沃顿商学院全套笔记-二十-
沃顿商学院全套笔记（二十）
沃顿商学院《商务基础》｜Business Foundations Specialization｜（中英字幕） - P6：5_品牌真言-电梯演讲.zh_en - GPT中英字幕课程资源 - BV1R34y1c74c
So we just talked about brand positioning， which is the strategic part of brand positioning。
And if you really think about brands， you'll realize that although you know some great。
crisp brands， it's very hard to get to that positioning。 You can have lots of different， thoughts。
you can have different points， different target segments， different frames of reference。
lots and lots and lots of different choices。 But then you want to hone into the right， choice。
That's the trick of marketing。 To explain marketing， the concepts aren't that， difficult to grasp。
but they are very， very hard to do right。 There's lots and lots， of ways to do marketing wrong。
and only a few ways to do marketing precisely right。
And the next concept that I'm going to talk about is a brand mantra or an elevator speech。
The elevator speech you may have heard of that。 This is the way you define a brand in， 30 seconds。
So we're talking about 30 seconds worth of material。 It sounds so easy， 30 seconds。
But the truth of the matter is to get the right critical 30 seconds， the right brand。
mantra that takes lots and lots of analysis and a lot of wrong turns and a lot of wrong， ways。
If you come up with a brand mantra right away or an elevator speech right away， maybe， you're lucky。
But chances are you haven't given it enough thought。 You really do need。
to think about lots of the different positionings。 So what I'm going to suggest here， what I'm。
going to talk about is relatively easy concept to get。 But it's very hard to do well。 So。
what we want， let me tell you where we want to end up and I'll talk about how we get， to it。
We want to add up with a 30 second speech， as I said， the elevator speech or a， brand mantra。
And a brand mantra may be three words。 But I want to get down to the right， three words。
And so one of the things you do is when you're creating a brand and thinking。
about a brand or thinking about a product， a product category， there's a lot of market。
research that you can do to try to figure out what's going on in customers' hands。 And。
how do they think about the category and how do they think about different brands？ And。
one way you can think about it in order to figure out again what's the essence of the， brand。
what's the brand mantra is to develop what's called a mental map。 And what a mental。
map is a kind of a graphic with circles and arrows and things like that of what the brand， is。
And it's kind of a thought association process。 You ask the consumer what comes to。
mind when you think of the brand。 And then there's lots of different ways to do this。
And I'll just show you one， but there are a lot of different ways。 And you write down。
what the brand is， what the essence of the brand is from the consumer point of view。
what the different associations are and how those associations lead to other associations。
And some people call this mental map。 Some people call them schemas。 And there's a lot。
of different techniques you can do in these mental maps。 You can， the size of the circle。
can be how often that association is named by different people。 The lines that connect。
one circle to another circle can be the strength of those associations。 But essentially what。
you're developing is sometimes it's called a semantic associative network or a mental， map。
You're developing a picture of the thought associations that come up with the brand。
And so what I'm going to show you here is a mental map of McDonald's。 You start out。
with what differentiates McDonald's。 You think about the golden arches， the brand name。 And， then。
and this is just one person's thought process， you come up with things that are。
characteristic of the category。 And so those are the red circles。 So McDonald's makes meals。
It provides services。 It's family food， family fun。 It's good value。 And then the yellow。
circles here are the associations with each one of these points of parity， actually， frame。
of reference characteristics that are unique to McDonald's。 So McDonald's has certain meals。
What are the meals that McDonald's has？ Well， it gives hamburgers。 It has breakfast。 It， has fries。
What are the brands associated with those meals？ Egg McMuffin， a big Mac。 What's the quality？ Well。
it's always consistent。 It's fresh。 It's good tasting。 And this is， one example of a mental map。
There's lots of other ones that you can come up with。 But。
you can see the idea here is that you have circles and lines that connect these associations。
You can do this in a lot of different ways。 You can do it the closest ones to the core。
or the ones that are at top of mind that come up first， the ones that are further away， you know。
come up after a time。 And so there are a lot of things。 But what I'm trying to。
get here is all of the thought associations that come up with a brand。 And then what you。
want to do is do this over several customers and do it in market research stages several。
different ways。 And essentially you want to take all these different abstract phrases。
and concepts that are out there and figure out which are the most important， maybe five， to ten。
which are the very most important。 And so what you're doing is you're starting。
with the mental map or the associations that people have with the brand or maybe with the。
category and depending upon how well known the brand is， you might do it at a category level。
you might do it at a what if level， you might do it at a prototype level， a concept level。
or the brand level。 But you have this big mental map and then you want to hone down that mental。
map to the core brand values which are the five or ten critical brand values that are。
important to that brand。 And from that you then want to reduce those five or ten to the。
key concepts that are going to be the DNA of the brand， the brand mantra。 So the brand。
mantra is defined as the heart and soul of the brand， the DNA， it's the brand essence。
the brand promise。 And it's again goes back to that elevator speech， it's just really。
what people think of as the core of the brand。 It's very important to know this brand mantra。
because everything you do within this brand mantra， all your products that you come out。
with all your new products， all your advertising has to all fit within the essence。 The customer。
is going to know the brand mantra， the employees are going to know the brand mantra， you really。
want， if you have a very very strong brand， it's very crystal clear what that brand is。
and what it means and it characterizes everything that's done under the brand name。 And that's。
very very important。 It's particularly important nowadays as you go online， offline， websites。
phones， your brand is on lots of different things and you really want to make sure that。
the heart and the soul of the brand is consistent across all of these different media， these。
different platforms， these different products。 So what is the essence of the brand mantra？
It has three basic parts。 One part is the brand function。 It describes the nature of。
the product or service。 It describes the type of experiences， the benefits that the brand， provides。
Then there's a descriptive modifier that further classifies or clarifies the nature。
of what the brand is delivering and then there's an emotional qualifier that kind of explains。
exactly what those benefits are and in what way the brand delivers on those。
It's probably easier to give you some examples。 Before I do that though， let me just say again。
what the brand mantra is used for。 It's used internally to guide decisions。 I think already。
mentioned this。 It's what the brand shouldn't， should not be。 By the way， that's a very important。
idea。 A brand mantra not only says what a brand is but as importantly it says what， a brand is not。
And you really want to have almost black and white that idea。 This is， a Nike， this is not a Nike。
that kind of idea。 And it communicates the boundaries of the。
brand。 It has to be short， simple and it should be inspirational。 So now we have the examples。
These are very famous ones。 Nike， they're global brands。 Nike， Disney， McDonald's。 So Nike。
is authentic athletic performance。 They just do it， be real， you know， that's authentic。
It's very much an athletic brand。 It's not just shoes， it's clothing。 But when you think， of Nike。
you think about athletic and it's about performance。 The technique or the ability， to， again。
just do it， that kind of notion。 Disney and McDonald's are kind of interesting。
because they both are about family fun。 And they actually both have a lot of things in。
common but the brand mantra is different。 Disney is about entertainment。 Now that is。
not to say that Disney doesn't have food。 Disney sells quite a bit of food at their parks。
and in different places that they have。 But when you think Disney， you think fun， family。
entertainment。 And even the food comes within that brand mantra of Disney， of entertainment。
McDonald's on the other hand is fun and family but it's food。 And even if you have a McDonald's。
playground or something like that， you still think of it as the food first。 And so although。
these are similar and， you know， in some sense， you can see they're actually also quite， quite。
different。 And I don't think you'd ever get Disney and McDonald's confused。 Even though。
they're going after similar target markets and they're offering similar emotional benefits。
they really are quite， quite distinct， different brands。 And they have very different brand。
mantras。 [Music]， (gentle music)。
沃顿商学院《商务基础》｜Business Foundations Specialization｜（中英字幕） - P60：12_2 3 2 调整分录 II.zh_en - GPT中英字幕课程资源 - BV1R34y1c74c
Hello， I'm Professor Brian Boucher。 Welcome back。 This video is part two of our look at adjusting journal entries。
Hopefully this sequel will be an Empire Strikes Back type sequel and not a Mannequin 2 type， sequel。
Anyway， let's get to it。 Okay， let's do some practice with adjusting journal entries。
I will give you a series of related transactions。
Some of them will be cash transactions that happen during the regular operating period。
of the company。 And then other times we'll look at the fiscal year end and then ask the question about。
whether there's an adjusting entry needed and if so， what it would be。 As always。
the pause icon will appear if you want to pause the video and try to come up。
with the journal entry before I give it to you as the answer。
Let's get started。 On September 30th， BOC loans $100，000 to an employee at a 12% interest rate。
This is a cash transaction that's happening during the fiscal period。
BOC is loaning $100，000 cash。
Cash is going down， so we credit cash for $100，000。
The debit here is going to be an asset called Notes Receivable。
It's receivable because the employee owes us $100，000 of cash in the future。
We don't want to call it accounts receivable because we only use that for customers， so。
we call it Notes Receivable。
December 31， it's the end of the fiscal year and no principal or interest payments have。
yet been made。 Do we need an adjusting entry and if so， what would it be？
We do need an adjusting entry in this case because three months has gone by and we haven't gotten。
paid any interest， but we've earned interest revenue。
We've earned interest revenue because we've provided the service of having the money outstanding。
to the employee over the past three months。
We have a contract where we're eventually going to get paid， so it meets both the earned。
and realized criteria。 We're going to recognize interest revenue。
We recognize revenue with a credit。 We credit interest revenue for $3，000。
The debit is again going to be a receivable and we're going to be specific here and call。
it interest receivable because the asset is that we're owed cash for interest。
We don't want to call it Notes Receivable because we're only going to use that for the。
principal part and of course we don't want to call it accounts receivable because we only。
use that for customers。 How did you come up with $3，000 as the amount of interest revenue？
Let me show you。 We have a hundred thousand of principal and a 12% interest rate。
Anytime you see an interest rate， you should assume it's an annual rate unless it specifies。
otherwise。
So， a hundred thousand times 12% is 12，000 of interest per year， but it hasn't been a year。
yet， so we take 12，000 times 3/12 because it's been three months and we end up with $3，000。
of interest for the three months。
Now it's January 6th， the employee sends a check for three months of interest on the loan。
This is a cash transaction happening in the next fiscal year。
We're receiving cash， so we're going to debit cash for 3，000 because we're receiving the。
interest receivable that was owed before and if we're receiving the interest receivable。
it's no longer receivable so we need to get rid of that account so we credit interest。
receivable to reduce that asset by 3，000 since we've now received the check。
Next set of transactions。 So， it's December 31st。
It's the end of the fiscal year。 During December， employees earn $400，000 in salaries。
but paychecks do not get issued。
until January 2nd。
It's the end of the fiscal year， so we have to ask ourselves whether we need an adjusting。
entry。 We do in this case because we've had employees work for us， even though they haven't been。
paid， we have to recognize an expense for the amount of salaries that they earn during。
December。 So we're going to create an expense and we create an expense with a debit。
Debit salary expense for $400，000。
We haven't paid them cash， but we owe cash。 We have an obligation to pay them for the time they worked。
The obligation sounds like a liability， and in fact it is so we credit salaries payable。
liability for $400，000。
What do you mean by earned salaries？ I thought earned was one of the revenue recognition criteria。
This is an expense。 Yes， earned is one of the revenue recognition criteria。
And from the perspective of the employee， the employee earned salary revenue。
The employee provided service， they have an agreement to get paid， so it's revenue for。
the employee， and what is revenue for the employee is an expense for the employer， which。
is why this is salary expense。 Now it's January 2nd， and the paid checks are sent to the employees。
If we've sent checks that means we've paid cash， so we're going to credit cash for $400，000。
By paying the cash， we've gotten rid of the obligation to pay their employees， so we have。
to reduce the liability。 We reduce liabilities with a debit， so we debit salaries payable for $400。
000。
Next series of transactions。 On November 20th， BOC pays $10，000 for December's rent。
So BOC's paid cash， their cash has gone down， so we need to credit cash for $10，000。
The debit is going to be to an asset called prepaid rent。
It's an asset because we're either going to get the benefit of occupying the space in。
the future or we're going to get our money back。 So either way。
we create an asset called prepaid rent for $10，000 at this point。
Now it's December 31st。 It's the end of the fiscal year。 Do we need an adjusting entry？
And if so， what would it be？
We do need an adjusting entry because December has gone by and we've occupied the space for。
the month of December。 The prepaid rent is no longer prepaid， it's been used up。
So we have to create an expense for the amount of rent that we've used up。
We create an expense through a debit， so we debit rent expense for $10，000。
Our rent is no longer prepaid， so we have to get rid of that asset。
We get rid of an asset with a credit， so we credit prepaid rent for $10，000， which brings。
the balance down to zero。
Next set of transactions。 So it's June 30th。
A customer pays BOC $60，000 for a three-year software license。
So in this example， BOC is a company that sells software。
We've received $60，000 cash as BOC， so we need to debit cash for $60，000。
But BOC hasn't delivered any of the software yet， so they can't recognize revenue。
Instead， they have to create an obligation or a liability for their responsibility to。
deliver the software over the next three years。
So we create a liability with a credit， credit unearned software revenue for $60，000。
So now December 31st， it's the end of the fiscal year， is an adjusting entry needed。
and if so， what is it？
We do need an adjusting entry because six months of that three years has gone by， and。
as time goes by， we get to recognize revenue for the amount of time that's passed。
So we're going to credit software revenue for $10，000 to recognize six months worth of。
revenue。
This in turn has to reduce the liability。 We reduce the liability with a debit。
debit unearned software revenue for $10，000。
So after this transaction， the balance and unearned software revenue would be $50，000。
which is our obligation to deliver software over the next two and a half years。
I know why the answer is $10，000， but maybe you should explain it with the other views。 Sure。
I'm happy to explain how to get $10，000 for the other viewers。 BOC is going to earn $60。
000 of revenue over three years。
Assuming they earn it on a straight line basis， that's $20，000 per year。
It hasn't been a year， it's only been six months。 So $20，000 times one half is $10。
000 and BOC gets to book $10，000 of revenue for the six。
months。
Next series of transactions。 It's June 30th。 BOC purchases a building for $500，000。
The expected life of the building is 20 years and its expected salvage value is $100，000。
At this point， we have to account for purchasing the building， but we're not going to do any。
depreciation yet because we just bought the building。
We paid $500，000 cash， so we credit cash $500，000。
We received a building， a building's an asset， so we debit building for $500，000。
Now it's December 31st。 It's the end of the fiscal year。
Is an adjusting entry needed？ And if so， what is it？
We do need an adjusting entry to recognize the depreciation for six months。
The format of the depreciation expense journal entry always looks like this。
We debit depreciation expense to create the expense。
And then we credit accumulated depreciation。
Remember accumulated depreciation is a contra asset account。
That's where we're going to store up the depreciation over time。
We're not going to directly deduct it from the building account， but instead we're going。
to put it in this contra asset called accumulated depreciation。
Because it's a contra asset， a credit increases the account， increases the contra asset， which。
in turn is reducing total assets。 Now we did $10，000 as the number。
Where did we get that from？ I've got that one on the slide。 So the building originally cost $500。
000 and the salvage value was $100，000。
So we're using up $400，000 of value over time。
We're doing it over 20 years， so that's 20，000 of depreciation per year。
But it's only been six months， so we need to take the 20，000 divided by two to get $10，000。
of expense for the six months。
What if your salvage value or useful life estimates are wrong？
How can you possibly know what a building will be worth in 20 years， or even that you。
will use it for 20 years？ Both the useful life and salvage value are managers' best estimates at the time they。
buy the building of how long the building will last and how much it will be worth when。
they're done with it。 Like all estimates， they will almost certainly be incorrect。 But at any point。
if the manager gets better information， they can revise their estimates。
So if they think they're going to use it longer or shorter than they originally thought， they。
can extend or reduce the useful life and then just change the depreciation expense going， forward。
And then when they decide to sell the building， if it's not worth the salvage value， then。
we'll just book a gain or loss when we sell it。 And we'll see this play out more later in the course。
Okay， last set of transactions。 It's December 31st。
BOC still has an outstanding order for $300，000 of products that will be delivered and billed。
in January。 Do we need an adjusting entry at this point？
We do not need an adjusting entry at this point。
We haven't earned any revenue because we haven't delivered any goods or services this。
year。 We haven't collected any cash so we don't have to account for any cash that we've received。
So basically， there's no transaction yet。
Everything's going to happen in the future， so there's no adjusting entry needed at this。
point。 Okay， so we can't record rather than you yet。
Is there any way that we can let people know about this all then？ Yes。
companies can always voluntarily disclose additional information that they're not allowed。
to recognize in the financial statements。 For example。
companies often disclose the order backlog in their annual report。
The order backlog is a disclosure of the number of outstanding orders the company has that。
haven't gotten to the point yet where the company could book revenue from them。
So the investors can use this disclosure to find out about upcoming orders even though。
they haven't yet shown up on the balance sheet or the income statement。
Here's a quick graphical overview of adjusting entries before we wrap up the video。
Think about a timeline where we have cash transactions that happen at different times。
than we recognize revenues or expenses。
The deferred revenue and deferred expense occur when we have a cash transaction before。
we recognize a revenue or expense。 So if we receive cash before we can book revenue。
we need a liability， an unearned revenue liability。
to bridge the gap。 Or if we pay cash before we record an expense， we need an asset。
a prepaid asset to bridge。
the gap。
For accrued expenses and accrued revenue， now the expense and revenue recognition is happening。
before the cash transaction。 If we have to recognize an expense before we pay cash。
we need a liability to bridge the。
gap and that liability is going to be a payable。
If we book revenue before we receive cash， then we need an asset to bridge the gap and。
that asset is going to be a receivable。
So all of the adjusting entries that we talk about are going to fit into one of these four。
categories。
Now that we've done examples of all the possible types of adjusting journal entries， I can't。
think of anything better to do than do more practice with them。
And that's what we'll do in the next video when we continue the relics Potter case。
I'll see you then。 See you next video。 Bye。
沃顿商学院《商务基础》｜Business Foundations Specialization｜（中英字幕） - P61：13_2 4 1 文物寻宝案例部分 4a.zh_en - GPT中英字幕课程资源 - BV1R34y1c74c
Hello， I'm Professor Brian Buchay。 Welcome back。 In this video。
we're going to take what we learned about adjusting entries and apply。
them to the Relic Spotter case。 Let's get started。
In prior videos， we did all 20 transactions that occurred during Relic Spotter's first。
six months of operations。
Now it's 5 p。m。 on the last day of the fiscal year， December 31。
We're not going to record any more transactions without CIDERS。
But before we put together the financial statements， we have to record the internal。
transactions or adjusting entries。
As in prior videos， I want to try to record the journal entry and post a T account for。
each required adjusting entry。 I will again put up the pause sign so that you can try the journal entry yourself before。
I reveal the answer。
Transaction 21。 When Park called her account on December 31， 2012。
she was pleased to tell them that。
the company had 78，800 in cash。 By the way， before I go on， if we pull up the cash T account。
add it up the debits， add it。
up all the credits， you could see that the balance is 78，800。
That's not going to change because all of these adjusting entries will not involve cash。
We'll be back to the transaction。 Park wanted to go out and celebrate。
but the account reminded her that she needed to stay。
in to do adjusting entries。 For example， even though it wasn't paid in cash。
a crude interest on the mortgage was。
$4，900。
The adjusting entry here is that we have to recognize interest expense that we've incurred。
by having the mortgage outstanding during the year。
To create an expense， we're going to debit interest expense for 4900， which is the number。
provided in the transaction。
And we're going to have to recognize a liability because we have an obligation to pay the bank。
cash for this interest sometime in the next period。 So we create the liability with a credit。
Credit interest payable for 4900。
What does the word accrued mean？ And why is this an expense if the bank hasn't made us pay the interest yet？
Let me check my dictionary。 Accrued means to accumulate， grow or increase as interest on money。
And that's exactly what happened here。 The loan was outstanding for eight months。
And so the interest accumulated or grew or accrued for eight months。
Even though we haven't paid that interest in cash， we have to expense it because the money。
was outstanding during this period。 So that interest cost is a cost of doing business this period and we need to match that cost。
to the revenue we generated。 So we need an expense which we create through the adjusting entry。
Then we need to post this to T-accounts so we create an interest payable liability。
This will go on the balance sheet to show that we have this obligation to pay interest。
in the future on the end of the year。
And we create an interest expense to recognize that one of the costs of doing business this。
period was that we've incurred interest costs。
Transaction 22。 The accountant said that depreciation needed to be recorded on the building。
Park was confused by this because she received an unsolicited letter from a mortgage broker。
informing her that the building had increased in value to $120，000。
Now recall that in transaction number five Park had renovated the building bringing its。
original cost to $85，000。
She also determined that the useful life of the building was 25 years with an expected。
salvage value of $10，000。
So for the adjusting entry， remember the format that we use for depreciation expense。
We debit building depreciation expense for $1，500。
We debit the expense to create it。 And then we credit accumulated depreciation。
It's the contra asset where we're going to store up the depreciation over time。
Now where we get the $1，500 is we take the difference between the original cost of $85，000。
and the salvage value of $10，000。 So that $75，000 we're going to depreciate over time divided by 25 years of life would。
be 3，000 of depreciation per year。 It hasn't been a year yet。
The business has only been open six months。 So we take half a year to get the $1，500。
The building was purchased in April and during the day。
Why are we recording only six months of depreciation？
You are correct since we finished the building seven months ago we could have recorded seven。
months of depreciation。 But I chose to do six months because relic spotters only been open for six months and。
I'm trying to match the cost of the building with the revenue we generated。
Plus the math was a lot easier with six months rather than seven months。
And what about the letter from the mortgage broker？ If his building is worth $120，000。
why are we depreciating it？ For non-financial assets like buildings。
we use an accounting method called historical， cost or amortized cost。
What this means is that if the value of the building goes above what is listed on the。
balance sheet， we never write it up。 But if the value of the building drops below what it is on the balance sheet。
we write it， down。 This is an example of the conservative。
I mean the non-aggressive nature of accounting where。
we tend to err on the side of objectivity or reliability。
Because if we allowed managers to write up something that's hard to value like a building。
there'd be too much opportunity for manipulation so we only allow them to write it down in value。
And I don't know what the specific principle is called in accounting， but we never rely。
on values from unsolicited letters or mortgage brokers， which is probably a life lesson that。
you should carry out beyond this course。 We post this journal entry to T-accounts。
We create a T-account for cumulative depreciation as a contra asset。
It is a credit balance and then a T-account for building depreciation expense。
Transaction 23。
The accountant also noted that Park needed to record depreciation on the metal detectors。
Recall that in transaction number six， Park purchased $120，000 of metal detectors。
She determined that they would only last for two years at which time they'd have no remaining。
value。
The metal entry has the same format as the last transaction。
We debit metal detector depreciation expense to create the expense。
And we credit accumulated depreciation to increase the contra asset where we store up depreciation。
over time。 Where do we get 30，000 from？ The metal detectors originally cost 120，000。
They have no salvage value， so we're taking that entire 120，000， spreading it over two。
years to get 60，000 per year。 But it's only been half a year。
so the amount that we depreciate is 30，000。
So why do you have separate accounts for building and metal detector depreciation expense？
But you only have one account for accumulated depreciation？
You'll see why when we get to the video on financial statements。 But as a little preview。
what you'll see is when we do the income statement， building。
depreciation expense and metal detector depreciation expense are going to go into different parts。
of the income statement， so we need to keep track of them and separate accounts。
But when we do the balance sheet， there's just going to be one line for all of the accumulated。
depreciation so we can throw it all into one account。
We post this to T-accounts by putting another credit entry and accumulated depreciation and。
creating a T-account for metal detector depreciation expense。
Transaction 24， the accountant-， Thank you for reminding me about the land。
There's a long-standing tradition in accounting where we don't depreciate land。
We don't assume that land is systematically used up to generate revenue。
So as long as the value of the land is at or above what it's carried on the balance sheet。
we just leave it at its original cost。 But if the value of the land dropped below what it was on the balance sheet。
we would， write it down to that value， but we wouldn't systematically depreciate it over time。
That's why when we originally bought the land and building together， we had to separate how。
much of the value was from the land and how much was from the building。
The amount of value from the building is hitting the income statement over 25 years as it's。
depreciated， whereas the value that's put in the land account will never hit the income。
statement as long as the value of the land stays at or above that level。 Let's try this again。
Transaction 24， the accountant continued。 What about adjusting the software amortization account？
Recall that in Transaction Number 8， Park paid the $2，100 three-year software license fee on。
June 30th。
When the software is an intangible asset， we're going to use the term amortization instead。
of depreciation。
So we're going to debit software amortization expense for $350。
And then because it's amortization， I'm going to credit the software account directly。
to recognize the amortization。 Where does the $350 come from？
Well we paid $2，100 for a three-year license， so that $700 per year of amortization。
It hasn't been a full year， so we take half a year of that to get $350。
Wait， why do you reduce the software account directly instead of creating an accumulated。
data acquisition account？ Yeah， as I mentioned in a prior video。
the historical tradition is that for amortization。
we just reduce the intangible asset account directly instead of creating a separate accumulated。
amortization account。 And I think historically we've done that because intangible assets have not been that。
big of a deal on the balance sheet。 But nowadays， more and more companies are starting to have larger and larger intangibles。
And you will see more and more accumulated amortization accounts。
But I wanted to show you the old-fashioned way because you still will see this practice。
quite a bit of just directly reducing the intangible asset account instead of creating。
an accumulated amortization。 But you can see it either way。 We post this one of T-accounts。
We directly reduce the software account with a credit and then we debit a software amortization。
expense account。 Wow， we've only done four of the eight adjusting journal entries for a relic spotter and we've。
already recorded 12 minutes of video。 I guess the virtual students have a lot to say today。
So I'm going to end the video here and then we'll pick up in the next video with the last。
four adjusting journal entries for a relic spotter。 I'll see you then。 See you next video。
[ Silence ]。
沃顿商学院《商务基础》｜Business Foundations Specialization｜（中英字幕） - P62：14_2 4 2 文物寻宝案例部分 4b.zh_en - GPT中英字幕课程资源 - BV1R34y1c74c
Hello and Professor Brian Buchay， welcome back。 In this video we are going to wrap up the final four adjusting entries for RelicsVotter。
Let's get started。
Transaction 25， the accountant asked， "What about the prepaid advertising account？"。
Recall that in transaction number 9， Park paid $8，000 up front on June 30th， 2012 for。
advertising through June 30th， 2013。
We need an adjusting journal entry to recognize an expense for the six months of advertising。
that has been used up between June 30th， 2012 and December 31， 2012。
So we debit advertising expense to recognize the expense。
And then we have to credit prepaid advertising to reduce the asset so that its balance now。
is how much is prepaid going forward。 I got 4，000 by taking 8。
000 that we prepaid for a year and realizing that half a year。
has gone by so if you take half a year of 8，000 it's 4，000 for six months。
How do you know that half of the prepaid advertising has been used up？
What if most of the adverts ran in the first few months？ Then， more than half has been used up。
For deferred expenses such as a prepaid asset， we allow managers to either allocate it based。
on time as we're doing here or based on usage。 For example。
if the manager thought that the company would have 50 advertisements run over。
the next year and so far this period， 30 advertisements have run， then what the manager would do is。
take 3/5 of the prepaid asset as an expense this period and defer the remaining 2/5 to， next period。
So， we allow managers to choose whichever method they want either usage or time based on what。
they think would best match the business activities of the company。 I hate to break this to you。
but there's often no true or correct way to do something in， the accounting system。
I often characterize adjusting entries as the creative writing part of the accounting system。
We give managers discretion on how to do their adjusting entries because we want them to。
best capture the true economics or the true business activities of the company。 In other words。
we give some creative writing to the managers hoping they'll write better， non-fiction books。
But of course， there have been cases where managers have abused this discretion where they've。
used the creative writing part to write better novels or fiction books。
What you have to do is learn as much accounting as possible so that you know what the options， are。
Then think about managers and incentives to manipulate in a given situation and approach。
the financial statements with a healthy degree of skepticism which you often need to do。
We post this to T-accounts so we post a credit to prepaid advertising。
Now the balance will be $4，000 which is how much is prepaid as of December 31 and we create。
an advertising expense T-account with a debit balance。
Transaction 26， the accountant asked， "What about the notes receivable account？"。
Recall that in transaction number 10， Park borrowed $5，000 from Relic spotter at a 10%。
interest rate on June 30， 2012 with the principal and interest due an alump sum on June 30， 2013。
We need an adjusting journal entry to recognize the interest revenue that we've earned by。
providing the money outstanding for six months。
So we're going to credit interest revenue for $250。
The debit here is going to be an interest receivable to represent the fact that Rebecca。
Park owes us $250 in cash。
Now where the $250 comes from is the total interest is going to be $5，000 a principal times。
a 10% annual interest rate is $500 of interest per year but it's only been six months so we。
take half of that to get $250。 Why isn't all $500 of interest considered interest receivable？
Aren't we going to receive that much in interest between now and June？ Actually。
all $500 of interest is not necessarily receivable between now and June。
Let's say Santa Claus brought Rebecca Park $5，000 as a Christmas gift so on January 2。
she decided to come in and repay the loan。 On that date she wouldn't owe us $500 of interest because that's for a year and it's。
only been six months。 She would only owe the $250 of interest that have been accrued so far。
So the other $250 is not necessarily receivable unless the money continues to stay outstanding。
for the next six months so we can't consider it receivable as of December 31。
Then we post this journal entry to the interest receivable and the interest revenue T accounts。
Transaction 27， the accountant asked， "What about the unearned revenue account？"。
Recall that in transaction number 15， the Penn Antiquities Club paid relic spotter $1，200。
cash up front on December 1， 2012 for unlimited rentals over the next year。
We need an adjusting entry here to recognize the revenue we've earned by providing one。
month of unlimited rentals so we credit rental revenue for $100。
Part of our obligation has gone down by delivering one month of unlimited rentals so we need。
to reduce our liability。 We debit unearned rental revenue to reduce this obligation。
Where does the $100 come from？
We got $1，200 up front for a full year。
One-twelfth of a year has gone by so we only recognize $100 of that $1，200 during the first。
month。 Could this revenue be recognized based on the number of rentals instead of based on time？
But wait， with the contract allowing unlimited rentals。
It would seem fishy to do this based on the number of rentals。 Yes。
it would seem fishy if the allocation was done based on number of rentals instead。
of time when you have a contract which provides unlimited rentals。 Yes， you're starting to get it。
It's important to understand what the actual business activities of the company are and。
then you can see whether the accounting is matching those business activities。
If the accounting matches the business activities as it does in the relic spotter case， then。
you can continue to feel comfortable with managers。
But if you saw a mismatch like unlimited rentals being accounted for based on number of rentals。
in the period， then you start to get skeptical about whether managers are manipulating or， not。
We post this to T-accounts。
We put a debit and an unearned rental revenue。 So now the balance in this liability is going to be $1。
100 which represents how much of an。
obligation we have on December 31st。
We have to deliver 11 more months of unlimited rentals。
And then we add a credit to the rental revenue T-account。
And finally， did I ever mention that the word finally is my favorite word in the accounting。
language？ Let's try this again。 Transaction 28。
Finally， the account noted that relic spotter incurred an estimated income tax expensive。
$630 for 2012。 Park was confused by this because she did not do her taxes until April。
We do need an adjusting journal entry here。 Even though Park is not going to file her taxes until April。
she is incurred taxes by。
operating the business during 2012。
And we have to show an expense because that's a cost of doing business。
So we're going to debit income tax expense for $630。 This is money that we owe the government。
That's an obligation。 So we need to credit a liability income tax payable for $630。
Then we post this to T-accounts。
We create an income tax payable so that we can show on our balance sheet that we owe the。
IRS $630 of taxes as of December 31。 And we create an expense account income tax expense which has a debit balance。
There's no adjusting entry for par value。
We only worry about par value when we issue new stock。 But glad you came anyway。 Okay。
now that we've finished all the adjusting entries for relic spotter， all we need to do。
is learn about financial statements and closing entries。
And then we can start doing the balance sheet and income statement for relic spotter。
I'll see you next time。 See you next video。 Bye。
沃顿商学院《商务基础》｜Business Foundations Specialization｜（中英字幕） - P63：15_2 5 财务报表和期末分录.zh_en - GPT中英字幕课程资源 - BV1R34y1c74c
Hello， I'm Professor Brian Boucher。 Welcome back。 In this video。
we're going to go to the last two stops on the accounting cycle， financial。
statements and closing entries。 Then we'll go right into the relic spotter case and do the balance sheet and income。
statement and closing entries for relic spotter。 Let's get started。 Last video。
we completed the adjusting entries for relic spotter。
Now we can move on to the next two steps in the accounting cycle， putting together an。
adjusted trial balance and preparing financial statements。
The adjusted trial balance is we just add everything up after doing adjusting entries。
and make sure our debits equal our credits。 Then we're going to use those balances to put together financial statements。
We're going to do the income statement first。 Then we can use that income to update retained earnings and prepare the balance sheet。
And then finally， we'll complete the statement of cash flows and the statement of stockholder。
equity。 Are you ever going to cover the statement of stockholder's equity？ You keep putting it off。
Yes， I will eventually cover the statement of stockholder's equity， but I'm not going。
to tell you when。 You need to keep watching the videos because you never know when it's going to finally。
appear。 The income statement generally has the following format。
And I say generally because there's no hard and fast rules on how the income statement has， to look。
but what you're going to see is the most common format used by companies。 On the top line。
we have revenues or sales。 And this is going to be revenues or sales from whatever you define as your core business。
So when we get to relic spotter， it will be rental revenue for metal detectors and the。
sales of sundries。 Then we subtract cost of goods sold to get gross profit。
Cost of goods sold is the product costs or the direct costs of producing this revenue。
And then gross profit then would be interpreted as the markup over the product costs。
Then we subtract operating or SG&A expense to get operating income。
SG&A stands for selling general and administrative。 These are all the period costs。
all the other costs of running the business。 Operating income would be a picture of the profitability of the core business。
It helps answer the question of whether the company price their product or services high。
enough to cover all the product and period costs of delivering those goods or services。
After operating income， we subtract any interest expense or interest income and then we adjust。
for gains or losses。 Gains or losses we haven't talked about yet。
but they're like revenues or expenses except， they don't come from your core business。 For example。
if relic spotter sold their building and had a gain， we would put that gain。
here because they're not in the business of selling buildings。 After you make those adjustments。
you get pre-tax income。 Then you subtract income tax expense to give you bottom line net income。
which is also called， earnings or net profit。
You know， I always hear my boss talking about things being above the line or below the line。
Is that magical line on this income statement？ Yes， that magical line is operating income。
Most investors and analysts use operating income as a key measure of the performance of the。
core business。 So if the company has some kind of unusual expense。
managers will see is there any way， that they can move it below the operating income line so that the performance of the。
core business looks better。 So， yeah， managers spend a lot of time worrying about whether unusual gains or unusual expenses。
will appear above or below this magical operating income line。
For the balance sheet format， assets are listed first and they're listed in the following order。
First we see current assets。 These are assets that are going to provide benefits within the next year。
And they're ordered by liquidity， which is how readily they can be converted to cash。
So we always see cash come first， then accounts receivable， inventory， and then any prepaid。
assets which actually never convert to cash。 They're just deferred expenses。
Then we have non-current assets， including the tangible assets， the property plant equipment。
and then the intangible assets which would be things like software， trademarks， or this。
thing called Goodwill which we get from an acquisition。 And we'll talk about later in the course。
Then come liabilities and stockholders' equity。 Starting with current liabilities which are obligations within the next year。
Again， ordered by liquidity， so we'll see bank borrowings， accounts payables and other， payables。
and then deferred revenues and other non-cash current liabilities last in， the section。
Then we'll have non-current liabilities。 These are liabilities that are due beyond a year。
So longer term bank borrowings and bonds。 And then other types of liabilities like deferred taxes which we'll talk about later。
And pensions。 Then we have stockholders' equity where we start with the contributed capital， so the。
common stock， the additional paid in capital， the treasury stock， and then retained earnings。
Hmm。
I guess the virtual students went out for virtual coffee。 Oh well， let's continue。
When we finish the financial statements we're ready for the last stop on the accounting。
cycle which is closing entries。 This allows us to get ready to start a new period so that we can do the cycle over and。
over and over and over and over and over again for the whole life of the company。
Closing entries involve closing temporary accounts。 What's a temporary account？
It's an account that accumulates the effects of transactions only for a certain period of。
time so either fiscal quarter or fiscal year。 These would be the revenue and expense accounts which then get closed out to retained earnings。
at the end of the period。 Permanent accounts are the accounts that accumulate the effects of transactions over the life。
of the business。 These would be the balance sheet accounts like assets， liabilities。
contributed capital， and retained earnings。 The actual closing entries are internal transactions that zero out temporary accounts at the end。
of the accounting period。 Again， by internal transactions we mean this is the accountant sitting at his or her desk。
These are not transactions with outsiders。 And the goal is to transfer the balances in the revenue and expense accounts and retained。
earnings。 So the way the entries look is for revenues we want to zero out the revenue account。
Revenue accounts have credit balances so if we debit them we're going to zero them out。
And then we credit retained earnings which moves the balance from revenue into retained， earnings。
For expenses expenses have debit balances。 To zero them out we want to credit them so we credit expense accounts and debit retained。
earnings。 And notice in both cases we're not creating any new stockholders equity we're just transferring。
it from one type of account to another from the temporary accounts to the permanent account。
retained earnings。 Then my grandpa tried to teach me accounting when I was five。
He said something about an income summary account as part of closing entries。 Where is it？
Hey that happened to me also。 Yeah， there are still some textbooks that use income summary accounts。
This is a very temporary account and what happens is you close the revenue and expense。
accounts in the income summary and then you close income summary into retained earnings。
With the net effect being that there's only one entry that goes into retained earnings。
instead of the two that we used in our approach。 But you get to the same place so it really doesn't matter which approach you use。
I like not using the income summary approach because it's just more straightforward and。
not create a new account。 After the closing entries we do a post closing trial balance so we add everything up to make。
sure our debits equal our credits。 At this point only the permanent account should have balances。
all the revenue and expense， accounts should have a zero balance and now we're ready to start the next period。
We're going to do to finish up the relic spotter case is we're going to prepare the adjusted。
trial balance， put together an income statement， record the closing entries and post them to。
the T accounts and then prepare the balance sheet。
I'm going to switch over to Excel to show you how all this stuff works。
We go back to a page of T accounts and we have more things filled in so accumulated depreciation。
is now filled in after the adjusting entries。 We can see the adjustment to the software account that we made and then for expenses and revenues。
we have more than filled in so again like building depreciation expense， interest revenue filled。
in through the adjusting entries。
Then we go to our trial balance spreadsheet and we put in the debits and credits for all。
the adjusting entries and then the balances after we've adjusted for the adjusting entries。
As we put everything in move of the balances over， we want to make sure that for just the。
adjustments alone our debits equal our credits which they do and the balances after doing。
adjusting entries are debits equal our credits。 We haven't made any mistakes we're fine at this point。
Now what we're going to do is take all of these revenue and expense accounts which are。
summarized right here on the trial balance worksheet and put them in the income statement。
format。 So we start out with relic spotters income statement for the year ended December 31 2012。
and it's important to note that it's for an entire year because income statements are。
always for a period of time。 We have to let people know what the period is。
For revenues I've split the revenues into two categories rental revenue and sales of。
sundries that's because relic spotters has two lines of business and so we want to highlight。
the revenues from the two different lines。 Then we need the cost of revenue so these are like the product costs。
Cost of goods sold of course matches up with the sundry sales but what was tricky is to。
figure out what's the cost of goods sold for rental revenue which is essentially a service。
What I decided was the direct cost of providing that service was the metal detector depreciation。
expense and the software。 So included those in cost of revenue to get gross profit which is the markup over cost。
that we got in our revenue。 Then we take off selling general and administrative expenses so these are the period costs salaries。
and wages legal fees advertising and building depreciation gives us total SGA and then our。
operating income and operating income is the profitability of our core business was the。
pricing of our product and service high enough to cover all the product costs for our core。
business and all the period costs and in this case it was。
Then below the operating income line we have interest revenue and interest expense。
We don't put interest revenue on the top line because our core business is not making loans。
we're not a bank so we put it below operating income and then interest expense typically。
goes below operating income as well。 That gives us pre-tax income we subtract income tax expense and we have a net income of 2370。
One more thing I want to point out before we leave the income statement is I separated。
depreciation expense into two buckets the metal detector depreciation expense is part。
of the direct cost of providing the rental service whereas the building depreciation is。
part of the selling and administrative function and so you'll see this a lot where depreciation。
may need to be put in two different categories because it's going to show up in two different。
places on the income statement。 So that's a wrap for the income statement。
I guess I should have let the virtual students know that they're allowed to drink virtual。
coffee in the virtual classroom so that they could have come back in time to see the closing。
entries in balance sheet for relics Potter。 Oh well at least you get to see it。
To see how the closing entries work let's go back to our T accounts。
So if we look at something like rental revenue after we did our adjusting entries and of course。
the entry during the period there was a credit balance of a hundred and twenty four thousand。
four hundred。 What the closing entries going to do is debit rental revenue so that the balance is zero。
If we look at advertising expense after doing the adjusting entry the balance was four thousand。
that went on the income statement。 The closing entry is going to credit advertising expense for four thousand which will zero it。
out。 So we do that for all the T accounts and we get these two big whopping journal entries。
So for the closing entries for revenues we debit all the revenue accounts which is going。
to zero them out and then we add them up and credit the balance to retained earnings。
For expense accounts we credit all the expense accounts to zero them out total them up and。
then that's the debits retained earnings。 So if we go back over to our retained earnings T account here's the closing entry that transfers。
all the revenues into retained earnings。 Here's the closing entry that transfers all the expenses into retained earnings。
Now those expenses and revenues are going to live in retained earnings forever。
We can come up with a final balance for tain earnings which is a debit balance of one thirty。
So even though we had positive net income we had more revenues than expenses we paid。
that big dividend and the dividend was bigger than our net income so we have a debit balance。
We have negative retained earnings。 That's okay remember retained earnings is one of the few accounts that can have it either。
a debit or credit balance。 After posting everything to T accounts we can go back to our trial balance worksheet where。
we add a couple columns for the closing entries and the post closing trial balances。
Notice for the permanent accounts you have the post closing balance is the same as the。
adjusted balance because we didn't do anything。 The only permanent account that's affected of course is retained earnings and then the。
closing entries also operated on revenues and expenses。
And if you look at the post closing trial balance you see that now all the revenue and。
expense accounts are at zero and it was retained earnings was the only balance that was affected。
by this process。 Now we're going to take all the balances of the permanent accounts and put together a。
balance sheet。 So we have the relic spotter incorporated balance sheet。
Notice a balance sheet is a point in time so we have December 31， 2012。
We start with assets and list all of our current assets in order of liquidity。
Then we follow up with tangible assets and this is the typical treatment where land building。
and metal detectors are listed at their original cost and then in one line item we subtract。
the accumulated depreciation to report something called net property plant equipment。
I've always found this a little misleading because we're really not depreciating land。
but it looks like we are but hey we've done this way for 4th century so who am I to complain。
Anyway then we have the intangible assets like software and that will give us total assets。
For liabilities and stockholders equity we have the current liabilities so the obligations。
in the next year ordered by liquidity。 Non-current liabilities so liabilities beyond a year。
For stockholders equity we have common stock and additional paid in capital and then retained。
earnings which I don't know we may want to call accumulated deficit since it's negative。
but I guess it's okay to call it retained earnings as well。
Gives us total stockholders equity and then our total liabilities in stockholders equity。
equals our total assets and we're done with the balance sheet。
In future videos later in the course we will continue with relic spotter to put together。
a statement of cash flows and then eventually we'll talk about a statement of stockholders， equity。
And with that we wrap up the basic building blocks section of the course。
All of the things that we've learned so far we're going to use over and over and over and。
over again on more advanced accounting topics。 The next step is to put together a statement of cash flows for relic spotter but that's。
going to take about a week of videos to learn how to do。
So why don't we stop here and I will see you next week。 See you next video。 [BLANK_AUDIO]。
沃顿商学院《商务基础》｜Business Foundations Specialization｜（中英字幕） - P64：16_2 6 3M公司利润表和资产负债表.zh_en - GPT中英字幕课程资源 - BV1R34y1c74c
Hello， I'm Professor Brian Buchay。 Welcome back。 Our trip around the accounting cycle has culminated in the preparation of the first。
two financial statements， the income statement and the balance sheet。 As is our custom。
we'll end the week by taking a look at the 3M company and report to see。
what their income statement and balance sheet look like。 So without further ado。
let's look at 3M's annual report。 Let's start with 3M's income statement。
which is on page 46 of their annual report。 And it'll make this interesting。
Why don't we just compare this directly to what we did for Relics Potter？
So over here is the Relics Potter income statement that we prepared and we'll just compare it。
directly to the 3M company。 So we started out with， Net Revenue was the top line。
broken into the two segments。 3M just gives us one line for net sales。
Then we had the cost of revenues or cost of goods sold。 Again 3M just has one line item。
We had selling general and administrative expenses。 3M has that as their next item。 Again。
only one line item。 They also have R&D， which we didn't have as Relics Potter。
Just let me delete that so that goes away。 They also had R&D。
which we did not have in Relics Potter。 That gives operating income and we see the same thing on the 3M financial statements。
So far we're seeing the same items in the same order。
There's just a lot more detail in Relics Potter。 Below the operating income line。
we get two interest revenue and interest expense。 Same thing for 3M。 Then we have pre-tax income。
income tax expense， net income。 You see the same order for 3M。
The only thing is they have this non-controlling interest， which we'll talk about later in the。
term。 Now， you may be wondering， how can a big multinational company like 3M。
producer of Post-It notes， and scotch tape and all sorts of other cool stuff。
get away with providing less information， in their income statement than Relics Potter？
Once it turns out， 3M is going to provide more information。
It's just not shown on the face of the income statement。
If we go back to that MD&A section， Management Discussion Analysis， so this is back on page。
18 of the report， we'll find that here is where 3M gives us a lot more detail about。
their income statement。 So here's net sales。 They give us US versus international。
They tell us how much of it is， price versus volume growth， how much of it is organic versus。
acquisitions。 They give you some geographic and product segment information。
and they'll give you more of that。 I'll show you in a second。
For operating expenses like cost of sales， they give you a whole paragraph explaining。
what happened。 So it includes manufacturing， engineering， and freight costs。
One of the effect of the changes year on year was the impact of selling price raw material。
cost changes。 Same thing with SG&A。 They don't quite give you the same detail breakdown of the components。
but they do talk， about how different light items change like pension expense。
restructuring expenses， cost， control， and productivity efforts。
So you're getting more detail on the line items here that you didn't see on the income。
statement。 Same thing with interest income and interest expense， income taxes。
And then as I mentioned， they go through each segment。
And for each segment like industrial and transportation business， healthcare business。
consumer and office business。 So this is the Post-it-Note segment， safety， security。
and protection services。 Maybe this is Post-it-Notes。 But in each case。
they're giving you the sales by the segment， operating income by segment。
and some details about what happened。 So we do actually get more of the information than we see in the income statement。
but you， have to dig into a different part of the report to find it。
Now let's take a look at the balance sheet， which is on page 48 of the 3M10K。
And again， we will compare it to our relic spotter balance sheet。 So this is as of December 31st。
the point in time。 Always start with cash。 That's the most liquid asset。
3M also has marketable securities， which are very liquid。 So things like securities that deposit。
Council receivable comes next on both statements。 3M talks about allowances。 In a couple weeks。
we'll talk about what these allowances for Council receivable mean。 Then we had inventory。
We also see inventories for 3M。 As a manufacturing company。
they have different categories of inventory。 We'll talk about that in about three weeks。
We had things like prepaid interest receivable， notes receivable。
3M just lumps those into other current assets。 Then for non-current assets。
we had land building metal detectors， accumulated depreciation PPE。 We look at 3M。
They have their PPE at cost in one line， less accumulated depreciation to get the net。
So it's the same treatment of original cost minus total depreciation gives you net that。
we saw with relic spotter。 Just with relic spotter。
we got a little bit more detail on the makeup of the PPE。 And then for intangible assets。
we just had software。 3M has a lot more goodwill， intangible assets nets， prepaid pensions。
and the always popular， other assets。 In terms of liabilities， we had accounts payable。
interest payable， income taxes payable， under， earned revenue， for relic spotter。
We can find similar things for 3M。 Counts payable， accrued payroll， accrued income taxes。
Accrued income taxes is another way of saying income tax is payable。
So a crude means the same thing has payable。 They have other current liabilities。
which presumably will have some of these other liabilities， in there。 We had one long-term debt。
mortgage payable。 Here 3M has their long-term debt。 As I talked about in the prior video。
you can also put the current portion of that in current， liabilities as 3M does。
Gets us down to total liabilities for 3M after there's a couple other liabilities that we。
didn't have for relic spotter。 And then finally， for shareholders' equity， we had common stock。
APIC， and retained earnings。 So 3M common stock， notice it's a really small balance because their par value is really small。
basically only one cent per share。 So almost all of their contributed capital goes into APIC。
Then they have retained earnings。 And I think I said last video that retained earnings always comes last。
Well， it didn't take long to find an exception to that。
3M lists treasury stock and accumulated other comprehensive income after retained earnings。
We'll talk about what these two items are。 Oops。 We'll talk about these two items much。
much later in the course。 There's also this non-controlling interest stuff which we'll talk about later。
But then bottom line， total liabilities and stockholders' equity。 And in relic spotter。
our assets equaled our liabilities plus equity and the same thing， for 3M。
No matter how big the company is， the two have to be equal。
Wow。 What a mess。 So now you may be wondering， let's say I really need to know about prepaid assets for。
3M。 Is there anywhere I can find them because I can't just go with this other current assets。
because it's not going to tell me what I need to know about prepaids。 In footnote 4 of the 10K。
which is on page 66， 3M provides us some more detail on the， balance sheet。
So basically they break down some of those line items like other current assets， other。
assets and property plant equipment。 So that we can see our prepaid expenses。
which we didn't see on 3M's balance sheet， was。
included in this total for other current assets。
Property plant equipment at cost， so the original cost， here 3M provides us the breakdown。
of land， buildings， machinery， construction leases to get the gross property plant equipment。
That's PPEany at cost。
Same thing with other current liabilities。 We get a breakdown into other kinds of payables。
So there's other kind of trade payables， derivative liabilities， restructuring， employee benefits。
and so forth。 So what 3M decided to do was instead of making their balance sheet two or three pages。
they。
put as few lines as they could get away with on their balance sheet and then provided a。
footnote which gave us a breakdown of some of the other line items。
Now there's not a section in the MDNA talking about these assets and liabilities in more。
detail because basically the footnotes tend to be oriented around a lot of these accounts。
and so we see more detail in the footnotes。 So for example， here's note three。
Goodwill and intangible assets。 This will tell us everything we need to know， hopefully。
about Goodwill and intangible assets。 So the additional balance sheet information we get。
we can usually go through the footnotes， and dig it out。
And so that's what we see for the balance sheet and the income statement for the 3M。
company。 So that's a wrap for week two。 I hope to see you again next week where we'll talk about preparing the statement of cash flows。
the third of the four major financial statements。 I'll see you then。 [no audio]。
