Gildan Activewear Inc. is a Montreal-based company that manufactures and sells activewear, socks, and underwear. The company€™s brands include Gildan, Gold Toe, and Anvil. The company also manufactures products through licensing arrangements with Under Armour and New Balance brands. Exhibit 4-16A presents the company€™s consolidated statements of earnings and comprehensive income for the years ended September 29, 2013, and September 30, 2012. Exhibit 4-16B is an extract from the company€™s significant accounting policies note that outlines its revenue recognition policy.

Exhibit 4-16B EXCERPT FROM GILDAN ACTIVEWEAR INC.€™S 2013 ANNUAL REPORT
(s) Revenue recognition:
Revenue is recognized upon shipment of products to customers, since title passes upon shipment, and to the extent that the selling price is fxed or determinable. At the time of sale, estimates are made for customer price discounts and volume rebates based on the terms of existing programs. Sales are recorded net of these program costs and estimated sales returns, which are based on historical experience, current trends and other known factors, and exclude sales taxes. New sales incentive programs which relate to prior sales are recognized at the time the new program is introduced.
Required:
a. Gildan reports €œnet sales€ on its consolidated statements of earnings. Explain what this means.
b. Calculate the amount of Gildan€™s gross profit percentage for 2013 and 2012. Has it improved?
c. Does Gildan prepare its consolidated statements of earnings using a single-step or a multi-step approach?
d. Does Gildan present its expenses by function or by nature? Does this approach require a higher level of management judgement when preparing the statement?
e. Explain Gildan€™s revenue recognition policy in your own words.

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GILDAN ACTIVEWEAR INC.'S 2013 CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME HIIBIT 4-16A GILDAN ACTIVEWEAR INC CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME Years ended September 29, 2013 and September 30, 2012 (in thousands of U.S. dollars, except per share data) 2013 2012 Net sales Cost of sales Gross profit $2,184,303 $1,948,253 1,552,128 396.125 1,550,266 634,037 Selling, general and administrative expenses (note 17(a)) Restructuring and acquisition-related costs (note 18) Operating income 226,035 14,962 282,563 8,788 342,686 12,013 330,719 10,541 320,178 155,128 Financial expenses, net (note 15(c)) Equity earnings in investment in joint venture Earnings before income taxes 11,598 (597) 144,127 (46) 4,33 Income tax expense (recovery) (note 19) Net earnings 148,464 Other comprehensive income (loss), net of related income taxes (note 15(d) Cash flow hedges Actuarial gain on employee benefit obligations 6,419 436 6,855 (6,399) 323 (6,076) $ 327,033 $ 142,388 Comprehensive income Earnings per share Basic (note 20) Diluted (note 20) 2.64 $ 2.61 $ 1.22 1.22