Refer to the Apple Inc. consolidated financial statements in Appendix A and online in the filings section of www.sec.gov. The cash and cash equivalents section of the Consolidated Balance Sheet shows a balance of $20,484 million as of September 24, 2016.

Requirements

1. What are the general criteria for an asset to be classified as a cash equivalent?

2. Refer to the Financial Instruments section of Note 1––Summary of Significant Accounting Policies. What types of assets does the company generally include in the category of cash equivalents?

3. Does the company include any more detailed description of cash equivalents? Where? Describe the categories.

Data from Apple Inc.

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CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except number of shares which are reflected in thousands and per share amounts) Years ended September 26, 2015 September 27, September 24, 2016 2014 215,639 131,376 84,263 Net sales 233,715 182,795 Cost of sales 140,089 112,258 70,537 Gross margin 93,626 Operating expenses: Research and development Selling, general and administrative Total operating expenses 6,041 10,045 14,194 24,239 8,067 14,329 22,396 11,993 18,034 Operating income Other income/(expense), net Income before provision for income taxes 60,024 1,348 61,372 15,685 45,687 71,230 1,285 72,515 19,121 53,394 52,503 980 Provision for income taxes 53,483 13,973 Net income 39,510 Earnings per share: Basic 8.35 2$ 9.28 2$ 6.49 6.45 8.31 2$ 9.22 Diluted Shares used in computing earnings per share: 5,470,820 5,753,421 6,085,572 Basic Diluted 5,500,281 5,793,069 6,122,663 Cash dividends declared per share 1.82 2.18 1.98 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Years ended September 24, September 26, September 27, 2016 2015 2014 Net income $ 45,687 53,394 $ 39,510 Other comprehensive income/(loss): Change in foreign currency translation, net of tax effects of $8, $201 and $50, respectively 75 (411) (137) Change in unrealized gains/losses on derivative instruments: Change in fair value of derivatives, net of tax benefit/(expense) of $(7), $(441) and $(297), respectively Adjustment for net (gains)/losses realized and included in net income, net of tax expense/(benefit) of $131, $630 and $(36), respectively Total change in unrecognized gains/losses on derivative 2,905 1,390 (741) (3,497) 149 instruments, net of tax (734) (592) 1,539 Change in unrealized gains/losses on marketable securities: Change in fair value of marketable securities, net of tax benefit/ (expense) of $(863), $264 and $(153), respectively Adjustment for net (gains)/losses realized and included in net income, net of tax expense/(benefit) of $(31), $(32) and $71, respectively Total change in unrealized gains/losses on marketable securities, 1,582 (483) 285 56 59 (134) net of tax 1,638 (424) 151 979 (1,427) 1,553 Total other comprehensive income/(loss) Total comprehensive income $ 46,666 $ 51,967 $ 41,063