The financial statements of P&G are presented in Appendix B of Textbook. The company's complete annual report, including the notes to the financial statements, is available online. Instructions Refer to P&G's financial statements and the accompanying notes to answer the following questions.
- Give two examples of where historical cost information is reported in P&G's financial statements and related notes.
- Give two examples of the use of fair value information reported in either the financial statements or related notes.
Course Hero X WileyPLUS x Appendix B: Specimen Financia X w |BCOR 299 Fall 20 Syllabus.doc x + - C edugen.wileyplus.com/edugen/courses/crs13376/ebook/a02/kieso9781119503682a02.xform?course=crs13376&id=ref&mode=preview Appendix B Specimen Financial Statements: The Procter & Gamble Company Once each year, a corporation communicates to its stockholders and other interested parties by issuing a complete set of audited financial statements. The annual report, as this communication is called, summarizes the financial results of the company's operations for the year and its plans for the future. Many annual reports are attractive, multicolored, glossy public relations pieces, containing pictures of corporate officers and directors as well as photos and descriptions of new products and new buildings. Yet the basic function of every annual report is to report financial information, almost all of which is a product of the corporation's accounting system. The content and organization of corporate annual reports have become fairly standardized. Excluding the public relations part of the report (pictures, products, etc.), the following are the traditional financial portions of the annual report: Financial Highlights Letter to the Stockholders Management's Discussion and Analysis Financial Statements Notes to the Financial Statements . Management's Responsibility for Financial Reporting Management's Report on Internal Control over Financial Reporting Report of Independent Registered Public Accounting Firm . Selected Financial Data The official SEC filing of the annual report is called a Form 10-K, which often omits the public relations pieces found in most standard annual reports. On the following pages, we present The Procter & Gamble Company (P&G)'s financial statements taken from the company's 2017 Form 10-K. Consolidated Statements of Earnings Amounts in millions except per share amounts; Years ended June 30 2017 2016 2015 NET SALES $ 65,058 $ 65,299 $ 70,749 Cost of products sold 32,535 32,909 37,056purse Hero x WileyPLUS X Appendix B: Specimen Financia X W BCOR 299 Fall 20 Syllabus.doc x C edugen.wileyplus.com/edugen/courses/crs13376/ebook/a02/kieso9781119503682a02.xform?course=crs13376&id=ref&mode=preview CaringS/(10SS) from discontinued operations U.ZT (0.42) BASIC NET EARNINGS PER COMMON SHARE $ 5.80 $ 3.80 $ 2.50 DILUTED NET EARNINGS PER COMMON SHARE: (1) Earnings from continuing operations $ 3.69 $ 3.49 $ 2.84 Earnings/(loss) from discontinued operations 1.90 0.20 (0.40) DILUTED NET EARNINGS PER COMMON SHARE $ 5.59 $ 3.69 $ 2.44 DIVIDENDS PER COMMON SHARE $ 2.70 $ 2.66 $ 2.59 (1) Basic net earnings per common share and Diluted net earnings per common share are calculated on Net earnings attributable to Procter & Gamble. Consolidated Statements of Comprehensive Income Amounts in millions; Years ended June 30 2017 2016 2015 NET EARNINGS $ 15,411 $ 10,604 $ 7,144 OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX Financial statement translation 239 (1,679) (7,220) Unrealized gains/(losses) on hedges (net of $(186), $5 and $739 tax, respectively) (306) 1,234 Unrealized gains/(losses) on investment securities (net of $(6), $7 and $0 tax, respectively) (59) 28 24 Unrealized gains/(losses) on defined benefit retirement plans (net of $551, $(621) and $328 tax, respectively) 1,401 (1,477 ) 844 TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX 1,275 (3, 127) (5, 118) TOTAL COMPREHENSIVE INCOME 16,686 7,477 2,026 Less: Total comprehensive income attributable to noncontrolling interests 85 96 108 TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO PROCTER & GAMBLE $ 16,601 $ 7,381 $ 1,918 Consolidated Balance Sheets Amounts in millions; As of June 30 2017 2016 AssetsX WileyPLUS X Appendix B: Specimen Financia X w BCOR 299 Fall 20 Syllabus.doc x + yplus.com/edugen/courses/crs13376/ebook/a02/kieso9781119503682a02.xform?course=crs13376&id=ref&mode=preview Consolidated Statements of Earnings Amounts in millions except per share amounts; Years ended June 30 2017 2016 2015 NET SALES $ 65,058 $ 65,299 $ 70,749 Cost of products sold 32,535 32,909 37,056 Selling, general and administrative expense 18,568 18,949 20,616 Venezuela deconsolidation charge 2,028 OPERATING INCOME 13,955 13,441 11,049 Interest expense 465 579 626 Interest income 171 182 149 Other non-operating income/(expense), net (404) 325 440 EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 13,257 13,369 11,012 Income taxes on continuing operations 3,063 3,342 2,725 NET EARNINGS FROM CONTINUING OPERATIONS 10, 194 10,027 8,287 NET EARNINGS/(LOSS) FROM DISCONTINUED OPERATIONS 5,217 577 (1, 143) NET EARNINGS 15,411 10,604 7, 144 Less: Net earnings attributable to noncontrolling interests 85 96 108 NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE $ 15,326 $ 10,508 $ 7,036 BASIC NET EARNINGS PER COMMON SHARE: (1) Earnings from continuing operations $ 3.79 $ 3.59 $ 2.92 Earnings/(loss) from discontinued operations 2.01 0.21 (0.42) BASIC NET EARNINGS PER COMMON SHARE $ 5.80 $ 3.80 $ 2.50 DILUTED NET EARNINGS PER COMMON SHARE: (1) Earnings from continuing operations $ 3.69 $ 3.49 $ 2.84 Earnings/(loss) from discontinued operations 1.90 0.20 (0.40) DILUTED NET EARNINGS PER COMMON SHARE $ 5.59 $ 3.69 $ 2.44Hero x WileyPLUS X Appendix B: Specimen Financia X W BCOR 299 Fall 20 Syllabus.doc x - edugen.wileyplus.com/edugen/courses/crs13376/ebook/a02/kieso9781119503682a02.xform?course=crs13376&id=ref&mode=preview Amounts in millions; Years ended June 30 2017 2016 2015 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR $ 7,102 $ 6,836 $ 8,548 OPERATING ACTIVITIES Net earnings 15,411 10,604 7, 144 Depreciation and amortization 2,820 3,078 3, 134 Loss on early extinguishment of debt 543 Share-based compensation expense 351 335 337 Deferred income taxes (601) (815) (803) Gain on sale of assets (5,490) (41) (766) Venezuela deconsolidation charge 2,028 Goodwill and intangible asset impairment charges 450 2, 174 Change in accounts receivable 322) 35 349 Change in inventories 71 116 313 Change in accounts payable, accrued and other liabilities (149) 1,285 928 Change in other operating assets and liabilities (43) 204 (976) Other 162 184 746 TOTAL OPERATING ACTIVITIES 12,753 15,435 14,608 INVESTING ACTIVITIES Capital expenditures (3,384) (3,314) (3,736) Proceeds from asset sales 571 432 4,498 Cash related to deconsolidated Venezuela operations (908) Acquisitions, net of cash acquired (16) (186) (137) Purchases of short-term investments (4,843) (2,815) (3,647) Proceeds from sales and maturities of short-term investments 1,488 1,354 1,203 Pre-divestiture addition of restricted cash related to the Beauty Brands divestiture (874) (996ourse Hero x WileyPLUS X Appendix B: Specimen Financia X W BCOR 299 Fall 20 Syllabus.doc x C edugen. wileyplus.com/edugen/courses/crs13376/ebook/a02/kieso9781119503682a02.xform?course=crs13376&id=ref&mode=preview Consolidated Statements of Shareholders' Equity Accumulated Total Common Additional Reserve for Other Non- Dollars in millions; Common Preferred Treasury Retained Share- Shares Paid-In ESOP Debt Comprehensive controlling Shares in thousands Stock Stock Stock Earnings holders' Outstanding Capital Retirement Income/ Interest Equity (Loss) BALANCE JUNE 30, 2014 2,710,806 $4,009 $1, 111 $63,911 ($1,340) ($7,662) ($75,805) $84,990 $762 $69,976 Net earnings 7,036 108 7,144 Other comprehensive loss (5, 118) (5, 118) Dividends to shareholders: Common (7,028) (7,028) Preferred, net of tax benefits (259) (259) Treasury purchases (54,670) (4,604) (4,604) Employee plan issuances 54, 100 156 3, 153 3,309 Preferred stock conversions 4,335 (34) 4 30 ESOP debt impacts 20 68 88 Noncontrolling interest, net (219) (239) (458) BALANCE JUNE 30, 2015 2,714,571 $4,009 $1,077 $63,852 ($1,320) ($12,780) ($77,226) $84,807 $631 $63,050 Net earnings 10,508 96 10,604 Other comprehensive loss (3, 127) (3, 127) Dividends to shareholders: Common (7, 181) (7, 181) Preferred, net of tax benefits (255) (255) Treasury purchases (1) (103.449) (8.217) (8.217)Course Hero x WileyPLUS X Appendix B: Specimen Financia X W BCOR 299 Fall 20 Syllabus.doc x + C edugen.wileyplus.com/edugen/courses/crs13376/ebook/a02/kieso9781119503682a02.xform?course=crs13376&id=ref&mode=preview Noncontrolling interest, net (219) (239) (458) BALANCE JUNE 30, 2015 2,714,571 $4,009 $1,077 $63,852 ($1,320) ($12,780) ($77,226) $84,807 $631 $63,050 Net earnings 10,508 96 10,604 Other comprehensive loss (3,127) (3, 127) Dividends to shareholders: Common (7, 181) (7, 181) Preferred, net of tax benefits (255 255) Treasury purchases() (103,449) (8,217) (8,217) Employee plan issuances 52,089 (144) 3,234 3,090 Preferred stock conversions 4,863 (39) 6 33 ESOP debt impacts 30 74 104 Noncontrolling interest, net (85) (85) BALANCE JUNE 30, 2016 2,668,074 $4,009 $1,038 $63,714 ($1,290) ($15,907) ($82,176) $87,953 $642 $57,983 Net earnings 15,326 85 15,411 Other comprehensive loss 1,275 1,275 Dividends to shareholders: Common (6,989) (6,989) Preferred, net of tax benefits (247) (247) Treasury purchases(2) (164,866) (14,625) (14,625) Employee plan issuances 45,848 (77) 3,058 2,981 Preferred stock conversions 4,241 (32) 28 ESOP debt impacts 41 81 122 Noncontrolling interest, net (133) (133) BALANCE JUNE 30, 2017 2,553,297 $4,009 $1,006 $63,641 ($1,249) ($14,632) ($93,715) $96,124 $594 $55,778 ( Includes $4,213 of treasury shares acquired in the divestiture of the Batteries business (see Note 13).() Includes $9,421 of treasury shares received as part of the share exchange inx WileyPLUS X Appendix B: Specimen Financia X W BCOR 299 Fall 20 Syllabus.doc x + dugen.wileyplus.com/edugen/courses/crs13376/ebook/a02/kieso9781119503682a02.xform?course=crs13376&id=ref&mode=preview GOODWILL 44,699 44,350 TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET 24, 187 24,527 OTHER NONCURRENT ASSETS 5,133 5,092 TOTAL ASSETS $ 120,406 $ 127, 136 Liabilities and Shareholders' Equity CURRENT LIABILITIES Accounts payable $ 9,632 $ 9,325 Accrued and other liabilities 7,024 7,449 Current liabilities held for sale 2,343 Debt due within one year 13,554 11,653 TOTAL CURRENT LIABILITIES 30,210 30,770 LONG-TERM DEBT 18,038 18,945 DEFERRED INCOME TAXES 8, 126 9, 113 OTHER NONCURRENT LIABILITIES 8,254 10,325 TOTAL LIABILITIES 64,628 69,153 SHAREHOLDERS' EQUITY Convertible Class A preferred stock, stated value $1 per share (600 shares authorized) 1,006 1,038 Non-Voting Class B preferred stock, stated value $1 per share (200 shares authorized) Common stock, stated value $1 per share (10,000 shares authorized; shares issued: 2017 - 4,009.2, 2016 - 4,009.2) 4,009 4,009 Additional paid-in capital 63,641 63,714 Reserve for ESOP debt retirement (1,249) (1,290) Accumulated other comprehensive income/(loss) (14,632) (15,907) Treasury stock, at cost (shares held: 2017 - 1,455.9, 2016 - 1,341.2) (93,715) (82, 176) Retained earnings 96, 124 87,953 Noncontrolling interest 594 642urse Hero x WileyPLUS X Appendix B: Specimen Financia X W BCOR 299 Fall 20 Syllabus.doc x + C edugen.wileyplus.com/edugen/courses/crs13376/ebook/a02/kieso9781119503682a02.xform?course=crs13376&id=ref&mode=preview OTHER NONCURRENT LIABILITIES 8,254 10,325 TOTAL LIABILITIES 64,628 69, 153 SHAREHOLDERS' EQUITY Convertible Class A preferred stock, stated value $1 per share (600 shares authorized) 1,006 1,038 Non-Voting Class B preferred stock, stated value $1 per share (200 shares authorized) Common stock, stated value $1 per share (10,000 shares authorized; shares issued: 2017 - 4,009.2, 2016 - 4,009.2) 4,009 4,009 Additional paid-in capital 63,641 63,714 Reserve for ESOP debt retirement (1,249) (1,290) Accumulated other comprehensive income/(loss) (14,632) (15,907) Treasury stock, at cost (shares held: 2017 - 1,455.9, 2016 - 1,341.2) (93,715) (82, 176) Retained earnings 96, 124 87,953 Noncontrolling interest 594 642 TOTAL SHAREHOLDERS' EQUITY 55,778 57,983 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 120,406 $ 127, 136 See accompanying Notes to Consolidated Financial Statements. Consolidated Statements of Shareholders' Equity Accumulated Total Common Additional Reserve for Other Non- Dollars in millions; Common Preferred Treasury Retained Share- Shares Paid-In ESOP Debt Comprehensive controlling Shares in thousands Stock Stock Stock Earnings holders' Outstanding Capital Retirement Income/ Interest Equity (Loss) BALANCE JUNE 30, 2014 2,710,806 $4,009 $1, 111 $63,911 ($1,340) ($7,662) ($75,805) $84,990 $762 $69,976 Net earningsse Hero X WileyPLUS X Appendix B: Specimen Financia X W BCOR 299 Fall 20 Syllabus.doc x C edugen.wileyplus.com/edugen/courses/crs13376/ebook/a02/kieso9781119503682a02.xform?course=crs13376&id=ref&mode=preview Consolidated Balance Sheets Amounts in millions; As of June 30 2017 2016 Assets CURRENT ASSETS Cash and cash equivalents $ 5,569 $ 7,102 Available-for-sale investment securities 9,568 6,246 Accounts receivable 4,594 4,373 INVENTORIES Materials and supplies 1,308 1, 188 Work in process 529 563 Finished goods 2,787 2,965 Total inventories 4,624 4,716 Deferred income taxes 1,507 Prepaid expenses and other current assets 2,139 2,653 Current assets held for sale 7, 185 TOTAL CURRENT ASSETS 26,494 33,782 PROPERTY, PLANT AND EQUIPMENT, NET 19,893 19,385 GOODWILL 44,699 44,350 TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET 24,187 24,527 OTHER NONCURRENT ASSETS 5,133 5,092 TOTAL ASSETS $ 120,406 $ 127, 136 Liabilities and Shareholders' Equity CURRENT LIABILITIES Accounts payable $ 9,632 $ 9,325 Accrued and other liabilities 7,024 7,449Course Hero x WileyPLUS X Appendix B: Specimen Financia X W BCOR 299 Fall 20 Syllabus.doe x C edugen. wileyplus.com/edugen/courses/crs13376/ebook/a02/kieso9781119503682a02.xform?course=crs13376&id=ref&mode=preview Cash transferred in Batteries divestiture (143) Change in other investments (26) 93 (163) TOTAL INVESTING ACTIVITIES (5,689) (5,575) (2,890) FINANCING ACTIVITIES Dividends to shareholders (7,236) (7,436) (7,287) Change in short-term debt 2,727 (418) (2,580) Additions to long-term debt 3,603 3,916 2, 138 Reductions of long-term debt (4,931) (1) (2,213) (3,512) Treasury stock purchases (5,204) (4,004) (4,604) Treasury stock from cash infused in Batteries divestiture (1,730) Impact of stock options and other 2,473 2,672 2,826 TOTAL FINANCING ACTIVITIES (8,568) (9,213) (13,019) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (29) (381) (411) CHANGE IN CASH AND CASH EQUIVALENTS (1,533) 266 (1,712) CASH AND CASH EQUIVALENTS, END OF YEAR $ 5,569 $ 7, 102 $ 6,836 SUPPLEMENTAL DISCLOSURE Cash payments for interest $ 518 $ 569 $ 678 Cash payment for income taxes 3,714 3,730 4,558 Divestiture of Batteries business in exchange for shares of P&G stock(2) 4,213 Divestiture of Beauty business in exchange for shares of P&G stock and assumption of debt 11,360 Assets acquired through non-cash capital leases are immaterial for all periods. () Includes $543 of costs related to early extinguishment of debt. () Includes $1,730 from cash infused into the Batteries business pursuant to the divestiture agreement (see Note 13). See accompanying Notes to Consolidated Financial Statements. Copyright @ 2018 John Wiley & Sons, Inc. All rights reserved.x WileyPLUS X Appendix B: Specimen Financia X W BCOR 299 Fall 20 Syllabus.doc x a edugen.wileyplus.com/edugen/courses/crs13376/ebook/a02/kieso9781119503682a02.xform?course=crs13376&id=ref&mode=preview Change in other operating assets and liabilities (43) 204 (976) Other 162 184 746 TOTAL OPERATING ACTIVITIES 12,753 15,435 14,608 INVESTING ACTIVITIES Capital expenditures (3,384) (3,314) (3,736) Proceeds from asset sales 571 132 4,498 Cash related to deconsolidated Venezuela operations (908) Acquisitions, net of cash acquired (16) (186) (137) Purchases of short-term investments (4,843) (2,815) (3,647) Proceeds from sales and maturities of short-term investments 1,488 1,354 1,203 Pre-divestiture addition of restricted cash related to the Beauty Brands divestiture (874) (996) Cash transferred at closing related to the Beauty Brands divestiture (475) Release of restricted cash upon closing of the Beauty Brands divestiture 1,870 Cash transferred in Batteries divestiture (143) Change in other investments (26) 93 (163) TOTAL INVESTING ACTIVITIES (5,689) (5,575) (2,890) FINANCING ACTIVITIES Dividends to shareholders (7,236) (7,436) (7,287) Change in short-term debt 2,727 (418) (2,580) Additions to long-term debt 3,603 3,916 2, 138 Reductions of long-term debt (4,931) (1) (2,213) (3,512) Treasury stock purchases (5,204) (4,004) (4,604) Treasury stock from cash infused in Batteries divestiture (1,730) Impact of stock options and other 2,473 2,672 2,826 TOTAL FINANCING ACTIVITIES (8,568) (9,213) (13,019)Course Hero x WileyPLUS Appendix B: Specimen Financia X W BCOR 299 Fall 20 Syllabus.doc x + edugen.wileyplus.com/edugen/courses/crs13376/ebook/a02/kieso9781119503682a02.xform?course=crs13376&id=ref&mode=preview BALANCE JUNE 30, 2016 2,668,074 $4,009 $1,038 $63,714 ($1,290) ($15,907) ($82, 176) $87,953 $64 $57,983 Net earnings 15,326 85 15,411 Other comprehensive loss 1,275 1,275 Dividends to shareholders: Common (6,989) (6,989) Preferred, net of tax benefits (247) (247) Treasury purchases (2) (164,866) (14,625) (14,625) Employee plan issuances 45,848 (77) 3,058 2,981 Preferred stock conversions 4,241 (32) 4 28 ESOP debt impacts 41 81 122 Noncontrolling interest, net (133) (133) BALANCE JUNE 30, 2017 2,553,297 $4,009 $1,006 $63,641 ($1,249) ($14,632) ($93,715) $96,124 $594 $55,778 ()Includes $4,213 of treasury shares acquired in the divestiture of the Batteries business (see Note 13).() Includes $9,421 of treasury shares received as part of the share exchange in the Beauty Brands transaction (see Note 13). See accompanying Notes to Consolidated Financial Statements. Consolidated Statements of Cash Flows Amounts in millions; Years ended June 30 2017 2016 2015 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR $ 7,102 $ 6,836 $ 8,548 OPERATING ACTIVITIES Net earnings 15,411 10,604 7, 144 Depreciation and amortization 2,820 3,078 3, 134 Loss on early extinguishment of debt 543 Share-based compensation expense 351 335 337 Deferred income taxes (601) (815) (803 Gain on sale of assets (5,490) (41) (766
