Question

Go to the SEC Web site. Under ‘‘Filings & Forms (EDGAR),’’ click on ‘‘Search for Company Filings.’’ Click on ‘‘Company or Fund, etc.’’ Under Company Name, enter ‘‘Amazoncom Inc’’ (or under Ticker Symbol, enter ‘‘AMZN’’). Select the 10-K filed January 30, 2009.

1.What were the net sales for 2008, 2007, and 2006?

2.What were the gross profits for 2008, 2007, and 2006?

3.What were the income from operations for 2008, 2007, and 2006?

4.What were the interest expenses for 2008, 2007, and 2006?

Go to the SEC Web site. Under ‘‘Filings & Forms (EDGAR),’’ click on ‘‘Search for Company Filings.’’ Click on ‘‘Company or Fund, etc.’’ Under Company Name, enter ‘‘Kroger Co’’ (or under Ticker Symbol, enter ‘‘KR’’). Select the 10-K filed March 31, 2009.

1.Why is the goodwill account on the balance sheet?

2.Is there a goodwill impairment charge for 2008? (Review Note 2—Goodwill.)

3.Would a goodwill impairment charge be described as a noncash impairment?

Answer 1

Answer to part (a)
Amazoncom Inc
			$Mn
Particulars	2006	2007	2008
Net Sales	10711	14835	19166
Gross Profits	2456	3353	4270
Income from operations	389	655	842
Interest expense	78	77	71

Answer to part (b)

1. There is in total $2271 Mn goodwill in the balance sheet which is mainly due to following reasons:

Carry forward goodwill from 2007	2144
Addition to goodwill (See note 1)	127
Closing goodwill	2271

Note 1: Goodwill representing the excess of this amount over the fair value of TLC’s net assets as of the investment date as Kroger is deemed primary owner of The Little Clinic LLC (“TLC”) due to current ownership interest and half of its written put options being at a floor price

2. No there is no impairment charge for 2008 as the annual evaluation does not suggest for the same. Kroger calculates goodwill on division level and recognizes goodwill impairment for any excess of the carrying value of the division’s goodwill over the implied fair value. If actual results differs significantly from anticipated future results for certain reporting units, they would recognize an impairment loss for any excess of the carrying value of the division’s goodwill over the implied fair value.

3. Yes, since there is no cash outflow while impairing goodwill, it should be considered as non-cash Impairment.