Gateway’s Accounting Policies The notes to the Gateway financial statements provide information on accounting choices and procedures used in preparing the financial statements. By looking at the summary of significant accounting policies in Gateway’s 1998 financial statements presented in Appendix A, answer each of the following:

a. Which assets are considered to be cash equivalents for reporting purposes?

b. Gateway has invested in marketable securities that are classified as available-for-sale and reports them on its balance sheet at fair value. How are the net holding gains and losses on these securities reported in the financial statements?

c. What types of inventory does Gateway have on hand at December 31, 1998? How is the inventory valued?

d. How does the company account for the costs of purchased software after it has been capitalized?

e. Does Gateway recognize income f.o.b. shipping point or f.o.b. destination?

f. What was the weighted average number of common shares outstanding at December 31, 1998? How many additional shares of common stock were added to the weighted average number of common shares outstanding to arrive at the weighted average number of shares used in computing diluted earnings per share?