Spin Master Corp. is a Toronto-based children’s entertainment company. The company designs, manufactures, and markets toys and digital games, as well as creating and producing entertainment content. Exhibit 4.13 contains an excerpt from Spin Master’s 2020 annual report.

Required 

a. Calculate Spin Master’s gross profit percentage for 2020 and 2019. Has it improved? 

b. Does Spin Master prepare its consolidated statement of earnings using a single-step or a multi-step approach? 

c. Does Spin Master present its expenses by function or by nature? Does this approach require a higher level of management judgement when preparing the statement?

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SPIN MASTER CORP. Consolidated Statements of Earnings and Comprehensive Income (US$ millions, except earnings per share) Revenue Cost of sales Gross profit Expenses Selling, marketing, distribution and product development Administrative expenses Depreciation and amortization expenses Other expenses Foreign exchange loss Finance costs Income before income tax (recovery) expense Income tax (recovery) expense Net income Notes 4 7 7 7 5 8 6 9 Year Ended December 31 2019 2020 $1,570.6 842.7 727.9 367.8 264.6 37.7 8.7 27.6 12.1 9.4 (36.1) $ 45.5 $1,581.6 796.6 785.0 395.4 247.9 32.6 6.6 5.8 11.7 85.0 20.7 $ 64.3