Question

2.1 Discussion Assignment: Case 2.1

50 Points Total. Initial post (40 pts) due Day 5 (11:59 CT), Replies (10 pts) due Day 7 (11:59 CT)

Part 1 Initial Post Due by day 5 (11:59, CT) of Week 3 (40 pts)

The Intel Case from the Fraser & Ormiston textbook will be used throughout the course.

Read Case 2.1 on page 86 of the textbook. Intel’s 2013 Form 10-K and annual report, to be used throughout the course, can be located in the Week 2 Theme – The Balance Sheet section.

Answer questions on page 86, and follow the instructions below:

• Provide cover page
• Use Times New Roman, 12 pt font, double-spaced, 1” margins all around
• Highly suggested, use headings/subtitles to respond to each question. (ie. Case 2.1 – Question (a), Case 2.1 – Question (b), etc.)
• For Question (b) write 1-2 paragraphs
• For Question (c) write 1-2 paragraphs
• For Question (d) write 1 paragraph
• For Question (e) write 1-2 paragraphs
• For Questions (f and g) write 1 paragraph
• Not including the cover page, you should expect to submit a 2-3-page paper.

questions

Case 2.1 Intel Case

The 2013 Intel form 10-K can be fond at the following website: www.pearsonhighered.com/fraser. Using the form 10-k, answer the following.

b. Describe the types of assets Intel owns. which assets are the most significant to the company? Using the notes to the financial statements, discuss the accounting methods used to value assets. What other information can be learned about the asset accounts from the notes? Have there been significant changes to the asset accounts from the notes? Have there been significant changes to the asset structure from 2012 to 2013?

c. Analyse the accounts receivable and allowance for doubtful accounts.

d. Describe the types of liabilities Intel incurred. Which liabilities are the most significant to the company? Have there been significant changes to the liability and equity structure from 2012 to2013?

e. Describe the commitments and contingencies of Intel.

f. Under which classifications are deferred taxes listed? What items is the most significant component of deferred taxes?

g. What equity accounts are included on the balance sheet of Intel?

Answer 1

2. Describe the types of assets & Intel owns.

Cash and cash equivalents, short-term investments, trading assets, accounts receivable, inventories, property, plant and equipment, equity securities

3. Discuss the accounting methods used to ,value assets.

The methods used to value assets is underlined by the presence of inflation and by the implications for tax payments and cash flows. The three cost flow assumptions most frequently used by companies are FIFO, LIFO, and asset management

4. Describe the Types of liabilities Intel has incurred . Which Liabilities are the most significant to the company ? Have there been significant changes to the liability and equity structure from 2009 to 2010?

Note 20 : Chipset Design Issue

In January 2011, as part of our ongoing quality assurance procedures, we identified a design issue with the Intel ® 6 Series Express Chipset family (formerly code-named Cougar Point). The issue affected chipsets sold in the fourth quarter of 2010 and January 2011. We subsequently implemented silicon fix, and began shipping the updated version of the affected chipset in February 2011. We estimate that the total cost to repair and replace affected materials and systems, located with customers and in the market, will be approximately $600 million. We recorded a charge of $311 million in the fourth quarter of 2010 which comprised $67 million in product costs for the affected chipsets and $ 244 million to establish a product accrual for this issue. We expect to recognize an additional charge of approximately $350 million in the 1st quarter of 2011, primarily related to an additional product accrual for the estimated costs to repair and replace affected materials and systems associated with products sold in January 2011. The charges incurred in the fourth quarter of 2011 are reflected in the results of the PC Client Group operating segment.

5.Describe the commitments and contingencies Intel.

Note 23: Commitments

‘Commitments for construction or purchase of property, plant and equipment totaled $4.6 billion as of 25 December 2010 ( $1.8 billion as of December 26,2009) most of which will be due within the next year. Other purchase obligations and commitments totaled approximately $600 million as of December 265,2010 (approximately $900 million as of December 26,2009) .Other purchase obligations and commitments include payments due under various types of licenses, agreements to purchase raw materials or other goods, and payments due under non-contingent funding obligations.’

Note 29 : Contingencies -

Government Competition Matters and Related Consumer Class Actions

f. Under which classifications are deferred taxes listed? What items is the most significant component of deferred taxes?

Deferred taxes are listed under the liabilities on the balance sheet and located in Note 28: Taxes.

g. What equity accounts are included on the balance sheet of Intel?

Stock, shares, accumulated other comprehensive income (loss), retained earnings