Ford Motor Company is one of the world's largest companies, with annual sales of cars and trucks in excess of \(\$ 120\) billion. Its annual report contained the following note:

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This year, Ford reported claims amounting to \(\$ 4.0\) billion and accrued expenses for warranties in the amount of \(\$ 3.9\) billion. Describe the financial statement effects for this year.
2. Carnival Cruise Lines operates cruise ships in Alaska, the Caribbean, the South Pacific, and the Mediterranean. Some cruises are brief; others can last for several weeks. The company does more than \(\$ 1\) billion in cruise business each year. The following note is from its annual report:

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In your own words, explain how deferred revenue is reported on the statement of financial position for Carnival. Assume that Carnival collected \(\$ 19\) million in 2011 for cruises that will be completed in the following year. Of that amount, \(\$ 4\) million was related to cruises of 10 or fewer days that were not complete; \(\$ 8\) million to cruises of more than 10 days that, on average, were 60 percent complete; and \(\$ 7\) million was related to cruises that had not yet begun. What is the amount of unearned revenue that should be reported on the 2011 statement of financial position?
3. Sunbeam Corporation is a consumer products company that manufactures and markets a number of familiar brands, including Mr. Coffee, Osterizer, First Alert, and Coleman. Annual revenues for the company exceed \(\$ 2\) billion. Its annual report contained the following information:

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Explain the meaning of this note in your own words. Describe how litigation has affected the financial statements for Sunbeam.
4. An annual report for Exxon reported a current ratio of 0.90 . For the previous year, the ratio was 1.08. Based on this information, do you think that Exxon is experiencing financial difficulty? What other information would you want to consider in making this evaluation?
5. Brunswick Corporation is a multinational company that manufactures and sells marine and recreational products. Its annual report contained the following information:

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In your own words, explain Brunswick's accounting policy for environmental expenditures. What is the justification for this policy?