Question
Interpreting Footnotes on Security Investments Cisco Systems Inc. reports the following information derived from its 2016 10-K report. (Note: Ciscos 2016 disclosures are consistent with
Interpreting Footnotes on Security Investments Cisco Systems Inc. reports the following information derived from its 2016 10-K report. (Note: Ciscos 2016 disclosures are consistent with the former accounting rules for marketable equity securities. See the Accounting Insight box on page 9-6 in the textbook.)
| Accumulated | |||||||
|---|---|---|---|---|---|---|---|
| Common Stock | Other | Total Cisco's | |||||
| Shares of | and Additional | Retained | Comprehensive | Shareholders' | Noncontrolling | ||
| $ millions | Common Stock | Paid in Capital | Earnings | Income (Loss) | Equity | Interests | Total Equity |
| Balance at July 25, 2015 | 5,085 | $43,592 | $16,045 | $61 | $59,698 | $9 | $59,707 |
| Net income | 11,026 | 11,026 | 11,026 | ||||
| Change in: | |||||||
| Unrealized gains and (losses) on investments, net | 114 | 114 | (10) | 104 | |||
| Derivative instruments | (43) | (43) | (43) | ||||
| Cumulative translation adjustment and other | (502) | (502) | (502) | ||||
| Other comprehensive income (loss) | (431) | (431) | (10) | (441) | |||
| Issuance of common stock | 113 | 1,127 | 1,127 | 1,127 | |||
| Repurchase of common stock | (148) | (1,280) | (2,638) | (3,918) | (3,918) | ||
| Repurchase of common stock for tax withholdings on vesting of restricted stock units | (21) | (557) | (557) | (557) | |||
| Cash dividends declared | (4,750) | (4,750) | (4,750) | ||||
| Tax effects from employee stock incentive plans | 30 | 30 | 30 | ||||
| Share-based compensation | 1,458 | 1,458 | 1,458 | ||||
| Purchase acquisitions | 146 | 146 | 146 | ||||
| Balance at July 30, 2016 | $5,029 | $44,516 | $19,683 | $(370) | $63,829 | $(1) | $63,828 |
Summary of Available-for-Sale Investments The following table summarizes the Company's available-for-sale investments (in millions).
| Gross | Gross | |||
|---|---|---|---|---|
| Amortized | Unrealized | Unrealized | ||
| July 30, 2016 | Cost | Gains | Losses | Fair Value |
| Fixed income securities | ||||
| U.S. government securities | $26,826 | $84 | $(2) | $26,908 |
| U.S. government agency securities | 2,809 | 8 | - | 2,817 |
| Non-U.S. government and agency securities | 1,096 | 4 | - | 1,100 |
| Corporate debt securities | 24,044 | 263 | (15) | 24,292 |
| U.S. agency mortgage-backed securities | 1,846 | 22 | - | 1,868 |
| Total fixed income securities | $56,621 | 381 | (17) | $56,985 |
| Publicly traded equity securities | 1,211 | 333 | (40) | 1,504 |
| Total | $57,832 | $714 | $(57) | $58,489 a.What is the amount of Ciscos investment portfolio on its balance sheet? Does that amount include any unrealized gains or losses? Explain. b.What does the number $103 represent in the Accumulated Other Comprehensive Income column? Explain. c.Under the new accounting rules that take effect in 2018, how would Cisco treat the $103? d.Compute comprehensive income for 2015. e.During 2015, did the currencies in the countries where Ciscos subsidiaries were headquartered weaken or strengthen?
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started