Obtain Disney’s 2016 Annual Report online. Review the financial statements and the notes to the financial statements.

1.List the types of investments held by Disney (Available-for-sale, equity-method investees, subsidiaries).

2. Assume Disney has only one investee in which it holds 40% ownership. Based on the basic financial statements, how much was the investee’s net income (loss) for 2016?

3. Assume Disney has a 25% owned investee and it intends to hold the investment indefinitely. Also assume that the investee distributed a total of $18M in dividends. What is the effect on Disney’s balance sheet equation (indicate direction(increase, decrease, no effect) and $ amount)?

Assets Liabilities Stockholder’s Equity

4. Prepare the journal entry to record Disneys’s share of earnings for fiscal year 2016 of its investees over which it has significant influence.

5.Disney entered into interest rate swaps and designated them as hedges.

What type of swaps are they (variable-to-fixed, fixed-to-variable)?

Disney designated these swaps as what kind of hedge?

Are the hedges 100% effective? How do you know?

6. What percentage of 2016 total assets represent net positions in hedged derivatives?

Answer rating: 100% (QA)

Answer 1 Availableforsale equitymethod investees subsidiaries 2 40 3 No effect 4 Increase by 18M 5 V... View the full answer