Excerpts from the 2016 statement of income, statement of operations, and notes to the financial statements of High Liner Foods Inc. are in Exhibits 2.21A to 2.21C. Although it is a Canadian company, based in Lunenburg, Nova Scotia, High Liner prepares its financial statements in U.S. dollars. However, the general format and accounting policies are similar to the financial statements you have seen so far.

EXHIBIT 2.21A High Liner Foods Incorporated’s 2016 Consolidated Statement of Income

EXHIBIT 2.21B High Liner Foods Incorporated’s 2016 Consolidated Statement of Financial Position

HIGH LINER FOODS INCORPORATED
Consolidated Statement of Financial Position
(in thousands of United States dollars)

EXHIBIT 2.21C Excerpt from High Liner Foods Incorporated’s 2016 Annual Report

21. Operating segment information

Required

Use the exhibits to answer the following questions.

a. In the shareholders’ equity section, what does the $86,094 thousand in common shares represent?

b. In the shareholders’ equity section, what does the $146,340 thousand in retained earnings represent?

c. What percentage of High Liner’s assets was financed by liabilities? Has this percentage increased or decreased from 2015?

d. How much did total assets change in 2016 over 2015? What were the major areas (or accounts) that accounted for the increase?

e. If High Liner were to pay the income taxes payable, in the current liabilities section, what would be the effect on the basic accounting equation?

f. What was High Liner’s gross profit as percentage of revenues in 2016? How did this compare with 2015?

g. In the accompanying notes to the financial statements, High Liner discloses separately the revenues and cost of sales for its two business segments: Canadian and U.S. segments. Calculate gross profit for each business segment as a percentage of revenues. Are the segments more or less profitable in 2016 than in 2015? Which segment is more profitable? Base your answers on High Liner’s note 21, Operating Segment Information (Exhibit 2.21C).

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HIGH LINER FOODS INCORPORATED Consolidated Statement of Income (in thousands of United States dollars, except per share amounts) Fifty-two weeks ended December 31, January 2, Notes 2016 2016 $ 956,016 $ 1,001,507 Revenues Cost of sales 753,179 799,843 Gross profit 202,837 201,664 Distribution expenses 43,610 48,037 Selling, general and administrative expenses 96,978 93,597 Impairment of property, plant and equipment 2,327 Business acquisition, integration and other expenses 7,473 4,787 Results from operating activities 55,135 52,557 16,247 Finance costs 25 14,296 Income before income taxes 40,839 36,310 Income taxes Current 17 8,737 5,707 Deferred (848) 17 1,022 Total income tax expense 7,889 6,729 Net income 32,950 29,581 Earnings per common share Basic 18 1.07 0.96 Diluted 18 1.06 0.95 Weighted average number of shares outstanding Basic 30,917,412 18 30,818,804 Diluted 31,264,671 18 31,174,788 December 31, January 2, Notes 2016 2016 ASSETS Current Cash $ 18,252 $ 1,043 Accounts receivable 75,190 76,335 Income taxes receivable 3,783 5,218 Other financial assets 22 1,705 6,453 Inventories 252,118 261,771 Prepaid expenses 3,340 2,051 Total current assets 354,388 352,871 Non-current Property, plant and equipment 111,322 115,879 Deferred income taxes 17 2,290 2,495 Other receivables and miscellaneous assets 22 864 1,683 Intangible assets 97,176 102,315 Goodwill 118,101 117,824 Total non-current assets 329,753 340,196 Total assets $684,141 $693,067 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Bank loans 10 621 $ 17,158 Accounts payable and accrued liabilities 11 135,272 120,336 Provisions 12 386 263 Other current financial liabilities 22 1,626 817 Other current liabilities 416 Income taxes payable 851 2,242 Current portion of long-term debt 13 11,816 Current portion of finance lease obligations 13 721 1,015 Total current liabilities 139,893 153,647 Non-current liabilities Long-term debt 13 266,327 281,017 Other long-term financial liabilities 22 196 89 Other long-term liabilities 888 483 Long-term finance lease obligations 13 702 715 Deferred income taxes 17 45,183 46,966 Future employee benefits 14 8,190 9,631 Total non-current liabilities 321,486 338,901 Total liabilities 461,379 492,548 Shareholders' equity Common shares 15 86,094 85,282