Answers To Assignment 2 1

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List of Assignments-Week 2

Be Sure to submit these assignments by 09/27/2014 on BlackBoard, under “Assignment-Week 2. Answers must be labeled properly, with all pertinent information. No late submissions will be accepted.

Assignment-1
The Procter & Gamble Company (P&G)
The financial statements of P&G are Posted in BlackBoard, under “Handouts”
Instructions
Refer to P&G's financial statements and the accompanying notes to answer the following questions.
(a)
What type of income statement format does P&G use? Indicate why this format might be used to present income statement information.
(b)
What are P&G's primary revenue sources?

(c)
Compute P&G's gross profit for each of the years 2009-2011. Explain why gross profit decreased in
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Inventory Fair Value Adjustments

In 2011, we recorded $46 million ($28 million after-tax or $0.02 per share) of incremental costs in cost of sales related to fair value adjustments to the acquired Inventory included in WBD’s balance sheet at the acquisition date and hedging contracts included in PBG’s and PAS’s balance sheets at the acquisition date. In 2010, we recorded $398 million ($333 million after-tax or $0.21 per share) of incremental costs related to fair value adjustments to the acquired inventory and other related hedging contracts included in PBG’s and PAS’s balance sheets at the acquisition date. Substantially all of these costs were recorded in cost of sales.

Venezuela Currency Devaluation

As of the beginning of our 2010 fiscal year, we recorded a one- time $120 million net charge related to our change to hyperinflationary accounting for our Venezuelan businesses and the related devaluation of the bolivar. $129 million of this net charge was recorded in corporate unallocated expenses, with the balance (income of $9 million) recorded in our PAB segment. In total, this net charge had an after-tax impact of $120 million or $0.07 per share.

COMPARATIVE ANALYSIS CASE (Continued)

Asset Write- Off

In 2010, we recorded a $145 million charge ($92 million after- tax or $0.06 per share) related to a change in scope of one release in our ongoing migration to SAP software. This change was driven, in part, by a review of our North America systems strategy

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