General Mills Inc. invests in a number of joint ventures to manufacture and distribute its food products, as discussed in the following footnote to its 10-K report for the fiscal year ended May 26, 2019.

(Use excel for any computation/work)

Required

a. How does General Mills account for its investments in joint ventures? How are these investments reflected on General Mills balance sheet, and how, generally, is income recognized on these investments? Estimate the amount of income that General Mills included in its 2019 income statement as Equity method income.

b. Does the $117.5 million investment reported on General Mills balance sheet sufficiently reflect the assets and liabilities required to conduct these operations? Explain. Note: The $452.9 million

INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES We have a 50 percent equity interest in Cereal Partners Worldwide (CPW), which manufactures and markets ready-to-eat cereal products in more than 130 countries outside the United States and Canada. CPW also markets cereal bars in several European countries and manufactures private label cereals for customers in the United Kingdom. We have guaranteed a portion of CPW's debt and its pension obligation in the United Kingdom. We also have a 50 percent equity interest in Hagen-Dazs Japan, Inc. (HDJ). This joint venture manu- factures and markets Hagen-Dazs ice cream products and frozen novelties. Results from our CPW and HDJ joint ventures are reported for the 12 months ended March 31. Joint venture related balance sheet activity follows: $ millions May 27, 2018 Cumulative investments Goodwill and other intangibles. Aggregate advances included in cumulative investments ... May 26, 2019 $452.9 472.1 249.0 $499.6 488.7 295.3 Joint venture earnings and cash flow activity follows: 2019 2018 2017 Fiscal Year ($ millions) Sales to joint ventures Net advances (repayments) Dividends received. $ 4.2 (0.1) 86.7 $ 7.4 17.3 113.2 $ 7.0 (3.3) 75.6 Summary combined financial information for the joint ventures on a 100 percent basis follows: Fiscal Year ($ millions) 2019 2018 2017 Net sales CPW HDJ. Total net sales Gross margin Earnings before income taxes Earnings after income taxes. $1,674.7 396.2 2,043.9 744.4 155.4 111.9 $1,734.0 430.4 2,164.4 853.6 $1,648.4 435.1 2,083.5 865.9 243.3 190.3 216.2 176.7 $ millions May 26, 2019 May 27, 2018 Current assets Noncurrent assets Current liabilities. Noncurrent liabilities $ 895.6 839.2 1,517.3 77.1 $ 938.5 902.5 1,579.3 72.6 INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES We have a 50 percent equity interest in Cereal Partners Worldwide (CPW), which manufactures and markets ready-to-eat cereal products in more than 130 countries outside the United States and Canada. CPW also markets cereal bars in several European countries and manufactures private label cereals for customers in the United Kingdom. We have guaranteed a portion of CPW's debt and its pension obligation in the United Kingdom. We also have a 50 percent equity interest in Hagen-Dazs Japan, Inc. (HDJ). This joint venture manu- factures and markets Hagen-Dazs ice cream products and frozen novelties. Results from our CPW and HDJ joint ventures are reported for the 12 months ended March 31. Joint venture related balance sheet activity follows: $ millions May 27, 2018 Cumulative investments Goodwill and other intangibles. Aggregate advances included in cumulative investments ... May 26, 2019 $452.9 472.1 249.0 $499.6 488.7 295.3 Joint venture earnings and cash flow activity follows: 2019 2018 2017 Fiscal Year ($ millions) Sales to joint ventures Net advances (repayments) Dividends received. $ 4.2 (0.1) 86.7 $ 7.4 17.3 113.2 $ 7.0 (3.3) 75.6 Summary combined financial information for the joint ventures on a 100 percent basis follows: Fiscal Year ($ millions) 2019 2018 2017 Net sales CPW HDJ. Total net sales Gross margin Earnings before income taxes Earnings after income taxes. $1,674.7 396.2 2,043.9 744.4 155.4 111.9 $1,734.0 430.4 2,164.4 853.6 $1,648.4 435.1 2,083.5 865.9 243.3 190.3 216.2 176.7 $ millions May 26, 2019 May 27, 2018 Current assets Noncurrent assets Current liabilities. Noncurrent liabilities $ 895.6 839.2 1,517.3 77.1 $ 938.5 902.5 1,579.3 72.6