Nestle-like all other businesses-adjusts accounts prior to year-end to get correct amounts for the financial statements. Examine Nestle's Balance Sheets in Appendix A, and pay particu lar attention to Note 11 onprovisions.

Requirements

1. Open a T-account for "provisions." Insert Nestle's balance of CHF 3,165 million at Decem ber 31, 2015. What four items does this total consist of? (Hint: for further details refer to the notes to the financialstatements.)
2. For simplicity's sake, assume that there is only one provisions account, provisions for war ranties, with an opening balance of CHF 3,165 million at December 31, 2015. Journalize the following transactionsfor the year ended December 31, 2016. Key entries by letter, and show amounts in millions.
   1. Made warranty payments of CHF 464 million to consumers.
   2. Charged CHF 895 million to the Income Statement as its best estimate of future war ranty needs.
   3. Misc. adjustments to the provisions account to the tune of a CHF 336 million debit due to exchange movements and reversal of previous over-estimation (credit retained earnings).
3. Post these entries to "provisions" and show that the ending balance of the account agrees with thecorresponding amount reported in Nestle's December 31, 2016, Balance Sheets.
4. Examine Note 8-Property, plant and equipment. Notice that accumulated depreciation

and impairment stood at CHF 26,323 million at December 31, 2015, and at CHF 28,376 million at December 31, 2016. Assume depreciation and impairment expense for 2016 was CHF 2,795 million in total. Explain what must have happened to account for the remainder of the change in the accumulateddepreciation and impairment account during 2016.