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Preparation of Classified Balance Sheet and Multi-Step Income Statement Inc., discloses in its 2014 annual report that its top priority is to build useful and engaging products that enable people to connect and share through mobile devices and personal com- puters. Its products include Facebook. Instagram, and WhatsApp, and it generates most of its revenue through advertising. Facebook, PI-5. Required: The following is a list of accounts from Facebooks financial statements. Use this alphabetical list of accounts to prepare a classified balance sheet as of December 31, 2014 and a multi-step income statement for the year ended December 31.2014. (Hint: Identify whether the account is a balance sheet or income statement account first.)
69 For year ending 12-31-2017 In Millions 2 Facebook 3 Accounts Receivable 4 Accounts Payable 5 Accrued Expenses 6 Cash 5,832 380 $ 2,892 8,079 $ 40,811 S 5,454 7 Common Stock 8 Cost of Revenues 9 General & Administrative Expenses $ 2,517 10 Goodwill 11 Interest&Other Income 12 Long-term Liabilities 13 Marketing Expenses 14 Marketable Securities 15 Other Current Liabilities 16 Other long-term assets 17 Prepaid Expenses $ 20,105 391 S 6,417 $4,725 $33,632 488 2,135 S1,020 $13,721 18 Property & Equipment(net) 19 Research & Development Expenses 20 Retained Earnings 21 Revenues 22 Tax Expense 23 24 25 26 7,754 $ 33,536 $ 40,653 4,660
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Answer #1

Multi step Income statement:

Facebook Inc Income Statement for the year ended 31st December, 2014 Revenues Cost of revenues Gross Profit Amount in Dollars 40,653 5,454 35,199 (40,653 5,454) Operating expenses General and administrative expense Marketing expenses Research and development expenses Total Operating expenses$ 2,517 4,725 7,754 14,996 |(2,517 4,725 7,754) Operating Income 20,203 (35,199 14,996)

Multi Step income statement:

Operating Income 20,203 (35,199 14,99) Non-Operating or Other Interest& Other income Total non-operating 391 391 Income before taxes Income tax expense 20,594 (20,203391) | $ 4,660 15,934 (20,594 4,660) Net income (after tax) In a multi-step income statement, gross margin is shown as well as segregration is done between operating and non-operating income and expense and represented separately

Classified balance sheet (asset side):

Facebook Inc Balance Sheet December 31, 2014 Assets: Current Assets Cash & cash equivalents Marketable securities Accounts Receivable Prepaid Expenses Total current assets $ 8,079 $ 33,632 $ 5,832 $ 1,020 S 48,563 Other long term assets $ 2,135 Property, plant & equipment Property, plant & equipment net S 13,721 Intangible assets Goodwill Total Intangible assets $ 20,105 S 20,105 Total assets $84,524 (48,563 +2135 13721 20105)

Classified balance sheet (liabilities and shareholders equity:

Liabilities Current Liabilities Accounts Payable Accrued expenses Other current liabilities Total current liabilities $380 $ 2,892 s 488 $ 3,760 Long term liabilities $ 6,417 Stockholders equity Common stock Retained earnings Total Stockholders equity $74,347 $ 40,811 $ 33,536 Total Liabilities and stockholders equity $84,524 (3760641774347)

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