2 Titan Networking became a public company through an IPO (initial public offering) two weeks ago. You are looking forward to the challenges of being assistant controller for a publicly owned corporation. One such challenge came in the form of a memo in this morning's in-box. "We need to start reporting comprehensive income in our financials," the message from your boss said. "Do some research on that, will you? That concept didn't exist when I went to school." In response, you sought out the financial statements of Cisco Systems, the networking industry leader. 21.66 points Skipped The following are excerpts from disclosure notes from Cisco's 2017 annual report: July 29, 2017 $9,609 Years Ended July 30, July 25, 2016 2015 $10,739 $8,981 eBook (89) 50 (39) 92 1 93 (12) (100) (112) Net income Other comprehensive income (loss): Available-for-sale investments: Change in net unrealized gains, net of tax Net (gains) losses reclassified into earnings, net of tax Cash flow hedging instruments: Change in unrealized gains and losses, net of tax Net (gains) losses reclassified into earnings Net change in cumulative translation adjustment and actuarial gains and losses, net of tax Other comprehensive income (loss) Comprehensive income 17 74 91 321 (59) 16 (43) (447) (397) $10,342 (140) 136 (4) (498) (614) $8,367 373 $9,982 Required: 1. Locate the financial statements of Cisco in the Investor Relations section of Cisco's website (www.cisco.com). Search the 2017 annual report for information about how Cisco accounts for comprehensive income. What does Cisco report in its balance sheet for 2017 Accumulated other comprehensive income? 2. From the information Cisco's financial statements provide, show the calculation of the change in the accumulated other comprehensive income from the end of fiscal 2016 to the end of fiscal 2017. Hint: One component of the change is Comprehensive (income) loss attributable to noncontrolling interests. 3. Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org). Identify the specific eight-digit Codification citation (XXX-XX-XX-X) from the authoritative literature that describes the two alternative formats for reporting comprehensive income. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Locate the financial statements of Cisco in the Investor Relations section of Cisco's website. Search the 2017 annual report for information about how Cisco accounts for comprehensive income. What does Cisco report in its balance sheet for 2017 Accumulated other comprehensive income? (Enter your answer in millions.) Accumulated other comprehensive income million Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 From the information Cisco's financial statements provide, show the calculation of the change in the accumulated other comprehensive income from the end of fiscal 2016 to the end of fiscal 2017. Hint: One component of the change is Comprehensive (income) loss attributable to noncontrolling interests. (Enter your answer in millions. Negative amounts should be indicated by a minus sign.) Show less Balance at July 30, 2016 Other comprehensive income (loss) Comprehensive income) loss attributable to noncontrolling interests Balance at July 29, 2017 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org). Identify the specific eight-digit Codification citation (XXX-XX-XX-X) from the authoritative literature that describes the two alternative formats for reporting comprehensive income. Topic Subtopic Section Paragraph Corporations frequently invest in securities issued by other corporations. Some investments are acquired to secure a favorable business relationship with another company. On the other hand, others are intended only to earn an investment return from the dividends or interest the securities pay or from increases in the market prices of the securitiesthe same motivations that might cause you to invest in stocks, bonds, or other securities. This diversity in investment objectives means no single accounting method is adequate to report every investment. Merck & Co., Inc., invests in securities of other companies. Access Merck's 2016 10-K (which includes financial statements) using EDGAR at www.sec.gov. Note: Merck's 2016 financial statements were issued prior to the effective date of ASU 2016-01, so do not be surprised by the fact that Merck includes equity investments among its available-for-sale investments. Required: 1. a. What is the amount of any AFS investment securities reported in the balance sheet? b. In which current and noncurrent asset categories are AFS investments reported by Merck? c. Is there an amount you can't find in the balance sheet but that you know must be there? 2. a. How are unrealized gains or losses on AFS investments reported, in net income or OCI? b. What about realized gains or losses on AFS investments? 3. Are any investments reported by the equity method? 4. What amounts from equity method investments are reported in the 2016 income statement? 5. Are cash flow effects of investments reflected in the company's statement of cash flows? 1-a. Amount listed as investments in non-current assets 1-b. Merck's 2016 balance sheet list as investments in non-current assets 1-b. Amount listed in short-term investments 1-c. Amount left as unidentified million million million million 2-a. AFS investments reported unrealized gain or losses in 2-b. AFS investments reported realized gain or losses in 3. 4. 5. Are any investments reported by the equity method? Amounts from equity method reported in 2016 income statement Are cash flow effects of investments reflected in the company's statement of cash flows? million 2 Titan Networking became a public company through an IPO (initial public offering) two weeks ago. You are looking forward to the challenges of being assistant controller for a publicly owned corporation. One such challenge came in the form of a memo in this morning's in-box. "We need to start reporting comprehensive income in our financials," the message from your boss said. "Do some research on that, will you? That concept didn't exist when I went to school." In response, you sought out the financial statements of Cisco Systems, the networking industry leader. 21.66 points Skipped The following are excerpts from disclosure notes from Cisco's 2017 annual report: July 29, 2017 $9,609 Years Ended July 30, July 25, 2016 2015 $10,739 $8,981 eBook (89) 50 (39) 92 1 93 (12) (100) (112) Net income Other comprehensive income (loss): Available-for-sale investments: Change in net unrealized gains, net of tax Net (gains) losses reclassified into earnings, net of tax Cash flow hedging instruments: Change in unrealized gains and losses, net of tax Net (gains) losses reclassified into earnings Net change in cumulative translation adjustment and actuarial gains and losses, net of tax Other comprehensive income (loss) Comprehensive income 17 74 91 321 (59) 16 (43) (447) (397) $10,342 (140) 136 (4) (498) (614) $8,367 373 $9,982 Required: 1. Locate the financial statements of Cisco in the Investor Relations section of Cisco's website (www.cisco.com). Search the 2017 annual report for information about how Cisco accounts for comprehensive income. What does Cisco report in its balance sheet for 2017 Accumulated other comprehensive income? 2. From the information Cisco's financial statements provide, show the calculation of the change in the accumulated other comprehensive income from the end of fiscal 2016 to the end of fiscal 2017. Hint: One component of the change is Comprehensive (income) loss attributable to noncontrolling interests. 3. Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org). Identify the specific eight-digit Codification citation (XXX-XX-XX-X) from the authoritative literature that describes the two alternative formats for reporting comprehensive income. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Locate the financial statements of Cisco in the Investor Relations section of Cisco's website. Search the 2017 annual report for information about how Cisco accounts for comprehensive income. What does Cisco report in its balance sheet for 2017 Accumulated other comprehensive income? (Enter your answer in millions.) Accumulated other comprehensive income million Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 From the information Cisco's financial statements provide, show the calculation of the change in the accumulated other comprehensive income from the end of fiscal 2016 to the end of fiscal 2017. Hint: One component of the change is Comprehensive (income) loss attributable to noncontrolling interests. (Enter your answer in millions. Negative amounts should be indicated by a minus sign.) Show less Balance at July 30, 2016 Other comprehensive income (loss) Comprehensive income) loss attributable to noncontrolling interests Balance at July 29, 2017 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org). Identify the specific eight-digit Codification citation (XXX-XX-XX-X) from the authoritative literature that describes the two alternative formats for reporting comprehensive income. Topic Subtopic Section Paragraph Corporations frequently invest in securities issued by other corporations. Some investments are acquired to secure a favorable business relationship with another company. On the other hand, others are intended only to earn an investment return from the dividends or interest the securities pay or from increases in the market prices of the securitiesthe same motivations that might cause you to invest in stocks, bonds, or other securities. This diversity in investment objectives means no single accounting method is adequate to report every investment. Merck & Co., Inc., invests in securities of other companies. Access Merck's 2016 10-K (which includes financial statements) using EDGAR at www.sec.gov. Note: Merck's 2016 financial statements were issued prior to the effective date of ASU 2016-01, so do not be surprised by the fact that Merck includes equity investments among its available-for-sale investments. Required: 1. a. What is the amount of any AFS investment securities reported in the balance sheet? b. In which current and noncurrent asset categories are AFS investments reported by Merck? c. Is there an amount you can't find in the balance sheet but that you know must be there? 2. a. How are unrealized gains or losses on AFS investments reported, in net income or OCI? b. What about realized gains or losses on AFS investments? 3. Are any investments reported by the equity method? 4. What amounts from equity method investments are reported in the 2016 income statement? 5. Are cash flow effects of investments reflected in the company's statement of cash flows? 1-a. Amount listed as investments in non-current assets 1-b. Merck's 2016 balance sheet list as investments in non-current assets 1-b. Amount listed in short-term investments 1-c. Amount left as unidentified million million million million 2-a. AFS investments reported unrealized gain or losses in 2-b. AFS investments reported realized gain or losses in 3. 4. 5. Are any investments reported by the equity method? Amounts from equity method reported in 2016 income statement Are cash flow effects of investments reflected in the company's statement of cash flows? million