General Electric (GE) disclosed the following non-GAAP reconciliation for its Industrial segment fromits 2018 Form 10-K.$ millions201820172016GE Industrial earnings (loss)Less: Nonoperating pension benefit costs (net of tax).Less: Gains and impairments for disposed or held for salebusinesses (net of tax)Less: Restructuring and other (net of tax)Less: Goodwill impairments (net of tax).Less: GE Industrial U.S. tax reform enactment adjustment$ 9,048$(20,587)(2,184)$(1,841)(1,550)(1,527)9748642,374(2,948)(22,371)(38)(2,778)(1,156)(4,905)(2,483)Adjusted GE Industrial earnings (loss) (Non-GAAP)$ 5,980$ 7,685$10,684Requireda. Explain how the non-GAAP items (in total) affected adjusted earnings each year. Are the adjustmentssignificant?b. GE makes five specific adjustments. Are any of the adjustments likely beyond the company's control?c. Calculate the year-over-year change (in % terms) in reported net income for 2017 and 2018. Calculatethe year-over-year change (in % terms) in the non-GAAP net income. Which trend do we believe moreaccurately depicts GE's performance over this period?

The generally accepted accounting principles (GAAP) is a standardized framework for financial…

$ millions GE Industrial earnings (loss) Less: Nonoperating pension benefit costs (net of tax) . . . . . . . . Less: Gains and impairments for disposed or held for sale businesses (net of tax) ..... Less: Restructuring and other (net of tax) Less: Goodwill impairments (net of tax).. Less: GE Industrial U.S. tax reform enactment adjustment.... Adjusted GE Industrial earnings (loss) (Non-GAAP).. ..... ..... .... 2018 $(20,587) (2,184) 2017 $(1,841) (1,550) 974 864 (2,948) (2,778) (22,371) (1,156) (38) (4,905) $5,980 $ 7,685 2016 $9,048 (1,527) 2,374 (2,483) $10,684 Required a. Explain how the non-GAAP items (in total) affected adjusted earnings each year. Are the adjustment significant? b. GE makes five specific adjustments. Are any of the adjustments likely beyond the company's control c. Calculate the year-over-year change (in % terms) in reported net income for 2017 and 2018. Calculat the year-over-year change (in % terms) in the non-GAAP net income. Which trend do we believe mor accurately depicts GE's performance over this period?

$ millions GE Industrial earnings (loss) Less: Nonoperating pension benefit costs (net of tax) . . . . . . . . Less: Gains and impairments for disposed or held for sale businesses (net of tax) ..... Less: Restructuring and other (net of tax) Less: Goodwill impairments (net of tax).. Less: GE Industrial U.S. tax reform enactment adjustment.... Adjusted GE Industrial earnings (loss) (Non-GAAP).. ..... ..... .... 2018 $(20,587) (2,184) 2017 $(1,841) (1,550) 974 864 (2,948) (2,778) (22,371) (1,156) (38) (4,905) $5,980 $ 7,685 2016 $9,048 (1,527) 2,374 (2,483) $10,684 Required a. Explain how the non-GAAP items (in total) affected adjusted earnings each year. Are the adjustment significant? b. GE makes five specific adjustments. Are any of the adjustments likely beyond the company's control c. Calculate the year-over-year change (in % terms) in reported net income for 2017 and 2018. Calculat the year-over-year change (in % terms) in the non-GAAP net income. Which trend do we believe mor accurately depicts GE's performance over this period?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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