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ACCY 500: Accounting Measurement, Reporting, and Control

ACCY 500: Accounting Measurement, Reporting, and Control

Group Assignment 2

Group Name:

Student names:

 

Part I: Accounts Receivable and Uncollectible Amounts

Using the balance sheet of Google provided in the next page, answer the following questions:

  1. 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?
  2. 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)

December 31,
2004 2005
Assets
Current assets:
Cash and cash equivalents $ 426,873 $ 3,877,174
Marketable securities 1,705,424 4,157,073
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
Goodwill 122,818 194,900
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
Total assets $ 3,313,351 $ 10,271,813
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 32,672 $ 115,575
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
Deferred revenue 36,508 73,099
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
Stockholders’ equity:
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
Retained earnings 590,471 2,055,868
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.

  1. Suppose that the Company charged $7 million as bad debt expense. Reckon the number of bad debts written off in 2010.
  1. Compute the amount of cash collected from customers during the year ended May 30th, 2010.
  1. What does cost flow assumption(s) for inventories General Mills use?
  1. 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?
  2. 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
2010 2009 2008
Net sales $14,796.5 $14,691.3 $13,652.1
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
Operating profit 2,606.1 2,325.0 2,229.2
Interest, net 401.6 382.8 399.7
Earnings before income taxes and after-tax earnings from joint ventures 2,204.5 1,942.2 1,829.5
Income taxes 771.2 720.4 622.2
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,
2010
May 31,
2009
Receivables:
     Fromcustomers $1,057.4 $971.2
     Lessallowancefordoubtful

accounts(15.8)(17.8)Total$1,041.6$953.4

 

In Millions May 30,
2010
May 31,
2009
Inventories:
     Raw materials and packaging $ 247.5 $ 273.1
     Finished goods 1,131.4 1,096.1
     Grain 107.4 126.9
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

 

  1. 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).

 

  1. 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).

 

  1. Refer to the same note as in part (a). Provide the entry that the Company will record at maturity.

 

December 31,
(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
Other 7101                38                    99    
Total Machinery and Engines 5,736

 

Financial Products:  15,000  9  4
        Commercial paper
Medium-term notes 15,073 12,678 12,857
Deposit obligations 232 232
Other               525                    377                  489    
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.

  1. How much did BP pay to purchase/develop additional Oil and Gas Properties in 2006?
  1. 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

Download Full Paper

 

Land-and-land-improvementProperty,-plant-and-equipment

 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.

  1. How much did Dow Jones originally pay for all the equipment that it owned as of December 31st, 2006?
  1. 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?
  1. 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
2006 2005
Assets
Current Assets:
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
224,642 195,790
Accounts receivable – other 18,313 22,584
Newsprint inventory 5,081 7,875
Current assets of discontinued operations - 10,448
Prepaid expenses 26,621 22,382
Deferred income taxes 25,754 14,459
Total current assets 313,648 284,171
Investments in associated companies, at equity 19,302 30,074
Other investments 5,151 7,083
Plant, property and equipment, at cost:
Land 22,763 23,046
Buildings and improvements 455,883 452,521
Equipment 1,181,171 1,177,300
Construction in progress 66,650 17,928
1,726,467 1,670,795
Less, accumulated depreciation 1,087,695 1,054,398
Plant, property and equipment, net 638,772 616,397
Goodwill 754,310 609,695
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
Other assets 11,275 11,737
Total assets $ 1,955,562 $ 1,781,972
The accompanying notes are an integral part of the consolidated financial statements.

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