a. Would you consider the presentation to be a multiple-step income statement or a single-step income statement? Comment.

b. Does it appear that there is a 100% ownership in all consolidated subsidiaries?

c. If a subsidiary were not consolidated but rather accounted for using the equity method, would this change net earnings (loss)? Explain.

d. 1. Comment on the goodwill impairment. What does this imply?

2. Comment on the investment impairments. What does this imply?

3. How significant are these impairments in relation to earnings (loss) from continuing operations before income taxes?

e. 1. How significant is selling, general, and administrative expenses in relation to gross margin?

2. How significant is research and development expenditures in relation to gross margin?

3. How significant are dividends paid in relation to net earnings (loss)?

4. a. Considering the above items, which one would you reduce first?

b. Considering the above items, which one would you protect the most?

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MOTOROLA, INC, AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN PART) Years Ended Decem ber 3 In millions, except per share amo unts) Net sales Cost of sales Gross margin Selling, general, and administrative expenses Research and development expenditures Other charges Operating earnings (loss) Other income (expense: 2008 2007 2006 S 36,622 26,670 S 42,847 30,120 S 30,146 8,395 4,330 4,109 2,347 5,092 4,429 984 553) 4,504 4.106 (2,391) 4,092 Interest income, net Gains on sales of investments and businesses, net Other 48 82 91 50 326 41 151 518 376) 246) Total other income (expense) 163