First Solar, Inc., adopted the new revenue recognition standard, ASC Topic 606, in 2017. The following are condensed versions of First Solar’s balance sheet, income statement, and cash flow statement, as they were presented in the company’s 2017 annual report, alongside the same financial statements as presented in the company’s 2016 annual report.

Required:

1. Did First Solar use retroactive restatement or the cumulative effect approach when it adopted ASC Topic 606? Explain how you can make that determination from the information provided.

2. Reconstruct the journal entry First Solar used at January 1, 2017, when it adopted ASC Topic 606.

3. What is the most reasonable way to compute a sales growth percentage for 2017 versus 2016?

4. Explain why net cash provided by (used in) operating activities is unchanged from the 2016 report to the 2017 report (for 2016 and 2015) even as net income changes. Your explanation should be more in depth than just noting that the reconciling items also change and result in the same cash flow amount. Why is that the case?

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($ in thousands) 2017 Annual Report 2016 Annu al Report December 31, December 31, BALANCE SHEET: 2017 2016 2016 2015 $3.832,772 3.031.729 $6.864,501 $3,787,829 3,036,539 $6,824.368 Current assets Noncurrent assets $3,786,620 $3,345, 586 3,080.593 $ 6,867,213 3.970,745 $7.316,331 Total assets $ 650,276 1,115,528 $ 899,707 Current liabilities $ 907,881 $ 960,800 Noncurrent liabilities 698, 138 754,8 19 807,044 1,765,804 1,654,526 5.212,687 Total liabilities 1,606,019 1,767, 844 Total equity 5,548,487 5.098.697 $6,864.501 5,218,349 $6824,368 $ 6,867,213 $7.316,331 Total assets 2017 Annual Report 2016 Annual Report INCOME STATEMENT: 2017 2016 2015 2016 2015 2014 $ 2.951.328 2,247,349 $2.941,324 $4.112.650 Net sales Cost of sales $2.904,563 $3.578,995 2,659,7 28 $3.391,187 2,566,246 2,392,377 2,266,145 2,979.888 Gross profit Operating expenses: Selling, general and administrative Research and development Production start-up Restructuring and asset impairments 548,947 638,4 18 1,132,762 703,979 919,267 824,941 202,699 88,573 42,643 37,181 261,994 255,192 261,994 255, 192 253,827 124, 762 1,021 818,792 130,593 16,818 124,762 1,021 818,792 130, 593 16818 143,969 5,146 Total operating expenses 371,096 1,206,569 402,603 1,206,569 402603 402,942 (502,590) 30,900 730, 159 Operating income (loss) Other income (expense) net 177,851 24,264 (568, 151) 30,900 516 664 3, 171 421,999 10, 102 3,171 Income (loss) before taxes and equity in carnings of unconsolidated affiliates Income tax (ex pen se) benefit Equity in carnings of unconsolidated affiliates, net of tax 733,330 (32,329) 202,115 (537,251) (23,167) (471,690) (58,219) 519,835 6, 156 432,101 (31,188) (371.996) 4,266 144,306 (107,595) 171,945 20,430 (4,949) Net (loss) income $ (165,615) $ (416, 112) $ 593,406 $ (357.964) $ 546 421 $ 395,964