Refer to the consolidated financial statements of Under Armour, Inc., online in the filings section of www.sec.gov. You can retrieve the 2016 Under Armour financial statements at www.sec.gov by clicking on Filings and then searching for “Under Armour” under Company Filings. When you see the list of filings for the company, select the Form 10-K for 2016. Be sure to retrieve the 2016 financial statements, not another year.

During 2016, the company reported net revenues of more than $4,825 million in its consolidated statement of income. In addition, the company had numerous accruals and deferrals. (Note that all amounts in this activity are rounded to the nearest million.)

Requirements

1. Examine Note 2, Summary of Significant Accounting Policies. Explain the company’s policy for recognizing each type of revenue that is included in the Consolidated Statements of Income.

2. Examine Under Armour’s, consolidated balance sheets at December 31, 2016, and December 31, 2015, as well as Note 2, Summary of Significant Accounting Policies. Ending net accounts receivable for 2015 (beginning balance for 2016) were $434 million. Ending net receivables for 2016 were $623 million (all amounts are rounded to the nearest million). Explain the source of these receivables. Were all of these amounts considered collectible (see Allowance for Doubtful Accounts under Note 2)? Why or why not?

3. Refer to Under Armour, Inc.’s, consolidated balance sheets at December 31, 2016, and December 31, 2015, and examine the balances of the account entitled “Prepaid expenses and other current assets.” What specific accounts might be included in this balance sheet line item? The beginning balance is $152 million, and the ending balance is $175 million. Construct a journal entry or entries that might account for the change.

4. View Note 3, Property and Equipment, Net. Notice that accumulated depreciation and amortization stood at $293 million at the end of 2015 and at $397 million at year-end 2016. Assume that depreciation and amortization expense for 2016 was $144 million. Explain what must have happened to account for the remainder of the change in the accumulated depreciation account during 2016. (Challenge)

5. In Note 2, Summary of Significant Accounting Policies, locate the paragraph entitled “Accrued Expenses.” What are the primary categories of items in Accrued Expenses? What type of account is Accrued Expenses? Did the company’s Accrued Expenses increase, decrease, or stay the same from 2015 to 2016? How would this change have impacted the company’s overall net income in 2016?