1. 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:

Warranties

Estimated warranty costs are accrued for at the time the vehicle is sold to a dealer. Estimates for warranty costs are made based primarily on historical warranty claim experience.

REQUIRED:

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:

REVENUE AND EXPENSE RECOGNITION

Guest cruise deposits represent unearned revenues and are initially recorded as customer deposit liabilities when received. Customer deposits are subsequently recognized as cruise revenues, together with revenues from onboard and other activities, and all associated direct costs and expenses of a voyage are recognized as cruise costs and expenses, upon completion of voyages with durations of 10 nights or less and on a pro-rata basis for voyages in excess of 10 nights.

REQUIRED:

In your own words, explain how deffered revenue is reported on the statement of financial position for Carnival. Assume that Carnival collected $15 million in 2017 for cruises that will be completed in the following year. Of that amount, $3 million was related to cruises of 10 or fewer nights that were not complete; $7 million to cruises of more than 10 nights that, on average, were 60 percent complete; and $5 million was related to cruises that had not yet begun. What is the amount of deferred revenue that should be reported on the 2017 statement of financial position?

3. An annual report for Exxon Mobil Corporation reported a quick ratio of 0.45. For the previous year, the ratio was 0.70. Based on this information, do you think that Exxon Mobil is experiencing financial difficulty? What other information would you want to consider in making this evaluation?

4. Brunswick Corporation is a multinational company that manufactures and sells marine and recreational productions. Its annual report contained the following information:

ENVIRONMENTAL MATTERS

The environmental remediation and clean-up projects in which the Company is involved have an aggregate estimated range of exposure of approximately $40.0 million to $64.2 million as of December 31,2015. At December 31, 2015 and 2014, the company had reserves for environmental liabilities of $40.0 million and $39.9 million, respectively, reflected in Accrued expenses and Other long-term liabilities in the Consolidated Balance Sheets. The Company recorded environmental provisions of $1.4 million, $1.0 million and $0.5 million for the years ended December 31, 2015, 2014 and 2013, respectively.

REQUIRED:

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