1. Dell Inc. is a leading technology company that offers a broad range of product categories, including mobility products, desktop PCs, software and peripherals, servers and networking, and storage. Its annual report contained the following note:

Warranty - We record warranty liabilities at the time of sale for the estimated costs that may be incurred under the terms of the limited warranty. The specific warranty terms and conditions vary depending upon the product sold and the country in which we do business, but generally include technical support, parts, and labour over a period ranging from one to three years. Factors that affect our warranty liability include the number of installed units currently under warranty, historical and anticipated rates of warranty claims on those units, and cost per claim to satisfy our warranty obligation.

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\section*{Required:}

Assume that estimated warranty costs for 2010 were \(\$ 1\) billion and that the warranty work was performed during 2011. Describe the financial statement effects for each year.

2. Walt Disney is a well-recognized brand in the entertainment industry, with products ranging from broadcast media to parks and resorts. The following note is from its annual report:

Required:
Assume that Disney collected \(\$ 100\) million in 2010 multi-year tickets that will be used in future years. For 2011, the company estimates that 60 percent of the tickets will be used. Describe the financial statement effects for each year.
Brunswick Corporation Company \section*{The Coca-Cola}
3. Brunswick Corporation is a multinational company that manufactures and sells marine and recreational products. Its annual report contained the following information:

\section*{Required:}
How should Brunswick report this litigation in its financial statements?
4. A recent annual report for the Coca-Cola Company reported current assets of \(\$ 12,176\) million and current liabilities of \(\$ 12,988\) million. Based on the current ratio, do you think that Coca-Cola is experiencing financial difficulty?
Alcoa 5. Alcoa is involved in the mining and manufacturing of aluminum. Its products can become an advanced alloy for the wing of a Boeing 767 or a common, recyclable Coca-Cola can. The annual report for Alcoa stated the following:

\section*{Required:}
In your own words, explain Alcoa's accounting policy for environmental expenditures. What is the justification for this policy?

Transcribed Image Text:

Walt Disney Revenue Recognition Revenues from advance theme park ticket sales are recognized when the tickets are used. For non-expiring, multi-year tickets, we recognize revenue over a three-year time period based on estimated usage, which is derived from historical usage patterns.