Bundle: Accounting, Loose-Leaf Version, 26th + LMS Integrated for CengageNOW, 2 terms Printed Access Card
26th Edition
ISBN: 9781305715967
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 15, Problem 15.18EX
To determine
(a)
Trading securities: These are short-term investments in debt and equity securities with an intention of trading and earning profits due to changes in market prices.
The balance of
(b)
To determine
To indicate: The presentation of trading investments on the
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Forecast an Income Statement
Following is the income statement for Medtronic PLC for the year ended April 29, 2016.
Consolidated Statements of Income
Apr. 29, 2016
Net sales
$29,721
Costs and expenses
Cost of products sold
9,214
Research and development expense
2,224
Selling, general, and administrative expense
9,469
Special charges (gains), net
70
Restructuring charges, net
290
Certain litigation charges, net
26
Acquisition-related items
283
Amortization of intangible assets
1,931
Other expense, net
107
Operating profit
6,107
Interest expense, net
955
Income from operations before income taxes
5,152
Provision for income taxes
979
Net income
$4,173
Use the following assumptions to prepare a forecast of the company's income statement for FY2017.
Net sales increase
18%
Cost of products sold
31.7% of net sales
Research and development expense
7.7% of net sales
Selling, general, and administrative expense
32.8% of net sales…
Select information from BUI
Balance Sheets as of December 31
Current Assets
Net Plant and Equipment
Total Assets
Accounts Payable
Notes Payable
Accruals
Long-Term Bonds
Total Common Equity
Total Liabilities & Equity
Income Statement
Earnings before interest and taxes
Depreciation and Amortization
Interest
Taxes 40%
Net Income
Other Information
WACC
Number of shares outstanding
Price per share
What was 2014 EVA?
$0
$197,600
$140,000
$57,600
2013
1,200,000
900,000
2,800,000 2,700,000
4,000,000 3,600,000
2014
200,000 216,000
280,000 108,000
120,000 252,000
1,040,000 864,000
2,360,000 2,160,000
4,000,000 3,600,000
2014
1,200,000.0
140,000.0
104,000.0
438,400.0
657,600.0
2014
18.00%
80,000
$22.13
For years ended December 31
Equity Investee Financial Summary,
$ millions
2018
2017
2016
Net sales...
Gross margin
Net income..
Cummins' share of net income.
$7,352
$7,050
$5,654
1,373
1,422
1,182
647
680
499
$ 336
$ 308
$ 260
Royalty and interest income..
58
49
41
Total equity, royalty and interest from investees...
$ 394
$ 357
$ 301
Current assets
$3,401
1,449
$3,416
1,379
Noncurrent assets
Current liabilities..
Noncurrent liabilities..
Net assets...
(2,669)
(218)
(2,567)
(237)
$1,963
$1,991
Cummins' share of net assets
$1,144
$1,116
a. What assets and liabilities of unconsolidated affiliates are omitted from Cummins' balance sheet as a
result of the equity method of accounting for those investments?
b. Do the liabilities of the unconsolidated affiliates affect Cummins directly? Explain.
c. How does the equity method impact Cummins' ROE and its RNOA components (net operating asset
turnover and net operating profit margin)?
Chapter 15 Solutions
Bundle: Accounting, Loose-Leaf Version, 26th + LMS Integrated for CengageNOW, 2 terms Printed Access Card
Ch. 15 - Why might a business invest cash in temporary...Ch. 15 - What causes a gain or loss on the sale of a bond...Ch. 15 - When is the equity method the appropriate...Ch. 15 - How does the accounting for a dividend received...Ch. 15 - Prob. 5DQCh. 15 - What is the major difference in the accounting for...Ch. 15 - Prob. 7DQCh. 15 - How would a debit balance in Unrealized Gain...Ch. 15 - What are the factors contributing to the trend...Ch. 15 - Prob. 10DQ
Ch. 15 - Prob. 15.1APECh. 15 - Bond investment transactions Journalize the...Ch. 15 - Prob. 15.2APECh. 15 - Stock investment transactions On September 12,...Ch. 15 - Prob. 15.3APECh. 15 - Prob. 15.3BPECh. 15 - Prob. 15.4APECh. 15 - Prob. 15.4BPECh. 15 - Prob. 15.5APECh. 15 - Prob. 15.5BPECh. 15 - Prob. 15.6APECh. 15 - Prob. 15.6BPECh. 15 - Prob. 15.1EXCh. 15 - Prob. 15.2EXCh. 15 - Prob. 15.3EXCh. 15 - Prob. 15.4EXCh. 15 - Prob. 15.5EXCh. 15 - Entries for investment in stock, receipt of...Ch. 15 - Prob. 15.7EXCh. 15 - Prob. 15.8EXCh. 15 - Entries for stock investments, dividends, and sale...Ch. 15 - Prob. 15.10EXCh. 15 - Prob. 15.11EXCh. 15 - Prob. 15.12EXCh. 15 - Prob. 15.13EXCh. 15 - Prob. 15.14EXCh. 15 - Prob. 15.15EXCh. 15 - Prob. 15.16EXCh. 15 - Fair value journal entries, trading investments...Ch. 15 - Prob. 15.18EXCh. 15 - Prob. 15.19EXCh. 15 - Prob. 15.20EXCh. 15 - Prob. 15.21EXCh. 15 - Prob. 15.22EXCh. 15 - Prob. 15.23EXCh. 15 - Prob. 15.24EXCh. 15 - Prob. 15.25EXCh. 15 - Prob. 15.26EXCh. 15 - Prob. 15.27EXCh. 15 - Prob. 15.28EXCh. 15 - Prob. 15.29EXCh. 15 - Prob. 15.1APRCh. 15 - Prob. 15.2APRCh. 15 - Stock Investment transaction, equity method and...Ch. 15 - Prob. 15.4APRCh. 15 - Prob. 15.1BPRCh. 15 - Prob. 15.2BPRCh. 15 - Stock investment transactions, equity method and...Ch. 15 - Prob. 15.4BPRCh. 15 - Selected transactions completed by Equinox...Ch. 15 - Benefits of fair value On July 16, 1998, Wyatt...Ch. 15 - International fair value accounting International...Ch. 15 - Prob. 15.3CPCh. 15 - Warren Buffett and "look-through" earnings...Ch. 15 - Prob. 15.5CP
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