Consolidated Statements of Earnings (millions, except per share amounts) 2017 2015 2016 $ 7,890 S 7,961 $ 8,082 4,831 817 5.181 893 641 Net sales... Costs and expenses Cost of products sold Marketing and selling expenses. Administrative expenses ... Research and development expenses Other expenses/ (income) Restructuring charges.. Total costs and expenses. Earnings before interest and taxes Interest expense Interest income Earnings before taxes Taxes on earnings Net earnings Less: Net earnings (loss) attributable to noncontrolling interests Net earnings attributable to Campbell Soup Company Per Share - Basi Net earnings attributable to Campbell Soup Company ........ Weighted average shares outstanding - basic Per Share - Assuming Dilution Net earnings attributable to Campbell Soup Company Weighted average shares outstanding - assuming dilution 488 98 238 18 6,490 1,400 112 5 1.293 124 131 31 7.001 960 115 4 849 5,300 884 601 117 24 102 7.028 1,054 108 3 949 283 406 286 563 887 666 887 $ 563 $ 666 S 2.91 $ 1.82 $ 2.13 303 309 312 S S 1.81 $ 2.89 307 2.13 313 311 See accompanying Notes to Consolidated Financial Statements CAMPBELL SOUP COMPANY Consolidated Balance Sheets (millions, except per share amounts) July 30, 2017 July 31, 2016 296 626 319 $ 605 902 74 1,900 2,454 2,115 1,118 139 7,726 $ 940 46 1.908 2,407 2.263 1,152 107 7,837 $ S Current assets Cash and cash equivalents Accounts receivable, net Inventories Other current assets Total current assets. Plant assets, net of depreciation Goodwill.... Other intangible assets, net of amortization Other assets ($51 as of 2017 and $34 as of 2016 attributable to variable interest entity) Total assets. Current liabilities Short-term borrowings Payable to suppliers and others Accrued liabilities Dividends payable Accrued income taxes Total current liabilities Long-term debt. Deferred taxes Other liabilities Total liabilities Commitments and contingencies Campbell Soup Company shareholders' equity Preferred stock, authorized 40 shares: none issued Capital stock, S.0375 par value; authorized 560 shares, issued 323 shares Additional paid-in capital Earnings retained in the business Capital stock in treasury, at cost. Accumulated other comprehensive loss Total Campbell Soup Company shareholders' equity. Noncontrolling interests Total equity.... Total liabilities and equity 1,037 $ 666 561 111 20 2.395 2.499 490 697 6,081 1,219 610 604 100 22 2,555 2.314 396 1,039 6.304 12 359 2.385 (1,066) (53) 1,637 8 1,645 7,726 $ 12 354 1.927 (664) (104) 1,525 8 1,533 7,837 S See accompanying Notes to Consolidated Financial Statements a-1. Find the discussion of Property, Plant, and Equipment and depreciation methods used by Campbell's. Use data from the Campbell Soup Company annual report Straight-line method Double declining method Written down value method a-2. Why the particular method is used for the purpose described. Straight-line depreciation is used for financial reporting purposes because depreciation expense will be lower than under any of the accelerated depreciation methods. Straight-line depreciation is used for financial reporting purposes because depreciation expense will be higher than under any of the accelerated depreciation methods. a-3. What method do you think the company uses for income tax purposes? Accelerated depreciation using the MACRS rates is probably used for tax purposes to minimize taxes payable. Straight line Method using the MACRS rates is probably used for tax purposes to minimize taxes payable. Written down value Method using the MACRS rates is probably used for tax purposes to minimize taxes payable. b. Calculate the ratio of the depreciation and amortization expense for 2017 reported in the Consolidated Statements of Cash Flows, Supplemental Financial Statement Data to the total cost (not net book value) of property, plant, and equipment reported in the schedule. (Round your percentage answer to 1 decimal place. (eg 32.6)) Ratio % c. Based on the ratio calculated in part b and the depreciation method being used by Campbell's, what is the average useful life being used for its depreciation calculation? (Round your answer to 1 decimal place.) Average useful life years d. Assume that the use of an accelerated depreciation method for 2017 would have resulted in 25% more depreciation and amortization than reported by Campbell's at July 30, 2017. By what percentage would this have reduced the retained earnings amount reported at July 30, 2017? (Round your percentage answer to 1 decimal place. (eg 32.6)) Reduction in retained earnings % Consolidated Statements of Earnings (millions, except per share amounts) 2017 2015 2016 $ 7,890 S 7,961 $ 8,082 4,831 817 5.181 893 641 Net sales... Costs and expenses Cost of products sold Marketing and selling expenses. Administrative expenses ... Research and development expenses Other expenses/ (income) Restructuring charges.. Total costs and expenses. Earnings before interest and taxes Interest expense Interest income Earnings before taxes Taxes on earnings Net earnings Less: Net earnings (loss) attributable to noncontrolling interests Net earnings attributable to Campbell Soup Company Per Share - Basi Net earnings attributable to Campbell Soup Company ........ Weighted average shares outstanding - basic Per Share - Assuming Dilution Net earnings attributable to Campbell Soup Company Weighted average shares outstanding - assuming dilution 488 98 238 18 6,490 1,400 112 5 1.293 124 131 31 7.001 960 115 4 849 5,300 884 601 117 24 102 7.028 1,054 108 3 949 283 406 286 563 887 666 887 $ 563 $ 666 S 2.91 $ 1.82 $ 2.13 303 309 312 S S 1.81 $ 2.89 307 2.13 313 311 See accompanying Notes to Consolidated Financial Statements CAMPBELL SOUP COMPANY Consolidated Balance Sheets (millions, except per share amounts) July 30, 2017 July 31, 2016 296 626 319 $ 605 902 74 1,900 2,454 2,115 1,118 139 7,726 $ 940 46 1.908 2,407 2.263 1,152 107 7,837 $ S Current assets Cash and cash equivalents Accounts receivable, net Inventories Other current assets Total current assets. Plant assets, net of depreciation Goodwill.... Other intangible assets, net of amortization Other assets ($51 as of 2017 and $34 as of 2016 attributable to variable interest entity) Total assets. Current liabilities Short-term borrowings Payable to suppliers and others Accrued liabilities Dividends payable Accrued income taxes Total current liabilities Long-term debt. Deferred taxes Other liabilities Total liabilities Commitments and contingencies Campbell Soup Company shareholders' equity Preferred stock, authorized 40 shares: none issued Capital stock, S.0375 par value; authorized 560 shares, issued 323 shares Additional paid-in capital Earnings retained in the business Capital stock in treasury, at cost. Accumulated other comprehensive loss Total Campbell Soup Company shareholders' equity. Noncontrolling interests Total equity.... Total liabilities and equity 1,037 $ 666 561 111 20 2.395 2.499 490 697 6,081 1,219 610 604 100 22 2,555 2.314 396 1,039 6.304 12 359 2.385 (1,066) (53) 1,637 8 1,645 7,726 $ 12 354 1.927 (664) (104) 1,525 8 1,533 7,837 S See accompanying Notes to Consolidated Financial Statements a-1. Find the discussion of Property, Plant, and Equipment and depreciation methods used by Campbell's. Use data from the Campbell Soup Company annual report Straight-line method Double declining method Written down value method a-2. Why the particular method is used for the purpose described. Straight-line depreciation is used for financial reporting purposes because depreciation expense will be lower than under any of the accelerated depreciation methods. Straight-line depreciation is used for financial reporting purposes because depreciation expense will be higher than under any of the accelerated depreciation methods. a-3. What method do you think the company uses for income tax purposes? Accelerated depreciation using the MACRS rates is probably used for tax purposes to minimize taxes payable. Straight line Method using the MACRS rates is probably used for tax purposes to minimize taxes payable. Written down value Method using the MACRS rates is probably used for tax purposes to minimize taxes payable. b. Calculate the ratio of the depreciation and amortization expense for 2017 reported in the Consolidated Statements of Cash Flows, Supplemental Financial Statement Data to the total cost (not net book value) of property, plant, and equipment reported in the schedule. (Round your percentage answer to 1 decimal place. (eg 32.6)) Ratio % c. Based on the ratio calculated in part b and the depreciation method being used by Campbell's, what is the average useful life being used for its depreciation calculation? (Round your answer to 1 decimal place.) Average useful life years d. Assume that the use of an accelerated depreciation method for 2017 would have resulted in 25% more depreciation and amortization than reported by Campbell's at July 30, 2017. By what percentage would this have reduced the retained earnings amount reported at July 30, 2017? (Round your percentage answer to 1 decimal place. (eg 32.6)) Reduction in retained earnings %