Income Statement

1. Are the expenses presented by function or nature? How does this presentation enhance your understanding of the statement?

2. What is amortization on the intangible and other assets during the year and why does amortization expense not appear as a separate component on the income statement?

3. What portion of the company's expenses are research and development? What is their policy regarding capitalization of such costs?

Balance Sheet

1. What portion of the company's assets is property, plant, and equipment? Has the portion increased or decreased from the prior year?

2. How does the company value its plant and equipment?

3. Assume that one of the subsidiaries sold equipment to the parent two years ago and reported a substantial gain. The parent still owns and uses this equipment. Due to an oversight, the intercompany gain has never been eliminated when preparing the consolidated statements. What is the impact of this error on total asset turnover and return on assets for the current year?

Cash Flow Statement

1. Does the company employ the direct or indirect method of accounting for operating cash flows?

2. What was the biggest cash outflow during the year?

3. What percentage of the companies expenses were related to stock based compensation? Why does Google use stock based compensation to encourage employees?

4. If the company had reported gains or losses on sale of subsidiaries in income from continuing operations rather than in income from discontinued operations, what impact would this have had on the company's share price? Briefly explain.