past collections (Financial Accounting Standards Board, 2016), and longer terms ordinarily raise expected losses.
Passage 5: A Related-Party Distributor
The related-party note reads: "A distributor in which a member of our board holds a 30 percent interest purchased products totaling 9 percent of net sales on terms consistent with those offered to other distributors." Nine percent of 2025 sales is about $49.2 million. The note does not say whether this distributor received extended terms, held bill-and-hold inventory or issued any of the new notes.
Combined Effect
Bill-and-hold revenue of $41.2 million and the service plan shift of about $8.7 million together come to about $50 million of 2025 revenue, roughly 9 percent, and the $49.2 million of related-party sales may overlap either. The warranty and allowance changes add about $9.4 million of pretax income, and the service plan shift perhaps $4.5 million more at Tidewell's margin. Close reading of notes is where a reader learns what the face of the statements leaves out (Penman, 2013).
References
Financial Accounting Standards Board. (2016). Accounting Standards Update No. 2016-13: Financial instruments, credit losses (Topic 326). FASB.
Financial Accounting Standards Board. (n.d.). Accounting Standards Codification Topic 250: Accounting changes and error corrections. FASB.
Penman, S. H. (2013). Financial statement analysis and security valuation (5th ed.). McGraw Hill.
What the AC466 Unit 7 assignment asks for
The seventh AC466 unit asks you to analyze specific disclosure notes. Quote each passage exactly rather than summarizing it, since the analysis turns on particular words. For each, explain what the wording permits under the relevant standard, whether it reflects a change in principle or a change in estimate, and what it leaves unsaid. Quantify the effect on revenue or pretax income where the filing allows, showing how you estimated it. Compare each change with evidence elsewhere in the report, such as a lower allowance alongside longer payment terms. Look across the passages for a common direction. Close with a combined estimate of how much of the year's results depend on these choices. References to ASC 250, the CECL update and Penman belong in APA 7.
How the AC 466 Unit 7 example is put together
The sample quotes five passages. The bill-and-hold sentence supports $41.2 million, about 7.5 percent of revenue, and the analysis notes what it omits. The service plan sentence is estimated to have shifted about $8.7 million, from the gap between actual deferred revenue and 2024's ratio. The highlighted sentence observes that five permitted choices all moved income into the peak year. The warranty passage is treated as a prospective change in estimate under ASC 250, worth about $4.9 million. The credit loss passage is read against lengthening terms and the CECL standard, worth about $4.5 million. The related-party passage puts $49.2 million of sales with a director's distributor. A combined section totals about $50 million of revenue and $14 million of pretax income, citing Penman.
Where the points sit in the AC466 Unit 7 rubric
AC466 note analyses earn credit for exact quotation, accurate classification of each change and careful quantification. Graders check that each passage is quoted, not paraphrased, and that the writer explains what the wording permits under the standard. Distinguishing changes in estimate from changes in principle is expected. Effects should be estimated with the method shown. The strongest analyses set each change against conflicting evidence in the same report and notice when several choices point the same way. A combined estimate turns separate readings into something an investor can weigh. Restraint matters: each choice may be permitted, and the analysis should say so. Correct APA 7 references to the standards are the last element Purdue Global checks.
AC466 Unit 7 help: mistakes that cost points
Many Unit 7 analyses summarize notes in the writer's words, losing the wording that matters. Others treat every change as improper, though most are permitted. Changes in estimate are confused with changes in principle. Effects are described without numbers. The allowance is analyzed without reference to the payment terms described elsewhere. Related-party disclosures are skipped. No combined effect is offered. If your section assigned specific notes from an annual report, our writers can quote, classify and quantify them.
Get an AC466 Unit 7 example written to your instructions
Is the full annual report available, or only the notes a section assigned? Either can anchor Unit 7, sent with the prompt and the rubric. Each passage is quoted exactly, read for what it permits and sized wherever the statements carry enough figures. First custom analysis: free, 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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AC466 Unit 7 questions, answered
Why quote the note instead of summarizing it?
Because the analysis turns on specific words, and a summary substitutes the writer's reading for the text. A phrase such as 'at the distributor's request' permits something different from 'at the distributor's written request for a substantive business reason'. Quoting lets a grader test the interpretation against the original, which graders in this course tend to credit.
What is the difference between a change in estimate and a change in principle?
A change in estimate revises a judgment, such as a warranty rate, as new information arrives, and it is applied from the change forward. A change in principle switches between acceptable methods and is generally applied retrospectively, with a justification that the new method is preferable. Mislabeling one as the other misstates how the reported figures were affected.
Can the analysis use notes from my assigned company?
Yes. Send the annual report or the specific notes your instructor assigned, plus the prompt and rubric. The passages that matter most for your company's numbers are quoted exactly, each is read for what it permits and leaves unstated, and effects are quantified wherever the statements provide enough figures to do so.
Where can I find a free AC466 Unit 7 sample paper?
This page holds a complete AC466 Unit 7 disclosure note analysis of a composite pool equipment maker, with five quoted passages, classifications, estimated effects, a combined figure and APA 7 references.
How much did the warranty change add in AC466 Unit 7?
Cutting the estimated warranty cost from 2.5 to 1.6 percent of $547.1 million of sales lowered warranty expense by about $4.9 million, applied prospectively as a change in estimate.