The below charts were pulled from Nike’s 10K. The pink column represents data from May 31, 2012, and the purple column from May 31, 2011. a. What current assets are included in the balance sheet? ASSETS Current assets: Cash and equivalents $2,317 $1,955 Short-term investments (Note 6) 1,440 2,583 Accounts receivable, net (Note 1) 3,280 3,138 Inventories (Notes 1 and 2) 3,350 2,715 Deferred income taxes (Note 9) 274 312 Prepaid expenses and other current assets (Notes 6 and 16) 870 594 Total current assets 11,531 11,297 b.
What method does the company use to value inventory? The Notes indicate that NIKE uses “last in first out,” or LIFO, for domestic inventories and “first in first out,” or FIFO, for international inventories c. What depreciation method does the company use? The Notes indicate that NIKE uses the straight line method for buildings and leasehold improvements and the declining balance method for machinery and equipment. As with the inventory cost-flow assumption, standard-setting bodies give firms freedom to select any depreciation method from the set deemed acceptable.
These bodies do not provide criteria as to which method is more “appropriate” for a particular firm. The methods that NIKE uses for financial reporting closely coincide with the methods it uses for tax reporting. Thus, NIKE saves record keeping costs by using the same depreciation methods for financial and tax reporting. d. What assets other than current assets and property, plant, and equipment are included on the balance sheet? Identifiable intangible assets, net (Note 4) 535 487 Goodwill (Note 4) 201 205 Deferred income taxes and other assets (Notes 6, 9 and 16) 919 894 . What current liabilities are included on the balance sheet? Current liabilities: Current portion of long-term debt (Note 8) $49 $200 Notes payable (Note 7) 108 187 Accounts payable (Note 7) 1,588 1,469 Accrued liabilities (Notes 5, 6 and 16) 2,053 1,985 Income taxes payable (Note 9) 67 117 Total current liabilities 3,865 3,958 f. Does the company have long-term debt? How much? Long-term debt (Note 8) 228 276 g. Does the company have commitments and contingencies? If so, what commitments does the company have and for what amount is the company committed?
Based on Note 15, The Company leases space for certain of its offices, warehouses and retail stores under leases expiring from 1 to 23 years after May 31, 2012. Rent expense was $494 million, $446 million, and $416 million for the years ended May 31, 2012, 2011 and 2010, respectively. Amounts of minimum future annual rental commitments under non-cancelable operating leases in each of the five years ending May 31, 2013 through 2017 are $408 million, $387 million, $271 million, $224 million, $186 million, respectively, and $662 million in later years.
As of May 31, 2012 and 2011, the Company had letters of credit outstanding totaling $138 million and $99 million, respectively. These letters of credit were generally issued for the purchase of inventory and guarantees of the Company’s performance under certain self-insurance and other programs. h. What shareholders’ equity accounts are included in the balance sheet? Shareholders’ equity: Common stock at stated value (Note 11): Class A convertible — 90 and 90 shares outstanding — — Class B — 368 and 378 shares outstanding 3 3 Capital in excess of stated value 4,641 3,944
Accumulated other comprehensive income (Note 14) 149 95 Retained earnings 5,588 5,801 Total shareholders’ equity 10,381 9,843 http://www. sec. gov/Archives/edgar/data/320187/000119312512312306/d341264d10k. htm http://www. sec. gov/Archives/edgar/data/320187/000119312512312306/0001193125-12-312306-index. htm http://www. sec. gov/cgi-bin/viewer? action=view&cik=320187&accession_number=0001193125-12-312306&xbrl_type=v#