In the CVS annual report in the Supplement to Chapter 1, refer to the balance sheet and the Summary of Significant Accounting Policies in the notes to the financial statements.
1. Examine the accounts in the current assets, property and equipment, and current liabilities sections of CVS's balance sheet. Which are most likely to have had year-end adjusting entries? Describe the nature of the adjusting entries. For more information about the property and equipment section, refer to the notes to the financial statements.
2. Where is depreciation (and amortization) expense disclosed in CVS's financial statements?
3. CVS has a statement on the "Use of Estimates" in its Summary of Significant Accounting Policies. Read this statement, and tell how important estimates are in determining depreciation expense. What assumptions do accountants use in estimating depreciation?