Apple Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except number of shares which are reflected in thousands and por share amounts) Years ended September 26, September 28, September 29, 2020 2019 2018 Net sales: Products Services Total net sales $ 220,747 $ 53,768 274,515 213,883 $ 46,291 260,174 225,847 39,748 265,595 Cost of sales: Products Services Total cost of sales Gross margin 151,286 18.273 169,559 104,956 144,996 16,786 161.782 98,392 148,164 15,592 163,756 101,839 18,752 19,916 38,668 16,217 18,245 34,462 14,236 16,705 30,941 Operating expenses Research and development Selling, general and administrative Total operating expenses Operating income Other income (expense), net Income before provision for Income taxes Provision for income taxes Net income 66.288 803 67,091 9.680 57,411 $ 63,930 1,807 65,737 10,481 55 256 $ 70,898 2,005 72,903 13,372 59.531 $ $ $ 3.31 $ 3.28 $ 2.99 $ 2.97 $ 3.00 2.98 Enrings per share: Basic Diluted Share used in computing earringe per share: Basic 17,352,119 Diluted 17,528,214 See accompanying Notes to Consolidated Financial Statements, 18,471,336 18,595,651 19,821,510 20,000,435 CONSOLIDATED BALANCE SHEETS (In millions, except number of shares which are reflected in thousands and par value) September 26, 2020 September 28, 2019 ASSETS: $ Current assets: Cash and cash equivalents Marketable securities Accounts receivable, net Inventories Vendor non-trade receivables Other current assets Total current assets 38,016 $ 52,927 16,120 4,061 21,325 11,264 143,713 48,844 51,713 22.926 4, 106 22,878 12,352 162,819 Non-current assets: Marketable securities Property, plant and equipment, net Other non-current assets Total non-current assets Total assets 100,887 36,766 42,522 180,175 323,888 $ 105,341 37,378 32,978 175,697 338,516 LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities: Accounts payable Other current liabilities Deferred revenue Commercial paper Term debt Total current liabilities 42,296 $ 42,684 6.643 4,996 8.773 105,392 46.236 37,720 5,522 5.980 10.250 105,718 Non-current liabilities: Term debt Other non-current liabilities Total non-current liabilities Total liabilities 54,490 153,157 258,549 91,807 50,503 142,310 248,028 Commitments and contingencies Shareholders' equity Common stock and additional paid-in capital, S0.00001 par value: 50,400,000 shares authorized: 16,978,763 and 17,772,945 shares issued and outstanding, respectively Retained earings Accumulated other comprehensive income (loss) Total shareholders' equity Total liabilities and shareholders' equity 50,779 14,966 (406) 65,339 323,888 S 45,174 45,898 (584) 90.488 338,516 Apple Inc. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In millions, except per share amounts) Years ended September 26, September 28, September 29, 2020 2019 2018 $ 90,488 $ 107,147 $ 134.047 Total shareholders' equity, beginning balances 45,174 880 40,201 781 35,867 669 Common stock and additional paid-in capital: Beginning balances Common stock issued Common stock withheld related to net share settlement of equity awards Share-based compensation Ending balances (2,250) 6,975 50,779 (2002) 6,194 45,174 (1,778) 5,443 40,201 45,898 57,411 (14,087) 70,400 55,256 (14,129) 98,330 59,531 (13,735) Retained earnings: Beginning balances Net income Dividends and dividend equivalents declared Common stock withheld related to net share settlement of equity awards Common stock repurchased Cumulative effects of changes in accounting principles Ending balances (1.604) (72,516) (136) 14.966 (1.029) (67,101) 2,501 45,898 (948) (73,056) 278 70,400 Accumulated other comprehensive income/loss): Beginning balances Other comprehensive income/loss) Cumulative effects of changes in accounting principles Ending balances (584) 42 136 (406) (3,454) 2.781 89 (584) (150) (3,026) (278) (3,454) $ 65,339 $ 90 488 $ 107,147 Total shareholders' equity, ending balances $ 0.795 $ 0.75 $ 0.68 Dividends and dividend equivalents declared per share or RSU See accompanying Notes to Consolidated Financial Statements. Apple Inc. Notes to Consolidated Financial Statements Note 1 - Summary of Significant Accounting Policies Basis of Presentation and Preparation The consolidated financial statements include the accounts of Apple Inc. and its wholly owned subsidiaries (collectively "Apple" or the Company). Intercompany accounts and transactions have been eliminated. In the opinion of the Company's management, the consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these consolidated financial statements and accompanying notes in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. Certain prior period amounts in the consolidated financial statements and accompanying notes have been reclassified to conform to the current period's presentation The Company's fiscal year is the 52 or 53-week period that ends on the last Saturday of September. The Company's fiscal years 2020, 2019 and 2018 spanned 52 weeks each. An additional week is included in the first fiscal quarter every five or six years to realign the Company's fiscal quarters with calendar quarters. Unless otherwise stated, references to particular years, quarters, months and periods refer to the Company's fiscal years ended in September and the associated quarters, months and periods of those fiscal years. Common Stock Split On August 28, 2020, the Company effected a four-for one stock split to shareholders of record as of August 24, 2020. All share, restricted stock unit ("RSU) and per share or per RSU information has been retroactively adjusted to reflect the stock split. Recently Adopted Accounting Pronouncements Leases At the beginning of the first quarter of 2020, the Company adopted the Financial Accounting Standards Board's (the "FASB") Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842) ("ASU 2016-02"), and additional ASUS issued to clarify and update the guidance in ASU 2016-02 (collectively, the "new leases standard), which modifies loase accounting for lessoas to increase transparency and comparability by recording lease assets and abilities for operating leases and disclosing key Information about leasing arrangements. The Company adopted the new leases standard utilizing the modified retrospective transition method, under which amounts in prior periods presented were not restated. For contracts existing at the time of adoption, the Company elected to not reassess whether any are or contain leases, loase classification, and (i) initial direct costs. Upon adoption, the Company recorded $7.5 billion of right-of-use ("ROU) assets and $8.1 billion of lease liabilities on its Condensed Consolidated Balance Sheet Hedging At the beginning of the first quarter of 2020, the Company adopted FASB ASU No. 2017-12. Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12) ASU 2017-12 expands component and fair value hedging, specifies the presentation of the effects of hodging instruments, eliminates the separate measurement and presentation of hedge ineffectiveness, and updates disclosure requirements related to hedging. The Company adopted ASU 2017-12 utilizing the modified retrospective transition method. Upon adoption, the Company recorded a $136 million increase in accumulated other comprehensive income/loss) ("AOCI) and a corresponding decrease in retained pings in the Condensed Consolidated Statement of Shareholders' Equity. Advertising Costs Advertising costs are expensed as incurred and included in selling general and administrative expenses. Share-Based Compensation The Company generally measures share-based compensation based on the closing price of the Company's common stock on the date of grant and recognizes expense on a straight-line basis for its estimate of equity awards that will ultimately vest. Earnings Per Share The following table shows the computation of basic and diluted eamings per share for 2020, 2019 and 2018 (net income in millions and shares in thousands): 2018 Numerator Net income $ 57,411 $ 55.256 $ 59,531 2020 2019 Denominator: Weighted-average basic shares outstanding Effect of dilutive securities Weighted average diluted shares 17,352,119 176,095 17,528,214 18,471,336 124,315 18,595,651 19,821,510 178.925 20,000,435 $ $ Basic earnings per share 3.31 $ 2.99 $ 3.00 Diluted eamings per share 3.28 $ 2.97 $ 2.98 The Company applies the treasury stock method to determine the dilutive effect of potentially dilutive securities. Potentially dilutive securities representing 62 million shares of common stock were excluded from the computation of diluted earings per share for 2019 because their effect would have been anticilutive. Cash Equivalents and Marketable Securities All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents. The Company's investments in marketable debt securities have been classified and accounted for as available-for-sale. The Company classifies its marketable debt securities as either short-term or long-term based on each instrument's underlying contractual maturity date. Unrealized gains and losses on marketable debt securities classified as available-for-sale are recognized in other comprehensive incomaloss) ("Ocm). The Company's investments in marketable equity securities are classified based on the nature of the securities and their availability for use in current operations. The Company's marketable equity securities are measured at fair value with gains and losses recognized in other income (expense), net ("Ol&E"). The cost of securities sold is determined using the specific identification method. Inventories Inventories are measured using the first-in, first-out method. Property, Plant and Equipment Depreciation on property, plant and equipment is recognized on a straight-line basis over the estimated useful lives of the assets, which for buildings is the lesser of 40 years or the remaining life of the building; betwoon one and five years for machinery and equipment, including product tooling and manufacturing process equipment, and the shorter of lease term or useful life for Teasehold improvements. Capitalized costs related to internal-use software are amortized on a straight-line basis over the estimated useful lives of the assets, which range from three to seven years. Depreciation and amortization expense on property and equipment was $9.7 billion, $11.3 billion and $9.3 bilion during 2020, 2019 and 2018, respectively. Non-cash investing activities involving property, plant and equipment resulted in a net increase/ decrease) to accounts payable and other current liabilities of $(2.9) bilion and $3.4 billon during 2019 and 2018, respectively, Answer the questions from above 1. What is the ending Retained earnings balance for the year ended September 26, 2020? 2. What is the amount of Dividends and dividend equivalents declared for the year ended September 26, 2020 2 (Do not type a parenthesis around the number.) 3. What is the amount of Common stock repurchased for the year ended September 26, 2020 2 (Do not type a parenthesis around the number.) 4. Describe how Apple determines its fiscal year. 5. What inventory method is used for inventories? Multiple Choice FIFO LIFO Weighted Average Specific Identification 6. What depreciation method is used for Property, Plant and Equipment Multiple Choice Declining Balance Units of Production Straight Line MACRS 7. What is the estimated useful life for Buildings? multiple Choice Between 1-5 years 1 5 years 10 years The lesser of 40 years or the remaining life of the underlying building 8. What is the estimated useful life for Machinery and equipment? Multiple Choice Between 1-5 years 5 years 10 years The lesser of 40 years or the remaining life of the underlying machinery and equipment