1.

Aeropostale engages in sale of fashion footwear and apparels for both men
and women as its primary business.
2. Assets = Liabilities + Stockholders Equity (in thousands)
$740 844 = $330 480 + $410 364
3. The management of Aeropostale is responsible for preparing accurate
financial statements.
4. a) Deloitte and Touche LLP was Aeropostales auditor for the fiscal year. In
their opinion, the auditor expressed that the company has effectively
implemented internal controls over financial reporting and in line with the
standards set by the Committee of Sponsoring Organizations of the
Treadway Commission. This information can be found in the report of
independent registered public accounting firm on page 32.
b) Having effective internal control over the firms financial reports means
the report serves as a reliable and credible source of financial information
that enables investors and creditors to make informed decisions.
5. Shareholders can expect to receive proceeds as residual claimants of the
companys net income, which is positive. Bondholders are also able to get
their proceeds as the current ratio is approximately 2.24. We can expect
that the company is able to fulfil its short term debt obligations if it
liquidates at the end of the fiscal year.
6. a) The company recognises sales revenue at the point of sale, when the
good is received to the customer, be it in physical stores or via shipping.
Other forms of revenue includes shipping revenue from its e-commerce
customers and revenue from licensing arrangements based on what is
contractually earned or guaranteed minimum royalty levels.
b) Gift cards are considered as liability upon purchase (unearned
revenue/accrued gift cards) and will be recognised as sales revenue when
the amount is redeemed for merchandise in stores.
Journal entry:
Dr. Cash
x
Cr. Accrued gift cards
x
Recognition of unearned revenue from the sale of gift cards
*x is denoted as the store value of gift card at the time of purchase
7. a) Aeropostale has a net cash outflow from investing activities for the year
ended February 2013 of $97 484 000** (not sure)
b) The main driver for the net cash outflow is due to expenditures on
capital goods.
8. a) Net fixtures, equipment and improvements is the largest category of
non-current assets for the year ended February 2013.
b) Aeropostale reported $65 539 000 of amortisation expense and
depreciation expense.

c) The amortization expense is related to intangible assets such as

customer relationships and e-commerce software platform. The
depreciation expense is related to fixtures, equipment and improvements.
d) Net income reported in 2014 will be overstated.
9. a) Aeropostales merchandise inverntory is valued utilizing the cost
method at the lower of cost or market determined on a weighted average
basis.
b) Correct value for income before income taxes = $60 026 000
10.No dividends on common or preferred stock paid for the last 3 years
11.The Balance Sheet & Income statement will be affected. (KIV effect on
statement of cash flow) The amount of assets and liabilities recorded will
be reduced and the expenses will increase. As a result, the net income
would be lower. (not sure)

12.
Merchandise Inventory (in thousands)
(Beginning Balance) 163
522
(Purchase)
1 437 456.8 (COGS)
(Ending Balance) 155 463
Purchase = $1 429 397 800