Financial statements often serve as a starting point in formulating budgets. Review Polaris’ financial statements to determine its cash paid for acquisitions of property and equipment in the current year and the budgeted cash needed for such acquisitions in the next year.

Required
1. Which financial statement reports the amount of cash paid for acquisitions of property and equipment? Explain where on the statement this information is reported.
2. Indicate the amount of cash
(a) paid for acquisitions of property and equipment in the year ended December 31, 2011,
(b) To be paid (budgeted for) next year under the assumption that annual acquisitions of property and equipment equal 40% of the prior year’s net income.