i need help trying to do #3
Exhibit 6 Excerpts from Alphabet Inc. 2017 10-K Note 3 to Consolidated Fancial Statement Note 3. Financial Instruments 0 Cash, Cash Equivalents, and Marketable Securities The following tables summarize our cash, cash equivalents and markets of December 31, 2016 and 2017 (in millions): As of December 31, 2015 Gross Gross Adjusted Unrealized Unrealized Fair Cost Gains Value Cash $ 7,078 $ 057.078 5 708 Level 1 Money market and other funds 4,783 0 4,789 U.S. government notes 38,454 (215) 38.285 Marketable equity securities 160 0 293 43,397 (215) 43,361 Level2: Time deposits 142 142 Mutual funds 204 211 U.S. government agencies 1,826 1,815 Foreign government bonds 2,345 (7) 2,356 Municipal securities 4,757 (65) 4,707 Corporate deot securities 12,993 (116) 12,991 Mortgage-backed securities 12,006 (216) 11,816 Asset-backed securities 1.855 1,856 36.128 (416) 35,894 444 Total 86.603 (631) $ 86,333 $ 12,918 As of December 31, 2017 Gross Gross Cash and Adjusted Unrealized Unrealized Fair Cash Losses Value Equivalents (11) 1515 4.705 12.900 11.816 73.415 Marketable Securities 0 U.S. government agencies 1,826 Foreign government bonds 2,345 Municipal securities 4,757 Corporate deot securities 12,993 (116) 12. Mortgage-backed securities 12,006 (216) 11.816 Asset-backed securities 1,855 1.450 36,128 (416) 35.8944 Total $ 86,603 $ (631) $80 100 As of December 31, 2017 Gross Adjusted Unrealized Unrealized Fair Cost Gains Losses Value Cash $ 7.158 $ 0 $ 7.158 Les 11: Money market and other funds 1,833 0 1,833 US government notes 37.256 (310) 36,948 1241 Marketable equity securities 242 340 39,331 (312) 39,121 3.074 Level 2 Time deposits 359 357 Mutual funds U.S. government agencies (29) 3,684 Foreign government bonds 2,948 (14) 2,940 Municipal securities 7,631 (53) 7.580 Corporate debt securities 24.269 (135) 24,155 Mortgage-backed securities 11,157 (163) 11,003 Asset-backed securities 5.632 (17) 5,619 55.941 (411) 55,592 Total $ 102.430 $ 164 (723) S 101,871 10.715 The majority of our time deposits are foreign deposits. The fair value option was elected for mutual funds with gains (losses) recognized in other income (expense), net. 359 252 232 3.713 3.654 2.940 7.580 24.029 11.003 5.619 55,109 91.156 483 $ During the years ended December 31, 2016 and 2017, there were no other-than-temporary impairment losses. Study Questions for Fair Value Accounting for Financial Securities at Alphabet A-23350 QUESTION 3 ASU 2016-01 eliminated alternate options for how organizations account for marketable equity securities a. Marketable equity securities are included in the line items "Money market and other funds, "Marketable equity securities," and "Mutual funds" of the tables in Note 3 of Alphabet's 2017 10-K (see Exhibit 6 in the case). Which method did Alphabet use to account for its marketable equity securities prior to ASU 2016-01 going into effect? Which method did it use subsequent to implementation of ASU 2016-01? b. Had Alphabet always accounted for its marketable equity securities in accordance with the rules set forth in ASU 2016-01, would the following fiscal 2017 financial statement items be higher then, lower than, or the same as reported? If different, by how much? (If after-tax numbers are not available, assume a tax rate of 20 percent). i Book value of investments in marketable equity securities ii. Retained earnings ini. Net income iv. Cash flow from investing c. How would your answer to part b) change if ASU 2016-01 had eliminated the option to recognize unrealized holding gains and losses in OCI for all securities and instead required that such unrealized holding gains and losses be recognized in Net income? QUESTION 4 Exhibit 6 Excerpts from Alphabet Inc. 2017 10-K Note 3 to Consolidated Fancial Statement Note 3. Financial Instruments 0 Cash, Cash Equivalents, and Marketable Securities The following tables summarize our cash, cash equivalents and markets of December 31, 2016 and 2017 (in millions): As of December 31, 2015 Gross Gross Adjusted Unrealized Unrealized Fair Cost Gains Value Cash $ 7,078 $ 057.078 5 708 Level 1 Money market and other funds 4,783 0 4,789 U.S. government notes 38,454 (215) 38.285 Marketable equity securities 160 0 293 43,397 (215) 43,361 Level2: Time deposits 142 142 Mutual funds 204 211 U.S. government agencies 1,826 1,815 Foreign government bonds 2,345 (7) 2,356 Municipal securities 4,757 (65) 4,707 Corporate deot securities 12,993 (116) 12,991 Mortgage-backed securities 12,006 (216) 11,816 Asset-backed securities 1.855 1,856 36.128 (416) 35,894 444 Total 86.603 (631) $ 86,333 $ 12,918 As of December 31, 2017 Gross Gross Cash and Adjusted Unrealized Unrealized Fair Cash Losses Value Equivalents (11) 1515 4.705 12.900 11.816 73.415 Marketable Securities 0 U.S. government agencies 1,826 Foreign government bonds 2,345 Municipal securities 4,757 Corporate deot securities 12,993 (116) 12. Mortgage-backed securities 12,006 (216) 11.816 Asset-backed securities 1,855 1.450 36,128 (416) 35.8944 Total $ 86,603 $ (631) $80 100 As of December 31, 2017 Gross Adjusted Unrealized Unrealized Fair Cost Gains Losses Value Cash $ 7.158 $ 0 $ 7.158 Les 11: Money market and other funds 1,833 0 1,833 US government notes 37.256 (310) 36,948 1241 Marketable equity securities 242 340 39,331 (312) 39,121 3.074 Level 2 Time deposits 359 357 Mutual funds U.S. government agencies (29) 3,684 Foreign government bonds 2,948 (14) 2,940 Municipal securities 7,631 (53) 7.580 Corporate debt securities 24.269 (135) 24,155 Mortgage-backed securities 11,157 (163) 11,003 Asset-backed securities 5.632 (17) 5,619 55.941 (411) 55,592 Total $ 102.430 $ 164 (723) S 101,871 10.715 The majority of our time deposits are foreign deposits. The fair value option was elected for mutual funds with gains (losses) recognized in other income (expense), net. 359 252 232 3.713 3.654 2.940 7.580 24.029 11.003 5.619 55,109 91.156 483 $ During the years ended December 31, 2016 and 2017, there were no other-than-temporary impairment losses. Study Questions for Fair Value Accounting for Financial Securities at Alphabet A-23350 QUESTION 3 ASU 2016-01 eliminated alternate options for how organizations account for marketable equity securities a. Marketable equity securities are included in the line items "Money market and other funds, "Marketable equity securities," and "Mutual funds" of the tables in Note 3 of Alphabet's 2017 10-K (see Exhibit 6 in the case). Which method did Alphabet use to account for its marketable equity securities prior to ASU 2016-01 going into effect? Which method did it use subsequent to implementation of ASU 2016-01? b. Had Alphabet always accounted for its marketable equity securities in accordance with the rules set forth in ASU 2016-01, would the following fiscal 2017 financial statement items be higher then, lower than, or the same as reported? If different, by how much? (If after-tax numbers are not available, assume a tax rate of 20 percent). i Book value of investments in marketable equity securities ii. Retained earnings ini. Net income iv. Cash flow from investing c. How would your answer to part b) change if ASU 2016-01 had eliminated the option to recognize unrealized holding gains and losses in OCI for all securities and instead required that such unrealized holding gains and losses be recognized in Net income? QUESTION 4
