Review Note 1 Significant Accounting Policies, Consolidation (page 44). The consolidated financial statements include the accounts of Sherwin-Williams and its subsidiaries. There are over 50 subsidiaries worldwide for Sherwin-Williams. Briefly explain why intercompany accounts and transactions are eliminated in preparing Sherwin Williams consolidated financial statements.

Notes to Consolidated Financial Statements (thousands of dollars unless otherwise indicated NOTE1-SIGNIFICANT ACCOUNTING POLICIES investments and the risk of loss is limited to the amount of contributed capital, the Company is not considered the primary beneficiary. In accordance with the Consolidation Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC), the investments are not consolidated. For affordable housing investments entered into prior to the January 1, 2015 adoption of Accounting Standard Update (ASU) No. 2014-01, the Company uses the effective yield method to determine the carrying value of the investments. Under the effective yield method, the initial cost of the investments is amortized to income tax expense over the period that the tax credits are recognized. For affordable housing investments entered into on or after the January 1, 2015 adoption of ASU No. 2014-01, the Company uses the proportional amortization method. Under the proportional amortization method. the initial cost of the investments is amortized to income tax expense in proportion to the tax credits and other tax benefits received. The amounts of the investments, included in Other assets were $193,413, $189,484 and $223,935 at December 31 2016, 2015 and 2014, respectively. The liabilities recorded on the balance sheets for estimated future capital contributions to the investments were $178,584, $172,899 and $198,776 at December 31, 2016, 2015 and 2014. Consolidation. The consolidated financial statements include the accounts of The Sherwin-Williams Company and its wholly owned subsidiaries (collectively, "the Company"). Inter company accounts and transactions have been eliminated. Use of estimates. The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and notes. Actual results could differ from those amounts development, manufacture, distribution and sale of paint, coatings and related products to professional, industrial, commercial and retail customers primarily in North and South America, with additional operations in the Caribbean region, Europe and Asia Reportable segments. See Note 18 for further details. Cash flows. Management considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Fair value of financial instruments. The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments: Cash and cash equivalents: The carrying amounts reported for Cash and cash equivalents approximate fair Short-term borrowings: The carrying amounts reported for Short-term borrowings approximate fair reported for Short-term investments approximate fair Long-term debt (including current portion): The fair Investments in securities: Investments classified as values of the Company's publicly traded debt, shown below, are based on quoted market prices. The fair values of the Company's non-traded debt, also shown below, are estimated using discounted cash flow analyses, based on the Company's current incremental borrowing rates for similar types of borrowing arrangements. The Company's publicly traded debt and non-traded debt are classified as level 1 and level 2, respectively, in the fair value hierarchy See Note 7 available-for-sale are carried at market value. See the recurring fair value measurement table on page 45 Non-traded investments: The Company has investments in the U.S. affordable housing and historic renovation real estate markets and certain other investments that have been identified as variable interest entities. However, because the Company does not have the power to direct the day-to-day operations of the 2015 Value Amoun Publicly traded debt-.. Non-traded debt . . $1,907,704 1,912,646 $1,905,650 $1,960,169 $1,114,205 $1,160,280 4,097 Revised due to the adoption of ASU No. 2015-03. See Impact of recently issued accounting standards section Derivative instruments: The Company utilizes in foreign currency. See Note 13. There were no material foreign currency option and forward contracts outstanding at December 31, 2016, 2015 and 2014 derivative instruments as part of its overall financial risk management policy. The Company entered into foreign currency option and forward currency exchange contracts with maturity dates of less than twelve months in 2016, 2015, and 2014, primarily to hedge against value changes In 2016, the Company entered into a series of interest rate lock agreements which were designated as cash flow hedges. See Note 7