Refer to the financial statements of Quaker Oats Company with the following footnotes.

                                

($ millions)			Year 11	Year 10	Year 9
Advertising, media and production			$277.5	$ 282.8	$ 256.5
Merchandising			1,129.9	912.5	886.2
Total advertising and merchandising			$1,407.4	$1,195.3	$1,142.7
Maintenance and repairs			$ 96.1	$ 96.6	$ 93.8
Depreciation expense			$125.2	$ 103.5	$ 94.5
Research and development			$44.3	$ 43.3	$ 39.3
INTEREST (INCOME) EXPENSE
($ millions)			Year 11	Year 10	Year 9
Total interest expense			$101.9	$120.2	$ 75.9
Total interest income			(9.0)	(11.0)	(12.4)
Net interest allocated to discontinued operations			(6.7)	(7.4)	(7.1)
	Year 11		Year 10		Year 9
	Amount	% of Pretax Income	Amount	% of Pretax Income	Amount		% of Pretax Income
($ millions)
Tax provision based on the federal statutory rate	$139.9	34.0%	$130.0	34.0%	$81.3		34.0%
State and local income taxes, net of federal income tax benefit	16.7	4.1	11.9	3.1	7.7		3.2
ANC benefit	—	—	—	—	(1.7)		(.7)
Repatriation of foreign earnings .	4.3	1.0	4.8	1.3	(2.1)		(.9)
Non-U.S. tax rate differential	8.2	2.0	9.8	2.5	8.8		3.7
U.S. tax credits	(.2)	—	(.1)	—	(.7)		(.3)
Miscellaneous items—net	6.8	1.6	(2.9)	(.8)	(3.1)		(1.3)
Actual tax provision	$175.7	42.7%	$153.5	40.1%	$90.2		37.7%
OTHER (INCOME) EXPENSE
($ millions)			Year 11	Year 10		Year 9
Foreign exchange (gains) losses-net			$(5.1)	$ 25.7		$ 14.8
Amortization of intangibles			22.4	22.2		18.2
Losses (gains) from plant closings andoperations sold or to be sold— net			8.8	(23.1)		119.4
Miscellaneous—net			. 6.5	(8.4)		(2.8)
Net other expense			. $32.6	$ 16.4		$149.6

Required:

a. Recast Quaker Oats’ income statements through Income from Continuing Operations for Years 11, 10, and 9 (estimate federal income tax at 34%).

b. Interpret trends revealed by the recasted income statements.

Answer rating: 100% (QA)

Answer 1 Income Statement through Income from Continuing Operations 2 As per income stat... View the full answer