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Refer to the 3.00% senior notes due May 2027. Calculate the interest expense on this note for fiscal year 2022.

Refer to the 3.00% senior notes due May 2027. Calculate the interest expense on this note for fiscal year 2022.

SWFT Individual Income Taxes
SWFT Individual Income Taxes
43rd Edition
ISBN:9780357391365
Author:YOUNG
Publisher:YOUNG
Chapter13: Tax Credits And Payment Procedures
Section: Chapter Questions
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Refer to the 3.00% senior notes due May 2027. Calculate the interest expense on this note for fiscal year 2022. 

 

Page 34 of Annual Report REVENUE Net sales Membership fees Total revenue OPERATING EXPENSES Merchandise costs Selling, general and administrative Preopening expenses Operating income OTHER INCOME (EXPENSE) Interest expense Interest income and other, net INCOME BEFORE INCOME TAXES Provision for income taxes Net income including noncontrolling interests Net income attributable to noncontrolling interests NET INCOME ATTRIBUTABLE TO COSTCO NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO: Basic Diluted Shares used in calculation (000's) Page 36 in Annual Report Basic Diluted CURRENT ASSETS Cash and cash equivalents OTHER ASSETS Total current assets CURRENT LIABILITIES Accounts payable Property and equipment, net Operating lease right-of-use assets Other long-term assets TOTAL ASSETS Accrued salaries and benefits Accrued member rewards Deferred membership fees Current portion of long-term debt Other current liabilities OTHER LIABILITIES Total current liabilities Short-term investments Receivables, net of allowance for doubtful accounts of $90 and $70 Merchandise inventories Other current assets COSTCO WHOLESALE CORPORATION CONSOLIDATED STATEMENTS OF INCOME (amounts in millions, except per share data) Long-term debt, excluding current portion Long-term operating lease liabilities Other long-term liabilities TOTAL LIABILITIES COMMITMENTS AND CONTINGENCIES EQUITY 441,825,000 and 441,255,000 shares issued and outstanding Additional paid-in capital Accumulated other comprehensive loss Retained earnings Page 41 in the Annual Report Receivables, Net Total Costco stockholders' equity Noncontrolling interests TOTAL EQUITY TOTAL LIABILITIES AND EQUITY United States Canada Other International ASSETS Merchandise inventories LIABILITIES AND EQUITY $ Long-Term Debt $ Page 49-50 in the Annual Report Note 5-Debt 2022 2023 2024 $ $ Preferred stock $0.01 par value; 100,000,000 shares authorized; no shares issued and outstanding Common stock $0.01 par value; 900,000,000 shares authorized; 2025 2026 52 Weeks Ended August 29, 2021 COSTCO WHOLESALE CORPORATION CONSOLIDATED BALANCE SHEETS (amounts in millions, except par value and share data) Merchandise Inventories Merchandise inventories consist of the following (in $ millions): 192,052 $ 3,877 195,929 170,684 18,461 76 6,708 Thereafter Total (171) 143 6,680 1,601 5,079 2.300% Senior Notes due May 2022 2.750% Senior Notes due May 2024 3.000% Senior Notes due May 2027 1.375% Senior Notes due June 2027 1.600% Senior Notes due April 2030 1.750% Senior Notes due April 2032 Other long-term debt Total long-term debt Less unamortized debt discounts and issuance costs Less current portion (1) Long-term debt, excluding current portion (72) 5,007 $ 443,089 444,346 11.30 $ 11.27 $ $ $ 52 Weeks Ended August 30, 2020 $ August 29, 2021 $ 2021 $ 163,220 $ 3,541 166,761 144,939 16,332 55 5,435 (1) Net of unamortized debt discounts and issuance costs. Maturities of long-term debt during the next five fiscal years and thereafter are as follows: (160) 92 5,367 1,308 4,059 2021 (57) 4,002 $ 9.05 $ 9.02 $ 442,297 443,901 11,258 $ 917 1,803 14,215 1,312 29,505 23,492 2,890 3,381 59,268 $ 16,278 $ 4,090 1,671 2,042 799 4,561 29,441 6,692 2,642 2,415 41,190 4 7,031 (1,137) 11,666 17,564 514 18,078 59,268 $ Receivables consist primarily of vendor, reinsurance, credit card incentive, third-party pharmacy and other receivables. Receivables are recorded net of an allowance for credit losses which considers creditworthiness of vendors and third parties, historical experience and current economic trends. 10,248 $ 1,456 2,511 14,215 $ 52 Weeks Ended September 1, 2019 800 $ 1,000 1,000 1,250 1,750 1,000 731 7,531 40 799 6,692 $ 149,351 3,352 152,703 2020 $ 132,886 14,994 86 4,737 August 30, 2020 $ (150) 178 Merchandise inventories are valued at the lower of cost or market as determined primarily by the retail inventory method, and are stated using the last-in, first-out (LIFO) method for substantially all U.S. merchandise inventories. Merchandise inventories for all foreign operations are primarily valued by the retail method of accounting, and are stated using the first-in, first-out (FIFO) method. The Company believes the LIFO method more fairly presents the results of operations by more closely matching current costs with current revenues. 4,765 1,061 3,704 If all merchandise inventories had been valued using the first-in, first-out (FIFO) method, inventories would have been higher by $1,000 million at August 29, 2021 and $900 million at August 30, 2020. The Company calculates its FIFO inventory valuation using the retail method for store inventories and the cost method for distribution facility inventories. (45) 3,659 2020 8.32 8.26 439,755 442,923 The Company's long-term debt consists primarily of Senior Notes, described below. The Company at its option may redeem the Senior Notes at any time, in whole or in part, at a redemption price plus accrued interest. The redemption price is equal to the greater of 100% of the principal amount or the sum of the present value of the remaining scheduled payments of principal and interest to maturity. Additionally, upon certain events, the holder has the right to require the Company to purchase this security at a price of 101% of the principal amount plus accrued and unpaid interest to the date of the event. Interest on all outstanding long-term debt is payable semi-annually. The estimated fair value of Senior Notes is valued using Level 2 inputs. 12,277 1,028 1,550 12,242 1,023 28,120 At the end of 2021 and 2020, the fair value of the Company's long-term debt, including the current portion, was approximately $7,692 and $7,987, respectively. The carrying value of long-term debt consisted of the following (in $ millions): 21,807 2,788 2,841 55,556 14,172 3,605 1,393 1,851 95 3,728 24,844 7,514 2,558 1,935 36,851 4 6,698 (1,297) 12,879 18,284 421 18,705 55,556 8,871 1,310 2,061 12,242 800 1,000 1,000 1,250 1,750 1,000 857 7,657 48 95 7,514 800 91 1,109 136 100 5,295 7,531
Transcribed Image Text:Page 34 of Annual Report REVENUE Net sales Membership fees Total revenue OPERATING EXPENSES Merchandise costs Selling, general and administrative Preopening expenses Operating income OTHER INCOME (EXPENSE) Interest expense Interest income and other, net INCOME BEFORE INCOME TAXES Provision for income taxes Net income including noncontrolling interests Net income attributable to noncontrolling interests NET INCOME ATTRIBUTABLE TO COSTCO NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO: Basic Diluted Shares used in calculation (000's) Page 36 in Annual Report Basic Diluted CURRENT ASSETS Cash and cash equivalents OTHER ASSETS Total current assets CURRENT LIABILITIES Accounts payable Property and equipment, net Operating lease right-of-use assets Other long-term assets TOTAL ASSETS Accrued salaries and benefits Accrued member rewards Deferred membership fees Current portion of long-term debt Other current liabilities OTHER LIABILITIES Total current liabilities Short-term investments Receivables, net of allowance for doubtful accounts of $90 and $70 Merchandise inventories Other current assets COSTCO WHOLESALE CORPORATION CONSOLIDATED STATEMENTS OF INCOME (amounts in millions, except per share data) Long-term debt, excluding current portion Long-term operating lease liabilities Other long-term liabilities TOTAL LIABILITIES COMMITMENTS AND CONTINGENCIES EQUITY 441,825,000 and 441,255,000 shares issued and outstanding Additional paid-in capital Accumulated other comprehensive loss Retained earnings Page 41 in the Annual Report Receivables, Net Total Costco stockholders' equity Noncontrolling interests TOTAL EQUITY TOTAL LIABILITIES AND EQUITY United States Canada Other International ASSETS Merchandise inventories LIABILITIES AND EQUITY $ Long-Term Debt $ Page 49-50 in the Annual Report Note 5-Debt 2022 2023 2024 $ $ Preferred stock $0.01 par value; 100,000,000 shares authorized; no shares issued and outstanding Common stock $0.01 par value; 900,000,000 shares authorized; 2025 2026 52 Weeks Ended August 29, 2021 COSTCO WHOLESALE CORPORATION CONSOLIDATED BALANCE SHEETS (amounts in millions, except par value and share data) Merchandise Inventories Merchandise inventories consist of the following (in $ millions): 192,052 $ 3,877 195,929 170,684 18,461 76 6,708 Thereafter Total (171) 143 6,680 1,601 5,079 2.300% Senior Notes due May 2022 2.750% Senior Notes due May 2024 3.000% Senior Notes due May 2027 1.375% Senior Notes due June 2027 1.600% Senior Notes due April 2030 1.750% Senior Notes due April 2032 Other long-term debt Total long-term debt Less unamortized debt discounts and issuance costs Less current portion (1) Long-term debt, excluding current portion (72) 5,007 $ 443,089 444,346 11.30 $ 11.27 $ $ $ 52 Weeks Ended August 30, 2020 $ August 29, 2021 $ 2021 $ 163,220 $ 3,541 166,761 144,939 16,332 55 5,435 (1) Net of unamortized debt discounts and issuance costs. Maturities of long-term debt during the next five fiscal years and thereafter are as follows: (160) 92 5,367 1,308 4,059 2021 (57) 4,002 $ 9.05 $ 9.02 $ 442,297 443,901 11,258 $ 917 1,803 14,215 1,312 29,505 23,492 2,890 3,381 59,268 $ 16,278 $ 4,090 1,671 2,042 799 4,561 29,441 6,692 2,642 2,415 41,190 4 7,031 (1,137) 11,666 17,564 514 18,078 59,268 $ Receivables consist primarily of vendor, reinsurance, credit card incentive, third-party pharmacy and other receivables. Receivables are recorded net of an allowance for credit losses which considers creditworthiness of vendors and third parties, historical experience and current economic trends. 10,248 $ 1,456 2,511 14,215 $ 52 Weeks Ended September 1, 2019 800 $ 1,000 1,000 1,250 1,750 1,000 731 7,531 40 799 6,692 $ 149,351 3,352 152,703 2020 $ 132,886 14,994 86 4,737 August 30, 2020 $ (150) 178 Merchandise inventories are valued at the lower of cost or market as determined primarily by the retail inventory method, and are stated using the last-in, first-out (LIFO) method for substantially all U.S. merchandise inventories. Merchandise inventories for all foreign operations are primarily valued by the retail method of accounting, and are stated using the first-in, first-out (FIFO) method. The Company believes the LIFO method more fairly presents the results of operations by more closely matching current costs with current revenues. 4,765 1,061 3,704 If all merchandise inventories had been valued using the first-in, first-out (FIFO) method, inventories would have been higher by $1,000 million at August 29, 2021 and $900 million at August 30, 2020. The Company calculates its FIFO inventory valuation using the retail method for store inventories and the cost method for distribution facility inventories. (45) 3,659 2020 8.32 8.26 439,755 442,923 The Company's long-term debt consists primarily of Senior Notes, described below. The Company at its option may redeem the Senior Notes at any time, in whole or in part, at a redemption price plus accrued interest. The redemption price is equal to the greater of 100% of the principal amount or the sum of the present value of the remaining scheduled payments of principal and interest to maturity. Additionally, upon certain events, the holder has the right to require the Company to purchase this security at a price of 101% of the principal amount plus accrued and unpaid interest to the date of the event. Interest on all outstanding long-term debt is payable semi-annually. The estimated fair value of Senior Notes is valued using Level 2 inputs. 12,277 1,028 1,550 12,242 1,023 28,120 At the end of 2021 and 2020, the fair value of the Company's long-term debt, including the current portion, was approximately $7,692 and $7,987, respectively. The carrying value of long-term debt consisted of the following (in $ millions): 21,807 2,788 2,841 55,556 14,172 3,605 1,393 1,851 95 3,728 24,844 7,514 2,558 1,935 36,851 4 6,698 (1,297) 12,879 18,284 421 18,705 55,556 8,871 1,310 2,061 12,242 800 1,000 1,000 1,250 1,750 1,000 857 7,657 48 95 7,514 800 91 1,109 136 100 5,295 7,531
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