Will Upvote 1

Use Apple's financial statements in Appendix A to answer the following. Required: 1. Is Apple's statement of cash flows prepared under the direct method or the indirect method? 2. For each fiscal year 2019,2018 , and 2017 , identify the amount of cash provided by operating activities and cash paid for dividends. 3. In 2019, did Apple have sufficient cash flows from operations to pay dividends? 4. Did Apple spend more or less cash to repurchase common stock in 2019 versus 2018 ? Complete this question by entering your answers in the tabs below. Is Apple's statement of cash flows prepared under the direct method or the indirect method? Complete this question by entering your answers in the tabs below. For each fiscal year 2019,2018 , and 2017, identify the amount of cash provided by operating activities and cash paid for dividends. (Enter your answers in millions of dollars.) Complete this question by entering your answers in the tabs below. In 2019, did Apple have sufficient cash flows from operations to pay dividends? In 2019, did Apple have sufficient cash flows from operations to pay dividends? Complete this question by entering your answers in the tabs below. Did Apple spend more or less cash to repurchase common stock in 2019 versus 2018? This appendix includes financial information for (1) Apple, (2) Google, and (3) Samsung. Apple states that it designs, manufactures and markets smartphones, personal computers, tablets, wearables, and accessories, and sells a variety of related services. It competes with both Google and Samsung in the United States and globally. The information in this appendix is taken from annual 10-K reports (or annual report for Samsung) filed with the SEC or other regulatory agency. An annual report is a summary of a company's financial results for the year along with its current financial condition and future plans. This report is directed to external users of financial information, but it also affects the actions and decisions of internal users. A company often uses an annual report to showcase itself and its products. Many annual reports include photos, diagrams, and illustrations related to the company. The primary objective of annual reports, however, is the financial section, which communicates much information about a company, with most data drawn from the accounting information system. The content of a typical annual report's financial section follows. - Letter to Shareholders - Financial History and Highlights - Quantitative and Qualitative Disclosures about Risk Factors - Management Discussion and Analysis - Management's Report on Financial Statements and on Internal Controls - Report of Independent Accountants (Auditor's Report) and on Internal Controls - Financial Statements - Notes to Financial Statements - Directors, Officers, and Corporate Governance - Executive Compensation - Accounting Fees and Services This appendix provides the financial statements for Apple (plus selected notes), Google, and Samsung. (Note: Google is part of Alphabet; we refer to Alphabet as "Google" because of its global familiarity and because Google makes up 99% of Alphabet's revenues.) The appendix is organized as follows: - Apple A-1 through A-8 - Google A-9 through A-12 - Samsung A-13 through A-16 Many assignments at the end of each chapter refer to information in this appendix. We encourage readers to spend time with these assignments; they are especially useful in showing the relevance and diversity of accounting and reporting. Special note: The SEC maintains the EDGAR (Electronic Data Gathering, Analysis, and Retrieval) database at SEC.gov for U.S. filers. The Form 10K is the annual report form for most companies. It provides electronically accessible information. The Form 10-KSB is the annual report form filed by small businesses. It requires slightly less information than the Form 10-K. One of these forms must be filed within 90 days after the company's fiscal year-end. (Forms 10-K405, 10-KT, 10-KT405, and 10-KSB405 are slight variations of the usual form due to certain regulations or rules.) Appendix A Financial Statement Information Apple Inc. CONSOLIDATED BALANCE SHEETS (In millions, except number of shares which are reflected in thousands and par value) LIABILITIES AND SHAREHOLDERS' EQUITY Appendix A Financial Statement Information Appendix A Financial Statement Information See accompanying Notes to Consolidated Financial Statements. Appendix A Financial Statement Information A...I-T.. Basis of Presentation and Preparation software delivered at the time of sale. The second perforIn the opinion of the Company's management, the consoli- mance obligation is the right to receive certain product-related dated financial statements reflect all adjustments, which are bundled services, which include iCloud, Siri and Maps. The normal and recurring in nature, necessary for fair financial third performance obligation is the right to receive, on a statement presentation. The preparation of these consoli- when-and-if-available basis, future unspecified software updated financial statements and accompanying notes in con- grades relating to the software bundled with each device. The formity with U.S. generally accepted accounting principles Company allocates revenue and any related discounts to these requires management to make estimates and assumptions performance obligations based on their relative SSPs. Bethat affect the amounts reported. cause the Company lacks observable prices for the undeliv- The Company's fiscal year is the 52- or 53-week period ered performance obligations, the allocation of revenue is that ends on the last Saturday of September. The Company's based on the Company's estimated SSPs. Revenue allocated fiscal years 2019 and 2018 spanned 52 weeks each, whereas to the delivered hardware and bundled software is recognized fiscal year 2017 included 53 weeks. A 14 th week was in- when control has transferred to the customer, which generally cluded in the first fiscal quarter of 2017 , as is done every occurs when the product is shipped. Revenue allocated to the five or six years, to realign the Company's fiscal quarters product-related bundled services and unspecified software with calendar quarters. Unless otherwise stated, references upgrade rights is deferred and recognized on a straight-line to particular years, quarters, months and periods refer to the basis over the estimated period they are expected to be proCompany's fiscal years ended in September and the associ- vided. Cost of sales related to delivered hardware and bundled ated quarters, months and periods of those fiscal years. software, including estimated warranty costs, are recognized at the time of sale. Costs incurred to provide product-related Revenue Recognition_ bundled services and unspecified software upgrade rights are Net sales consist of revenue from the sale of iPhone, Mac, recognized as cost of sales as incurred. iPad, Services and other products. The Company recognizes For the sale of third-party products where the Company revenue at the amount to which it expects to be entitled when obtains control of the product before transferring it to the control of the products or services is transferred to its custom- customer, the Company recognizes revenue based on the ers. Control is generally transferred when the Company has a gross amount billed to customers. The Company considers present right to payment and title and the significant risks and multiple factors when determining whether it obtains conrewards of ownership of products or services are transferred to trol of third-party products including, but not limited to, its customers. For most of the Company's Products net sales, evaluating if it can establish the price of the product, retains control transfers when products are shipped. For the Compa- inventory risk for tangible products or has the responsibility ny's Services net sales, control transfers over time as services for ensuring acceptability of the product. For thirdparty apare delivered. Payment for Products and Services net sales is plications sold through the App Store, Mac App Store, TV collected within a short period following transfer of control or App Store and Watch App Store and certain digital content commencement of delivery of services, as applicable. sold through the Company's other digital content stores, the The Company records reductions to Products net sales Company does not obtain control of the product before related to future product returns, price protection and other transferring it to the customer. Therefore, the Company accustomer incentive programs based on the Company's ex- counts for such sales on a net basis by recognizing in pectations and historical experience. Services net sales only the commission it retains. For arrangements with multiple performance obliga-_ The Company has elected to record revenue net of taxes tions, which represent promises within an arrangement that collected from customers that are remitted to governmental auare capable of being distinct, the Company allocates reve- thorities, with the collected taxes recorded within other current nue to all distinct performance obligations based on their liabilities until remitted to the relevant government authority. relative stand-alone selling prices ("SSPs"). When avail-_ Deferred Revenue As of September 28, 2019 and Sepable, the Company uses observable prices to determine tember 29, 2018, the Company had total deferred revenue of SSPs. When observable prices are not available, SSPs are $8.1 billion and $8.8 billion, respectively. As of September established that reflect the Company's best estimates of 28, 2019, the Company expects 68% of total deferred revewhat the selling prices of the performance obligations nue to be realized in less than a year, 25% within one-to-two would be if they were sold regularly on a stand-alone basis. years, 6% within two-to-three years and 1% in greater than The Company has identified up to three performance obli- three years. gations regularly included in arrangements involving the sale of iPhone, Mac, iPad and certain other products. The first per- Advertising Costs formance obligation, which represents the substantial portion Advertising costs are expensed as incurred and included in of the allocated sales price, is the hardware and bundled selling, general and administrative expenses. 6 Appendix A Financial Statement Information Apple Inc. Notes-continued Inventories Inventories are measured using the first-in, first-out method. Property, Plant and Equipment Depreciation on property, plant and equipment is recognized on a straight-line basis over the estimated useful lives of the assets, which for buildings is the lesser of 30 years or the remaining life of the underlying building; between one Cash Equivalents and Marketable Securities and five years for machinery and equipment, including All highly liquid investments with maturities of three product tooling and manufacturing process equipment; and months or less at the date of purchase are classified as cash the shorter of lease term or useful life for leasehold imequivalents. The Company's investments in marketable debt provements. Capitalized costs related to internal-use softsecurities have been classified and accounted for as avail- ware are amortized on a straight-line basis over the able-for-sale. The Company classifies its marketable debt estimated useful lives of the assets, which range from three securities as either short-term or long-term based to five years. Depreciation and amortization expense on on each instrument's underlying contractual maturity date. property and equipment was $11.3 billion, $9.3 billion and Unrealized gains and losses on marketable debt securities $8.2 billion during 2019, 2018 and 2017, respectively. classified as available-for-sale are recognized in other comprehensive income/(loss) ("OCI"). The Company's investments in marketable equity securities are classified based on the nature of the securities and their availability for use in current operations. The Company's marketable equity securities are measured at fair value with gains and losses recognized in other income/(expense), net ("OI\&E"). The cost of securities sold is determined using the specific identification method. Fair Value Measurements Restricted Cash and Restricted Marketable Securities The fair values of the Company's money market funds and The Company considers cash and marketable securities to certain marketable equity securities are based on quoted be restricted when withdrawal or general use is legally re- prices in active markets for identical assets. The valuation stricted. The Company records restricted cash as other as- techniques used to measure the fair value of the Company's sets in the Consolidated Balance Sheets, and determines debt instruments and all other financial instruments, which current or non-current classification based on the expected generally have counterparties with high credit ratings, are duration of the restriction. The Company records restricted based on quoted market prices or model-driven valuations marketable securities as current or non-current marketable using significant inputs derived from or corroborated by securities in the Consolidated Balance Sheets based on the observable market data. classification of the underlying securities. The Company's restricted cash primarily consisted of Financial Instruments cash required to be on deposit under a contractual agree- The Company typically invests in highly rated securities, with ment with a bank to support the Company's iPhone Up- the primary objective of minimizing the potential risk of pringrade Program. cipal loss. The Company's investment policy generally reAccountsReceivable(TradeReceivables)ofcreditexposuretoanyoneissuer.Fairvaluesweredeter-quiressecuritiestobeinvestmentgradeandlimitstheamount The Company has considerable trade receivables outstand- mined for each individual security in the investment portfolio. ing with its third-party cellular network carriers, wholesalers, retailers, resellers, small and mid-sized businesses and Accrued Warranty and Guarantees education, enterprise and government customers. The following table shows changes in the Company's accrued As of September 28, 2019, the Company had no custom- warranties and related costs for 2019 and 2018: ers that individually represented 10% or more of total trade receivables. As of September 29, 2018, the Company had one customer that represented 10% or more of total trade receivables, which accounted for 10%. The Company's cellular network carriers accounted for 51% and 59% of total trade receivables as of September 28, 2019 and September 29, 2018, respectively. Appendix A Financial Statement Information Apple Inc. Notes-continued the Company's financial condition and operating results for that reporting period could be materially adversely affected. In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss, or a material loss greater than a recorded accrual, concerning loss contingencies for asserted legal and other claims, except for the following matters: Term Debt - VirnetX iOS Performance Management Cases As of September 28, 2019, the Company had outstanding - Qualcomm - French Competition Authority floating- and fixed-rate notes with varying maturities for an aggregate principal amount of $101.7 billion (collectively the "Notes"). The Notes are senior unsecured obligations Disaggregated Revenue by Significant Products and interest is payable in arrears. and Services The Company recognized $3.2 billion, $3.0 billion and $2.2 billion of interest cost on its term debt for 2019, 2018 and 2017 , respectively. The future principal payments for the Company's Notes as of September 28, 2019 are as follows (in millions): As of September 28, 2019 and September 29, 2018, the fair value of the Company's Notes, based on Level 2 inputs, was $107.5 billion and $103.2 billion, respectively. Share Repurchase Program On April 30, 2019, the Company announced the Board of Directors increased the current share repurchase program authorization from $100 billion to $175 billion of the Company's common stock, of which $96.1 billion had been utilized as of September 28, 2019. During 2019 , the Company repurchased 345.2 million shares of its common stock for $67.1 billion, including 62.0mil lion shares delivered under a $12.0 billion accelerated share repurchase arrangement dated February 2019, which settled in August 2019. The Company's share repurchase program does not obligate it to acquire any spe- A reconciliation of the Company's segment operating cific number of shares. income to the Consolidated Statements of Operations for 2019, 2018 and 2017 is as follows: Contingencies The Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business and that have not been fully resolved. The outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts above management's expectations, Apple Inc. Notes-continued Selected Financial Data combines the watchOS user interface and other technolo(in millions, except number of shares, which are reflected gies created specifically for a smaller device. In September in thousands, and per share amounts). 2019 , the Company introduced Apple Watch Series 5. Services Digital Content Stores and Streaming Services The Company operates various platforms that allow customers to discover and download applications and digital content, such as books, music, video, games and podcasts. These platforms include the App Store , available for iPhone and iPad, the Mac App Store, the TV App Store and the Watch App Store. The Company also offers subscription-based digital content streaming services, including Apple Music , which offers users a curated listening experience with on-demand radio stations, and Apple TV+, which offers exclusive original content, and is expected to be available in November 2019. and the AppleCare Protection Plan, which are fee-based services that extend the coverage of phone support eligibility and hardware repairs. AC + offers additional coverage for instances of accidental damage and is available in certain countries for certain products. Additionally, AC+ with theft and loss protection is available for iPhone in the U.S. iCloud iCloud is the Company's cloud service, Company Background which stores music, photos, contacts, calendars, mail, docThe Company designs, manufactures and markets smart- uments and more, keeping them up-to-date and available phones, personal computers, tablets, wearables and acces- across multiple Apple devices and Windows personal sories, and sells a variety of related services. The computers. Company's fiscal year is the 52- or 53-week period that Licensing The Company licenses the use of certain of ends on the last Saturday of September. The Company is a its intellectual property, and provides other related services. California corporation established in 1977. Other Services The Company delivers a variety of other services available in certain countries, including Products Apple Arcade TM, a game subscription service; Apple iPhone iPhone is the Company's line of smartphones Card TM, a co-branded credit card; Apple News+, a subbased on its iOS operating system. In September 2019, the scription news and magazine service; and Apple Pay, a Company introduced three new iPhones: iPhone 11, iPhone cashless payment service. 11 Pro and iPhone 11 Pro Max. Mac Mac is the Company's line of personal computMarkets and Distribution ers based on its macOS operating system. During 2019, The Company's customers are primarily in the consumer, the Company released a new version of MacBook Air and small and mid-sized business, education, enterprise and gova new Mac mini , and introduced an updated Mac Pro , ernment markets. The Company sells its products and resells which is expected to be available in the fall of 2019. third-party products in most of its major markets directly to iPad iPad is the Company's line of multi-purpose tab- consumers, small and mid-sized businesses, and education, lets. iPad is based on the Company's iPadOS TM operating sys- enterprise and government customers through its retail and tem, which was introduced during 2019. Also during 2019, online stores and its direct sales force. The Company also the Company released two new versions of iPad Pro , an employs a variety of indirect distribution channels, such as iPad Air , an updated iPad mini and a new 10.2-inch iPad. third-party cellular network carriers, wholesalers, retailers Wearables, Home and Accessories W Wearables, Home and resellers. During 2019, the Company's net sales through and Accessories includes AirPods , Apple TV TV , Apple its direct and indirect distribution channels accounted for Watch , Beats products, HomePod TM, iPod touch and 31% and 69%, respectively, of total net sales. other Apple-branded and third-party accessories. AirPods are the Company's wireless headphones that interact with Employees Siri. In October 2019, the Company introduced AirPods As of September 28, 2019, the Company had approximately Pro TM. Apple Watch is a personal electronic device that 137,000 full-time equivalent employees. Appendix A Financial Statement Information Google Inc. (Alphabet Inc.) a CONSOLIDATED BALANCE SHEETS Appendix A Financial Statement Information Google Inc. (Alphabet Inc.) a CONSOLIDATED STATEMENTS OF INCOME (In millions) ut we loosely refer to Alphabet as "Google" because of its Google provides 99% of Alphabet's $161,857 billion in revenues. See accompanying notes. Google Inc. (Alphabet Inc.) a CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Appendix A Financial Statement Information Google Inc. (Alphabet Inc. )a CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In millions, except share amounts which are reflected in thousands) "Google is part of Alphabet, but we loosely refer to Alphabet as "Google" because of its global familiarity and because Google provides 99% of Alphabet's $161,857 billion in revenues. See accompanying notes. Appendix A Financial Statement Information Google Inc. (Alphabet Inc.) a CONSOLIDATED STATEMENTS OF CASH FLOWS Appendix A Financial Statement Information Appendix A Financial Statement Information Samsung Electronics Co., Ltd. and Subsidiaries CONSOLIDATED STATEMENTS OF PROFIT OR LOSS The above consolidated statement of financial position should be read in conjunction with the accompanying notes. Samsung Electronics Co., Ltd. and Subsidiaries CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME The above consolidated statement of financial position should be read in conjunction with the accompanying notes. Camcuno Flostroniec Co Itd and Subcidiarios Appendix A Financial Statement Information