M9-15. Analyzing Derivatives and Hedging Refer to the information for Amgen in M9-14. This information reports activity related to Amgens cash flow hedges. a. Explain how this type of hedging works. Provide an example of how Amgen might use this type of hedging strategy. b. How did the hedges affect net income for 2015? c. If these same hedges had instead been fair value hedges, what amount would have been added to AOCI for the year?

B6 0 501 925 + 75% BDO Tools This investment for the year! M9-14. Interpreting Disclosures of Investment Securities A zen Inc. reports the following disclosure relating to its December 31, 2015, accumulated other com- prehensive income. L01 AMGENING Add on Foreign Currency Cash Flow Available-for- $ millions Translation Hedges Salo Securities Other AOCI Balance as of December 31, 2014 ......... $(264) $290 $ (19) $(15) $ (8) Other comprehensive income: Foreign currency translation adjustments ... (257) ----(257) Unrealized (losses) gains...... -- 150(299)8(141) Reclassification adjustments to income. - (143) 76 -(67) Other... ---11 Income taxes -(18) - (8) Balance as of December 31, 2015........ $(511) $297 $(260) $ (6) $(480) 10 a. How is Amgen accounting for its investment in marketable equity securities? How do you know? (Note: Amgen's 2015 disclosures are consistent with the former accounting rules for marketable equity securities. See the Business Insight box on page 9-6 in the module.) b.Explain how its 2015 financial statements are impacted by Amgen's unrealized losses on its invest- ment in marketable equily securities. c. Explain the reclassification adjustments to income of $76 million. B6 0 501 925 + 75% BDO Tools This investment for the year! M9-14. Interpreting Disclosures of Investment Securities A zen Inc. reports the following disclosure relating to its December 31, 2015, accumulated other com- prehensive income. L01 AMGENING Add on Foreign Currency Cash Flow Available-for- $ millions Translation Hedges Salo Securities Other AOCI Balance as of December 31, 2014 ......... $(264) $290 $ (19) $(15) $ (8) Other comprehensive income: Foreign currency translation adjustments ... (257) ----(257) Unrealized (losses) gains...... -- 150(299)8(141) Reclassification adjustments to income. - (143) 76 -(67) Other... ---11 Income taxes -(18) - (8) Balance as of December 31, 2015........ $(511) $297 $(260) $ (6) $(480) 10 a. How is Amgen accounting for its investment in marketable equity securities? How do you know? (Note: Amgen's 2015 disclosures are consistent with the former accounting rules for marketable equity securities. See the Business Insight box on page 9-6 in the module.) b.Explain how its 2015 financial statements are impacted by Amgen's unrealized losses on its invest- ment in marketable equily securities. c. Explain the reclassification adjustments to income of $76 million