Question

Interpreting Footnotes on Security Investments
Cisco Systems Inc. reports the following information derived from its 2016 10-K report. (Note: Cisco’s 2016 disclosures are consistent with the former accounting rules for marketable equity securities. See the Accounting Insight box on page 9-6 in the textbook.)

				Accumulated
		Common Stock		Other	Total Cisco's
	Shares of	and Additional	Retained	Comprehensive	Shareholders'	Noncontrolling
$ millions	Common Stock	Paid in Capital	Earnings	Income (Loss)	Equity	Interests	Total Equity
Balance at July 25, 2015	5,085	$43,592	$16,045	$61	$59,698	$9	$59,707
Net income			10,938		10,938		10,938
Change in:
Unrealized gains and (losses) on investments, net				112	112	(10)	102
Derivative instruments				(43)	(43)		(43)
Cumulative translation adjustment and other				(480)	(480)		(480)
Other comprehensive income (loss)				(411)	(411)	(10)	(421)
Issuance of common stock	113	1,127			1,127		1,127
Repurchase of common stock	(148)	(1,280)	(2,638)		(3,918)		(3,918)
Repurchase of common stock for tax withholdings on vesting of restricted stock units	(21)	(557)			(557)		(557)
Cash dividends declared			(4,750)		(4,750)		(4,750)
Tax effects from employee stock incentive plans		30			30		30
Share-based compensation		1,458			1,458		1,458
Purchase acquisitions		146			146		146
Balance at July 30, 2016	$5,029	$44,516	$19,595	$(350)	$63,761	$(1)	$63,760

Summary of Available-for-Sale Investments
The following table summarizes the Company's available-for-sale investments (in millions).

		Gross	Gross
	Amortized	Unrealized	Unrealized
July 30, 2016	Cost	Gains	Losses	Fair Value
Fixed income securities
U.S. government securities	$26,714	$82	$(2)	$26,794
U.S. government agency securities	2,809	8	-	2,817
Non-U.S. government and agency securities	1,096	4	-	1,100
Corporate debt securities	24,044	263	(15)	24,292
U.S. agency mortgage-backed securities	1,846	22	-	1,868
Total fixed income securities	$56,509	379	(17)	$56,871
Publicly traded equity securities	1,211	333	(40)	1,504
Total	$57,720	$712	$(57)	$58,375

a. What is the amount of Cisco’s investment portfolio on its balance sheet?
$Answer million

b. What does the number $112 represent in the “Accumulated Other Comprehensive Income” column?

The amount represents an unrealized loss on trading securities that resulted from a decrease in their value during the year.

The amount represents an unrealized loss on available for sale securities that resulted from a decrease in their value during the year.

The amount represents an unrealized gain on trading securities that resulted from an increase in their value during the year.

The amount represents an unrealized gain on available for sale securities that resulted from an increase in their value during the year.

c. Compute comprehensive income for 2015.
$Answer million

Answer 1

a. What is the amount of Cisco’s investment portfolio on its balance sheet?
$58,375.00	Million
Cisco’s 2016 balance sheet reports the investment portfolio at the current market value of$58,375 million, which does include unrealized gains and losses.
b. What does the number $112 represent in the “Accumulated Other Comprehensive Income” column?
The amount represents an unrealized loss on trading securities that resulted from a decrease in their value during the year.
The amount represents an unrealized loss on available for sale securities that resulted from a decrease in their value during the year.
The amount represents an unrealized gain on trading securities that resulted from an increase in their value during the year.
The amount represents an unrealized gain on available for sale securities that resulted from an increase in their value during the year.
The $112 million is the unrealized gain on securities that arose during 2016 because stock prices increased during the year
c. Compute comprehensive income for 2015.
Net Income	$10,938.00
Add OCI/(Loss)	$(411.00)
comprehensive income for 2015	$10,527.00	million