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© 2014 Pacific Crest
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e. How much does this company have in intangible assets? What type of assets would be included
in this account?
3. For each of the following categories (a through f):
●
determine in which financial statement the category belongs
●
decide whether that category would be larger for McDonald’s or Apple Inc.
●
provide an explanation for the company you selected
a. Research and Development
b. Inventory
c. COGS
d. Property Plant and Equipment
e. Intangible Assets
f. SG&A
Check your answers using the link available from the companion website.
H
ardest Problem
How hard
can
it be? Can you still use what you’ve learned?
Based on the Models, the Methodologies, and the Demonstrate Your Understanding (DYU) problems in
this activity, create the
hardest
problem you can. Start with the hardest DYU problem in this experience
and by contrasting and comparing it with the other DYU problems, play “What if” with the different
conditions and parameters in the various problems.
Can you still solve the problem? If so, solve it. If not, explain why not.
What makes it difficult to understand a corporate financial statement?
T
roubleshooting
Find the error and correct it!
Marja had been hired by Deville
Productions as a summer intern in
the accounting department.
Her first task was to straighten out
an income statement prepared by
the previous intern.
“There are least two major errors
on this statement,” noted her su-
pervisor; “Please fix them before
lunchtime.”
Identify the errors and
provide corrections.
Deville Productions
March 21
Total Revenue
$
4,320,000
Cost of Goods Sold
$
617,000
Gross Profit
$
4,937,000
Operating Expenses
Research and Development $
55,000
Selling General and Administrative $
2,001,000
Non-Recurring
-
Others
-
Income Expenses
$
2,881,000
Income from Continuing Operations
Total other income $
187,000
Earnings before interest and taxes
$
3,068,000
Interest Expense
-
Income before tax
$
3,068,000
Income tax expense $
744,000
Minority interest
-
Net Income from Continuing Operations $
2,324,000
Non-recurring Events
Net Income
$
2,324,000
8.5 Corporate Finance