Type
Solution Manual
Book Title
Financial Accounting Fundamentals 5th Edition
ISBN 13
978-0078025754

978-0078025754 Appendix C Solution Manual Part 5

March 26, 2020
Reporting in Action BTN C-1
1. Yes, Apple’s financial statements are consolidated. The statements are
labeled as “consolidated” in each of the financial statement headings.
2. Apples comprehensive income for the year ended September 28, 2013,
Change in foreign currency translation, net of tax effects of $35 ...............
(112)
Total change in unrecognized gains/losses on derivative instruments,
64
3. Yes. Its consolidated statement of comprehensive income does include
a Foreign Currency Translation Adjustments amount. (See above for
amount.)
4. The return on total assets for the year ended September 28, 2013, ($
5. Answer depends on the annual report information obtained.
Comparative Analysis BTN C-2
1. Apples return on total assets
Current Year: $37,037 / [($207,000 + $176,064) / 2] = 19.3%
2. Return on total assets = Profit margin x Total asset turnover
—— Returns in part 2 can differ from those in part 1 due to rounding ——
Apples component analysis of return on total assets*
Current Year
Google’s component analysis of return on total assets*
Comparative Analysis (Concluded)
3. Current Year Analysis: Apple has the higher return on total assets
(19.3%) compared to Google (12.6%), the higher profit margin (21.7% vs.
One Year Prior Analysis: Apple has the higher return on total assets
(28.5%) compared to Google (12.9%), the higher profit margin (26.7% vs.
Ethics Challenge BTN C-3
1. Kasey’s bonus is not contingent on the classification of available-for-
sale versus held-to-maturity. Designation of the bonds as available-for-
2. Generally, Kasey must classify its debt securities as either short or long
term and as available-for-sale or held-to-maturity. Since the bonds are
5-year bonds they should be classified as long-term investments unless
Communicating in Practice BTN C-4
TO: Mary Jolee
FROM: (Your Name)
SUBJECT: Sale of Kemper Common Stock
The $6,000 loss on the sale of Kemper common stock is correctly stated.
Jolee Company owned 40% of the outstanding shares, and therefore
accounts for the investment according to the equity method. Under the
Taking It to the Net BTN C-5
($ millions for Parts 1 through 4)
2. Mutual funds; Commercial paper; Certificates of deposit; U.S.
3. Unrealized gains = $3,249; and Unrealized losses = $(460).
Teamwork in Action BTN C-6
There is no specific solution to this activity. The instructor should serve as
a facilitator during this learning reinforcement activity.
Entrepreneurial Decision BTN C-7
1.
2015
Jan. 1
Internet Rights ...................................................
2.
Mar. 31
Accounts Payable* ............................................
Loss from Currency Translation......................
Cash ..............................................................
26,790
Paid ¼ of total amount due
3. Since all of the company’s payments are to be in yen, the company can
buy yen in advance to “lock in” the payment amount.
NOTE: A few students might understand the company’s opportunity for hedging.
Hitting the Road BTN C-8A
Exchange rates can be found at businesses that specialize in foreign currency
exchange. Also, American Express offices abroad exchange currencies for
cardholders and post foreign exchange rates. Typically, railroad stations and
airports also post foreign exchange rates and offer currency exchange services.
Global Decision BTN C-9
1. Samsung ( in millions)
Return on total assets = Net Income / Average Total Assets
Return on total assets = Profit margin x Total asset turnover
Current Year
One Year Prior
2. (a) Current Year Analysis: Samsung vs Apple vs Google
Return on total assets = Profit margin x Total asset turnover
Company
Return on total assets*
Profit margin
Total asset turnover
In the current year, Apple has the highest return on total assets followed
by Samsung, and then Google. Apple also has the highest profit margin
Global Decision (Concluded)
2. (b) Prior Year Analysis: Samsung vs Apple vs Google
Return on total assets = Profit margin x Total asset turnover
Company
Return on total assets*
Profit margin
Total asset turnover
In the prior year, Apple has the highest return on total assets followed
by Samsung, and then Google. Apple also has the highest profit margin

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