AN CT4-2 The financial statements of Columbia Sportswear Company are presented in Appendix B. Financial statements of VF Corporation are presented in Appendix C. Instructions (a) Identify two accounts on Columbia's balance sheet that provide evidence that Colum- bia uses accrual accounting. In each case, identify the income statement account that would be affected by the adjustment process. (b) Identify two accounts on VF's balance sheet that provide evidence that VF uses accrual accounting (different from the two you listed for Columbia). In each case, identify the income statement account that would be affected by the adjustment process. COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) $ Year Ended December 31, 2014 2013 2,100.590 $ 1.684,996 $ 1,145,639 941,341 954.951 743,655 763,063 625,656 6,956 13,795 198,844 131,794 1,004 503 (1.053) (274) (871) 198,521 131,426 (56,662) (37,823) 141.859 93,603 4.686 (738) 137,173 $ 94,341 $ 2012 1,669,563 953,169 716,394 596,635 13,769 133.528 379 Net sales Cost of sales Gross profit Selling general and administrative expenses Net licensing income Income from operations Interest income, net Interest expense on note payable to related party (Note 22) Other non-operating expense Income before income tax Income tax expense (Note 11) Net income Net income (loss) attributable to non-controlling interest Net income attributable to Columbia Sportswear Company Earnings per share attributable to Columbia Sportswear Company (Note 17): Basic Diluted Weighted average shares outstanding (Note 17): Basic Diluted 133.907 (34,048) 99,859 $ 99,859 $ $ $ 1.97 1.94 1.37 1.36 1.48 1.46 69,807 70.681 68,756 69,434 67.680 68,264 COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED BALANCE SHEETS (In thousands) December 31, 2014 2013 ASSETS Current Assets: Cash and cash equivalents $ $ Short-term investments Accounts receivable, net (Note 6) 413,558 27,267 344,390 437,489 91.755 306,878 Inventories 329,228 Deferred income taxes (Note 11) 384,650 57,001 52,041 39,175 1,266,041 291,563 143,731 68,594 22,280 1,792,209 33,081 1,250,472 279,373 36,288 14,438 25.017 1,605,588 $ $ $ $ 173,557 120,397 7,251 49 301,254 Prepaid expenses and other current assets Total current assets Property, plant, and equipment, net (Note 7) Intangible assets, net (Notes 3,8) Goodwill (Notes 3, 8) Other non-current assets Total assets LIABILITIES AND EQUITY Current Liabilities: Accounts payable Accrued liabilities (Note 10) Income taxes payable (Note 11) Deferred income taxes (Note 11) Total current liabilities Note payable to related party (Note 22) Other long-term liabilities (Notes 12, 13) Income taxes payable (Note 11) Deferred income taxes (Note 11) Total liabilities Commitments and contingencies (Note 14) Shareholders' Equity: Preferred stock; 10,000 shares authorized; none issued and outstanding Common stock (no par value): 250,000 shares authorized: 69,828 and 69,190 issued and outstanding (Note 15) Retained earnings Accumulated other comprehensive income (Note 18) Total Columbia Sportswear Company shareholders' equity Non-controlling interest (Note 5) Total equity Total liabilities and equity 214,275 144,288 14,388 169 373.120 15,728 35,435 9,388 3,304 436,975 29,527 13,984 7.959 352,724 72,700 1,255,070 15,833 1,343,603 11.631 1,355,234 1.792,209 52,325 1,157.733 35,360 1.245,418 7.446 ,252864 1,605,588 1 $ $ VF CORPORATION Consolidated Balance Sheets December 2014 2013 In thousands except share amounts $ 971,895 1,276,224 1,482,804 154,285 300.646 4,185,854 942.181 2,433,552 1,824,956 593,597 $9.980,140 $ 776,403 1,360,443 1,399,062 169,321 177,753 3,882,982 932,792 2.960,201 2,021,750 517,718 $ 10,315,443 $ ASSETS Current assets Cash and equivalents Accounts receivable, less allowance for doubtful accounts of $26,694 in 2014 and $45,350 in 2013 Inventories De ferred income taxes Other current assets Total current assets Property, plant and equipment Intangible assets Goodwill Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Short-term borrowings Current portion of long-term debt Accounts payable Accrued liabilities Total current liabilities Long-term debt Other liabilities Commitments and contingencies Stockholders' equity Preferred Stock, par value Sl: shares authorized, 25.000.000; no shares outstanding in 2014 and 2013 Common Stock, stated value $0.25; shares authorized, 1,200,000,000; 432,859,891 shares outstanding in 2014 and 440,310,370 in 2013 Additional paid-in capital Accumulated other comprehensive income (loss) Retained eamings Total stockholders' equity Total liabilities and stockholders' equity $ 21,822 3,975 690,842 903,602 1,620,241 1,423,581 1,305,436 18,810 5.167 638,732 905,292 1,568,001 1,426,829 1,243,575 108,215 2.993.186 (702,272) 3,231,753 5,630.882 $9.980,140 110,078 2,746,590 (211,720) 3,432.090 6,077,038 $ 10,315,443 See notes to consolidated financial statements VF CORPORATION Consolidated Statements of Income 2014 Year Ended December 2013 2012 In thousands, except per share amounts $ 12,154,784 $ 11,302,350 $ 10,766,020 127,377 117,298 113,835 12,282,161 11,419,648 10,879,855 Net sales Royalty income Total revenues Costs and operating expenses Cost of goods sold Selling, general and administrative expenses Impairment of good will and intangible assets 5,931,469 3,841,032 5,817,880 3,596,708 Operating income Interest income Interest expense Other income (expense), net Income before income taxes Income taxes Net income Net income attributable to noncontrolling interests Net income attributable to VF Corporation common stockholders Earnings per common share attributable to VF Corporation common stockholders Basic Diluted Cash dividends per common share 6,288,190 4,159,885 396,362 10,844,437 1,437,724 6,911 (86,725) (5,544) 1,352,366 304,861 1,047,505 9.772,501 1,647,147 4,141 (84,773) (4,025) 1,562,490 352,371 1,210,119 9.414,588 1,465,267 3,353 (93,605) 46,860 1,421,875 335.737 1,086,138 (139) 1,085,999 $ 1,047,505 $ 1,210,119 $ $ $ $ 2.42 2.38 1.1075 2.76 2.71 0.9150 2.47 2.43 0.7575 $ $ $ See notes to consolidated financial statements. AN CT4-2 The financial statements of Columbia Sportswear Company are presented in Appendix B. Financial statements of VF Corporation are presented in Appendix C. Instructions (a) Identify two accounts on Columbia's balance sheet that provide evidence that Colum- bia uses accrual accounting. In each case, identify the income statement account that would be affected by the adjustment process. (b) Identify two accounts on VF's balance sheet that provide evidence that VF uses accrual accounting (different from the two you listed for Columbia). In each case, identify the income statement account that would be affected by the adjustment process. COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) $ Year Ended December 31, 2014 2013 2,100.590 $ 1.684,996 $ 1,145,639 941,341 954.951 743,655 763,063 625,656 6,956 13,795 198,844 131,794 1,004 503 (1.053) (274) (871) 198,521 131,426 (56,662) (37,823) 141.859 93,603 4.686 (738) 137,173 $ 94,341 $ 2012 1,669,563 953,169 716,394 596,635 13,769 133.528 379 Net sales Cost of sales Gross profit Selling general and administrative expenses Net licensing income Income from operations Interest income, net Interest expense on note payable to related party (Note 22) Other non-operating expense Income before income tax Income tax expense (Note 11) Net income Net income (loss) attributable to non-controlling interest Net income attributable to Columbia Sportswear Company Earnings per share attributable to Columbia Sportswear Company (Note 17): Basic Diluted Weighted average shares outstanding (Note 17): Basic Diluted 133.907 (34,048) 99,859 $ 99,859 $ $ $ 1.97 1.94 1.37 1.36 1.48 1.46 69,807 70.681 68,756 69,434 67.680 68,264 COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED BALANCE SHEETS (In thousands) December 31, 2014 2013 ASSETS Current Assets: Cash and cash equivalents $ $ Short-term investments Accounts receivable, net (Note 6) 413,558 27,267 344,390 437,489 91.755 306,878 Inventories 329,228 Deferred income taxes (Note 11) 384,650 57,001 52,041 39,175 1,266,041 291,563 143,731 68,594 22,280 1,792,209 33,081 1,250,472 279,373 36,288 14,438 25.017 1,605,588 $ $ $ $ 173,557 120,397 7,251 49 301,254 Prepaid expenses and other current assets Total current assets Property, plant, and equipment, net (Note 7) Intangible assets, net (Notes 3,8) Goodwill (Notes 3, 8) Other non-current assets Total assets LIABILITIES AND EQUITY Current Liabilities: Accounts payable Accrued liabilities (Note 10) Income taxes payable (Note 11) Deferred income taxes (Note 11) Total current liabilities Note payable to related party (Note 22) Other long-term liabilities (Notes 12, 13) Income taxes payable (Note 11) Deferred income taxes (Note 11) Total liabilities Commitments and contingencies (Note 14) Shareholders' Equity: Preferred stock; 10,000 shares authorized; none issued and outstanding Common stock (no par value): 250,000 shares authorized: 69,828 and 69,190 issued and outstanding (Note 15) Retained earnings Accumulated other comprehensive income (Note 18) Total Columbia Sportswear Company shareholders' equity Non-controlling interest (Note 5) Total equity Total liabilities and equity 214,275 144,288 14,388 169 373.120 15,728 35,435 9,388 3,304 436,975 29,527 13,984 7.959 352,724 72,700 1,255,070 15,833 1,343,603 11.631 1,355,234 1.792,209 52,325 1,157.733 35,360 1.245,418 7.446 ,252864 1,605,588 1 $ $ VF CORPORATION Consolidated Balance Sheets December 2014 2013 In thousands except share amounts $ 971,895 1,276,224 1,482,804 154,285 300.646 4,185,854 942.181 2,433,552 1,824,956 593,597 $9.980,140 $ 776,403 1,360,443 1,399,062 169,321 177,753 3,882,982 932,792 2.960,201 2,021,750 517,718 $ 10,315,443 $ ASSETS Current assets Cash and equivalents Accounts receivable, less allowance for doubtful accounts of $26,694 in 2014 and $45,350 in 2013 Inventories De ferred income taxes Other current assets Total current assets Property, plant and equipment Intangible assets Goodwill Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Short-term borrowings Current portion of long-term debt Accounts payable Accrued liabilities Total current liabilities Long-term debt Other liabilities Commitments and contingencies Stockholders' equity Preferred Stock, par value Sl: shares authorized, 25.000.000; no shares outstanding in 2014 and 2013 Common Stock, stated value $0.25; shares authorized, 1,200,000,000; 432,859,891 shares outstanding in 2014 and 440,310,370 in 2013 Additional paid-in capital Accumulated other comprehensive income (loss) Retained eamings Total stockholders' equity Total liabilities and stockholders' equity $ 21,822 3,975 690,842 903,602 1,620,241 1,423,581 1,305,436 18,810 5.167 638,732 905,292 1,568,001 1,426,829 1,243,575 108,215 2.993.186 (702,272) 3,231,753 5,630.882 $9.980,140 110,078 2,746,590 (211,720) 3,432.090 6,077,038 $ 10,315,443 See notes to consolidated financial statements VF CORPORATION Consolidated Statements of Income 2014 Year Ended December 2013 2012 In thousands, except per share amounts $ 12,154,784 $ 11,302,350 $ 10,766,020 127,377 117,298 113,835 12,282,161 11,419,648 10,879,855 Net sales Royalty income Total revenues Costs and operating expenses Cost of goods sold Selling, general and administrative expenses Impairment of good will and intangible assets 5,931,469 3,841,032 5,817,880 3,596,708 Operating income Interest income Interest expense Other income (expense), net Income before income taxes Income taxes Net income Net income attributable to noncontrolling interests Net income attributable to VF Corporation common stockholders Earnings per common share attributable to VF Corporation common stockholders Basic Diluted Cash dividends per common share 6,288,190 4,159,885 396,362 10,844,437 1,437,724 6,911 (86,725) (5,544) 1,352,366 304,861 1,047,505 9.772,501 1,647,147 4,141 (84,773) (4,025) 1,562,490 352,371 1,210,119 9.414,588 1,465,267 3,353 (93,605) 46,860 1,421,875 335.737 1,086,138 (139) 1,085,999 $ 1,047,505 $ 1,210,119 $ $ $ $ 2.42 2.38 1.1075 2.76 2.71 0.9150 2.47 2.43 0.7575 $ $ $ See notes to consolidated financial statements