The consolidated financial statements of Amazon.com, Inc., are given in Appendix A at the end of this book.
1. Refer to Note 1 Description of Business and Accounting Policies, under Investments.
Describe the method of accounting used for investments over which the company can exercise significant influence, but not control. How does the company classify these investments on its balance sheet? How does the company account for these investments on its income statement?
2. Does Amazon.com have any other types of investments other than the ones described in (1)? How does the company account for them? Does it adjust for periodic changes in fair market value of these investments? If so, where do these adjustments appear?
3. Continue looking in Note 1, under the caption Foreign Currency. Describe the nature of Amazon.com’s business dealings with foreign currencies. What has been the impact of this activity on its financial statements? On which financial statement is the impact of this activity reflected?
4. Which monetary currency was stronger, the U.S. dollar or Amazon.com, Inc.’s foreign currencies, during 2008, 2007, and 2006? Give the basis for your answers.