29. Equity Method Account Activity For Archer Daniels Midland Corporation (ADM), equity method investments are reported in the bal- ance sheet account titled, Investments in and advances to affiliates. According to ADM's December 31, 2017 SEC Form 10-K, the balance in this account was $5,088 million. Note 18 of ADM's financial statements includes the following disclosure about its equity method investments: The Company ap- plies the equity method of accounting for investments in investees over which the Company has the ability to exercise significant influence ... The Company had 56 and 59 unconsolidated domestic and foreign affiliates as of December 31, 2017 and 2016, respectively. The following table summarizes the combined balance sheets as of December 31, 2017 and 2016, and the combined statements of earnings of the Company's unconsolidated affiliates for the years ended December 31, 2017, 2016, and 2015. ADM has 24.9% and 23.2% average percentage ownership of its equity method investees on December 31, 2017 and 2016, respectively. December 31 (in millions) 2017 2016 Current assets Non-current assets Current liabilities.. Non-current liabilities Noncontrolling interests Net assets. $28,200 21,411 (24,209) (4,250) (981) $20,171 $25,145 21,347 (20,587) (5,830) (943) $19,132 Year Ended December 31 (in millions) 2017 2016 2015 Net sales. Gross profit. . Net income $55,908 4,687 1,800 $45,296 4,375 1,119 $47,980 4,530 1,428 For this exercise assume the ownership percentages and changes therein are proportional to the dollar amounts reported on the investee's financial statements. a. Of the total balance of $5,088 million reported in Investments in and advances to affiliates on December 31, 2017, what is the approximate amount of equity method investments included in the balance? b. What is the approximate amount of equity method income included in ADM's reported earnings for the year ended December 31, 2017? For the year ended December 31, 2017, what additional activity (i.e., both source and amount) did ADM record in its Equity Investment Accounts? What is the likely cause of this additional activity? C. 29. Equity Method Account Activity For Archer Daniels Midland Corporation (ADM), equity method investments are reported in the bal- ance sheet account titled, Investments in and advances to affiliates. According to ADM's December 31, 2017 SEC Form 10-K, the balance in this account was $5,088 million. Note 18 of ADM's financial statements includes the following disclosure about its equity method investments: The Company ap- plies the equity method of accounting for investments in investees over which the Company has the ability to exercise significant influence ... The Company had 56 and 59 unconsolidated domestic and foreign affiliates as of December 31, 2017 and 2016, respectively. The following table summarizes the combined balance sheets as of December 31, 2017 and 2016, and the combined statements of earnings of the Company's unconsolidated affiliates for the years ended December 31, 2017, 2016, and 2015. ADM has 24.9% and 23.2% average percentage ownership of its equity method investees on December 31, 2017 and 2016, respectively. December 31 (in millions) 2017 2016 Current assets Non-current assets Current liabilities.. Non-current liabilities Noncontrolling interests Net assets. $28,200 21,411 (24,209) (4,250) (981) $20,171 $25,145 21,347 (20,587) (5,830) (943) $19,132 Year Ended December 31 (in millions) 2017 2016 2015 Net sales. Gross profit. . Net income $55,908 4,687 1,800 $45,296 4,375 1,119 $47,980 4,530 1,428 For this exercise assume the ownership percentages and changes therein are proportional to the dollar amounts reported on the investee's financial statements. a. Of the total balance of $5,088 million reported in Investments in and advances to affiliates on December 31, 2017, what is the approximate amount of equity method investments included in the balance? b. What is the approximate amount of equity method income included in ADM's reported earnings for the year ended December 31, 2017? For the year ended December 31, 2017, what additional activity (i.e., both source and amount) did ADM record in its Equity Investment Accounts? What is the likely cause of this additional activity? C
