During the year ended October 2, 2011, Gildan Activewear Inc. (Gildan) experienced numerous accruals and deferrals. As a long-term employee of Gildan's accounting and financial staff, it is your job to explain the effects of accruals and deferrals on Gildan's financial statements. (Gildan's financial statements appear in Appendix A at the end of this book and on MyAccountingLab.) Suppose the following questions were raised at the shareholders' meeting:
1. "Prepaid expenses" in the amount of $10,966,000 are listed on the October 2, 2011, balance sheet. What items could be included in this balance, and why is this account listed as a balance sheet account instead of an expense account?
2. The balance sheet lists "Future Income Taxes" in two different places at October 2, 2011. What types of accounts are they shown as and at what amounts?
3. Refer to Note 8 and the account "long-term debt." How large is the current loan? How large is Gildan's "credit facility" at October 2, 2011?
4. "Accounts payable and accrued liabilities" is shown on the balance sheet in the amount of $315,269,000. Define an accrued liability and give an example of items that could be included in this liability.
5. What is "depreciation," and how much depreciation has been recorded to date for the manufacturing equipment at October 2, 2011? (Refer to Note 4 for this amount.)