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7 Question 1 Net product sales reported on Amazon's income statement includes both cash sales and credit sales. a. True c b. False Question 2 Atthe most recent balance sheet date, Amazon's estimate of uncollectible accounts receivable was (in millions): a, $13.512. b.$13.164. C C $12.186. d. $348. Question 3 over ratio at the last two balance Use the following formula to calculate Amazon's accounts receivable turn sheet dates: Account receivable turnover ratio Total net sales/ Accounts receivable, net and other. Select the correct answer below. a. The company collected accounts receivable faster in the most recent reporting period than the prior reporting period C b. The company collected accounts receivable slower in the most recent reporting period than the prior reporting period. company collected accounts receivable at the same rate as in the prior reporting period. Question 4 heet date, the historical cost of the company's property and equipment was (in millions): o a.$48.866. b.$19.707. C c$68,573. d. $88,280 Question 5 At the most recent balance sheet date, the book value of Amazon's property and equipment was (in millions): a. $19,707. b, $68,573. . $88.280 d, $48.866 C C Question 6 At the most recent balance sheet date, total depreciation expense recognized by Amazon's on property and equipment since the assets were acquired was (in millions): a. $19,707. Cb.$48,866 . $68.573. d, $88,280. Question 7 Amazon's current year's depreciation expense was: C a $19.707 (in millions) b, $13327 (in millions) C c $8.8 billion $6.4 billion CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) Year Ended December 31, 2016 S 79,268 94,665 118,573 2015 2017 Net product sales Net service sales 27,738 107,006 41,322 135,987 59,293 77,866 Total net sales Operating expenses: Cost of sales Fulfillment Marketing Technology and content General and administrative Other operating expense, net 71,651 13,410 5,254 12,540 1,747 111,934 25,249 10,069 22,620 3,674 88,265 17,619 7,233 16,085 2,432 167 131,801 2.2334,186 100 (484) 90 (294) 3,892 (1,425) (96) Total operating expenses 104.773 173,760 4,106 202 (848) 346 (300) 3,806 (769) Operating income Interest income Interest expense Other income (expense), net 50 (459) (256) (665) Total non-operating income (expense) Income before income taxes Provision for income taxes Equity-method investment activity, net of tax Net income Basic earnings per share Diluted earnings per share Weighted-average shares used in computation of carnings per share: 1,568 (950) (22) 596 S 2,37 S 3,033 1.28 $ 1.25 $ 5.01 S 4.90 S 6.32 6.15 Basic 467 477 474 480 Diluted 484 493 See accompanying notes to consolidated financial statements CONSOLIDATED BALANCE SHEETS (in millions, except per share data) December 31, 2016 2017 ASSETS Current assets: Cash and cash equivalents Marketable securities Inventories Accounts receivable, net and other S 19,334 $ 20,522 10,464 16,047 13,164 60,197 48,866 13,350 8,897 S 83,402 S131,310 6,647 11,461 8,339 45,781 29,114 3,784 4.723 Total current assets Property and equipment, net Goodwill Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable Accrued expenses and other Unearned revenue S 25,309 S 34,616 18,170 5,097 57,883 24,743 20,975 13,739 4,768 43,816 7,694 12,607 Total current liabilities Long-term debt Other long-term liabilities Commitments and contingencies (Note 7) Stockholders' equity Preferred stock, $0.01 par value: Authorized shares-500 Issued and outstanding shares-none Common stock, $0.01 par value: Authorized shares-5,000 Issued shares-500 and 507 Outstanding shares-477 and 484 Treasury stock, at cost Additional paid-in capital Accumulated other comprehensive loss Retained earnings (1,837) 17,186 (985) 4,916 19.285 (1,837) 21,389 (484) 8,636 27.709 83.402 S 131,310 Total stockholders' equity Total liabilities and stockholders' equity CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) Year Ended December 31, 2016 2015 2017 Net product sales Net service sales S 79,268 S 94,665 S 118,573 59,293 177,866 27,738 107,006 41,322 135,987 Total net sales Operating expenses: Cost of sales 71,651 3,410 5,254 12,540 1,747 88,265 7,619 7,233 16,085 2,432 167 131,801 4,186 100 (484) 90 (294) 3,892 (1,425) 111,934 25,249 10,069 22,620 3,674 214 173,760 4,106 202 (848) 346 (300) 3,806 (769) Fulfillment Marketing Technology and content General and administrative Other operating expense, net Total operating expenses 104,773 2,233 Operating income Interest income Interest expense Other income (expense),net 50 (459) (256) (665) Total non-operating income (expense) Income before income taxes Provision for income taxes Equity-method investment activity, net of tax Net income Basic earnings per share Diluted earnings per share Weighted-average shares used in computation of earnings per share 1,568 (950) (22) 596 S 1.28 S 25 S 2,371 S 5.01 S 4.90 S 3,033 6.15 Basic Diluted 467 474 484 480 477 See accompanying notes to consolidated financial statements Note 3-PROPERTY AND EQUIPMENT Property and equipment, at cost, consisted of the following (in millions): December 31. 2016 2017 Gross property and equipment (1) Land and buildings Equipment and internal-use software (2) Other corporate assets Construction in progress S 13,998 S23,718 38,387 2,390 4,078 68,573 19.707 48,866 25,989 649 1,805 Gross property and equipment 42,441 Total accumulated depreciation (1) 13.327 29,114 $ Total property and equipment, net (I) Excludes the original cost and accumulated depreciation o fully-depreciated assets (2) Includes internal-use software of $1.4 billion and S1.1 billion as of December 31, 2016 and 2017 Depreciation expense on property and equipment was $4.9 billion, S6.4 billion, and S8 8 billion which includes amortization of property and equipment acquired under capital leases of $2.7 billion, $3.8 billion, and $5.4 billion for 2015, 2016, and 2017. Gross assets recorded under capital leases were $17.0 billion and $26.4 billion as of December 31, 2016 and 2017. Accumulated depreciation associated with capital leases was S8.5 billion and $13.4 billion as of December 31, 2016 and We capitalize construction in progress and record a corresponding long-term liability for build-to-suit lease agreements where we are considered the owner, for accounting purposes, during the construction period. For buildings under build-to-suit lease arrangements where we have taken occupancy, which do not qualify for sales recognition under the sale-leaseback accounting guidance, we determined that we continue to be the deemed owner of these buildings This is principally due to our significant investment in tenant improvements As a result, the buildings are being depreciated over the shorter of their useful lives or the related leases' terms. Additionally, certain build-to-suit lease arrangements and finance leases provide options. Upon occupancy, the long-term construction obligations are considered long-term finance lease obligations with amounts payable during the next 12 months recorded as "Accrued expenses and othet" Gross assets remaining under finance leases were $2.9 billion and $5.4 billion as of December 31,2016 leases was $361 million and $635 million as of December 31, 2016 and 2017 purchase and 2017. Accumulated depreciation associated with finance Note 4-ACQUISITIONS, GOODWILL, AND ACQUIRED INTANGIBLE ASSETS Acquisition Activity During 2015 and 2016, we acquired certain companies for an aggregate purchase price of $690 million and $103 million The primary reason for these acquisitions, none of which were individually material to our consolidated financial sta was to acquire technologies and know-how to enable Amazon to serve customers more tements, effectively On May 12, 2017, we acquired Souq Group Ltd ("Souq"), an e-commerce company, for of cash acquired, and on August 28, 2017, we acquired Whole Foods Market, a grocery store chain, for billion, net of cash acquired. Both acquisitions are intended to expand our retail presence. During 2017, we also acquired certain other companies for an aggregate purchase price of $204 milion. The approximately $132 was to acquire technologies and know-how to enable Amazon to serve customers more effectively primary reason for our other 2017 acquisitions Acquisition-related costs were expensed as incurred and were not significant. The valuation of liabilities in the Whole Foods Market acquisition is preliminary and subject to change certain assets and