E5-40
Interpreting Revenue Recognition Disclosure for Multi-channel Retailer Amazon.com
naira, Russian ruble and Egyptian pound. anslation of foreign mary exposures include the U.S. dollar versus stralian dollar, Canadian dollar, Mexican peso, Brazilian real, Nigerian a. Complete the following table that summarizes the information that Kellogg reports in the excerpt above. Confirm the % change that Kellogg reports. Kellogg Consolidated Reported operating profit . . 2018 2017 % change (2017 to 2018) Currency-neutral adjusted operating profit . ... . . . .. . F5-15. b. Kellogg reports "Adjusted growth" that shows various adjustments to reported growth numbers. Explain why Kellogg provides this information in its financial statements. Briefly explain how Project K and Brexit impacted operating profits in 2018. c. How did foreign currency exchange rates affect operating profit at each of the geographic segments? What can we infer about the strength of the $US vis-a-vis the currencies in Kellogg's segments? d. Describe how the accounting for foreign exchange translation affects reported operating profit. e. What are the three sources of Kellogg's foreign exchange exposure'. 6-40. Interpreting Revenue Recognition Disclosure for Multi-channel Retailer Amazon.com reports the following in footnotes to its 2018 financial statements. LO1 Amazon. We serve consumers through our online and physical stores and focus on selection, price, and convenience. We design our stores to enable hundreds of millions of unique products to be Hor sold by us and by third parties across dozens of product categories. Customers access our offerings through our websites, mobile apps, Alexa, and physically visiting our stores. We also manufacture and sell electronic devices, including Kindle e-readers, Fire tablets, Fire TVs, and Echo devices, and we develop and produce media content. In addition, we offer Amazon Prime, a membership program that includes unlimited free shipping on over 100 million items, access to unlimited streaming of thousands of movies and TV episodes, and other benefits. For each of the following revenue streams, list the nature of the performance obligation and when Amazon would recognize revenue for that performance obligation. a. Online sale of merchandise owned by Amazon JOgo b. Online sale of merchandise owned by third parties YAM c. Sale of a Kindle e-reader d. Collecting cash for an Amazon Prime membership e. Sale of media content such as a movie available for download E5-41. Operating Expenses LO6 Target Corporation's footnote from a recent annual report table illustrates the primary items classified Targ in each major expense category: cost of sales (COS), or selling, general and administrative (SG&A). For each expense, indicate whether the item would be included in COS or SG&A. a. Advertising expenses . b. Compensation and benefits costs for headquarters employees. c. Compensation and benefits costs for store employees .... d. Compensation and benefits costs for distribution center employees . ...... e. Distribution center costs . . . . . . . .::. . f. Freight expenses associated with moving merchandise from our vendors to our . . .. . .. distribution centers and our retail stores . .. ... 9. Freight expenses associated with moving merchandise among our distribution and retail . . . . . . stores . continued
