Use the 2008 Form 10-K for Snap-on Inc. to complete the requirements below. To obtain the Form 10-K you can use either use the EDGAR system following the instructions in Appendix A, or it can be found under “Corporate Information” on the company’s corporate website; www.snapon.com. Read carefully the following portions of the document:
“Products and Services” on page 5.
“Consolidated Statement of Earnings” on page 55.
The following parts of Note 1 on page 60: •
“Shipping and handling”
“Advertising and promotion”
“Note 4: Inventories” on page 66.
“Note 5: Property and equipment” on page 67.
Required
a. Does the level of detail that Snap-on provides regarding costs incurred to manufacture its products suggests the company’s financial statements are designed primarily to meet the needs of external or internal users?
b. Does Snap-on treat shipping and handling costs as product or period costs?
c. Does Snap-on treat advertising and promotion costs as product or period costs?
d. In the first accounting course you learned about a class of inventory called merchandise inventory. What categories of inventory does Snap-on report in its annual report?
e. What is the cost of the land owned by Snap-on? What is the cost of its machinery and equipment?