BYP6-1

Financial Reporting
Problem: Apple Inc.
The notes that accompany a companys financial
statements provide informative details that would
clutter the amounts and descriptions presented in
the statements. Refer to the financial statements
of Apple Inc. in Appendix A as well as its annual
report. Instructions for accessing and using the
companys complete annual report, including the
notes to the financial statements, are also provided
in Appendix A.

Financial Reporting
Problem: Apple Inc.
Instructions:
Answer the following questions. Complete the requirements in millions of dollars, as
shown in Apples annual report.

a) What did Apple report for the amount of inventories in its

consolidated balance sheet at September 29, 2012? At
September 28, 2013?
b) Compute the dollar amount of change and the percentage
change in inventories between 2012 and 2013. Compute
inventory as a percentage of current assets at September 28,
2013.
c)

How does Apple value its inventories? Which inventory cost flow
method does Apple use? (See Notes to the Financial Statements.)

d) What is the cost of sales (cost of goods sold) reported by Apple

for 2013, 2012, and 2011? Compute the percentage of cost of
sales to net sales in 2013.

(a) What did Apple report for the amount of

inventories in its consolidated balance sheet
at September 29, 2012? At September 28,
2013?

(a) What did Apple report for the amount of

inventories in its consolidated balance sheet
at September 29, 2012? At September 28,
2013?

September 29, 2012 September 28, 2013

Inventories

$791 million

$1,764 million

(b) Compute the dollar amount of change and the

percentage change in inventories between 2012
and 2013. Compute inventory as a percentage of
current assets at September 28, 2013.
Dollar change in inventories between 2012 and 2013:
$1,764 $791 = $973 million increase
Percent change in inventories between 2012 and 2013:
$973 $791 = 123% increase
2013 inventory as a percent of current assets:
$1,764 $ 73,286 = 2.4%

(c) How does Apple value its inventories?

Which inventory cost flow method does
Apple use? (See Notes to the Financial
Statements.)
According to Apples Consolidated Financial
Statements, Inventories are stated at the lower
of cost, computed using the first-in, first-out
method, or market. If the cost of the inventories
exceeds their market value, provisions are made
currently for the difference between the cost and
the market value.
(see Note 1 Inventories)

(d) What is the cost of sales (cost of goods sold)

reported by Apple for 2013, 2012, and 2011?
Compute the percentage of cost of sales to net
sales in 2013.

(d) What is the cost of sales (cost of goods sold)

reported by Apple for 2013, 2012, and 2011?
Compute the percentage of cost of sales to net
sales in 2013.
Year
Cost of Sales

2013

2012

2011

$106,606 million

$87,846 million

$64,431 million

2013 cost of sales as a percentage of net sales

$106,606 $170,910 = 62.4%