Apple has entered into contracts that require the future purchase of goods or services (unconditional purchase obligations). At year-end 2017, Apple reports the following for these future payments. Use Apple's financial statements in Appendix A.

$ millions	2018			2019			2020			2021			2022
Future payments	$	1,798		$	2,675		$	1,626		$	1,296		$	1,268

Required 1. As of year-end 2017, what is the total dollar amount (in millions) of Apples future payments for unconditional purchase obligations? 2. Compute the ratio of the total dollar amount of Apples future payments for unconditional purchase obligations divided by Apples total liabilities of $241,272, as of year-end 2017. 3. Is the ratio of accounts payable to total liabilities higher or lower than the ratio of unconditional purchase obligations to total liabilities computed in part 2?

AA 16-1 Company Analysis LO C2 Apple has entered into contracts that require the future purchase of goods or services ("unconditional purchase obligations"). At year- end 2017, Apple reports the following for these future payments. Use Apple's financial statements in Appendix A. $ millions Future payments 2018 $1,798 2019 $ 2,675 2020 $1,626 2021 $1,296 2022 $1,268 Required 1. As of year-end 2017, what is the total dollar amount (in millions) of Apple's future payments for unconditional purchase obligations? 2. Compute the ratio of the total dollar amount of Apple's future payments for unconditional purchase obligations divided by Apple's total liabilities of $241,272, as of year-end 2017. 3. Is the ratio of accounts payable to total liabilities higher or lower than the ratio of unconditional purchase obligations to total liabilities computed in part 2? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 As of year-end 2017, what is the total dollar amount (in millions) of Apple's future payments for unconditional purchase obligations? Total payments for unconditional purchase obligations AA 16-1 Company Analysis LO C2 Apple has entered into contracts that require the future purchase of goods or services ("unconditional purchase obligations"). At year- end 2017, Apple reports the following for these future payments. Use Apple's financial statements in Appendix A. $ millions Future payments 2018 $ 1,798 2019 $2,675 2020 $1,626 2021 $1,296 2022 $1,268 Required 1. As of year-end 2017, what is the total dollar amount (in millions) of Apple's future payments for unconditional purchase obligations? 2. Compute the ratio of the total dollar amount of Apple's future payments for unconditional purchase obligations divided by Apple's total liabilities of $241,272, as of year-end 2017. 3. Is the ratio of accounts payable to total liabilities higher or lower than the ratio of unconditional purchase obligations to total liabilities computed in part 2? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the ratio of the total dollar amount of Apple's future payments for unconditional purchase obligations divided by Apple's total liabilities of $241,272, as of year-end 2017. (Record answers as percents, rounded to two decimals.) Ratio AA 16-1 Company Analysis LO C2 Apple has entered into contracts that require the future purchase of goods or services ("unconditional purchase obligations"). At year- end 2017, Apple reports the following for these future payments. Use Apple's financial statements in Appendix A. $ millions Future payments 2018 2019 2020 2021 2022 $1,798 $ 2,675 $1,626 $1,296 $1,268 Required 1. As of year-end 2017, what is the total dollar amount (in millions) of Apple's future payments for unconditional purchase obligations? 2. Compute the ratio of the total dollar amount of Apple's future payments for unconditional purchase obligations divided by Apple's total liabilities of $241,272, as of year-end 2017. 3. Is the ratio of accounts payable to total liabilities higher or lower than the ratio of unconditional purchase obligations to total liabilities computed in part 2? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Is the ratio of accounts payable to total liabilities higher or lower than the ratio of unconditional purchase obligations to total liabilities computed in part 2? Is the ratio of accounts payable to total liabilities higher or lower than the ratio of unconditional purchase obligations to total liabilities computed in part 2? Required 2 Required 3 ) FINAL PAGES aptara FOA FINAL PAGES aptara FOA cornelia Super Appendix Financial Statement information Appendix A Financial Statement information APPLE APPLE September 24, 2016 aber 26, 2015 233.715 140.069 93.626 $ 0.484 46,61 15,754 Apple Inc. CONSOLIDATED BALANCE SHEETS (In millions, except number of shares which are reflected in thousands and rear value) September 30, 2017 ASSETS Current assets Cash and cash equivalents 20289 Short-term marketable securities 53.892 Accounts receivable less allowances of $58 and 553, respectively 17,874 4.855 Vendor non-trade receivables 17.799 Other current 13936 Total current assets 128.645 Long-term marketable securities 194,714 Property, plant and equipment, net 33.783 Godwill 5.717 Acquired intangible assets, net 2208 Other creases 10162 Total assets 375 319 Apple Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (In w oons, except member of shares which are reflected in thousands and per share amounts) Years ended September 30, 2017 September 24, 2016 Net sales 229.214 215,639 Cost of sales 141.048 131,376 Gross marrin 29,186 Operating expenses Research and development 11,581 10,045 Selling general and administrative 15.251 14.194 Total operating expenses 26,842 Operating income 60.004 Other income expensel, et 2.745 1.348 Income before provision for income taxes 61.392 Provision for income TASES 15,718 15,685 Net income 45,687 14,329 13,545 71,230 105.859 170,430 27,010 5,414 19.121 53.394 Earnings per share 8.35 S 9.28 3.757 321,656 Shares used in computing evenings per share LIABILITIES AND SHAREHOLDERS' EQUITY 5,217,242 5.251.692 5.490,820 5,500,281 2185 5,753.421 5.793069 Diluted Cash dividends declared per share See accompanying Notes to Consolidated Financial Statements 49.009 25744 7565 11.977 8.105 Current liabilities Accounts payable Accrued expenses Deferred revenue Commercial paper Current portion of long-term debt Total current liabilities Deferred revemo, non-current Long-term debe Other non-current liabilities Total liabilities Commitments and contingencies 100814 97.207 75.422 16.074 191437 September 26, 2015 53,394 241.272 Apple Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Is millions) Years ended September 30, 2017 September 24, 2016 Net income 48,351 $ 45,687 Other comprehensive income loss): Change in foreian currency translation, net of tax effects of S(77), S 5 201, respectively Change in unrealized osts on derivative instruments Change in fair value or derivatives, helofax benefit (expense) of 54478, 57) and (441), respectively Adjustment for netgims) loses realized and included in net income, net of tax expense benefit of $175, $131 and 5680. respectively Total change in unrealized gains losses on derivative (411) S 35.867 cholders' equity Common stock and additional paid-in capital, S0.00001 par value: 12,600,000 shares authorized: 5,126,201 and 5.3 M6,166 shares issued an outstanding, respectively Retegs Accumulated other comprehensive incon doss) Total Shareholders' equity Total liabilities and shareholders' equity 31,251 96,364 2,905 1,315 (1,477) (3.497 128,249 134047 375 319 See accompanying Notes to Consolidated Financial Statements (782) Change in unrealized gains losses on marketable securities: Change in fair value of marketable writies, net of tax benefit expense of $125. 1863) and $264, respectively Adjustment for met gains) losses realised and included in net income net of tax expense benefit of $35.831), and $(32), respectively Total change in unrealized gainsloses en marketable securities, nel oftas Total other comprehensive income foss) Total comprehensive income 56 1,638 (784) 47.567 (1427 51.967 $ 46.666 See accompanying Notes to Consolidated Financial Statements. WATESA AL-A172 1918 sasa LATASI MA Al-Aline 3 1918 usa FINAL PAGES aptara FOA FINAL PAGES aptara FOA Appendix Financial Statement information Appendix A Financial Statement information APPLE Apple Inc. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In mions, except number of shares which are reflected in thousands) Accumulated Apple Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS APPLE September 30, 2017 20,464 September 24, 2016 $ 21.120 September 26, 2015 13.844 Comprehensive Total Shareholders Comungu Stock and Additional Paid-In Capital Am 5366.161 S 48,351 53,394 Retaimed Farming 87.15 53394 23.313 S Yeurs ended Cash and cash equivalents, beginning of the year Operating activities Net income Adjustments to reconcile net income to cash generated by operating activities Depreciation and amortization Share-based compensation expense Deferred income tax expense $ 101547 10,157 10.505 11.257 (1.427) (1427 (11.627) (11627 (36,026 5966 4933 1382 (325 012) 35 3.386 Changes in operating assets and liabilities: Accounts receivable, net 37.624 16091 217 651) Balanges as of September 27, 2014 Net income Other comprehensive income (los) Dividends and dividend equivalent declared Repurchase of common stock Share-based compensation Common stock sed, nct of shares withheld for employee taxes Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 26, 2015 Net income Other comprehensive income (los) Dividends and dividend equivalent declared Repurchase of common stock Share-based compensation Common stock issued, net of shares withheld for employee taxes Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 24, 2016 718 27,416 5 (4,254) (5,318) 5528.753 1,055 92.284 45.687 119.355 45.687 929 (12.1881 129.000) (3.735 (2851 5.001 1. 02 (66) 154 (12.1 RRI 129.000 (1 554) (2003) 65824 ( 269) 61598 Vendor antrade receivables Other current and no t assets Accounts payable Deferred revenue Other current and non-current liabilities Cash generated by operating activities Investing activities: Purchases of marketable securities Proceeds from maturities of marketable securities Proceeds from sales of marketable securities Payments made in connection with business acquisitions, net Payments for acquisition of property, plant and equipment Payments forquisition of intangible assets Payments for strategic investments.net 37.022 (806) (4191 1199.486) 31,775 94.561 (1654021 14,538 107 407 536.166 s (142.428) 21.255 90155 1297 127) 1814) 31.251 3 2018 S 9 6 364 9636 S (12.451) (11.2471 (64 (784) 128.249 48351 (786) (12.803) (33.001) (395) (6 446) (45977) 156.276) 095 Other comprehensive income (los) Dividends and dividend equivalent declared (12.803 Repurchase of common stock (246.496) 33001) Share-based compensation 4909 Common stock issued, net of shares withheld for employee taxes 013) (581) Tasbenefit from equity awards, including transfer pricing adjustments Balances as of September 30, 2017 5.128.201 3 5.62 9 8330 $ See accompanying Notes to Consolidated Financial Statements (1494) (1570) (12.150) (150) 134.047 Cash used in investing activities Financing activities Proceeds from issuance of common stock Escess tax benefits from equity awards Payments for lates related to not share settlement of equity awards Payments for dividends and dividend equivalents Repurchases of common stock Proceeds from issuance of term delt, et Repayments of term debi Change in commercial paper, net Cash used in mancing activities Increase (decrcise) in cash and eash equivalents Cash and cash equivalents, end of the year (1.1991 (11.561) (35.253) (1.874) (12,789) (32.900) 28,662 0.500) 3,852 (17,347) (195) 20,289 24954 (2.500) 2.191 (17,716 (20.483) $ 21 120 Supplemental cash flow disclosure Cash paid for income taxel, nel Cash paid for interest 10.444 $ 13,252 11,591 2,092 $ $ 1316 5 See accompanying Notes to Consolidated Financial Statements LATES AL Aline 4 1918 sasa LATASI MA Al-Aline 1918 usa FINAL PAGES aptara FOA FINAL PAGES aptara FOA Appendix Financial Statement information Appendix A Financial Statement information APPLE Apple Inc. Notes continued Apple Inc. Notes-continued APPLE Dividends The Company declared and paid cash dividends per share during the periods presented as follows: Dividends Per Share Fourth quarter $ 0.63 Third quarter 0.63 Second quartier 0.57 First quarter Total cash dividends declared and paid $ 2.40 which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level Quoted prices in active markets for identical assets or liabilities Level 2 Observable inputs other than quoted prices in ac tive markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive mar kets, or other inputs that are observable or can be corrobo- rated by observable market data for substantially the full term of the assets or liabilities. Level 3 Inputs that are generally unobservable and typically reflect management's estimate of assumptions that market participants would use in pricing the asset or liability. Amount Dividends Amount in millions) Per Share (in millions) $ 3.252 S 0.57 $ 3,071 3281 0.57 3 ,117 2.955 052 2 ,879 $ 12.5615 2.18 $ historical experience, age of the accounts receivable bal ances, credit quality of the Company's customers, current economic conditions and other factors that may affect the customers' abilities to pay. Inventories Inventories are stated at the lower of cost, computed using the first in, first-out method, and net realizable value. Any adjustments to reduce the cost of inventories to their net real- izable value are recognized in earnings in the current period. Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation is computed by use of the straight-line method over the estimated useful lives of the assets, which for buildings is the lesser of 30 years or the remaining life of the underlying building; between one and five years for me chinery and equipment, including product tooling and man- ufacturing process equipment and the shorter of lease term or useful life for leasehold improvements. The Company capitalizes eligible costs to acquire or develop internal use software that are incurred subsequent to the preliminary project stage, Capitalized costs related to internal use soft ware are amortized using the straight-line method over the estimated useful lives of the assets, which range from three to five years. Depreciation and amortization expense an property and equipment was $8.2 billion, $8.3 billion and $9.2 billion during 2017, 2016 and 2015, respectively. 11.955 The Company does not amortize goodwill and intangi- ble assets with indefinite useful lives; rather, such assets are required to be tested for impairment at least annually or sooner if events or changes in circumstances indicate that the assets may be impaired. The Company performs its goodwill and intangible asset impairment tests in the fourth quarter of each year. The Company did not recognize any impairment charges related to goodwill or indefinite lived intangible assets during 2017, 2016 and 2015. For purposes of testing goodwill for impairment, the Company estab lished reporting units based on its current reporting struc ture. Goodwill has been allocated to these reporting units to the extent it relates to each reporting unit. In 2017 and 2016, the Company's goodwill was primarily allocated to the Americas and Europe reporting units. The Company amortizes its intangible assets with defi- nite useful lives over their estimated useful lives and re- views these assets for impairment. The Company typically amortizes its acquired intangible assets with definite useful lives over periods from three to seven years. Acquired Intangible Assets The Company's acquired intangible assets with definite useful lives primarily consist of patents and licenses. The following table summarizes the components of acquired intangible asset balances as of September 30, 2017. Amortization expense related to acquired intangible assets was S1.2 billion in 2017. Segment Information and Geographic Data Ne sales by peoduct wil) iPhone iPad Mac Services Other Products Total net sales The Company's valuation techniques used to measure the fair value of money market funds and certain marketable equity securities were derived from quoted prices in active markets for identical assets or liabilities. The valuation techniques used to measure the fair value of the Company's debt instruments and all other financial instruments, all of which have counterparties with high credit ratings, were valued based on quoted market prices or model-driven val uations using significant inputs derived from or corrobo- rated by observable market data. In accordance with the fair value accounting require ments, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has not elected the fair value option for any eli gible financial instruments. 2017 $141,319 19,222 25,850 29,980 12,863 $229,234 2016 $136,700 20,628 22,831 24,148 2015 $155.041 23227 25,471 1 9,909 10.067 $233,715 11,112 5215,639 2017 2016 2015 996.000 $10,684 SM6.613 $21T2 $93.866 $ 31,186 w ed Carrying Amortization Art Property, Plant and Equipment, Net millions) Land and buildings Machinery, equipment and internal-use software Leasehold improvements Gross property, plant and equipment Accumulated depreciation and a tortization Total property, plant and equipment, nel Carrying A Smiliens A t Definite-lived and amortizable acquired intangible assets $7507 Indefinite-lived and non-amortizable acquired intangible assets Total acquired intangible S7601 (5309 $ 2.195 $54,938 $16,514 Accrued Warranty and Indemnification The following table shows changes in the Company's ac crued warranties and related costs for 2017 and 2016: 2017 2016 $13.587 $ 10.185 54.210 44,543 7.2296,517 25.076 61.245 (41 293) (34,235) $ 33,783 5 27,010 $49.952 $15348 S50.337 $ 16527 Reportable segmenti) Americas Net sales Operating income Europe Netales Operating income Greater China: Net sales Operating income Japan: Net sales Operating income Rest of Asia Pacific Net sales Operating income 1 5109) $ 2.298 $44,764 $17,092 $48.492 S18833 58.715 $23.002 Fair Value Measurements $ millions 2017 Beginning accrued warranty and related costs $ 3.702 Cost of warranty claims 14,122) Accruals for product warranty 4,454 Ending accrued warranty and related costs $ 3.834 2016 $4,780 14.663) 3.585 S 3,702 $17,733 $8,0017 $16.928 7.165 S 15,706 $ 7,617 $15,199 $ 5,304 $13.654 S 4.781 S 15.093 $ 5518 Long-Lived Assets Including Goodwill and Other Acquired Intangible Assets The Company reviews property, plant and equipment, in ventary component prepayments and identifiable intangi- bles, excluding goodwill and intangible assets with indefinite useful lives, for impairment. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is mea sured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to gener ate. If property, plant and equipment, inventory component prepayments and certain identifiable intangibles are consid- ered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair value The Company applies fair value accounting for all finan- cial assets and liabilities and non-financial assets and li- abilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be re- ceived from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities that are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk mea surements or assumptions that market participants would we ta price the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk Fair value is estimated by applying the following hierarchy. A reconciliation of the Company's segment operating in come to the Consolidated Statements of Operations for 2017. 2016 and 2015 is as follows: Term Debt As of September 30, 2017, the Company had outstanding floating and fixed rate notes with varying maturities for an aggregate principal amount of $104.0 billion (collectively the "Notes"). The Notes are senior unsecured obligations, and interest is payable in arrears. The Company recognized $2.2 billion, S1.4 billion and $722 million of interest expense on its term debt for 2017, 2016 and 2015, respectively. As of September 30, 2017 and September 24, 2016, the fair value of the Company's Notes, based on Level 2 inputs, was $106.1 billion and $81.7 billion, respectively. $ millions Segment operating income Research and development 2017 $27.631 2016 $74,301 2015 $83,850 Other corporate expenses, net Total operating income 1581) (4.706) $61.144 (10,015) (4,232) .04 18,067) (4.553) $11.200 LATES AL Aline 1918 sasa LATES AL Aline 1918 usa