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The website for this text contains Walmart s January 3 1 , 2 0 2 1 , Form 1 0 - K . You should
The website for this text contains Walmarts January Form K You should read the management discussion and analysis MD&A financial statements, and notes to the financial statements, especially Note Summary of Significant Accounting Policies.
Required: Revenue Recognition
a
Does Walmart recognize all of its revenue at a point in time? If not, how is it recognized?
Required: Cost of Sales and Inventory
b
What costing method does Walmart use to determine cost of sales and inventory?
c
How does Walmart handle the requirement to report inventory at lowerofcostormarket?
d
Does Walmart have a large LIFO reserve? If not, why?
e
Walmart receives discounts from suppliers because it purchases large volumes of merchandise. Is this reported as other income or accounted for in another way?
Required: Working Capital
f
Operations create working capital accounts. Which of Walmarts working capital accounts are the most financially significant?
g
Does Walmarts working capital management yield a positive or negative net investment in working capital? Is this a good situation for Walmarts profitability? Why?
Required: Income Taxes
h
Note to Walmarts consolidated financial statements presents a substantial amount of income taxrelated information, including an effective income tax rate reconciliation. Which reconciling items appear to be relatively persistent?
i
What is the effect of Walmarts generation of income in foreign jurisdictions on the effective tax rate? Is the effect changing over time?
j
What are the two largest deferred tax assets? Explain how they have arisen and why they are assets.
k
What is the valuation allowance It has increased during the twoyear period. What is the implication of this increase for earnings?
l
Why does Walmart report a deferred tax liability for property and equipment? Speculate whether Walmart expanded or contracted based on the information in this section of the tax note.
Required: Pensions
m
What kind of pension plans does Walmart have, and how are earnings affected by each?
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