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ACCY 500: Accounting Measurement, Reporting, and Control
Group Assignment 2
Part I: Accounts Receivable and Uncollectible Amounts
Using the balance sheet of Google provided in the next page, answer the following questions:
- As of December 31st, 2005, how much does Google expect to collect from its customers in the future because of sales that were made prior to January 1st, 2006?
- Assume that Google had written off $2,500 (thousand) of its accounts receivable as permanently uncollectible during the year ended December 31st, 2005. How much did bad debt expense Google record during 2005?
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
|Cash and cash equivalents||$||426,873||$||3,877,174|
|Accounts receivable, net of allowances of $3,962 and $14,852||311,836||687,976|
|Income taxes receivable||70,509||—|
|Deferred income taxes, net||19,463||49,341|
|Prepaid revenue share, expenses and other assets||159,360||229,507|
|Total current assets||2,693,465||9,001,071|
|Property and equipment, net||378,916||961,749|
|Intangible assets, net||71,069||82,783|
|Deferred income taxes, net, non-current||11,590||—|
|Prepaid revenue share, expenses and other assets, non-current||35,493||31,310|
|Liabilities and Stockholders’ Equity|
|Accrued compensation and benefits||82,631||198,788|
|Accrued expenses and other current liabilities||64,111||114,377|
|Accrued revenue share||122,544||215,771|
|Income taxes payable||—||27,774|
|Current portion of equipment leases||1,902||—|
|Total current liabilities||340,368||745,384|
|Deferred revenue, long-term||7,443||10,468|
|Liability for stock options exercised early, long-term||5,982||2,083|
|Deferred income taxes, net||—||35,419|
|Other long-term liabilities||30,502||59,502|
|Commitments and contingencies|
|Class A and Class B common stock, $0.001 par value: 9,000,000 shares authorized at December 31, 2004 and December 31, 2005, 266,917, and 293,027 shares issued and outstanding, excluding 7,605, and 3,303 shares subject to repurchase (see Note 10) at December 31, 2004 and December 31, 2005||267||293|
|Additional paid-in capital||2,582,352||7,477,792|
|Deferred stock-based compensation||(249,470||)||(119,015||)|
|Accumulated other comprehensive income||5,436||4,019|
|Total stockholders’ equity||2,929,056||9,418,957|
|Total liabilities and stockholders’ equity||$||3,313,351||$||10,271,813|
See accompanying notes.
Part II: Accounts Receivables and Inventory
Please contemplate the Income-Statement and Note 17 (Supplemental information) for General Mills below and answer the following questions. For the purpose of this difficulty, assume that inventory values determined using the average cost method is identical to FIFO values. Also, suppose that revenue is presented net of bad debt expense.
- Suppose that the Company charged $7 million as bad debt expense. Reckon the number of bad debts written off in 2010.
- Compute the amount of cash collected from customers during the year ended May 30th, 2010.
- What does cost flow assumption(s) for inventories General Mills use?
- Suppose that General Mills had in all periods used FIFO as their cost flow assumption for all their inventories. What would have been General Mills’ book value of inventories at the end of the fiscal year 2010 under this alternative cost flow assumption?
- What is the amount of inventory purchases in the fiscal year 2010?
Consolidated Statements of Earnings
GENERAL MILLS, INC. AND SUBSIDIARIES
|(In Millions, Except per Share Data)||Fiscal Year|
|Cost of sales||8,922.9||9,457.8||8,778.3|
|Selling, general, and administrative expenses||3,236.1||2,951.8||2,623.6|
|Divestitures (gain), net||—||(84.9)||—|
|Restructuring, impairment, and other exit costs||31.4||41.6||21.0|
|Earnings before income taxes and after-tax earnings from joint ventures||2,204.5||1,942.2||1,829.5|
|After-tax earnings from joint ventures||101.7||91.9||110.8|
|Net earnings, including earnings attributable to noncontrolling interests||1,535.0||1,313.7||1,318.1|
|Net earnings attributable to noncontrolling interests||4.5||9.3||23.4|
|Net earnings attributable to General Mills||$ 1,530.5||$ 1,304.4||$1,294.7|
|Earnings per share – basic||$ 2.32||$ 1.96||$ 1.93|
|Earnings per share – diluted||$ 2.24||$ 1.90||$ 1.85|
|Dividends per share||$ 0.96||$ 0.86||$ 0.78|
|See accompanying notes to consolidated financial statements.|
NOTE 17. SUPPLEMENTAL INFORMATION
ThecomponentsofcertainConsolidatedBalanceSheetaccounts are asfollows:
|In Millions||May 30,
|In Millions||May 30,
|Raw materials and packaging||$ 247.5||$ 273.1|
|Excess of FIFO or weighted-|
average cost over LIFO cost(a) (142.3)(149.3)Total$1,344.0$1,346.8
(a)Inventoriesof$958.3millionasofMay30,2010,and$908.3millionasofMay31,2009, were valued atLIFO.
Part III: Long-term Debt of Caterpillar
Refer to the Table in Caterpillar’s Annual Report for long-term liabilities. Recall that the Company’s fiscal year end is 31 December 2008. Using the information provided, answer the following questions:
NOTE: Always use Semi-Annual Calculations
- Refer to the 6.550% notes due 2011 (1st instrument on the table). Calculate the interest expense on this note for fiscal 2009 (year ended 31 December 2009).
- Refer to the 6.550% notes due 2011 (1st instrument on the table). Calculate the coupon payment on this note for fiscal 2009 (year ended 31 December 2009).
- Refer to the same note as in part (a). Provide the entry that the Company will record at maturity.
|(Millions of dollars)||2008||2007||2006|
|Machinery and Engines:|
|Notes—6.550% due 2011||$ 250||$250||$250|
|Notes—5.700% due 2016||517||510||500|
|Debentures—7.250% due 2009||—||305||307|
|Debentures—9.375% due 2011||123||123||123|
|Debentures—7.000% due 2013||350||—||—|
|Debentures—7.900% due 2018||898||—||—|
|Debentures—9.375% due 2021||120||120||120|
|Debentures—8.000% due 2023||82||82||82|
|Debentures—6.625% due 2028||299||299||299|
|Debentures—7.300% due 2031||349||348||348|
|Debentures—5.300% due 2035||203||202||201|
|Debentures—6.050% due 2036||748||748||747|
|Debentures—8.250% due 2038||248||—||—|
|Debentures—6.950% due 2042||249||249||249|
|Debentures—7.375% due 2097||297||297||297|
|Capital lease obligations||293||68||72|
|Total Machinery and Engines||5,736|
|Total Financial Products||17,098||14,190||13,986|
|Total long-term debt due after one year||$ 22,834||$ 17,829||$ 17,680|
|1 Increase in 2008 due to the consolidation of Cat Japan. See Note 25 for additional details.|
Part IV: Fixed Assets of BP
On the next page, you can find the note on Property, Plant and Equipment Assets of BP’s 2006 Annual Report. Using the information provided in the note, please answer the questions below. All numbers in the questions below and the footnote are in $ million.
- How much did BP pay to purchase/develop additional Oil and Gas Properties in 2006?
- Assume that BP received a total of $400 in cash from selling Oil and Gas Properties.
- At the time of sale, what was the accumulated depreciation on the Oil and Gas Properties that were sold?
- Calculate the total amount of gain or loss that BP recognized on these asset sales.
26 Property, plant and equipment
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Part V: Fixed Assets of Dow Jones
Use the attached balance sheet for the year 2006 to answer the following questions about long-term assets. All numbers in the questions below and the balance sheet are in $ thousands.
- How much did Dow Jones originally pay for all the equipment that it owned as of December 31st, 2006?
- Assuming that no Buildings (and Improvements) were sold during the year 2006, how much did Dow Jones pay to purchase/improve buildings during the year?
- Assume that Dow Jones had purchased $155,000 in additional equipment and recorded total depreciation expenses of $122,000 during the fiscal year 2006. Also, assume that the only thing that the Dow Jones sold was one piece of printing equipment for $190,000 in cash.
- How much did the Dow Jones originally pay for the piece of equipment that was sold?
- At the time of sale, what was the accumulated depreciation on the piece of equipment that was sold?
- Did Dow Jones record a gain or a loss on the sale of the printing equipment?
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
|As of December 31|
|Cash and cash equivalents||$||13,237||$||10,633|
|AAccounts receivable – trade, net of allowance for doubtful
accounts of $5,390 in 2006 and $5,870 in 2005
|Accounts receivable – other||18,313||22,584|
|Current assets of discontinued operations||-||10,448|
|Deferred income taxes||25,754||14,459|
|Total current assets||313,648||284,171|
|Investments in associated companies, at equity||19,302||30,074|
|Plant, property and equipment, at cost:|
|Buildings and improvements||455,883||452,521|
|Construction in progress||66,650||17,928|
|Less, accumulated depreciation||1,087,695||1,054,398|
|Plant, property and equipment, net||638,772||616,397|
|Other intangible assets, less accumulated amortization||196,901||135,265|
|of $32,375 in 2006 and $20,370 in 2005|
|Deferred income taxes||16,203||44,179|
|Long-term assets of discontinued operations||-||43,371|
|The accompanying notes are an integral part of the consolidated financial statements.|