Field trip assignment (5 points) to look up Facebook 10-K

Go to www.sec.gov, choose search EDGAR for company filings and then search by Company or Fund Name,.. Use the search by company name Facebook. Enter Filing type 10-K, hit the Search button, and then choose documents tab under Format for the filing dated 2017-02-03. Click the first .htm file under the Document column to open the 10-k file.

Hint: choose Document 1.

1. Before you begin, read the following summary of the10-k prepared by the SEC for investors: http://www.sec.gov/investor/pubs/reada10k.pdf (open in a new window so you dont get kicked out of MyGateway and if the link doesnt work, search for Investor Bulletin: How to Read a 10-K on google and it will come up). No points here, just a great help.

2. After you open up the 10-K file, you will see FORM 10-K and FACEBOOK, INC. to make sure you are reading the correct document. Then scroll down to find the table of contents to quickly find the items below. One of the highlighted items in the Table of Contents contains information that has to be prepared in accordance with GAAP, as opposed to being information required by the SEC outside of GAAP. Which item? (0.5 point)

3. Click on Financial Statements and Supplementary Data to find the Index to Consolidated Financial Statements and then choose Notes to the Consolidated Financial Statements. What does the term consolidated mean based on your reading of Note 1 (in your words, no textbook or Wikipedia definitions)? (0.5 point)

4. Continue with the Summary of Significant Accounting Policies note Note 1.

a. Find the discussion of the Use of Estimates. Name 2 places in the financial statements where estimates are relied upon. (0.5 points)

b. Find the discussion of Revenue. What are the named sources of revenue? (0.5 point)

c. Find the discussion of Property and Equipment. What depreciation method is used for assets? (0.5 point)

5. Scroll up to the page before Consolidated Balance Sheets. This is the Report of the Independent Auditors. Read the audit opinion. What responsibility do the auditors take regarding the financial statements? (0.5 point)

6. Is the Facebook audit opinion unqualified (use your book for help if you dont remember from your reading chapter 3)? (1 point)

7. What opinion the auditors gave to Facebooks internal controls? (0.5 point)

8. (0.5 point) At beginning of the Management Discussion and Analysis section What information are highlighted as non-GAAP?

9. In the Financial results: section, does revenue on non-GAAP basis show a higher year-to-year growth?

10. Is MD&A neutral and prepared in according to GAAP?