Required: e-1. Find the discussion of Property, Plant, and Equipment and depreciation methods used by Campbell's. Use data from the Campbel Soup Company annual report Straight-line method Double declining method Written down value method a-2. Why the particular method is used for the purpose described. O Straight-line depreciation is used for financial reporting purposes because depreciation expense will be lower than under any of the accelerated depreciation methods. O Straight-line depreciation is used for financial reporting purposes because depreciation expense will be higher than under any of the accelerated depreciation methods. a-3. What method do you think the company uses for income tax purposes? Accelerated depreciation using the MACRS rates is probably used for tax purposes to minimize taxes payable. Straight line Method using the MACRS rates is probably used for tax purposes to minimize taxes payable. Written down value Method using the MACRS rates is probably used for tax purposes to minimize taxes payable. b. Calculate the ratio of the depreciation and amortization expense for 2017 reported in the Consolidated Statements of Cash Flows. Supplemental Financial Statement Data to the total cost (not net book value) of property, plant, and equipment reported in the schedule. (Round your percentage answer to 1 decimal place. (eg 32.6)) Ratio % c. Based on the ratio calculated in part b and the depreciation method being used by Campbell's, what is the average useful life being used for its depreciation calculation? (Round your answer to 1 decimal place.) Average useful life years d. Assume that the use of an accelerated depreciation method for 2017 would have resulted in 25% more depreciation and amortization than reported by Campbell's at July 30, 2017. By what percentage would this have reduced the retained earnings amount reported at July 30, 2017? (Round your percentage answer to 1 decimal place. (eg 32.6)) Reduction in retained earnings 96 Net sales... Costs and expenses Cost of products sold. Marketing and selling expenses. Administrative expenses Research and development expenses. Other expenses/ (income). Restructuring charges.. Total costs and expenses... Earnings before interest and taxes Interest expense Interest income.. Earnings before taxes. Taxes on earnings.. Net earnings CAMPBELL SOUP COMPANY Consolidated Statements of Earnings (millions, except per share amounts) Less: Net earnings (loss) attributable to noncontrolling interests Net earnings attributable to Campbell Soup Company Per Share Basic - Net earnings attributable to Campbell Soup Company Weighted average shares outstanding-basic Per Share Assuming Dilution Net earnings attributable to Campbell Soup Company Weighted average shares outstanding-assuming dilution See accompanying Notes to Consolidated Financial Statements. CAMPBELL SOUP COMPANY Consolidated Balance Sheets (millions, except per share amounts) 2017 2016 2015 $ 7,890 $ 7,961 $ 8,082 4,831 5,181 5,300 817 893 884 488 641 601 98 124 117 238 131 24 18 31 102 6,490 7,001 7,028 1,400 960 1,054 112 115 108 5 4 3 1,293 849 949 406 286 283 887 563 666 887 563 S 666 2.91 $ 305 1.82 $ 2.13 309 312 2.89 $ 1.81 $ 2.13 307 311. 313 July 30, 2017 July 31, 2016 Current assets Cash and cash equivalents Accounts receivable, net Inventories. Other current assets $ 319 $ 296 605 626 902 940 74 46 Total current assets. 1,900 1,908 Plant assets, net of depreciation 2,454 2,407 Goodwill.... 2,115 2,263 Other intangible assets, net of amortization. 1,118 1,152 Other assets ($51 as of 2017 and $34 as of 2016 attributable to variable interest entity) Total assets.. 139 107 $ 7,726 $ 7,837 Current liabilities Short-term borrowings. 1,037 $ 1,219 Payable to suppliers and others 666 610 Accrued liabilities 561 604 Dividends payable 111 100 Accrued income taxes 20 22 Total current liabilities. Long-term debt. Deferred taxes. Other liabilities. 2,395 2,555 2,499 2,314 490 396 697 1,039 6,081 6,304 Total liabilities... Commitments and contingencies Campbell Soup Company shareholders' equity Preferred stock; authorized 40 shares; none issued Capital stock, S.0375 par value; authorized 560 shares; issued 323 shares. Additional paid-in capital... Earnings retained in the business. Capital stock in treasury, at cost. Accumulated other comprehensive loss. Total Campbell Soup Company shareholders' equity. Noncontrolling interests. Total equity. Total liabilities and equity See accompanying Notes to Consolidated Financial Statements. 12 12 359 354 2,385 1.927 (1,066) (664) (53) 1,637 (104) 1,525 8 8 1,645 1,533 7,726 $ 7,837 CAMPBELL SOUP COMPANY Consolidated Statements of Cash Flows (millions) 2017 2016 2015 Cash flows from operating activities: Net earnings.... Adjustments to reconcile net eamings to operating cash flow Impairment charges. Restructuring charges. Stock-based compensation.. Pension and postretirement benefit expense (income). Depreciation and amortization. Deferred income taxes Other, net Changes in working capital, net of acquisitions Accounts receivable. Inventories Prepaid assets. Accounts payable and accrued liabilities $ Pension fund contributions Net receipts from hedging activities Other (53) Net cash provided by operating activities. 1,291 1,491 Cash flows from investing activities: Purchases of plant assets (338) (341) (380) Sales of plant assets. - Business acquired, net of cash acquired - Other, net.. (30) Net cash used in investing activities. (368) (354) Cash flows from financing activities: Net short-term borrowings (repayments). 245 (762) Long-term borrowings.. 211 Long-term repayments.. Repayments of notes payable. Dividends paid. (90) (400) (420) (390) Treasury stock purchases.. Treasury stock issuances. (437) (143) 2 Contributions from noncontrolling interest. Payments related to tax withholding for stock-based compensation.. Other, net.. Net cash used in financing activities (22) (21) Effect of exchange rate changes on cash. (911) 11 (1,099) (550) Net change in cash and cash equivalents 23 Cash and cash equivalents-beginning of period 296 Cash and cash equivalents-end of period $ 319 $ 296 $ See accompanying Notes to Consolidated Financial Statements. - @ @ g F | 887 $ 563 $ 141 31 64 6 # +8 ^ |@g #| |8g | |B (258) 317 308 (30) (27) (48) (5) @@ (2) 1,206 (232) (18) (603) (309) (394) (244) Balance Sheets 2017 2016 Accounts receivable Customer accounts receivable $ 561 $ 566 Allowances.. (11) (12) Subtotal.. $ 550 $ 554 Other.. 55 72 605 $ 626 Inventories Raw materials, containers and supplies $ 377 $ 391 Finished products.. 525 549 902 $ 940 Other current assets Fair value of derivatives. Other.... Plant assets Land Buildings Machinery and equipment Projects in progress Total cost Accumulated depreciation Other assets Investments.. Deferred taxes Other.... $ 9 $ 5 65 41 74 S 46 64 $ 58 1,553 1,488 4,231 4,042 195 176 6,043 $ 5,764 (1) (3,589) (3,357) $ 2,454 S 2,407 Accrued liabilities Accrued compensation and benefits. Fair value of derivatives... Accrued trade and consumer promotion programs Accrued interest. Restructuring Other... Other liabilities Pension benefits... Deferred compensation (2) Postretirement benefits.. Fair value of derivatives.. Unrecognized tax benefits Restructuring Other.. 69 $ 47 36 41 34 19 $ 139 $ 107 241 S 263 43 16 131 130 34 35 24 57 88 103 $ 561 $ 604 261 $ 501 96 100 247 285 1 44 34 31 2 17 56 61 $ 697 $ 1,039 Depreciation expense was $299 in 2017, $288 in 2016 and $286 in 2015. Buildings are depreciated over periods ranging from 7 to 45 years. Machinery and equipment are depreciated over periods generally ranging from 2 to 20 years. (2) The deferred compensation obligation represents unfunded plans maintained for the purpose of providing our directors and certain of our executives the opportunity to defer a portion of their compensation. All forms of compensation contributed to the deferred compensation plans are accounted for in accordance with the underlying program. Deferrals and our contributions are credited to an investment account in the participant's name, although no funds are actually contributed to the investment account and no investments are actually purchased. Seven investment choices are available, including: (1) a book account that tracks the total return on our stock; (2) a book account that tracks the performance of the Vanguard Institutional Index; (3) a book account that tracks the performance of the Vanguard Extended Market Index; (4) a book account that tracks the performance of the Vanguard Total International Stock Index; (5) a book account that tracks the performance of the Vanguard Total Bond Market Index; (6) a book account that tracks the performance of the Vanguard Short-Term Bond Index; and (7) a book account that tracks the BlackRock Short-Term Investment Fund. Participants can reallocate investments daily and are entitled to the gains and losses on investment funds. We recognize an amount in the Consolidated Statements of Earnings for the market appreciation/depreciation of each fund