amount in millions unless specified.

CONSOLIDATED STATEMENT OF INCOME

Note

Reference

Number 2019 2018 2017

(millions of dollars)

Revenues and other income

Sales and other operating revenue 255,583 279,332 237,162

Income from equity affiliates7 5,441 7,355 5,380

Other income 3,914 3,525 1,821

Total revenues and other income 264,938 290,212 244,363

Costs and other deductions

Crude oil and product purchases (*)143,801 156,172 128,217

Production and manufacturing expenses 36,826 36,682 32,690

Selling, general and administrative expenses 11,398 11,480 10,649

Depreciation and depletion 918,998 18,745 19,893

Exploration expenses, including dry holes 1,269 1,466 1,790

Non-service pension and postretirement benefit expense 17 1,235 1,285 1,745

Interest expense 830 766 601

Other taxes and duties 19 30,525 32,663 30,104

Total costs and other deductions 244,882 259,259 225,689

Income before income taxes 20,056 30,953 18,674

Income taxes 19 5,282 9,532 (1,174)

Net income including noncontrolling interests 14,774 21,421 19,848

Net income attributable to noncontrolling interests 434 581 138

Net income attributable to ExxonMobil 14,340 20,840 19,710

The information in the Notes to Consolidated Financial Statements is an integral part of these statements.

(*) Use this number as cost of goods sold

3. Miscellaneous Financial Information

Research and development expenses totaled $1,214 million in 2019, $1,116 million in 2018, and $1,063 million in 2017.

Net income included before-tax aggregate foreign exchange transaction losses of $104 million and $138 million in 2019 and 2018, respectively, and a gain of $6 million in 2017.

... The aggregate replacement cost of inventories was estimated to exceed their LIFO carrying values by $9.7 billion and $8.2 billion at December 31, 2019, and 2018, respectively.

Crude oil, products and merchandise as of year-end 2019 and 2018 consist of the following:

2019 2018

(millions of dollars)

Crude oil 5,111 4,783

Petroleum products 5,281 5,666

Chemical products 3,240 3,821

Gas/other 378 533

Total 14,010 14,803

CONSOLIDATED BALANCE SHEET

Note

ReferenceDec. 31 Dec. 31

Number 2019 2018

(millions of dollars)

Assets

Current assets

Cash and cash equivalents 3,089 3,042

Notes and accounts receivable 6 26,966 24,701

Inventories

Crude oil, products and merchandise 3 14,010 14,803

Materials and supplies 4,518 4,155

Other current assets 1,469 1,272

Total current assets50,052 47,973

Investments, advances and long-term receivables 8 43,164 40,790

Property, plant and equipment, at cost, less accumulated

depreciation and depletion 9 253,018 247,101

Other assets, including intangibles, net 16,363 10,332

Total assets 362,597 346,196

Liabilities

Current liabilities

Notes and loans payable 6 20,578 17,258

Accounts payable and accrued liabilities 6 41,831 37,268

Income taxes payable 1,580 2,612

Total current liabilities 63,989 57,138

Long-term debt 14 26,342 20,538

Postretirement benefits reser17 22,304 20,272

Deferred income tax liabilities 19 25,620 27,244

Long-term obligations to equity companies 3,988 4,382

Other long-term obligatio 21,416 18,094

Total liabilities 163,659 147,668

Commitments and contingencies 16 - -

Equity

Common stock without par value15,637 15,258

Earnings reinvested (*) 421,341 421,653

Accumulated other comprehensive income(19,493) (19,564)

Common stock held in treasury (225,835) (225,553)

ExxonMobil share of equity 191,650 191,794

Noncontrolling interests 7,288 6,734

Total equity 198,938 198,528

Total liabilities and equity 362,597 346,196

The information in the Notes to Consolidated Financial Statements is an integral part of these statements

(*) This is ExxonMobil's label for Retained Earnings

Problem I: Transaction Analysis (Exxon Mobil Corporation)

At the end of fiscal 2019, Exxon Mobil realized that its fiscal 2019 financial statements contained several errors.Consider each question independently, and ignore tax effects.

1. On December 14, 2019, Exxon Mobil signed a contract to deliver eight billion cubic feet of natural gas to Ameren (an electric utility company).The cost to Exxon Mobil of producing this gas was $16.All entries relating to production were correctly recorded.Ameren paid ExxonMobil $4 cash on December 14, 2019 and agreed to pay an additional $20 upon delivery in January, 2020. No entry was made regarding the contract or the December 14^th cash receipt.

If needed adjustments were made to correct the error, what would be the reported amounts (not just the effect) for:

a)Total Current Assets as of December 31, 2019?

b)Total Current Liabilities as of December 31, 2019?

c)Net income attributable to ExxonMobil, for the year ended December 31, 2019?

2. On January 1, 2019 (i.e., the first day of fiscal 2019), ExxonMobil purchased a pipeline system at a cost of $360.ExxonMobil also spent $120 testing the pipeline to ensure that it met environmental standards.ExxonMobil expects to use the pipeline for the next 30 years, at which time it will have a residual value of $60.ExxonMobil accidentally accounted for this asset using the straight-line method, when their policy was to use the double (i.e., 200%) declining balance method.

If needed adjustments were made to correct the error, what would be the reported amounts (not just the effect) for:

a)Total Assets as of December 31, 2019?

b)Total Equity as of December 31, 2019?

c)Net income attributable to ExxonMobil, for the year ended December 31, 2019?

3. On December 20, 2019, ExxonMobil paid $1,000 cash to purchase shares of ExxonMobil in the open market.No entry was made for this transaction.

If needed adjustments were made to correct the error, what would be the reported amounts (not just the effect) for:

a)Total Assets as of December 31, 2019?

b)Total Equity as of December 31, 2019?

c)Net income attributable to ExxonMobil, for the year ended December 31, 2019?

Problem II: Inferences (Exxon Mobil Corporation)

1. What were dividends declared for the year ended December 31, 2019?

2.Assume that during fiscal 2019, ExxonMobil purchased property, plant, and equipment worth $26,163.ExxonMobil sold property, plant, and equipment in return for cash of $2,275.What was ExxonMobil's gain or loss on the sale of the property, plant and equipment? answer should include both a number and a direction (gain or loss)?

Problem III:Materials and Supplies (Exxon Mobil Corporation)

The "Materials and Supplies" inventory listed on ExxonMobil's balance sheet represents items purchased for use in ExxonMobil's business.This could include spare parts for equipment, specialty chemicals used in the drilling process, and office supplies.Because of the large dollar value, ExxonMobil capitalizes these items as assets when they are purchased, and then expenses them as they are used.Other firms, where these costs are smaller in magnitude, will often expense such items as purchased.You are interested in comparing ExxonMobil to some of these smaller firms, and so want to determine their performance as if they had expensed the materials and supplies immediately, rather than capitalizing them.Ignore taxes.

Hint:Although "Materials and Supplies" are labeled as inventory, this is NOT an inventory question.The cost flow method used here (LIFO vs FIFO) has NO impact on your answer.

1.Compute ExxonMobil's net income attributable to ExxonMobil for the year ended December 31, 2019, assuming that ExxonMobil had always expensed such costs at the time of purchase.

2.Compute ExxonMobil's current ratio (defined as current assets divided by current liabilities) as of December 31, 2019, assuming that ExxonMobil had always expensed such costs at the time of purchase.

3. What are the three conditions which must be met for a company such as ExxonMobil to capitalize an expenditure?Three short bullet points should suffice (do it in a total of FIVE words).

Problem IV: Inventory (Exxon Mobil Corporation)

Throughout Problem IV, assume that Exxon Mobil faces a marginal tax rate of 30%.

compare Exxon Mobil with British Petroleum, a British competitor which uses FIFO for its inventory.Assume that Exxon Mobil uses FIFO for its "Materials and supplies inventory", but LIFO for its "Crude oil, products and merchandise" inventories.Assume that ExxonMobil's "Cost of Goods Sold" is recorded in the income statement as "Crude oil and product purchases". Finally, assume that any additional taxes owed/saved affect income taxes payable.For both ratios, show the numbers used to compute them (i.e., show 25/75=33%, rather than just 33%).

1.Had ExxonMobil always used FIFO for its entire inventory, what would be ExxonMobil's total asset turnover ratio (defined as total revenues and other income divided by ENDING total assets) for the year ended December 31, 2019?

2.Had ExxonMobil always used FIFO for its entire inventory, what would be ExxonMobil's return on equity ratio (defined as net income attributable to ExxonMobil divided by ENDING total equity) for the year ended December 31, 2019?

3.Assuming that ExxonMobil's income tax rate has always been 30%, how much income tax has ExxonMobil's use of LIFO saved or cost them over the life of the firm?