Access Samsung's income statement in your textbook on Page A-15 in Appendix A.

Required

1. Is Samsung's selling and administrative expenses budget likely to be an important budget in its master budgeting process? Explain.

2. Identify three types of expenses that would be reported as selling and administrative expenses on Samsung's income statement.

3. Who likely has the initial responsibility for Samsung's selling and administrative expense budget? Explain.

a AA 6 Page A-1 Samsung Electronics Co., Ltd. and Subsidiaries CONSOLIDATED STATEMENTS OF PROFIT OR LOSS 2017 2016 For the year ended December 31 (In millions of Korean won) Revenue Cost of sales Gross profit Selling and administrative expenses Operating profit Other non-operating income KRW 239,575,376 129,290,661 110,284,715 56,639,677 53,645,038 3,010,657 1,419,648 201,442 9,737,391 8,978,913 KRW 201,866,745 120,277,715 81,589,030 52,348,358 29,240,672 3,238,261 2,463,814 19,501 11,385,645 10,706,613 Share of profit of associates and joint ventures Financial income Financial expense Q A G Financial income Financial expense Profit before income tax Income tax expense Profit for the period 9,737,391 8,978,913 56,195,967 14,009,220 42,186,747 11,385,1 10,706, 7 30,713,654 7,987,560 22,726,092 22,415,655 310,437 Profit attributable to owners of the parent Profit attributable to non-controlling interests 41,344,569 842,178 Earnings per share -Basic Diluted 299,868 299,868 157,967 157,967 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. Samsung Electronics Co., Ltd. and Subsidiaries CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the year ended December 31 2017 2016 6 Samsung Electronics Co., Ltd. and Subsidiaries CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 2017 2016 KRW 42,186,747 KRW 22,726,092 414,247 (6,347) 963,602 50,438 For the year ended December 31 (In millions of Korean won) Profit for the period Other comprehensive income (loss) Items not to be reclassified to profit or loss subsequently: Remeasurement of net defined benefit liabilities, net of tax Shares of other comprehensive income (loss) of associates and joint ventures, net of tax Items to be reclassified to profit or loss subsequently: Changes in value of available-for-sale financial assets, net of tax Share of other comprehensive income (loss of associates and joint ventures, net of tax Foreign currency translation, net of tax Gain (loss) on valuation of derivatives Other comprehensive income (loss) for the period, net of tax Total comprehensive income for the period (23,839) (130,337) 1,131,536 511,207 (49,256) (6,334,987) (37,121) (5,502,257) 36,684,490 1,991,400 24,717,492 Comnrehensive income attributable to. IYY IVVY 42,186,747 22,726, 0 0 414,247 (6,347) 963,602 50,438 18 milions of hureun won) Profit for the period Other comprehensive income (loss) Items not to be reclassified to profit or loss subsequently: Remeasurement of net defined benefit liabilities, net of tax Shares of other comprehensive income (loss) of associates and joint ventures, net of tax Items to be reclassified to profit or loss subsequently: Changes in value of available-for-sale financial assets, net of tax Share of other comprehensive income (loss) of associates and joint ventures, net of tax Foreign currency translation, net of tax Gain (loss) on valuation of derivatives Other comprehensive income (loss) for the period, net of tax Total comprehensive income for the period (23,839) (130,337) 1,131,536 511,207 (49,256) (6,334,987) (37,121) (5,502,257) 36,684,490 24,717,492 Comprehensive income attributable to: Owners of the parent Non-controlling interests 35,887,505 796,985 24,310,814 406,678 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. Page A-16