Fundamental Accounting Principles 22th Edition by John Wild ,Ken Shaw,Barbara Chiappetta

Exercise 21

Refer to the financial statements of Apple in Appendix A to answer the following.
1. Compute times interest earned for the fiscal years ended 2013, 2012, and 2011. Apple reports that 2013 interest expense was $136 million, and during 2012 and 2011 it "had no debt outstanding and accordingly did not incur any related interest expense"; however, for purposes of learning from this assignment, assume that Apple had interest expense of $100 million for each of 2012 and 2011. Comment on Apple's ability to cover its interest expense for this period. Assume an industry average of 10 for times interest earned.
2. Apple's current liabilities include "Deferred revenue"; assume that this account reflects "Loyalty reward liabilities." Is this a known or an estimated liability Explain how this liability is created.
3. Identify its total of accrued expenses and search its footnotes to list the six accounts that make up accrued expenses.
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4. Access Apple's financial statements for fiscal years ending after September 28, 2013, at its website ( Apple.com ) or the SEC's EDGAR database ( www.SEC.gov ). Compute its times interest earned for years ending after September 28, 2013, and compare your results to those in part 1. If no interest expense is reported, assume $100 million of interest expense in each year.
Reference : Apple 's financial statements in Appendix A