Financial Reporting Problem: Apple Inc.

CT10.1

The financial statements of Apple Inc. are presented in Appendix A. The complete annual report, including the notes to the financial statements, is available at the company's website.

Instructions

Refer to Apple's financial statements and answer the following questions about current and contingent liabilities and payroll costs.

a. What were Apple's total current liabilities at September 26, 2015? What was the increase/decrease in Apple's total current liabilities from the prior year?

b. What were the components of total current liabilities on September 26, 2015?

c. What were Apple's total long-term liabilities at September 26, 2015? What was the increase/decrease in total long-term liabilities from the prior year?

d. Determine whether Apple redeemed (bought back) any long-term liabilities during the fiscal year ended September 26, 2015.

APPENDIX A

Specimen Financial Statements: Apple Inc.

Once each year, a corporation communicates to its stockholders and other interested parties by issuing a complete set of audited financial statements. The annual report, as this communication is called, summarizes the financial results of the company's operations for the year and its plans for the future. Many annual reports are attractive, multicolored, glossy public relations pieces, containing pictures of corporate officers and directors as well as photos and descriptions of new products and new buildings. Yet the basic function of every annual report is to report financial information, almost all of which is a product of the corporation's accounting system.

The content and organization of corporate annual reports have become fairly standardized. Excluding the public relations part of the report (pictures, products, etc.), the following are the traditional financial portions of the annual report:

• Financial Highlights
• Letter to the Stockholders
• Management's Discussion and Analysis
• Financial Statements
• Notes to the Financial Statements
• Management's Responsibility for Financial Reporting
• Management's Report on Internal Control over Financial Reporting
• Report of Independent Registered Public Accounting Firm
• Selected Financial Data

The official SEC filing of the annual report is called a Form 10-K, which often omits the public relations pieces found in most standard annual reports. On the following pages, we present Apple Inc.'s financial statements taken from the company's 2015 Form 10-K. The complete Form 10-K, including notes to the financial statements, is available at the company's website.