Nokia reported 2017 operating income on the Income Statement by subtracting expenses listed by function (i.e., selling, general, and administration) as seen below:

In footnotes 8 and 10, they list the expenses and other income by nature:

Required:

A. Does Nokia report expenses on the income statement by nature or by function?

B. Using the income statement numbers, compute operating expenses for 2017. Does this number reconcile the amount of operating expenses reported in footnote 8? What is the difference and what is it?

C. Looking at footnote 10, should Nokia include any of these items in operating income?

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For the year ended December 31 Net sales Cost of sales Gross profit Research and development expenses Selling, general and administrative expenses Other income Other expenses Operating profit/(loss) Notes 2017 EURM 4,7 23,147 (14,008) 9,139 (4,916) (3,615) 363 10 8, 10 (955) 16 8. Expenses by nature EURM 2017 Continuing operations Personnel expenses (Note 9) 7,845 Cost of material 7,776 Depreciation and amortization (Notes 14, 15) 1,591 Rental expenses 339 Impairment charges 210 Other 5,733 Total operating expenses 23,494