Please Complete the Vertical Analysis of the Income Statement Data

question 88

Essay

Please complete the vertical analysis of the income statement data shown on the form below:
$$\begin{array} { | l | r | r | } \hline \text { Dollar amounts in millions) } & { \mathbf { 2 0 1 4 } } \\\hline \text { Revenues } & \text { Amount } & \text { \% of total } \\\hline \text { Cost of revenues } & \$ 6,355 & \\\hline \text { Gross profit } & 2,370 & \\\hline \text { Operating expenses: } & & \\\hline \text { Sales and marketing expense } & 675 & \\\hline \text { General and administrative expense } & 410 & \\\hline \text { Research and development expense } & 470 & \\\hline \text { Other expense } & 400 & \\\hline \text { Total operating expenses } & \$ 1,955 & \\\hline & & \\\hline \text { Income before income tax } & \$ 1,030 & \\\hline \text { Income tax expense } & 230 & \\\hline \text { Net income (loss) } & \$ 800 & \\\hline\end{array}$$

Prepare consolidated balance sheets, including adjustments for fair value increments, amortization, and investment in subsidiary.

Understand the impact of intercompany transactions on consolidated financial statements.

Calculate non-controlling interest on the consolidated balance sheet.

Recognize and adjust for over or under-valuation of acquired assets and liabilities.

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Definitions:

Long-term Loss

A financial loss realized on the sale or exchange of an asset held for more than one year, affecting capital gains tax calculations.

Adjusted Basis

The original cost of property plus any improvements, or minus depreciation or losses, used to calculate capital gains or losses for tax purposes.

FMV

Fair Market Value, the price at which property would sell between a willing buyer and seller in an arm's length transaction.

Gift Tax

A federal tax on the transfer of property by gift from one individual to another with the donor being primarily responsible for paying the tax.