Make an investment decision
Response to the following problem:
Infografix Corporation's consolidated sales for 2014 were $26.6 billion, and expenses totaled $24.8 billion. Infografix operates worldwide and conducts 37% of its business outside the United States. During 2014, Infografix reported the following items in its financial statements (amounts in billions):
Foreign-currency translation adjustment..................................... $(202)
Unrealized holding........on available-for-sale investments................ (328)
As you consider an investment in Infografix stock, some concerns arise.
Answer each of the following questions:
1. What do the parentheses around the two dollar amounts signify?
2. Are these items reported as assets, liabilities, stockholders' equity, revenues, or expenses? Are they normal-balance accounts, or are they contra accounts?
3. Did Infografix include these items in net income? In retained earnings? In the final analysis, how much net income did Infografix report for 2014?
4. Should these items scare you away from investing in Infografix stock? Why or why not? (Challenge)