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BYP 12-3 COMPARATIVE ANALYSIS PROBLEM
(a)
(in millions)
Amazon
Wal-Mart
1.
Cash used for investing activities
$1,930
$16,609
2.
Cash used for capital expenditures
1,811
13,510
(b) In its Note 1 to the consolidated financial statements, Amazon states:
Principles of Consolidation
The consolidated financial statements include the accounts of
Amazon.com, Inc., its wholly-owned subsidiaries, and those entities in
BYP 12-4 REAL-WORLD FOCUS
Answers will vary depending on company chosen. The following sample
solution is provided for Medtronic, Inc.
BYP 12-5 DECISION MAKING ACROSS THE ORGANIZATION
entries are provided below.
(b) Both the stockholder and the president are correct. Since the equity
method adjusts the investment account for the earnings of the
Entries for the investment in JMB Company:
Acquisition
Stock Investments ............................................ 1,300,000
Previous Years—Equity Method
Stock Investments ............................................ 372,000
Cash ................................................................... 132,000
BYP 12-5 (Continued)
This Year—Equity Method
Stock Investments ............................................ 156,000
Sale of the JMB Company Stock
BYP 12-6 COMMUNICATION ACTIVITY
Dear Mr. Nichols:
statement until you sell it. On the other hand, your debt investment should
be accounted for as a trading security since you purchased it with the intent to
generate a short-term profit. Unrealized gains and losses at your balance sheet
date should be reported directly in income.
BYP 12-7 ETHICS CASE
(a) Classifying the securities as they propose will indeed have the effect on
(b) What each proposes is unethical since it is knowingly not in accordance
BYP 12-8 ALL ABOUT YOU
(a) Ask—The lowest price at which a market maker will sell a specified
Margin—Paying for stock partly in cash and partly by borrowing
from the brokerage firm.
Prospectus—A document that contains important information about
Index Fund—A type of mutual fund or Unit Investment Trust whose
investment objective typically is to achieve the same return as a
particular market index, such as the S&P 500 Composite Stock
Price Index.
regarding their answers.
BYP 12-9 FASB CODIFICATION ACTIVITY
price.
(b) Available-for-Sale Securities; Those not classified as either trading
securities or held-for-collection securities.
